Pathfinder Bancorp, Inc. :PBHC-US: Earnings Analysis: 2016 By the Numbers : February 2, 2017

Pathfinder Bancorp, Inc. reports financial results for the year ended December 31, 2016.

We analyze the earnings along side the following peers of Pathfinder Bancorp, Inc. – Greene County Bancorp, Inc., Flushing Financial Corporation, Dime Community Bancshares, Inc., Lake Shore Bancorp, Inc., TrustCo Bank Corp NY and Astoria Financial Corporation (GCBC-US, FFIC-US, DCOM-US, LSBK-US, TRST-US and AF-US) that have also reported for this period.

Highlights

  • Net interest income margins widened from 82.08% to 82.91% compared to the same period last year.
  • Net loan assets changed 14.40% compared to same period last year and 14.40% from previous period, total deposits changed 24.61% compared to same period last year and 24.61% from previous period.
  • Earnings growth from operating margin improvements as well as from one-time items.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016 2015 2014 2013 2012
Relevant Numbers (Annual)
Revenues 24.47 22.94 20.84 19.04 17.92
Revenue Growth (YOY) N/A N/A N/A N/A N/A
Earnings 3.27 2.89 2.75 2.41 2.65
Earnings Growth (YOY) 13.26 5.25 14.09 -9.14 13.99
Net Margin 13.37 12.59 13.17 12.64 14.78
EPS 0.78 0.66 0.63 0.58 0.53
Return on Equity 5.04 3.93 4.72 5.74 5.6
Return on Assets 0.48 0.49 0.52 0.49 0.57

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Earnings Growth Analysis

The company’s earnings growth was influenced by the following factors: (1) Year-on-year improvements in net interest income margins from 82.08% to 82.91% and (2) improvement in loan loss provisions. As a result, net interest income after provisions margins improved from 76.20% to 79.01% compared to the same period last year. Loan loss provisions as a percentage of net interest income were 4.70% this period and 7.16% a year ago.

Net Interest Income Margin Versus Loan Loss Provisions Margin

Quadrant label definitions. Hover to know more

High Risk; High Reward Loans, Risky Loan Portfolio, Conservative Loan Portfolio, Safer Loan Portfolio
Net Interest Income Margin History
Loan Loss Provisions Margin History

Net Loans and Total Deposits

A financial institution’s core operations represented by Net Interest Income and Net Interest Income after Provisions are dependent on both the growth and quality of its deposits as well as the growth and quality of its loans. A firm could boost its interest income in the short-term by just increasing its loan assets with less concern about their quality – but this would eventually lead to greater loan loss provisions. Similarly a drive to increase deposits could result in higher interest expenses and eventually effect the firm’s equity. It is thus important to understand net interest income performance in context to loan loss provisions, loan assets and deposits.

Loan Assets Growth Rate History (HY YOY)
Total Deposits Growth Rate History (HY YOY)

The firm’s improvement in net interest income margins was influenced by both the relative increase in the levels of net loan assets and the level of total deposits as a percentage of equity. On an absolute basis, net loan assets changed 14.40% compared to the same period last year and 14.40% from the previous period. Total deposits changed 24.61% compared to the same period last year and 24.61% from the previous period.

Margins

The company’s earnings growth has also been influenced by the following factors: (1) Improvements in operating margins from 17.45% to 18.02% and (2) one-time items. The company’s pretax margins are now 18.02%, compared to 17.45% for the same period last year.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

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Company Profile

Pathfinder Bancorp, Inc. is a holding company, which engages in the investment on its subsidiary, Pathfinder Bank. The Bank attracts deposits from the general public in the bank’s area, and investing such deposits, together with other sources of funds, in loans secured by family residential real estate, commercial real estate, small business loans, and consumer loans. It also invest in securities, which consist of securities issued by the United States Government and its agencies and sponsored enterprises, state and municipal obligations, corporate debt securities, mutual funds, and equity securities. The company was founded on June 11, 2014 and is headquartered in Oswego, NY.

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