Stonegate Capital Partners Initiates Coverage on Pathfinder Bancorp, Inc. (NASDAQ: PBHC)
DALLAS, TX / ACCESSWIRE / August 6, 2021 / Pathfinder Bancorp, Inc. (NASDAQ:PBHC): The full report can be accessed by clicking on the following link:http://stonegateinc.com/reports/PBHC Initiation.pdf
COMPANY DESCRIPTION
Pathfinder Bancorp operates as a holding company that owns Pathfinder Bank (the Company or Bank), which provides various banking and financial products and services primarily in Central New York. The Bank is primarily engaged in the business of attracting deposits from the general public in the Bank's market areas. The Bank has a loan portfolio secured by commercial real-estate, residential real-estate, and originates unsecured small business loans, and consumer loans. The Company is also involved in the property, casualty, and life insurance brokerage business. The Company primarily serves individuals, families, small to mid-size business, and municipalities. Pathfinder Bancorp was founded 1859 and is headquartered in Oswego, NY.
COMPANY SUMMARY
Pathfinder Bank is focus on measured growth and risk mitigation - Pathfinder Bank is positioned as the market leader in Oswego County, NY by deposit market share and has a growing presence in the attractive Onondaga County, NY. Given its market position, the Bank has shown consistent balance sheet growth over the past 5 years, with total loan CAGR of 13.9% and total deposit CAGR of 15.2% since 2015. Additionally, the Bank increased allowance for loan losses (ALL) from 1.11% of total loans at December 31,2019 to 1.55% on December 31, 2020.
Well diversified portfolio with good credit quality - Pathfinder Bank's loan portfolio is well diversified and primarily consists of commercial real-estate loans, commercial loans, and residential mortgage loans. Net charge-offs to average loans was 0.08% in 2020 and averaged 0.13% over the prior three years.
Improving profitability metrics - The Bank has experienced improving metrics over the years with a 17bps increase in ROAA (return on avg. assets) and a 209bps increase in ROAE (return on avg. equity) from 2019 to 2020. A focus on expense control also drove a 10.0% decrease in the Bank's efficiency ratio and a 41bps decrease in noninterest expense to average assets ratio, from 2019 to 2020. Additionally, low net interest expense to average assets is 1.74% in 2020 and provides a cushion against NIM (net interest margin) compression.
Pathfinder bank is well capitalized - At the end of 2020, the Bank's Tier 1 capital ratio was 8.63%. Additionally, its Total Capital ratio was 13.13% as of December 31, 2020. The Company has historically been proactive in supplementing its ratios for future growth as evidenced by its subordinated debt offerings in F15 and F20, and an equity offering in 2019. Lastly, the Company has $50.4M in cash as of Q1F21.
Simplified capital structure - On June 28th, 2021, the Company converted all its series B convertible preferred stock into an equal number of newly created series A non-voting common shares. The new non-voting shares are equal to existing voting common shares. Importantly, the conversion simplifies the capital structure and increases the Company's tangible common equity and related ratios. As a result, its TCE/TA ratio increased to 7.85% in Q1F21 compared to 6.22% in Q2F20.
Valuation - We are using a P/TB to help frame valuation of Pathfinder Bank. Using a P/TB value range of 1.0x to 1.4x, with a mid-point of 1.2x, we arrive at a valuation range of $16.50 to $23.25, with a mid-point of $20.00. See page 6 for further details.
About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.
CONTACT:
Stonegate Capital Partners
info@stonegateinc.com
(214) 987-4121
SOURCE: Stonegate Capital Partners
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