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Pathfinder Bancorp Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 14, 2009 06:18PM

Pathfinder Bancorp Inc. (PBHC) filed Quarterly Report for the period ended 2009-06-30.

Highlight of Business Operations:

Net income was $31,000, or $0.01 per basic and diluted share, for the three months ended June 30, 2009, as compared to $300,000, or $0.12 per basic and diluted share, for the same period in 2008. For the six months ended June 30, 2009, the Company reported net income of $610,000, or $0.25 per basic and diluted share as compared to $632,000, or $0.25 per basic and diluted share for the same period in 2008. During the second quarter of 2009, the Company recorded an investment security impairment charge of $197,000, net of tax benefits of $101,000. During the second quarter of 2008, the Company recorded an investment security impairment charge of $205,000, net of tax benefits of $137,000.

The Company sold approximately $4.5 million in municipal investment portfolio holdings and $6.4 million of fixed rate residential real estate loans during the first half of the year. These efforts, combined with other deposit gathering efforts, were undertaken to improve the Company s overall liquidity position and reduce its reliance on wholesale borrowings. Short-term borrowings decreased $16.6 million, or 94%, when compared to December 31, 2008. Long-term borrowings increased $1.0 million, or 3%, when compared to December 31, 2008.

The return on average assets and return on average shareholders\' equity were 0.03% and 0.61%, respectively, for the three months ended June 30, 2009, compared with 0.35% and 5.41%, respectively, for the three months ended June 30, 2008. During the second quarter of 2009, when compared to the second quarter of 2008, net interest income increased $239,000, partially offset by an increased provision for loan losses of $137,000. Noninterest expense increased $395,000, which was primarily the result of increased pension plan expense to amortize losses recorded in the prior year, and the increase in FDIC regular assessment and special assessment charges. The provision for income tax expense during the second quarter of 2009 included $58,000 to increase the valuation allowance on deferred tax assets generated by capital losses in 2008.

Net interest income, on a tax-equivalent basis increased to $2.8 million for the three months ended June 30, 2009, from $2.7 million for the three months ended June 30, 2008. The Company\'s net interest margin remained the same, at 3.41%, for the second quarter of 2009 when compared to the same quarter in 2008. Reductions in the Company s current levels of earning asset yields, due to falling short-term interest rates, have been offset by efforts to reduce the cost of funds, and have resulted in maintaining the Company s net interest margin. The small increase in net interest income is attributable to a decrease of 52 basis points in the average cost of interest bearing liabilities, and was offset by a decrease of 48 basis points in the average yield earned on earning assets. Average interest-earning assets increased 5% to $328.2 million for the three months ended June 30, 2009, as compared to $313.3 million for the three months ended June 30, 2008. The increase in average earning assets is primarily attributable to a $22.8 million increase in average loans receivable, and a $1.8 million increase in average interest earning deposits, offset by a $9.7 million decrease in average investment securities. Average interest-bearing liabilities increased $13.7 million to $301.3 million from $287.6 million for the three months ended June 30, 2008. The increase in the average balance of interest-bearing liabilities resulted primarily from a $15.7 million increase in average deposits and a $2.0 million decrease in average borrowings.

For the six months ended June 30, 2009, net interest income, on a tax-equivalent basis, increased to $5.6 million from $5.1 million for the six months ended June 30, 2008. Net interest margin increased 10 basis points, to 3.41% for the six months ended June 30, 2009 from 3.31% for the six months ended June 30, 2008. Average interest-earning assets increased 7% to $330.0 million for the six months ended June 30, 2009 as compared to $309.5 million for the six months ended June 30, 2008, and the yield on interest-earning assets decreased 48 basis points to 5.39% from 5.87% for the comparable period. The increase in average interest-earning assets was primarily attributable to a $23.8 million increase in average loans receivable and a $1.5 million increase in average interest earning deposits, partially offset by a $4.8 million decrease in average investment securities. Average interest-bearing liabilities increased $17.6 million but the cost of funds decreased 60 basis points to 2.17% for the six months ended June 30, 2009, from 2.77% for the same period in 2008. The increase in the average balance of interest-bearing liabilities resulted primarily from a $16.4 million, or 6.8%, increase in average deposits and an $1.2 million, or 2.9%, increase in average borrowings.

Average loans increased $23.8 million, with average yields decreasing 52 basis points to 5.90% from 6.42% for the six-month period ended June 30, 2009 when compared with the same period in 2008. Average residential real estate loans increased $5.7 million, or 4.5%, and experienced a slight decrease in the average yield of 16 basis points from the comparable six-month period ended June 30, 2008. Average commercial real estate loans increased $10.8 million, while the average yield on those loans decreased to 6.87% from 7.52% from the period a year earlier. Average commercial loans increased $4.9 million and experienced a decrease in the average yield of 148 basis points, to 5.08% for the six months ended June 30, 2009, from 6.56%, for the six months ended June 30, 2008. The decrease in the average yield on commercial loans was the result of new commercial loan origination activity taking place at lower yields and variable rate loans pricing downwards. Average consumer loans increased $2.2 million, or 8.5%, while the average yield decreased by 133 basis points.

Read the The complete Report



Stocks Discussed: PBHC,
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