UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2007
Pathfinder Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Federal 000-23601 16-1540137
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
(315) 343-0057
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 27, 2007, Pathfinder Bancorp, Inc. issued a press release disclosing
second quarter 2007 financial results. A copy of the press release is included
as Exhibit 99.1 to this report.
The information in Item 2.02 to this Form 8-K and Exhibit 99.1 in accordance
with general instruction B.2 of Form 8-K, is being furnished and shall not be
deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934,
nor shall it be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except shall be
expressly set forth by specific in such filing.
Exhibit No. Description
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99.1 Press Release of Pathfinder Bancorp, Inc. dated July 27, 2007
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PATHFINDER BANCORP, INC.
Date: July 27, 2007 By: /s/ Thomas W. Schneider
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Thomas W. Schneider
President and Chief Executive Officer
EXHIBIT INDEX
99.1 Earnings release dated July 27, 2007 announcing
June 30, 2007 earnings.
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Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT: THOMAS W. SCHNEIDER - PRESIDENT, CEO
JAMES A. DOWD - SENIOR VICE PRESIDENT, CFO
TELEPHONE: (315) 343-0057
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PATHFINDER BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS
Oswego, New York, July 27, 2007 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) announced reported net income of $166,000, or $0.07 per
diluted share, for the three months ended June 30, 2007 as compared to $303,000,
or $0.12 per diluted share for the same period in 2006. For the six months
ended June 30, 2007, the Company reported net income of $331,000, or $.13 per
share, compared to $543,000, or $0.22 per share, for the same period in 2006.
"While the continuation of a flat to inverted yield curve continues to strain
margins and interest rate spreads," stated Thomas W. Schneider, President and
CEO, "the decline in 2007 earnings is more directly attributable to costs
associated with preparing for and implementing the enhanced internal controls of
Section 404 of the Sarbanes Oxley Act, and with the Bank Secrecy Act/Anti-Money
Laundering regulations. These increased regulatory burdens, combined with the
interest rate environment have adversely impacted profitability and overcome the
positive impacts from deposit and loan growth over the last year."
"Additionally", Schneider further stated, "we have been increasing our provision
for loan losses to recognize our increased commercial lending activity and the
slow down in the housing markets."
Net interest income for the quarter ended June 30, 2007, increased 2% when
compared to the same period during 2006. Interest income increased $405,000, or
10%, offset by increased interest expense of $370,000, or 20%. Net interest
rate spread decreased to 2.74% for the second quarter of 2007 from 2.93% for the
same period in 2006. Average interest-earning assets increased 5% to $286.6
million for the quarter ended June 30, 2007 as compared to $273.5 million for
the same quarter of 2006, and the yield on those assets increased 28 basis
points to 6.09% compared to 5.81% for the same period in 2006. The increase in
average earning assets is primarily attributable to an $11.3 million increase in
the average loan portfolio and a $7.6 million increase in interest earning
deposits, offset by a decrease in average investment securities of $5.7 million.
Average interest-bearing liabilities increased $8.1 million and the cost of
funds increased 47 basis points to 3.35% from 2.88% for the same period in 2006.
The increase in the average balance of interest-bearing liabilities resulted
primarily from a $19.8 million increase in average deposits, offset by an $11.7
million decrease in borrowed funds.
Provision for loan losses for the quarter ended June 30, 2007 increased to
$75,000 from $1,000 for the same period in 2006. The increased provision is
reflective of the increased risk inherent with the growing commercial loan
portfolio. The Company's ratio of allowance for loan losses to period end loans
increased to 0.76% at June 30, 2007 as compared to 0.74% at December 31, 2006.
Nonperforming loans to period end loans have increased slightly to 0.61% at June
30, 2007 from 0.57% at December 31, 2006.
Non-interest income, exclusive of gains and losses from the sale of securities,
loans and foreclosed real estate, increased to $684,000 for the quarter ended
June 31, 2007 compared to $611,000 for the same quarter in the prior year. The
increase in non-interest income is primarily attributable to an increase in
service charges on deposit accounts, investment services revenue and fees
associated with the Bank's Visa Debit card usage.
Net losses from the sale of securities, loans and foreclosed real estate for the
quarter ended June 30, 2007 decreased $12,000 when compared to the same quarter
of 2006.
Non-interest expense increased $217,000, or 9%, for the quarter ended June 30,
2007 when compared to the same period in the prior year. Professional and other
services expense increased $110,000 primarily from consulting expenses
associated with the on-going SOX 404 process review, a customer base risk
analysis for BSA compliance and a direct mail campaign aimed at attracting new
deposit customers. Salaries and employee benefits increased $91,000 primarily
from increased commissions paid to mortgage originators and investment services
representatives, combined with normal merit based salary increases. Data
processing expenses increased $46,000 primarily due to an increase in Internet
banking costs, customer check processing and ATM processing charges and
maintenance charges. These increases were offset by a $47,000 decrease in other
expenses primarily due to a reduction in costs associated with foreclosed real
estate properties as the number of properties decreased to 7 from 13 in the
comparable quarter of 2006. Additionally, audit and exam and travel and
training expenses were lower when compared to the second quarter of 2006.
On March 22, 2007, the Company entered into a trust-preferred issuance for $5.0
million, adjustable quarterly at a 1.65% spread over the 3-month LIBOR. The
Company used the proceeds from that issuance to retire its original trust
preferred obligation on June 27, 2007, at its first call date. The original
obligation was for $5.0 million, adjustable quarterly at a spread of 3.45% over
the 3-month LIBOR. The new issuance and retirement of the original trust
preferred obligation will result in an approximate pre-tax annual savings of
$90,000 to the institution.
Pathfinder Bancorp, Inc. is the mid-tier holding company of Pathfinder Bank, a
New York chartered savings bank headquartered in Oswego, New York. The Bank has
seven full service offices located in its market area consisting of Oswego
County. Financial highlights for Pathfinder Bancorp, Inc. are attached.
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Presently, the only business conducted by Pathfinder Bancorp, Inc. is the 100%
ownership of Pathfinder Bank and Pathfinder Statutory Trust I.
This release may contain certain forward-looking statements, which are based on
management's current expectations regarding economic, legislative, and
regulatory issues that may impact the Company's earnings in future periods.
Factors that could cause future results to vary materially from current
management expectations include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and economic, competitive,
governmental, regulatory, and technological factors affecting the Company's
operations, pricing, products, and services.
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PATHFINDER BANCORP, INC.
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
For the three months For the six months
ended June 30, ended June 30,
(Unaudited) (Unaudited)
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2007 2006 2007 2006
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CONDENSED INCOME STATEMENT
Interest and dividend income $ 4,337 $ 3,932 $ 8,606 $ 7,797
Interest expense 2,223 1,853 4,371 3,601
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Net interest income 2,114 2,079 4,235 4,196
Provision for loan losses 75 1 125 23
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Net interest income after provision for loan losses 2,039 2,078 4,110 4,173
Noninterest income 691 606 1,282 1,199
Noninterest expense 2,527 2,310 4,985 4,721
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Income before taxes 203 374 407 651
Provision for income taxes 37 71 76 108
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Net income $ 166 $ 303 $ 331 $ 543
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KEY EARNINGS RATIOS
Return on average assets 0.21% 0.40% 0.21% 0.36%
Return on average equity 3.15% 5.85% 3.14% 5.19%
Return on average tangible equity (A) 3.88% 7.33% 3.87% 6.49%
Net interest margin (tax equivalent) 2.99% 3.11% 3.00% 3.12%
SHARE AND PER SHARE DATA
Basic weighted average shares outstanding 2,483,532 2,463,132 2,482,557 2,463,132
Basic earnings per share $ 0.07 $ 0.12 $ 0.13 $ 0.22
Diluted earnings per share 0.07 0.12 0.13 0.22
Cash dividends per share 0.1025 0.1025 0.205 0.205
Book value per share - - 8.36 8.35
(Unaudited) (Unaudited) (Unaudited)
June 30, December 31, June 30, June 30,
2007 2006 2006 2005
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SELECTED BALANCE SHEET DATA
Assets $ 304,556 $ 301,382 $ 296,953 $ 310,471
Earning assets 277,020 274,083 267,520 277,927
Total loans 205,726 203,209 192,850 187,943
Deposits 254,825 245,585 232,071 237,239
Borrowed Funds 20,410 26,360 36,260 43,260
Trust Preferred Debt 5,155 5,155 5,155 5,155
Shareholders' equity 20,761 20,850 20,579 21,678
ASSET QUALITY RATIOS
Net loan charge-offs (annualized) to average loans 0.06% 0.11% 0.05% 0.09%
Allowance for loan losses to period end loans 0.76% 0.74% 0.86% 1.00%
Allowance for loan losses to nonperforming loans 123.42% 127.65% 117.51% 92.61%
Nonperforming loans to period end loans 0.61% 0.57% 0.73% 1.08%
Nonperforming assets to total assets 0.56% 0.54% 0.78% 0.94%