OSWEGO, NY -- (MARKET WIRE) -- February 6, 2007 -- Pathfinder Bancorp, Inc., the mid-tier holding
company of Pathfinder Bank (
"We are pleased with the improved results for 2006 and a positive earnings trend despite the compression of net interest rate spread that the Company has experienced as a result of the inverted interest rate yield curve," stated Thomas W. Schneider, President and CEO.
"The significant improvement in 2006 earnings performance is the result of the continued execution by our staff and management of the strategic initiatives set forth by our Board of Directors," according to Schneider. "We experienced record growth of our commercial loan portfolio of $13.3 million, or 27%. The growth of these higher yielding assets was funded by deposit growth of $9.2 million, or 4%, as well as a reduction of lower earning investment securities. Additionally, the Company increased fee source income by 6% and reduced operating expenses by 4%."
"We look forward to continuing to deliver quality services to our customers and progressing our strategic plan to enhance franchise value," Schneider stated.
Net interest income for the year ended December 31, 2006 decreased $416,000, or 5%, when compared to the same period during 2005. Interest expense increased $1.2 million, or 19%, offset by an increase in interest income of $771,000, or 5%. Net interest rate spread decreased to 2.92% for the year ended December 31, 2006 from 3.07% for the same period in 2005. Average interest-earning assets decreased 2%, to $273.4 million, for the year ended December 31, 2006 as compared to $278.8 million for the year ended December 31, 2005. The yield on average interest earning assets increased 37 basis points to 5.86% compared to 5.49% for the same period in 2005. The decrease in average interest earning assets is primarily attributable to a $10.7 million decrease in the average balance of investment securities and a $1.3 million decrease in the average balance of interest-earning deposits, offset by a $6.5 million increase in the average balance of the loan portfolio. Average interest-bearing liabilities decreased $6.7 million, while the cost of funds increased 52 basis points to 2.94% from 2.42% for the same period in 2005. The decrease in the average balance of interest-bearing liabilities resulted primarily from a $3.8 million, or 9%, decrease in borrowed funds and a $2.9 million, or 1%, decrease in average deposits.
Provision for loan losses for the year ended December 31, 2006 decreased 93% to $23,000 from $311,000 for the same period in 2005. The decrease in the provision primarily resulted from fewer charge-offs and improving asset quality. The Company's ratio of allowance for loan losses to period end loans has decreased to 0.74% at December 31, 2006 from 0.89% at December 31, 2005. Nonperforming loans to period end loans decreased to 0.63% at December 31, 2006, compared to 0.89% at December 31, 2005.
Non-interest income, exclusive of net gains and losses from the sale of securities, loans and foreclosed real estate, increased to $2.4 million for the year ended December 31, 2006 compared to $2.3 million for the same period in the prior year. The increase in non-interest income is primarily attributable to a $73,000 increase in service charges on deposit accounts, a $9,000 increase in loan servicing fees and a $7,000 increase in the earnings on bank owned life insurance.
Net gains and losses from the sale of securities, loans and foreclosed real estate increased $512,000, to a net gain of $219,000 for the year ended December 31, 2006, as compared to a net loss of $293,000 for the year ended December 31, 2005.
Operating expenses decreased 4% from the prior year to $9.7 million from $10.1 million. During 2006, salary and employee benefits, professional and other services and other expenses decreased $116,000, $167,000 and $150,000, respectively. The decrease in salaries and employee benefits was primarily due to a reduction in full time equivalent personnel to 96 at year end December 2006 as compared to 105 at year ended December 2005, combined with a reduction in stock based compensation expenses. The decrease in professional and other services was primarily due to a reduction in outside consulting charges, offset by an increase in advertising costs associated with a promotional mailing campaign. The decrease in other expenses was primarily due to lower expenses associated with ORE properties, audits and exams, and a write down of property and equipment at our former Fulton Branch that occurred in 2005.
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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2006 2005 2006 2005
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Condensed Income Statement
Interest income $ 4,105 $ 3,784 $ 15,869 $ 15,098
Interest expense 2,032 1,704 7,543 6,356
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Net interest income 2,073 2,080 8,326 8,742
Provision for loan losses - 82 23 311
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Net interest income
after provision for
loan losses 2,073 1,998 8,303 8,431
Other income 892 540 2,635 2,040
Other expense 2,555 2,621 9,667 10,060
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Income before taxes 410 (83) 1,271 411
Provision for income
taxes 95 (46) 243 (51)
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Net income $ 315 $ (37) $ 1,028 $ 462
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Key Earnings Ratios
Return on average
assets 0.42% -0.05% 0.34% 0.15%
Return on average
equity 5.82% -0.70% 4.86% 2.16%
Return on average
tangible equity (a) 7.16% -0.88% 6.04% 2.72%
Net interest margin
(tax equivalent) 3.06% 3.13% 3.10% 3.21%
Share and Per Share Data
Basic weighted average
shares outstanding 2,465,047 2,463,132 2,463,703 2,456,110
Basic earnings per share $ 0.13 $ (0.02) $ 0.42 $ 0.19
Diluted earnings per
share 0.13 (0.02) 0.41 0.19
Cash dividends per share 0.1025 0.1025 0.410 0.410
Book value per share - - 8.46 8.50
(Unaudited)
December December December December
31, 31, 31, 31,
2006 2005 2004 2003
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Selected Balance Sheet Data
Assets $ 301,382 $ 296,948 $ 302,037 $ 277,940
Earning assets 274,083 266,198 273,532 254,755
Total loans 203,209 189,568 186,952 188,717
Deposits 245,585 236,377 236,672 206,894
Borrowed Funds 26,360 31,360 35,360 40,960
Trust Preferred Debt 5,155 5,155 5,155 5,000
Shareholders' equity 20,850 20,928 21,826 21,785
Asset Quality Ratios
Net loan charge-offs
(annualized) to average
loans 0.12% 0.24% 0.33% 0.19%
Allowance for loan losses
to period end loans 0.74% 0.89% 0.98% 0.91%
Allowance for loan losses
to nonperforming loans 116.97% 99.94% 98.76% 57.32%
Nonperforming loans to
period end loans 0.63% 0.89% 0.99% 1.59%
Nonperforming assets to
total assets 0.58% 0.82% 0.88% 1.15%
(a) Tangible equity excludes intangible assets
Contact Information: CONTACT: Thomas W. Schneider President, CEO James A. Dowd Vice President, CFO Telephone: (315) 343-0057