PATHFINDER BANCORP INC
     PATHFINDER BANCORP INC. ("PBHC-ABHDPQ2")
- Second Quarter Earnings and Share Repurchase Plan
     Pathfinder Bancorp, Inc., the mid-tier holding company of Pathfinder
Bank, announced reported net income of $300,000, or $0.12 per diluted
share, for the three months ended June 30, 2008 as compared to $166,000, or
$0.07 per diluted share for the same period in 2007. For the six months
ended June 30, 2008, the Company reported net income of $632,000, or $0.25
per share, compared to $331,000, or $0.13 per share, for the same period in
2007.
     "Second quarter earnings and growth have continued on a favorable
trend," according to Thomas W. Schneider, President and CEO. "Net earnings
of $300,000 and $632,000 for the quarter and six months respectively, are
81% and 91% ahead of last year's income.
     "The Company has recorded an impairment charge on a security of
$205,000, net of taxes during the quarter. This charge is explained more
fully in the following text. Exclusive of this charge, quarterly income is
at record levels," Schneider continued. "Improved earnings are being
driven by a 13% year-over-year rate of growth in the loan portfolio and
enhanced net interest spreads from a steeper yield curve. This has
resulted in revenue growth for the first six months of the year of 16%,
while operating expenses have remained stable."
     On July 22, 2008, the Board of Directors approved a Share Repurchase
Plan of up to 5% of public shares outstanding. The repurchase program will
expire in six months.
     Net interest income for the quarter ended June 30, 2008, increased 25%
when compared to the same period during 2007. Interest income increased
$169,000, or 4%, combined with a decrease in interest expense of $354,000,
or 16%. Net interest rate spread increased to 3.20% for the second quarter
of 2008 from 2.74% for the same period in 2007. Average interest-earning
assets increased 9% to $313.3 million for the quarter ended June 30, 2008
as compared to $286.6 million for the same quarter of 2007. The yield on
interest-earning assets decreased 29 basis points to 5.80% compared to
6.09% for the same period in 2007. The increase in average earning assets
is primarily attributable to a $23.1 million increase in the average
balance of the loan portfolio and an $8.1 million increase in the average
balance of the investment securities portfolio, offset by a decrease in the
average balance of interest earning deposits of $4.5 million. Average
interest-bearing liabilities increased $22.2 million and the cost of funds
decreased 75 basis points to 2.60% from 3.35% for the same period in 2007.
The increase in average interest-bearing liabilities resulted primarily
from a $12.5 million and a $9.7 million increase in the average balance of
borrowed funds and deposits, respectively.
     Provision for loan losses for the quarter ended June 30, 2008
increased to $135,000 from $75,000 for the same period in 2007. 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,
as well as a general weakening in economic conditions. The Company's ratio
of allowance for loan losses to period end loans increased to 0.85% at June
30, 2008 as compared to 0.76% at December 31, 2007. Nonperforming loans to
period end loans increased to 1.24% at June 30, 2008 from 0.71% at December
31, 2007. The increase in total non-performing loans is primarily the
result of $497,000 in short-term, interest only, notes maturing during the
period. These notes are currently awaiting permanent financing structures
by the Company. In addition, one large commercial credit relationship,
with approximately $1.1 million outstanding, is awaiting initial production
orders in connection with a contract with a national distributor.
Management believes the financial strength of the individual borrowers,
combined with the related value of any underlying collateral, will not
result in any recorded loss beyond currently established reserves.
     Non-interest income, exclusive of gains and losses from the sale of
securities, loans and foreclosed real estate, decreased to $653,000 for the
quarter ended June 30, 2008 compared to $684,000 for the same quarter in
the prior year. The decrease in non-interest income is primarily
attributable to a decrease in service charges on deposit accounts and
decreased loan servicing fees.
     The increase in net securities losses is a result of recording an
other than temporary impairment charge of $342,000 relating to the
Company's holdings in the AMF Ultra Short Mortgage Fund (the "fund"). The
fund's value decline is a result of both weakness in the trading market of
the underlying securities and a deterioration in the credit quality of a
portion of the funds underlying private label mortgage-backed security
holdings. The company's ability to reduce its investment position in the
fund is limited by the fund's redemption policy. In particular, the fund
currently is limiting cash redemptions to $250,000 every 90 days, with any
excess redemptions paid by transferring underlying assets held by the fund.
The Company has received an initial $250,000 cash redemption and currently
expects, subject to market conditions, to request further cash redemptions
when allowed in the future. At June 30, 2008, the total carrying value of
the Company's remaining investment in the fund is approximately $3,073,000.
     Non-interest expenses decreased $106,000, or 4%, when compared to the
same period in the prior year. A decrease in salaries and employee benefits
of $32,000 was primarily due to a decrease in overtime, incentives and a
decrease in salaries as a result of an unfilled position. Data processing
expenses were $22,000 lower than the comparable quarter of 2007 as a result
of decreases in both depreciation and check processing charges. These
decreases were offset by increases in data processing maintenance and
internet banking expenses. Professional and other services expense
decreased $23,000 primarily from the elimination of consulting fees related
to the Sarbanes Oxley 404 review process, which were incurred in 2007.
Amortization expense decreased $55,000 as the core deposit intangibles
became fully amortized in October 2007. Counteracting these decreases was
a $20,000 increase in building occupancy expenses primarily due to
increases in depreciation and machine maintenance.
     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 six months
ended June 30, ended June 30,
(Unaudited) (Unaudited)
----------------------- ----------------------
2008 2007 2008 2007
---------- ----------- ---------- ----------
Condensed Income Statement
Interest and dividend
income $ 4,506 $ 4,337 $ 9,006 $ 8,606
Interest expense 1,869 2,223 3,957 4,371
---------- ----------- ---------- ----------
Net interest income 2,637 2,114 5,049 4,235
Provision for loan
losses 135 75 280 125
---------- ----------- ---------- ----------
Net interest income
after provision for
loan losses 2,502 2,039 4,769 4,110
Noninterest income 653 684 1,351 1,285
Net (losses) gains on
securities, loans and
foreclosed real estate (342) 7 (336) (3)
Noninterest expense 2,421 2,527 4,946 4,985
---------- ----------- ---------- ----------
Income before taxes 392 203 838 407
Provision for income
taxes 92 37 206 76
---------- ----------- ---------- ----------
Net income $ 300 $ 166 $ 632 $ 331
========== =========== ========== ==========
Key Earnings Ratios
Return on average
assets 0.35% 0.21% 0.38% 0.21%
Return on average
equity 5.41% 3.15% 5.68% 3.14%
Net interest margin
(tax equivalent) 3.41% 2.99% 3.31% 3.00%
Share and Per Share Data
Basic weighted average
shares outstanding 2,483,732 2,483,532 2,483,732 2,482,557
Basic earnings per
share $ 0.12 $ 0.07 $ 0.25 $ 0.13
Diluted earnings per
share 0.12 0.07 0.25 0.13
Cash dividends per share 0.1025 0.1025 0.205 0.205
Book value per share - - 8.51 8.36
(Unaudited) (Unaudited)
June 30, December 31, June 30,
2008 2007 2007
---------- ----------- ----------
Selected Balance Sheet
Data
Assets $ 346,304 $ 320,691 $ 304,556
Earning assets 314,770 290,192 277,020
Total loans 232,951 222,749 205,726
Deposits 266,829 251,085 254,825
Borrowed Funds 48,370 38,410 20,410
Trust Preferred Debt 5,155 5,155 5,155
Shareholders' equity 21,147 21,704 20,761
Asset Quality Ratios
Net loan charge-offs
(annualized) to
average loans 0.00% 0.08% 0.06%
Allowance for loan
losses to period end
loans 0.85% 0.76% 0.76%
Allowance for loan
losses to nonperforming
loans 68.40% 107.04% 123.42%
Nonperforming loans to
period end loans 1.25% 0.71% 0.61%
Nonperforming assets to
total assets 1.03% 0.77% 0.56%
     ____________________________________________________________
(c)2008 Market News Publishing Inc. All rights reserved.
Toronto:(416)366-8881 Vancouver:(604)689-1101 Fax:(604)689-1106


Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry