Pathfinder Bancorp, Inc. (“Company”) (NASDAQ: PBHC), the holding
company for Pathfinder Bank (“Bank”), announced first quarter 2021
net income of $2.2 million compared to $1.6 million for the same
three month period in 2020. First quarter net income available to
common shareholders was $1.6 million, or $0.36 per basic and
diluted share, compared to $1.3 million, or $0.29 per basic and
diluted share for the first quarter of 2020. First quarter 2021
total revenue (net interest income and total noninterest income) of
$10.4 million increased $878,000, or 9.2%, compared to $9.5 million
for the first quarter of 2020.
2021 First Quarter Performance
Highlights
- Total
interest-earning assets at March 31, 2021 were $1.2 billion, an
increase of $231.2 million, or 23.0%, compared to $1.0 billion at
March 31, 2020 and an increase of $77.9 million, or 6.7%, compared
to $1.2 billion at December 31, 2020.
- Total loans at
March 31, 2021 were $865.3 million, an increase of $114.8 million,
or 15.3%, compared to $750.5 million at March 31, 2020 and an
increase of $39.8 million, or 4.8%, compared to $825.5 million at
December 31, 2020.
- Total deposits
at March 31, 2021 were $1.07 billion, an increase of $169.0
million, or 18.8%, compared to $899.9 million at March 31, 2020 and
an increase of $73.0 million, or 7.3%, compared to $995.9 million
at December 31, 2020.
- Total net
interest income, before the provision for loan losses, for first
quarter 2021 increased by $781,000, or 10.0%, to $8.6 million from
$7.8 million for the prior year period.
- Funding costs
declined to 0.97%, a reduction of 52 basis points from 1.49% in the
first quarter of 2020.
“At the 12-month mark of the COVID-19 pandemic,
our team continues to perform above and beyond expectations, going
the extra mile to help our customers weather the pandemic’s
economic challenges,” said Thomas W. Schneider, President and Chief
Executive Officer. “Along with helping our customers navigate this
difficult time, our team’s efforts are providing strong top- and
bottom-line results that benefit our shareholders. First quarter
total revenue improved by more than 9%, reflecting double-digit
improvement to net interest income compared to the first quarter
2020. The bottom-line result was record net income of $2.2 million,
an increase of 27.5% over the first quarter of 2020, and an
annualized quarterly return on equity of 8.62%.”
“This was another in a series of solid quarterly
performances in an economic environment that remains
challenging. We continue to closely monitor credit quality
and respond appropriately to evolving customer circumstances on a
case-by-case basis. Net loan charge-offs remained minimal at an
annualized rate of 0.05% of average loans. While nonperforming
loans to period end loans remained higher than we would like at
2.47%, we believe this is more a reflection of technical factors
related to the requirements of GAAP and regulatory accounting
triggered by the pandemic’s restrictions on certain business
sectors, than a reflection of a significant deterioration in credit
quality. We remain comfortable with our current level of loan loss
reserves, but will continue to make prudent provisions in this
still uncertain credit environment.”
“Loan and deposit growth remained a significant
strength in the first quarter, much as it has during the last 12
months. We added more than $39 million in loans in the first
quarter, a significant portion of which came from our continued
participation in the Paycheck Protection Program (“PPP”). We are
very proud of our team’s continued focus on serving the needs of
our customer base, and the effort involved in guiding them through
the PPP process is an excellent example of that high level of
support. Along with helping to drive loan growth, PPP was a
catalyst for continued strong deposit growth throughout 2020, as
well as during the first quarter of 2021. Year-over-year deposit
growth of nearly $170 million has helped to moderate our funding
costs and substantially increased liquidity. At current funding
levels, we’re very well positioned to continue to respond to future
organic growth opportunities within our service area.”
“During March, our Board of Directors determined
that it was appropriate to raise our quarterly cash dividend to
$0.07 per share, based on the Bank’s continued solid performance
and improved profitability. We’re pleased to be able to enhance our
shareholder’s total return through appropriate dividend increases,
while we remain focused on building additional tangible equity for
the Company.”
Income Statement for the Quarter Ended
March 31, 2021
Net Interest Income
First quarter 2021 net interest income was $8.6
million, an increase of $781,000, or 10.0%, compared to $7.8
million for the same quarter in 2020, primarily a result of an
$882,000, or 27.0%, decrease in total interest expense. Interest
and dividend income in the first quarter was $10.9 million,
compared to $11.0 million in the first quarter of 2020. The
decrease in interest and dividend income was a result of a 70 basis
point decrease in the average yield earned on loans in the first
quarter of 2021 compared to the same quarter in 2020, partially
offset by an increase of $176.7 million in the average balance of
interest-earning assets. This decrease in the average rate earned
on loans was consistent with the general decline in the interest
rate environment following the onset of the COVID-19 pandemic, as
well as the effect that relatively lower-yielding PPP loan balances
had on overall loan portfolio yields. The decrease in the first
quarter of 2021 interest expense was primarily a result of a 90
basis point decrease in the average interest rate paid on time
deposits. As a result of the factors noted above, the net interest
margin for the first quarter of 2021 was 2.85%, an 18 basis point
decline compared to 3.03% for the first quarter of 2020. The
following table details the components of interest income and
interest expense for the quarters ended March 31, 2021 and
2020:
(Unaudited) |
|
For the three months ended |
|
|
|
|
|
|
|
|
(In
thousands, except per share data) |
|
March 31, 2021 |
|
|
March 31, 2020 |
|
|
Change |
|
Interest and dividend income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
8,847 |
|
|
$ |
9,242 |
|
|
$ |
(395 |
) |
|
-4.3 |
% |
Debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
|
1,976 |
|
|
|
1,692 |
|
|
|
284 |
|
|
16.8 |
% |
Tax-exempt |
|
|
29 |
|
|
|
7 |
|
|
|
22 |
|
|
314.3 |
% |
Dividends |
|
|
87 |
|
|
|
70 |
|
|
|
17 |
|
|
24.3 |
% |
Federal
funds sold and interest earning deposits |
|
|
3 |
|
|
|
32 |
|
|
|
(29 |
) |
|
-90.6 |
% |
Total interest and dividend income |
|
|
10,942 |
|
|
|
11,043 |
|
|
|
(101 |
) |
|
-0.9 |
% |
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits |
|
|
1,527 |
|
|
|
2,556 |
|
|
|
(1,029 |
) |
|
-40.3 |
% |
Interest on short-term
borrowings |
|
|
3 |
|
|
|
57 |
|
|
|
(54 |
) |
|
-94.7 |
% |
Interest on long-term
borrowings |
|
|
295 |
|
|
|
445 |
|
|
|
(150 |
) |
|
-33.7 |
% |
Interest on subordinated loans |
|
|
557 |
|
|
|
206 |
|
|
|
351 |
|
|
170.4 |
% |
Total interest expense |
|
|
2,382 |
|
|
|
3,264 |
|
|
|
(882 |
) |
|
-27.0 |
% |
Net interest income |
|
|
8,560 |
|
|
|
7,779 |
|
|
|
781 |
|
|
10.0 |
% |
Provision for loan losses |
|
|
1,028 |
|
|
|
1,067 |
|
|
|
(39 |
) |
|
-3.7 |
% |
Net interest income after provision for loan losses |
|
|
7,532 |
|
|
|
6,712 |
|
|
|
820 |
|
|
12.2 |
% |
Provision for Loan Losses
The first quarter 2021 provision for loan losses
was $1.0 million, compared to $1.1 million for the prior year
quarter. The first quarter provision for loan losses reflects a
prudent addition to reserves considering loan growth, asset quality
metrics, and continued COVID-19 economic uncertainty. The
credit-sensitive portfolios continue to be carefully monitored, and
the Bank will consistently apply its proven conservative loan
classification and reserve building methodologies to the analysis
of these portfolios. Please refer to the asset quality section
below for a further discussion of asset quality as it relates to
the allowance for loan loss.
Noninterest Income
First quarter 2021 noninterest income was $1.8
million, an increase of $97,000, or 5.5%, compared to $1.7 million
for the same three-month period in 2020. Recurring noninterest
income for the first quarter of 2021 was $1.3 million, reflecting a
$46,000, or 3.7%, improvement over the first quarter of the prior
year. Recurring noninterest income in the first quarters of 2021
and 2020 excludes unrealized gains (losses) on equity securities,
and gains on sales of loans, investment securities, foreclosed real
estate and fixed assets.
The following table details the components of
noninterest income for the quarters ended March 31, 2021 and
2020:
(Unaudited) |
|
For the three months ended |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
March 31, 2021 |
|
|
March 31, 2020 |
|
|
Change |
|
Service charges on deposit accounts |
|
$ |
331 |
|
|
$ |
356 |
|
|
$ |
(25 |
) |
|
-7.0 |
% |
Earnings and gain on bank
owned life insurance |
|
|
125 |
|
|
|
116 |
|
|
|
9 |
|
|
7.8 |
% |
Loan servicing fees |
|
|
90 |
|
|
|
49 |
|
|
|
41 |
|
|
83.7 |
% |
Debit card interchange
fees |
|
|
221 |
|
|
|
163 |
|
|
|
58 |
|
|
35.6 |
% |
Insurance agency revenue |
|
|
280 |
|
|
|
337 |
|
|
|
(57 |
) |
|
-16.9 |
% |
Other
charges, commissions and fees |
|
|
243 |
|
|
|
223 |
|
|
|
20 |
|
|
9.0 |
% |
Noninterest income before gains (losses) |
|
|
1,290 |
|
|
|
1,244 |
|
|
|
46 |
|
|
3.7 |
% |
Net gains on sales and
redemptions of investment securities |
|
|
- |
|
|
|
26 |
|
|
|
(26 |
) |
|
-100.0 |
% |
Gains/(losses) on marketable
equity securities |
|
|
234 |
|
|
|
(194 |
) |
|
|
428 |
|
|
220.6 |
% |
Net gains on sales of loans
and foreclosed real estate |
|
|
120 |
|
|
|
672 |
|
|
|
(552 |
) |
|
-82.1 |
% |
Gains
on sale of fixed assets |
|
|
201 |
|
|
|
- |
|
|
|
201 |
|
|
100.0 |
% |
Total noninterest income |
|
$ |
1,845 |
|
|
$ |
1,748 |
|
|
$ |
97 |
|
|
5.5 |
% |
Noninterest Expense
Total noninterest expense for the first quarter
of 2021 was $6.6 million, an increase of $391,000, or 6.3%, in
comparison to $6.2 million for the same three-month period in 2020.
The increase was primarily a result of higher professional and
other services fees, salaries and employee benefit expense and
audits and exams expense. Management believes that the increases in
professional and other services fees and audits and exams expense
are primarily related to the Bank’s first year of increased
internal controls testing under FDICIA requirements for
institutions with assets greater than $1 billion and additional
requirements placed on the Company as a result of the COVID-19
pandemic. Accordingly, the increases within these two categories of
expenses are not expected to be representative of the levels of
expenses in the remaining quarters of 2021.
The following table details the components of
noninterest expense for the quarters ended March 31, 2021 and
2020:
(Unaudited) |
|
For the three months ended |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
March 31, 2021 |
|
|
March 31, 2020 |
|
|
Change |
|
Salaries and employee benefits |
|
$ |
3,341 |
|
|
$ |
3,247 |
|
|
$ |
94 |
|
|
2.9 |
% |
Building and occupancy |
|
|
793 |
|
|
|
754 |
|
|
|
39 |
|
|
5.2 |
% |
Data processing |
|
|
676 |
|
|
|
600 |
|
|
|
76 |
|
|
12.7 |
% |
Professional and other
services |
|
|
417 |
|
|
|
316 |
|
|
|
101 |
|
|
32.0 |
% |
Advertising |
|
|
246 |
|
|
|
176 |
|
|
|
70 |
|
|
39.8 |
% |
FDIC assessments |
|
|
198 |
|
|
|
189 |
|
|
|
9 |
|
|
4.8 |
% |
Audits and exams |
|
|
202 |
|
|
|
125 |
|
|
|
77 |
|
|
61.6 |
% |
Insurance agency expense |
|
|
202 |
|
|
|
192 |
|
|
|
10 |
|
|
5.2 |
% |
Community service
activities |
|
|
48 |
|
|
|
107 |
|
|
|
(59 |
) |
|
-55.1 |
% |
Foreclosed real estate
expenses |
|
|
6 |
|
|
|
30 |
|
|
|
(24 |
) |
|
-80.0 |
% |
Other
expenses |
|
|
507 |
|
|
|
509 |
|
|
|
(2 |
) |
|
-0.4 |
% |
Total noninterest expenses |
|
$ |
6,636 |
|
|
$ |
6,245 |
|
|
$ |
391 |
|
|
6.3 |
% |
Balance Sheet at March 31,
2021
The Company’s total assets at quarter end were
$1.3 billion, an increase of $79.7 million, or 6.5%, from $1.2
billion at December 31, 2020. This increase was primarily driven by
increase in total loans and investment securities balances. Total
loans of $865.3 million grew by $39.8 million, or 4.8%, compared
with $825.5 million at December 31, 2020, primarily due to the
Bank’s participation in the second round of the PPP. Investment
securities totaled $326.8 million, an increase of $25.4 million
compared to $301.3 million at December 31, 2020.
Total deposits at March 31, 2021 were $1.1
billion, an increase of $73.0 million, or 7.3%, from $995.9 million
at December 31, 2020. Noninterest-bearing deposits totaled $197.5
million at March 31, 2021, an increase of $35.4 million, or 21.9%,
from the 2020 year end. Interest-bearing deposit growth was a
result of municipal deposit inflows related to seasonal tax
collections, as well as increases in retail and commercial
deposits. The increase in noninterest-bearing deposits
was primarily a result of the Bank’s participation in the PPP, as
well as ongoing growth in business banking relationships.
Subordinated loans were $39.4 million at both
March 31, 2021 and December 31, 2020. The Company exercised its
option to redeem $10.0 million of subordinated loans that were
outstanding at March 31, 2021 on April 1, 2021. The redemption of
this $10.0 million component of the Company’s outstanding
subordinated debt will prospectively reduce interest expense after
April 1, 2021 by $625,000 annually.
Shareholders’ equity was $99.9 million at March
31, 2021, compared with $97.5 million on December 31, 2020. The
increase was primarily a result of a $1.7 million increase in
retained earnings, a $468,000 decrease in the accumulated other
comprehensive loss, a $234,000 increase in additional paid in
capital, and a $45,000 increase due to ESOP shares earned.
Asset Quality
The Bank’s asset quality metrics, as measured by
net loan charge-offs to average loans, remained stable for the
first quarter of 2021. Annualized net loan charge-offs to average
loans were 0.05% for the first quarter 2021, compared with 0.07%
for the first quarter of 2020 and 0.08% for the full year 2020.
Nonperforming loans to total loans were 2.47% at March 31, 2021, a
decrease of 11 basis points compared to 2.58% at December 31,
2020.
Nonaccrual loans represented 2.47% of the total
loan portfolio at March 31, 2021 as compared to 2.58% at December
31, 2020. The nonperforming loan portfolio was relatively unchanged
at March 31, 2021, as compared to December 31, 2020. The decrease
in the nonperforming loans to totals loans was due to the increase
in overall loans, with nonperforming loans remaining relatively
consistent. Management is monitoring these entities closely and has
incorporated our current estimate of the ultimate collectability of
these loans into the reported allowance for loan losses at March
31, 2021.
The following table summarizes nonaccrual loans
by category and status at March 31, 2021:
(Unaudited)
Loan Type |
Collateral Type |
Number of Loans |
|
|
Loan Balance |
|
|
Average Loan Balance |
|
|
Weighted LTV at Origination/ Modification |
|
|
Status |
Loan Balance In Deferral |
|
Secured residential mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
33 |
|
|
$ |
2,899 |
|
|
$ |
88 |
|
|
|
85 |
% |
|
Under active resolution management by the Bank. |
$ |
107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured
commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel |
|
1 |
|
|
|
7,202 |
|
|
|
7,202 |
|
|
|
73 |
% |
|
Currently making principal and
interest payments. The borrower has substantial deposits with the
Bank. |
|
- |
|
|
Private Museum |
|
1 |
|
|
|
1,385 |
|
|
|
1,385 |
|
|
|
79 |
% |
|
The Bank is working on a
modification with the borrower. The borrower has substantial
deposits with the Bank. |
|
- |
|
|
Recreational |
|
1 |
|
|
|
1,234 |
|
|
|
1,234 |
|
|
|
50 |
% |
|
The loan is currently
classified as a Troubled Debt Restructuring (TDR). Next payment is
due June 1, 2021. |
|
1,234 |
|
|
All other |
|
11 |
|
|
|
1,629 |
|
|
|
148 |
|
|
|
86 |
% |
|
Under active resolution
management by the Bank. |
|
259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
lines of credit |
|
5 |
|
|
|
196 |
|
|
|
39 |
|
|
N/A |
|
|
Under active resolution
management by the Bank. |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
and industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate |
|
1 |
|
|
|
4,485 |
|
|
|
4,485 |
|
|
|
41 |
% |
|
The Bank modified the loan and
the next payment is due June 1, 2021. Repayment expected from
operations, pledges and collateral value. |
|
4,485 |
|
|
All Others |
|
10 |
|
|
|
1,712 |
|
|
|
171 |
|
|
N/A |
|
|
Under active resolution by the
Bank. |
|
240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer loans |
|
30 |
|
|
|
601 |
|
|
|
20 |
|
|
N/A |
|
|
Under
active resolution management by the Bank. |
|
- |
|
|
|
|
93 |
|
|
$ |
21,343 |
|
|
$ |
229 |
|
|
|
|
|
|
|
$ |
6,325 |
|
The allowance for loan losses to non-performing
loans at March 31, 2021 was 64.16%, compared with 59.89% at
December 31, 2020 and 205.87% at March 31, 2020. The change in the
allowance for loans losses to non-performing loans is primarily due
to the changes in nonaccrual loans discussed above.
COVID-19 Additional Discussion
Pathfinder Bank has participated in all rounds
of the Payroll Protection Program (“PPP”) to date. The Program was
initially established by the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act, and is a specialized low-interest loan
program funded by the U.S. Treasury Department and administered by
the U.S. Small Business Administration (“SBA”). The PPP was renewed
under the Consolidated Appropriations Act, 2021 and the American
Rescue Plan Act of 2021. While these legislative actions, and the
programs that resulted therefrom, appear to have significantly
reduced the negative near-term economic impact of the pandemic, the
future trajectory of the economy and the economy’s effect on the
financial condition and results of the Company’s operations cannot
be predicted with certainty.
Supplemental Disclosure – Deferred Loan
Statistics
Beginning in late March 2020, as part of the its
response to the realized and potential economic effects of the
COVID-19 pandemic, the Bank granted loan payment deferrals to the
substantial majority of commercial and consumer customers who had
made requests for such accommodations. These deferrals
were granted following individual discussions with each borrower
and were generally for periods of 90 or 180 days at the
outset. Following discussions with certain borrowers,
additional loan payment deferral periods of up to 90 days were
granted following the expiration of the initial 90- to 180-day
deferral periods. Typically, scheduled interest payments
placed into deferred status have been added to future scheduled
payments and are expected to be collected in total at the original
maturity date of the loan.
As of March 31, 2021, the Bank had active
deferrals on a total of 17 loans with aggregated outstanding
balances of $8.4 million. Of that total, eight deferred
loans were either residential mortgage loans or consumer loans.
These two categories of deferred loans had outstanding loan
principal balances totaling $793,000 at March 31, 2021. Of the
eight residential mortgage loans or consumer loans in deferral
status at March 31, 2021, one loan, representing $107,000 is also
in nonaccrual status at that date and has been included in the
nonaccrual loan totals disclosed in the table above. Due to the
substantially smaller outstanding balances of individual loan
within these categories and the presence of significant
collateralization in the case of residential mortgage loans,
management does not consider the loans in these categories to be at
increased risk of impairment as a result of their recent or current
deferral status.
Of the nine remaining loans granted deferral
status at March 31, 2021, $7.6 million were commercial real estate
and commercial & industrial loans (collectively, “commercial”
loans). Of the nine commercial loans in deferral status
at March 31, 2021, six loans, representing $6.2 million are also in
nonaccrual status at that date and have been included in the
nonaccrual loan totals disclosed in the table above. Of this $6.2
million in deferred commercial loans, $500,000 have deferral
periods that have been extended beyond a cumulative total of 180
days.
Cash Dividend
Declared
On March 29, 2021, the Company announced that
its Board of Directors had declared a cash dividend of $0.07 per
share on the Company's common and preferred stock, and a cash
dividend of $0.07 per notional share for the issued common stock
warrant relating to the fiscal quarter ending March 31, 2021. This
represents an increase of $0.01, or 16.7%, compared to the prior
dividend of $0.06 per share. The dividend will be payable to all
shareholders of record on April 15, 2021 and will be paid on May 7,
2021. Based on the closing price of the Company’s common stock of
$14.80 on April 30, 2021, the implied dividend yield is 1.9%. The
quarterly cash dividend of $0.07 equates to a dividend payout ratio
of 18.4%.
About Pathfinder Bancorp,
Inc.
Pathfinder Bank is a New York State chartered
commercial bank headquartered in Oswego, whose deposits are insured
by the Federal Deposit Insurance Corporation. The Bank
is a wholly owned subsidiary of Pathfinder Bancorp, Inc. (NASDAQ
SmallCap Market; symbol: PBHC). The Bank has ten
full-service offices located in its market areas consisting of
Oswego and Onondaga County and one limited purpose office in Oneida
County. Through its subsidiary, Pathfinder Risk
Management Company, Inc., the Bank owns a 51% interest in the
FitzGibbons Agency, LLC. At March 31, 2021, there were
4,540,520 shares of common stock issued and outstanding, as well as
1,380,283 shares of convertible perpetual preferred stock issued
and outstanding. The Company's common stock trades on the NASDAQ
market under the symbol "PBHC." At March 31, 2021, the
Company and subsidiaries had total consolidated assets of $1.31
billion, total deposits of $1.07 billion and shareholders' equity
of $99.9 million.
Forward-Looking Statement
Certain statements contained herein are “forward
looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are
generally identified by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar
expressions, or future or conditional verbs, such as “will,”
“would,” “should,” “could,” or “may.” 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.
As the result of the COVID-19 pandemic and the
related adverse local and national economic consequences, we could
be subject to any of the following additional risks, any of which
could have a material, adverse effect on our business, financial
condition, liquidity, and results of operations:
-
demand for our products and services may decline, making it
difficult to grow assets and income;
-
if the economy is unable to substantially reopen, and high levels
of unemployment continue for an extended period of time, loan
delinquencies, problem assets, and foreclosures may increase,
resulting in increased charges and reduced income;
-
collateral for loans, especially real estate, may decline in
value, which could cause loan losses to increase;
-
our allowance for loan losses may have to be increased if borrowers
experience financial difficulties beyond forbearance periods, which
will adversely affect our net income;
-
the net worth and liquidity of loan guarantors may decline,
impairing their ability to honor commitments to us;
-
as the result of the decline in the Federal Reserve Board’s target
federal funds rate to near 0%, the yield on our assets may decline
to a greater extent than the decline in our cost of
interest-bearing liabilities, reducing our net interest margin and
spread and reducing net income;
-
a material decrease in net income or a net loss over several
quarters could result in a decrease in the rate of our quarterly
cash dividend;
-
our cyber security risks are increased as the result of an increase
in the number of employees working remotely;
-
we rely on third party vendors for certain services and the
unavailability of a critical service due to the COVID-19 outbreak
could have an adverse effect on us; and
-
Federal Deposit Insurance Corporation premiums may increase if the
agency experiences additional resolution costs.
The Company disclaims any obligation to revise
or update any forward-looking statements contained in this press
release to reflect future events or developments.
Investor/Media Contacts
Thomas W. Schneider – President, CEOWalter F. Rusnak, Senior
Vice President, CFOTelephone: (315) 343-0057
PATHFINDER BANCORP,
INC.FINANCIAL HIGHLIGHTS(Dollars
and shares in thousands except per share amounts)
|
For the three months |
|
|
ended March 31, |
|
|
(Unaudited) |
|
|
2021 |
|
|
2020 |
|
Condensed Income Statement |
|
|
|
|
|
|
|
Interest and dividend income |
$ |
10,942 |
|
|
$ |
11,043 |
|
Interest expense |
|
2,382 |
|
|
|
3,264 |
|
Net interest income |
|
8,560 |
|
|
|
7,779 |
|
Provision for loan losses |
|
1,028 |
|
|
|
1,067 |
|
|
|
7,532 |
|
|
|
6,712 |
|
Noninterest income excluding net gains on sales of securities,
fixed assets, loans and foreclosed real estate |
|
1,290 |
|
|
|
1,244 |
|
Net gains on sales of securities, fixed assets, loans and
foreclosed real estate |
|
321 |
|
|
|
698 |
|
Gains (losses) on marketable equity securities |
|
234 |
|
|
|
(194 |
) |
Noninterest expense |
|
6,636 |
|
|
|
6,245 |
|
Income before income taxes |
|
2,741 |
|
|
|
2,215 |
|
Provision for income taxes |
|
549 |
|
|
|
455 |
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interest
and Pathfinder Bancorp, Inc. |
$ |
2,192 |
|
|
$ |
1,760 |
|
Net income attributable to noncontrolling interest |
|
38 |
|
|
|
70 |
|
Net income attributable to Pathfinder Bancorp
Inc. |
$ |
2,154 |
|
|
$ |
1,690 |
|
Convertible preferred stock dividends |
|
97 |
|
|
|
69 |
|
Warrant dividends |
|
9 |
|
|
|
8 |
|
Undistributed earnings allocated to participating securities |
|
439 |
|
|
|
290 |
|
Net income available to common shareholders |
$ |
1,609 |
|
|
$ |
1,323 |
|
|
|
|
|
|
|
|
|
|
For the Periods Ended |
|
|
(Unaudited) |
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
2021 |
|
|
2020 |
|
|
2020 |
|
Selected Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
Assets |
$ |
1,307,156 |
|
|
$ |
1,227,443 |
|
|
$ |
1,107,643 |
|
Earning assets |
|
1,237,704 |
|
|
|
1,159,778 |
|
|
|
1,006,535 |
|
Total loans |
|
865,307 |
|
|
|
825,495 |
|
|
|
750,522 |
|
Deposits |
|
1,068,908 |
|
|
|
995,907 |
|
|
|
899,860 |
|
Borrowed funds |
|
86,500 |
|
|
|
82,050 |
|
|
|
91,437 |
|
Allowance for loan losses |
|
13,693 |
|
|
|
12,777 |
|
|
|
9,606 |
|
Subordinated loans |
|
39,443 |
|
|
|
39,400 |
|
|
|
15,136 |
|
Pathfinder Bancorp, Inc.
Shareholders' equity |
|
99,939 |
|
|
|
97,456 |
|
|
|
88,006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios |
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs
(annualized) to average loans |
|
0.05 |
% |
|
|
0.08 |
% |
|
|
0.07 |
% |
Allowance for loan losses to
period end loans |
|
1.58 |
% |
|
|
1.55 |
% |
|
|
1.28 |
% |
Allowance for loan losses to
nonperforming loans |
|
64.16 |
% |
|
|
59.89 |
% |
|
|
205.87 |
% |
Nonperforming loans to period
end loans |
|
2.47 |
% |
|
|
2.58 |
% |
|
|
0.62 |
% |
Nonperforming assets to total
assets |
|
1.63 |
% |
|
|
1.74 |
% |
|
|
0.43 |
% |
PATHFINDER BANCORP,
INC.FINANCIAL HIGHLIGHTS(Dollars
and shares in thousands except per share amounts)
|
For the three months |
|
|
ended March 31, |
|
|
(Unaudited) |
|
|
2021 |
|
|
2020 |
|
Key Earnings Ratios |
|
|
|
|
|
|
|
Return on average assets |
|
0.68 |
% |
|
|
0.62 |
% |
Return on average common equity |
|
10.50 |
% |
|
|
8.71 |
% |
Return on average equity |
|
8.62 |
% |
|
|
7.27 |
% |
Net interest margin |
|
2.85 |
% |
|
|
3.03 |
% |
|
|
|
|
|
|
|
|
Share, Per Share and
Ratio Data |
|
|
|
|
|
|
|
Basic weighted average shares outstanding* |
|
4,442,231 |
|
|
|
4,606,772 |
|
Basic earnings per share* |
$ |
0.36 |
|
|
$ |
0.29 |
|
Diluted weighted average shares outstanding* |
|
4,442,231 |
|
|
|
4,606,772 |
|
Diluted earnings per share* |
$ |
0.36 |
|
|
$ |
0.29 |
|
Cash dividends per share |
$ |
0.07 |
|
|
$ |
0.06 |
|
Book value per common share at March 31, 2021 and 2020 |
$ |
18.07 |
|
|
$ |
15.32 |
|
Tangible book value per common share at March 31, 2021 and
2020 |
$ |
17.04 |
|
|
$ |
14.34 |
|
Tangible book value per common and preferred share at March 31,
2021 and 2020 |
$ |
16.09 |
|
|
$ |
14.13 |
|
Tangible equity to tangible assets at March 31, 2021 and 2020 |
|
7.31 |
% |
|
|
7.55 |
% |
Tangible equity to tangible assets at March 31, 2021 and 2020,
adjusted |
|
7.79 |
% |
|
|
7.55 |
% |
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation |
|
|
|
|
|
|
|
Tangible book value per common share |
|
|
|
|
|
|
|
Total equity |
$ |
99,939 |
|
|
$ |
88,006 |
|
Intangible assets |
|
(4,665 |
) |
|
|
(4,681 |
) |
Convertible preferred equity |
|
(17,901 |
) |
|
|
(15,369 |
) |
Common tangible equity |
|
77,373 |
|
|
|
67,956 |
|
Common shares outstanding |
|
4,541 |
|
|
|
4,740 |
|
Tangible book value per common share |
$ |
17.04 |
|
|
$ |
14.34 |
|
|
|
|
|
|
|
|
|
Tangible book value per common and fully converted
preferred share |
|
Total equity |
$ |
99,939 |
|
|
$ |
88,006 |
|
Intangible assets |
|
(4,665 |
) |
|
|
(4,681 |
) |
Common and convertible preferred tangible equity |
|
95,274 |
|
|
|
83,325 |
|
Common shares outstanding |
|
4,541 |
|
|
|
4,740 |
|
Convertible preferred shares outstanding |
|
1,380 |
|
|
|
1,155 |
|
Common and convertible preferred shares outstanding |
|
5,921 |
|
|
|
5,895 |
|
Tangible book value per common
and (fully converted) preferred share |
$ |
16.09 |
|
|
$ |
14.13 |
|
|
|
|
|
|
|
|
|
Tangible equity to tangible assets |
|
|
|
|
|
|
|
Tangible common equity (fully
converted basis) |
$ |
95,274 |
|
|
$ |
83,325 |
|
Tangible assets |
|
1,302,491 |
|
|
|
1,102,962 |
|
Tangible equity to tangible assets ratio |
|
7.31 |
% |
|
|
7.55 |
% |
|
|
|
|
|
|
|
|
Tangible equity to tangible assets, adjusted |
|
|
|
|
|
|
|
Tangible common equity (fully
converted basis) |
$ |
95,274 |
|
|
$ |
83,325 |
|
Tangible assets |
|
1,302,491 |
|
|
|
1,102,962 |
|
Less: Paycheck Protection
Program (PPP) loans |
|
(79,674 |
) |
|
|
- |
|
Total assets excluding PPP loans |
|
1,222,817 |
|
|
|
1,102,962 |
|
Tangible equity to tangible
assets ratio, excluding PPP loans |
|
7.79 |
% |
|
|
7.55 |
% |
* Basic and diluted earnings per share are
calculated based upon the two-class method for the three and twelve
months ended December 31, 2020 and 2019.
Weighted
average shares outstanding do not include unallocated ESOP
shares.
PATHFINDER BANCORP,
INC.FINANCIAL HIGHLIGHTS(Dollars
and shares in thousands except per share amounts)
The following table sets forth information
concerning average interest-earning assets and interest-bearing
liabilities and the yields and rates thereon. Interest income and
resultant yield information in the table has not been adjusted for
tax equivalency. Averages are computed on the daily average balance
for each month in the period divided by the number of days in the
period. Yields and amounts earned include loan fees. Nonaccrual
loans have been included in interest-earning assets for purposes of
these calculations.
|
(Unaudited)For the three months ended
March 31, |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
Average |
|
|
Average |
|
|
|
|
|
Yield / |
|
|
Average |
|
|
|
|
|
Yield / |
|
(Dollars in thousands) |
Balance |
|
|
Interest |
|
Cost |
|
|
Balance |
|
|
Interest |
|
Cost |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
849,676 |
|
|
$ |
8,847 |
|
|
4.16 |
% |
|
$ |
761,214 |
|
|
$ |
9,242 |
|
|
4.86 |
% |
Taxable investment securities |
|
308,259 |
|
|
|
2,063 |
|
|
2.68 |
% |
|
|
247,651 |
|
|
|
1,762 |
|
|
2.85 |
% |
Tax-exempt investment securities |
|
12,234 |
|
|
|
29 |
|
|
0.95 |
% |
|
|
1,364 |
|
|
|
7 |
|
|
2.05 |
% |
Fed funds sold and interest-earning deposits |
|
32,414 |
|
|
|
3 |
|
|
0.04 |
% |
|
|
15,683 |
|
|
|
32 |
|
|
0.82 |
% |
Total interest-earning assets |
|
1,202,583 |
|
|
|
10,942 |
|
|
3.64 |
% |
|
|
1,025,912 |
|
|
|
11,043 |
|
|
4.31 |
% |
Noninterest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
82,353 |
|
|
|
|
|
|
|
|
|
|
77,009 |
|
|
|
|
|
|
|
|
Allowance for loan losses |
|
(13,057 |
) |
|
|
|
|
|
|
|
|
|
(8,704 |
) |
|
|
|
|
|
|
|
Net unrealized gains on available-for-sale securities |
|
1,314 |
|
|
|
|
|
|
|
|
|
|
119 |
|
|
|
|
|
|
|
|
Total assets |
$ |
1,273,193 |
|
|
|
|
|
|
|
|
|
$ |
1,094,336 |
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW accounts |
$ |
94,951 |
|
|
$ |
57 |
|
|
0.24 |
% |
|
$ |
75,845 |
|
|
$ |
29 |
|
|
0.15 |
% |
Money management accounts |
|
15,597 |
|
|
|
4 |
|
|
0.10 |
% |
|
|
14,184 |
|
|
|
5 |
|
|
0.14 |
% |
MMDA accounts |
|
235,289 |
|
|
|
255 |
|
|
0.43 |
% |
|
|
194,458 |
|
|
|
402 |
|
|
0.83 |
% |
Savings and club accounts |
|
111,317 |
|
|
|
33 |
|
|
0.12 |
% |
|
|
87,118 |
|
|
|
26 |
|
|
0.12 |
% |
Time deposits |
|
399,176 |
|
|
|
1,178 |
|
|
1.18 |
% |
|
|
403,214 |
|
|
|
2,094 |
|
|
2.08 |
% |
Subordinated loans |
|
39,412 |
|
|
|
557 |
|
|
5.65 |
% |
|
|
15,131 |
|
|
|
206 |
|
|
5.45 |
% |
Borrowings |
|
85,070 |
|
|
|
298 |
|
|
1.40 |
% |
|
|
87,019 |
|
|
|
502 |
|
|
2.31 |
% |
Total interest-bearing liabilities |
|
980,812 |
|
|
|
2,382 |
|
|
0.97 |
% |
|
|
876,969 |
|
|
|
3,264 |
|
|
1.49 |
% |
Noninterest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
180,442 |
|
|
|
|
|
|
|
|
|
|
112,358 |
|
|
|
|
|
|
|
|
Other liabilities |
|
11,944 |
|
|
|
|
|
|
|
|
|
|
12,059 |
|
|
|
|
|
|
|
|
Total liabilities |
|
1,173,198 |
|
|
|
|
|
|
|
|
|
|
1,001,386 |
|
|
|
|
|
|
|
|
Shareholders' equity |
|
99,995 |
|
|
|
|
|
|
|
|
|
|
92,950 |
|
|
|
|
|
|
|
|
Total liabilities & shareholders' equity |
$ |
1,273,193 |
|
|
|
|
|
|
|
|
|
$ |
1,094,336 |
|
|
|
|
|
|
|
|
Net
interest income |
|
|
|
|
$ |
8,560 |
|
|
|
|
|
|
|
|
|
$ |
7,779 |
|
|
|
|
Net interest rate spread |
|
|
|
|
|
|
|
|
2.67 |
% |
|
|
|
|
|
|
|
|
|
2.82 |
% |
Net
interest margin |
|
|
|
|
|
|
|
|
2.85 |
% |
|
|
|
|
|
|
|
|
|
3.03 |
% |
Ratio of average interest-earning assets to average
interest-bearing liabilities |
|
|
|
|
|
|
|
|
122.61 |
% |
|
|
|
|
|
|
|
|
|
116.98 |
% |
PATHFINDER BANCORP,
INC.FINANCIAL HIGHLIGHTS(Dollars
and shares in thousands except per share amounts)
Net interest income can also be analyzed in
terms of the impact of changing interest rates on interest-earning
assets and interest bearing liabilities, and changes in the volume
or amount of these assets and liabilities. The following table
represents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and
interest-bearing liabilities have affected the Company’s interest
income and interest expense during the years indicated. Information
is provided in each category with respect to: (i) changes
attributable to changes in volume (change in volume multiplied by
prior rate); (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume); and (iii) total increase or
decrease. Changes attributable to both rate and volume have been
allocated ratably. Tax-exempt securities have not been adjusted for
tax equivalency.
|
(Unaudited)Three months ended March
31, |
|
|
2021 vs. 2020 |
|
|
Increase/(Decrease) Due to |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Increase |
|
(In
thousands) |
Volume |
|
|
Rate |
|
|
(Decrease) |
|
Interest Income: |
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
4,567 |
|
|
$ |
(4,962 |
) |
|
$ |
(395 |
) |
Taxable investment securities |
|
928 |
|
|
|
(627 |
) |
|
|
301 |
|
Tax-exempt investment securities |
|
67,867 |
|
|
|
(67,845 |
) |
|
|
22 |
|
Interest-earning deposits |
|
114 |
|
|
|
(143 |
) |
|
|
(29 |
) |
Total interest income |
|
73,476 |
|
|
|
(73,577 |
) |
|
|
(101 |
) |
Interest Expense: |
|
|
|
|
|
|
|
|
|
|
|
NOW accounts |
|
8 |
|
|
|
20 |
|
|
|
28 |
|
Money management accounts |
|
3 |
|
|
|
(4 |
) |
|
|
(1 |
) |
MMDA accounts |
|
426 |
|
|
|
(573 |
) |
|
|
(147 |
) |
Savings and club accounts |
|
9 |
|
|
|
(2 |
) |
|
|
7 |
|
Time deposits |
|
(21 |
) |
|
|
(895 |
) |
|
|
(916 |
) |
Subordinated loans |
|
343 |
|
|
|
8 |
|
|
|
351 |
|
Borrowings |
|
(11 |
) |
|
|
(193 |
) |
|
|
(204 |
) |
Total interest expense |
|
757 |
|
|
|
(1,639 |
) |
|
|
(882 |
) |
Net change in net interest income |
$ |
72,719 |
|
|
$ |
(71,938 |
) |
|
$ |
781 |
|
The above information is preliminary and based
on the Company's data available at the time of presentation.
Pathfinder Bancorp (NASDAQ:PBHC)
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Pathfinder Bancorp (NASDAQ:PBHC)
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From Jul 2023 to Jul 2024