Pathfinder Bancorp, Inc. Announces Fourth Quarter and Record Full Year Earnings

Pathfinder Bancorp, Inc. Announces Fourth Quarter and Record Full Year Earnings 
OSWEGO, NY -- (Marketwire) -- 01/30/13 --  Pathfinder Bancorp, Inc.
("Company"), the mid-tier holding company of Pathfinder Bank (NASDAQ:
PBHC), announced its results for the three and twelve-month periods
ended December 31, 2012. 
Highlights for the three and twelve month periods ended December 31,
2012 


 
--  Net income for the fourth quarter of 2012 was $729,000 as compared to
    $436,000 for the comparable prior year period. This increase was
    primarily due to increases in net interest income and net gains on
    sales of securities, loans and foreclosed real estate. Net income for
    the full year of 2012 was $2.6 million, representing record net income
    for the Company, compared to $2.3 million for 2011.
    
    
--  Basic and diluted earnings per share were $0.26 and $0.25,
    respectively, for the fourth quarter of 2012 as compared to basic and
    diluted earnings per share of $0.10 for the fourth quarter of 2011.
    Basic and diluted earnings per share were $0.88 and $0.87,
    respectively, for the full year of 2012 as compared to basic and
    diluted earnings per share of $0.53 and $0.52, respectively, for the
    full year of 2011. Earnings per share were lower in 2011 because net
    income available to common shareholders was reduced in the third
    quarter of 2011 due to the $470,000 of accelerated discount accretion
    on preferred stock as a result of the Company's participation in, and
    exit from, the U.S. Treasury's Capital Purchase Program.
    
    
--  Return on average assets was 0.61% for the three and twelve-month
    periods ended December 31, 2012 compared to 0.41% and 0.55%,
    respectively, for the corresponding periods in 2011.
    
    
--  Return on average equity was 7.04% and 6.68% for the three and twelve
    month periods ended December 31, 2012, respectively, compared to 4.41%
    and 6.75%, respectively, for the same periods in 2011.
    
    
--  Total loans were $333.7 million at December 31, 2012, compared to
    total loans of $304.8 million at December 31, 2011, representing an
    increase of 9.5%.

  
"Quality, organic loan growth has allowed us to continue favorable and
forward earnings trends despit
e the strong headwinds of compressed
net interest spreads brought on by excessive monetary policy
intervention in the national economy," stated Thomas W. Schneider,
President and CEO. "Annual earnings of $2.6 million represent a
record level for the Company. Loan growth of $29 million, or 9.5%,
while maintaining stable and strong asset quality, has been and will
continue to be the key driver of sustainable earnings during this
tepid economic recovery. We are confident in our market position to
continue our favorable trends."  
Income Statement 
For the three months ended December 31, 2012, net interest income
increased to $3.8 million from $3.6 million in the same prior year
period as the decrease in net interest margin was more than offset by
the increased amount of earning assets, particularly loans. The net
interest margin on a tax equivalent basis for the fourth quarter of
2012 continued to decrease to 3.52% from 3.68% for the comparable
prior year period as the yield on earning assets declined more
rapidly than the rates paid on interest bearing liabilities. Net
interest income for the full year of 2012 was $14.9 million as
compared to $14.3 million in the prior year with this increase driven
by our growth in earning assets.  
Noninterest income for the fourth quarter of 2012 was $891,000 as
compared to $593,000 for the comparable prior year period as net
gains on sales of securities, loans, and foreclosed real estate were
$236,000 more than the fourth quarter of 2011. Noninterest income for
the full year of 2012 was $3.1 million as compared to $3.2 million
for the full year of 2011. This year over year decrease was due to
net gains on sales of securities, loans, and foreclosed real estate
being $305,000 greater in 2011 as the Company restructured a portion
of its investment securities portfolio during the third quarter of
2011. Partially offsetting this year over year decrease were
increases in earnings on bank owned life insurance and debit card
interchange fees.  
Noninterest expense for the fourth quarter of 2012 was $3.5 million
as compared to $3.3 million in the comparable 2011 period. This
increase was due, in part, to increased medical insurance costs
within personnel expenses. Noninterest expense for the full year of
2012 was $13.5 million, 2.9% greater than the full year of 2011. 
For the fourth quarter of 2012 the Company recorded $175,000 in
provision for loan losses as compared to $270,000 for the fourth
quarter of 2012. For the twelve month period of this year, the
Company recorded $825,000 in provision for loan losses as compared to
$940,000 recorded in the same prior year period. This year over year
decrease is due to lower levels of net charge-offs, offset partially
by the need for additional provision due to the growth in the loan
portfolio. The Company views its current level of allowance for loan
losses as adequate to absorb the probable and estimable losses within
its loan portfolio. 
Balance Sheet as of December 31, 2012 
Total assets increased to $477.8 million at December 31, 2012 as
compared to $443.0 million at December 31, 2011. Earning assets
increased to $448.2 million at December 31, 2012 as compared to
$411.8 million at December 31, 2011. Within earning assets, loans
increased to $333.7 million at December 31, 2012 from $304.8 million
at year end 2011 and investment securities increased to $108.3
million at December 31, 2012 from $100.4 million at year end 2011.  
This increase in total assets was principally funded by increases in
customer and brokered deposits and short term borrowings as total
liabilities increased to $437.0 million at December 31, 2012 as
compared to $405.1 million at year end 2011. 
Shareholders' equity increased to $40.7 million at December 31, 2012
as compared to $37.8 million at December 31, 2011 due principally to
the after tax impact of increases in unrealized gains on available
for sale securities, the financial statement impact from the
Company's decision to freeze its defined benefit pension plan, and
net income through the twelve month period ended December 31, 2012. 
Asset Quality 
Asset quality continues to remain stable as net loan charge-offs as a
percentage of total loans for 2012 were 0.10%, similar to the prior
quarter and significantly less than the 0.21% recorded in the full
year of 2011. Net charge-offs for 2012 were $304,000 as compared to
$608,000 in 2011 and $480,000 in 2010. Management continues to adhere
to conservative underwriting policies and works closely with
borrowers who have experienced difficulty in this uncertain economic
climate to mitigate loss to the Bank. The allowance for loan losses
to period end loans increased slightly to 1.35% at December 31, 2012
as compared to 1.31% at December 31, 2011 and 1.28% at December 31,
2010. Nonperforming loans to period end loans increased to 1.66% at
December 31, 2012 from 1.55% at December 31, 2011 but decreased
significantly from 2.08% recorded at December 31, 2010.  
About Pathfinder Bancorp, Inc. 
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 eight full service offices located in
its market area consisting of Oswego County and n
orthern Onondaga
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 II. 
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)       
                         ------------------------  ------------------------ 
                             2012         2011         2012         2011    
                         -----------  -----------  -----------  ----------- 
                                                                            
Condensed Income                                                            
 Statement                                                                  
Interest and dividend                                                       
 income                  $     4,765  $     4,638  $    18,765  $    18,604 
Interest expense                 933        1,059        3,908        4,341 
                         -----------  -----------  -----------  ----------- 
  Net interest income          3,832        3,579       14,857       14,263 
Provision for loan                                                          
 losses                          175          270          825          940 
                         -----------  -----------  -----------  ----------- 
                               3,657        3,309       14,032       13,323 
Noninterest income                                                          
 excluding net gains on                                                     
 sales of securities,                                                       
 loans and foreclosed                                                       
 real estate                     665          603        2,627        2,451 
Net gain on sales of                                                        
 securities, loans and                                                      
 foreclosed real estate          226          (10)         436          741 
Noninterest expense            3,531        3,253       13,518       13,148 
                         -----------  -----------  -----------  ----------- 
  Income before income                                                      
   taxes                       1,017          649        3,577        3,367 
Provision for income                                                        
 taxes                           288          213          929        1,044 
                         -----------  -----------  -----------  ----------- 
                                                                            
  Net Income             $       729  $       436  $     2,648  $     2,323 
                                                                            
  Preferred stock                                                           
   dividends and                                                            
   discount accretion             82          187          449        1,003 
                         -----------  -----------  -----------  ----------- 
  Net income available                                                      
   to common                                                                
   shareholders          $       647  $       249  $     2,199  $     1,320 
                         ===========  ===========  ===========  =========== 
                                                                            
Key Earnings Ratios                                                         
  Return on average                                                         
   assets                       0.61%        0.41%        0.61%        0.55%
  Return on average                                                         
   equity                       7.04%        4.41%        6.68%        6.75%
  Net interest margin                                                       
   (tax equivalent)             3.51%        3.68%        3.50%        3.76%
                                                                            
                                                                            
Share and Per Share Data                                                    
  Basic weighted average                                                    
   shares outstanding      2,508,367    2,496,127    2,504,195    2,489,813 
  Basic earnings per                                                        
   share*                $      0.26  $      0.10  $      0.88  $      0.53 
  Diluted weighted                                                          
   average shares                                                           
   outstanding             2,524,030    2,536,619    2,516,408    2,536,100 
  Diluted earnings per                                                      
   share*                $      0.25  $      0.10  $      0.87  $      0.52 
  Cash dividends per                                                        
   share                 $      0.03  $      0.03  $      0.12  $      0.12 
  Book value per common                                                     
   share at December 31,                                                    
   2012 and 2011                                   $     10.60  $      9.49 
                                                                            
*Basic and diluted earnings per share are calculated based upon net income  
 available to common shareholders after preferred stock dividends and       
 discount accretion                                                         
Weighted average shares outstanding do not include unallocated ESOP shares. 
                                                                            
                                                                            
                                                                            
                           December     December     December     
          
                             31,          31,          31,                  
                             2012         2011         2010                 
                         -----------  -----------  -----------              
Selected Balance Sheet                                                      
 Data                                                                       
  Assets                 $   477,796  $   442,980  $   408,545              
  Earning assets             448,246      411,798      380,154              
  Total loans                333,748      304,750      285,296              
  Deposits                   391,805      366,129      326,502              
  Borrowed funds              34,964       26,074       41,000              
  Allowance for loan                                                        
   losses                      4,501        3,980        3,648              
  Junior subordinated                                                       
   debentures                  5,155        5,155        5,155              
  Shareholders' equity        40,747       37,841       30,592              
                                                                            
Asset Quality Ratios                                                        
  Net loan charge-offs                                                      
   (annualized) to                                                          
   average loans                0.10%        0.21%        0.18%             
  Allowance for loan                                                        
   losses to period end                                                     
   loans                        1.35%        1.31%        1.28%             
  Allowance for loan                                                        
   losses to                                                                
   nonperforming loans         81.13%       84.18%       61.58%             
  Nonperforming loans to                                                    
   period end loans             1.66%        1.55%        2.08%             
  Nonperforming assets                                                      
   to total assets              1.25%        1.19%        1.54%             

  
CONTACT: 
Thomas W. Schneider 
President, CEO
James A. Dowd 
Senior Vice President, CFO
Telephone: (315) 343-0057