SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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): February 4, 2008
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.)
Registrant's telephone number, including area code: (315) 343-0057
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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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Section 2 - Financial Information
Item 2.02
On February 4, 2008, Pathfinder Bancorp, Inc. issued a press release disclosing
fourth quarter and year end 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.
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: February 4, 2008 By: /s/ Thomas W. Schneider
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Thomas W. Schneider
President and Chief Executive Officer
EXHIBIT INDEX
Earnings release dated February 4, 2008 announcing December 31, 2007 earnings.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: THOMAS W. SCHNEIDER - PRESIDENT, CEO
JAMES A. DOWD - SENIOR VICE PRESIDENT, CFO
TELEPHONE: (315) 343-0057
[GRAPHIC OMITTED]
PATHFINDER BANCORP, INC. ANNOUNCES FOURTH QUARTER AND YEAR-END EARNINGS
Oswego, New York, February 4, 2008 Pathfinder Bancorp, Inc., the mid-tier
holding company of Pathfinder Bank, (NASDAQ SmallCap Market; symbol: PBHC,
listing: PathBcp) announced reported net income of $485,000, or $0.20 per
diluted share, for the three months ended December 31, 2007 as compared to
$315,000, or $0.13 per diluted share for the same period in 2006. For the
twelve months ended December 31, 2007, the Company reported net income of $1.1
million, or $0.45 per share, compared to $1.0 million, or $0.42 per share, for
the same period in 2006.
"We are pleased with the organic growth in loans, deposits and earnings we have
been able to achieve in 2007, particularly in view of the challenging and
volatile conditions in the financial services industry." according to Thomas W.
Schneider, President and CEO. "Per share earnings grew 7% in 2007 over 2006,
and 54% in the fourth quarter of 2007 over the same period in 2006. During
2007, revenues increased by 6.8% while expenses grew at less than 2.0%."
Schneider continued, "The Company did increase provisions for loan losses over
the prior year commensurate with loan portfolio growth and the increased risks
of economic uncertainty in a slow growth or recessionary environment."
"The loan portfolio grew at a rate of 9.6%", Schneider stated, "while we
continue to diversify the portfolio with a mix of residential, commercial and
consumer loans. Deposit growth was 2.2% and was tempered in the fourth quarter
as we replaced higher cost certificates of deposit with lower cost borrowings
from the Federal Home Loan Bank of New York. Non-interest bearing deposits grew
at 10.6% reflecting our strategic emphasis of growing customer relationships
through checking accounts. The organic growth in loans and lower cost deposits
combined with the positive relation between revenue and expense growth is
consistent with the continued execution of our strategic plan and positions the
company well for 2008."
Net interest income for the year ended December 31, 2007 increased $321,000, or
4%, when compared to the same period during 2006. Interest expense increased
$1.1 million, or 15%, which was more than offset by an increase in interest
income of $1.4 million, or 9%. Net interest rate spread decreased to 2.79% for
the year ended December 31, 2007 from 2.93% for the same period in 2006.
Average interest-earning assets increased 5%, to $287.1 million, for the year
ended December 31, 2007 as compared to $273.4 million for the year ended
December 31, 2006. The yield on average interest earning assets increased 20
basis points to 6.06% compared to 5.86% for the same period in 2006. The
increase in average interest earning assets is primarily attributable to a $15.8
million increase in the average balance of the loan portfolio and a $3.3 million
increase in the average balance of interest-earning deposits. These increases
were offset by a $5.4 million decrease in the average balance of security
investments. Average interest-bearing liabilities increased $8.1 million, or
3%, while the cost of funds increased 34 basis points to 3.27% from 2.93% for
the same period in 2006. The increase in the average balance of
interest-bearing liabilities resulted primarily from a $15.3 million, or 7%,
increase in average deposits, offset by a decrease in average borrowed funds of
$7.2 million, or 19%.
Provision for loan losses for the year ended December 31, 2007 increased to
$365,000 from $23,000 for the same period in 2006. The increased provision is
reflective of a growing loan portfolio and one more heavily weighted to
commercial term and commercial real estate, which have higher inherent risk
characteristics than a consumer real estate portfolio. The Company's ratio of
allowance for loan losses to period end loans has increased to 0.76% at December
31, 2007 from 0.74% at December 31, 2006. Non performing loans to period end
loans increased to 0.71% at December 31, 2007, compared to 0.63% at December 31,
2006. The majority of the increase in non performing loans is comprised of three
residential mortgages and one commercial mortgage, which are currently in a loan
work out status.
Non-interest income, exclusive of net gains and losses from the sale of
securities, loans and foreclosed real estate, increased to $2.6 million for the
year ended December 31, 2007 compared to $2.4 million for the same period in the
prior year. The increase in non-interest income is primarily attributable to a
$103,000 increase in service charges on deposit accounts, a $26,000 increase in
loan servicing fees, a $57,000 increase in debit card interchange fees and a
$39,000 increase in other charges, commissions and fees.
Net gains and losses from the sale of securities, loans and foreclosed real
estate increased $201,000, to a net gain of $420,000 for the year ended December
31, 2007, as compared to a net gain of $219,000 for the year ended December 31,
2006. The increase was due to the gain recognized on the sale of the Company's
holdings in the common stock of Fannie Mae in August 2007, combined with an
increased capital gain dividend received on an equity investment.
Operating expenses increased 2% from the prior year to $9.8 million from $9.7
million. During 2007, salary and employee benefits, building occupancy, data
processing and professional and other services increased $87,000, $51,000,
$55,000 and $154,000, respectively. This increase was offset by a reduction in
other expenses of $136,000 and amortization expenses of $41,000. The increase in
salaries and employee benefits was primarily due to incremental salary raises
and incentive compensation throughout the period. The increase in building
occupancy was due to an increase in depreciation expense on furniture and
fixtures, combined with building maintenance and landscaping improvements at
several branches. Data processing expenses increased primarily due to increases
in Internet banking costs, customer check processing and ATM processing charges.
Professional and other services expense increased 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. The decrease in other expenses was primarily due to a
reduction in expenses associated with ORE properties, liability insurance,
audits and exams and travel and training. Additionally, the write-off of
counterfeit items and ATM transactions were lower in 2007 when compared to the
same period in 2006.
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.
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.
PATHFINDER BANCORP, INC.
FINANCIAL HIGHLIGHTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
For the three months For the twelve months
ended December 31, ended December 31,
(Unaudited) (Unaudited)
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2007 2006 2007 2006
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CONDENSED INCOME STATEMENT
Interest income $ 4,403 $ 4,105 $ 17,309 $ 15,869
Interest expense 2,138 2,029 8,642 7,523
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Net interest income 2,265 2,076 8,667 8,346
Provision for loan losses 85 - 365 23
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Net interest income after provision for loan losses 2,180 2,076 8,302 8,323
Other income 982 889 3,042 2,615
Other expense 2,441 2,556 9,838 9,668
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Income before taxes 721 409 1,506 1,270
Provision for income taxes 236 94 384 242
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Net income $ 485 $ 315 $ 1,122 $ 1,028
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KEY EARNINGS RATIOS
Return on average assets 0.62% 0.42% 0.36% 0.34%
Return on average equity 8.98% 5.82% 5.27% 4.86%
Net interest margin (tax equivalent) 3.19% 3.06% 3.05% 3.10%
SHARE AND PER SHARE DATA
Basic weighted average shares outstanding 2,483,541 2,465,047 2,483,051 2,463,703
Basic earnings per share $ 0.20 $ 0.13 $ 0.45 $ 0.42
Diluted earnings per share 0.20 0.13 0.45 0.41
Cash dividends per share 0.1025 0.1025 0.410 0.410
Book value per share - - 8.75 8.45
(Unaudited)
December 31, December 31, December 31, December 31,
2007 2006 2005 2004
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SELECTED BALANCE SHEET DATA
Assets $ 320,691 $ 301,382 $ 296,948 $ 302,037
Earning assets 290,192 274,083 266,198 273,532
Total loans 222,749 203,209 189,568 186,952
Deposits 251,085 245,585 236,377 236,672
Borrowed Funds 38,410 26,360 31,360 35,360
Trust Preferred Debt 5,155 5,155 5,155 5,155
Shareholders' equity 21,734 20,850 20,928 21,826
ASSET QUALITY RATIOS
Net loan charge-offs (annualized) to average loans 0.10% 0.11% 0.24% 0.33%
Allowance for loan losses to period end loans 0.76% 0.74% 0.89% 0.98%
Allowance for loan losses to non performing loans 107.04% 127.65% 99.94% 98.70%
Non performing loans to period end loans 0.71% 0.57% 0.89% 0.98%
Non performing assets to total assets 0.77% 0.54% 0.82% 0.88%