Pathfinder Bancorp 2nd-quarter profit rises 14 percent

OSWEGO — Pathfinder Bancorp, Inc. (NASDAQ: PBHC), the holding company for Pathfinder Bank, reported net income of $823,000 in the second quarter, up 14 percent from $721,000 in the year-ago period.

Profit at the Oswego–based banking company was boosted by a $288,000 after-tax gain on the sale of an $8.8 million residential-loan portfolio. Pathfinder said it sold longer term and fixed-rate, lower yielding loans as it seeks to manage the interest-rate risk of its balance sheet.

Pathfinder’s earnings per share rose to 33 cents in the second quarter from 24 cents in the year-earlier quarter. 

The banking company had total loans of $337.6 million as of June 30, up slightly from total loans of $333.7 million as of Dec. 31, 2012, despite the sale of the nearly $9 million loan portfolio.

Pathfinder Bank has eight full-service branch offices in Oswego County and northern Onondaga County. It is generating growth in the greater Syracuse area and is making a move to further capitalize on it.

“Our earnings growth continues to be driven by organic loan origination in an expanded market,” Thomas W. Schneider, president and CEO of Pathfinder Bank, said in the earnings report. “Onondaga County and the greater Syracuse market have proven increasingly fertile ground for our community banking model. To further the bank’s success in this market we recently executed a lease for a loan production office in the renovated, historic Pike Block Building in downtown Syracuse,” he added. “We expect to open the office with deposit-gathering capabilities in the fall.”

In the second quarter, Pathfinder’s net interest income rose to $3.9 million from $3.7 million in the year-ago quarter as the increase in the average balance of earning assets, particularly loans, was partially offset by a decline in net interest margin. The bank’s net interest margin on a tax equivalent basis in the second quarter slipped to 3.40 percent from 3.47 percent for the year-earlier period as Pathfinder’s yield on loans declined more rapidly than the rates it paid on deposits. 

However, its net interest margin was unchanged compared to this year’s first quarter. 

Pathfinder’s noninterest income in the second quarter surged to $1.1 million from $783,000 in the prior-year period, mainly due to the gain on the sale of the residential-loan portfolio. That gain totaled $395,000 before taxes and $288,000 after taxes. Pathfinder also sold investment securities for a gain. 

Noninterest expense at Pathfinder in the second quarter totaled $3.6 million, an increase of $247,000 from the year-earlier period on a rise in staff costs driven by wage increases and employee-benefit costs, and miscellaneous other expenses. Those included a write-down on a repossessed asset, fraud losses, office supplies, and travel and training, Pathfinder said in the earnings report. The banking company also generated higher advertising expenses, stemming from Pathfinder’s focus on additional media exposure and direct-mail contact during the second quarter.

Pathfinder recorded $276,000 in a provision for loan losses in the second quarter, up from $150,000 in the year-earlier period. It recorded net charge-offs of $98,000 in the latest quarter, compared to $50,000 in net charge-offs in the second quarter of 2012. 

Pathfinder’s total assets increased to $494.4 million as of June 30, compared to $477.8 million as of Dec. 31, 2012.                 

Contact Rombel at arombel@cnybj.com