Pathfinder Bancorp Announces Agreement to Acquire East Syracuse Branch

Rhea-AI Summary

Pathfinder Bancorp, Inc. announces the acquisition of Berkshire Bank's East Syracuse branch, including $198 million in deposits and $32 million in loans. The acquisition is expected to enhance Pathfinder's financial performance, expand market presence, and improve liquidity. The deal is projected to boost earnings per share and tangible book value earn back period. Pathfinder's total assets will reach $1.7 billion post-acquisition, maintaining strong capital ratios.

Insights

Financial Analyst

The acquisition of Berkshire Bank's East Syracuse branch by Pathfinder Bancorp represents a strategic move that could bolster Pathfinder's market presence and financial metrics. With an additional $198 million in deposits and $32 million in loans, Pathfinder's liquidity profile and loan portfolio are poised for enhancement. The expected favorable internal rate of return and earnings per share accretion suggest a positive outlook for shareholder value. However, the actual financial impact will depend on the execution of the integration and the cost efficiencies realized from the consolidation.

It is crucial to monitor the post-acquisition performance to assess whether the anticipated accretion to earnings materializes and the tangible book value earn back period aligns with projections. The market will also look closely at the capital ratios post-acquisition to ensure that the balance sheet remains robust enough to support further growth. Pathfinder's strategic positioning within the region, coupled with an expanded asset base of approximately $1.7 billion, could provide a competitive edge in the local banking landscape.

Market Research Analyst

The acquisition of a branch from Berkshire Bank by Pathfinder Bancorp indicates a competitive step in the regional banking sector. The East Syracuse branch's location and physical space may enhance Pathfinder's customer service and operational capabilities. The strategic move to acquire a branch with a strong historical presence and customer base can be seen as an effort to deepen market penetration and customer loyalty.

Pathfinder's emphasis on maintaining personal connections and the decision to retain existing branch employees align with the trend of community banks leveraging local ties to differentiate themselves in a market dominated by larger national banks. The integration of the branch and its employees will be a critical factor in retaining customer trust and minimizing disruption. The impact on the local banking market could be significant, as Pathfinder strengthens its presence and potentially attracts new customers through its expanded services and regional branch network.

Economist

This transaction between Pathfinder and Berkshire Bank is reflective of the consolidation trend within the banking industry, which can lead to increased market concentration in certain regions. The acquisition's impact on the local economy should be positive, as it suggests a commitment to growth and may lead to enhanced financial services for both consumers and businesses in the East Syracuse area.

Pathfinder's strategy to focus on community-centric banking and relationship-driven values could foster economic stability and support for local businesses. The influx of nearly $200 million in low-cost deposits may provide Pathfinder with additional resources to fund local projects and loans, potentially stimulating economic activity in the region. Nonetheless, it is important to consider the broader implications of banking consolidation on competition and consumer choice in the long term.

OSWEGO, N.Y., March 04, 2024 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. (“Pathfinder”) (NASDAQ: PBHC) has announced the signing of a branch purchase and assumption agreement pursuant to which Pathfinder Bank will acquire the East Syracuse, New York branch of Berkshire Bank, located on 6611 Manlius Center Road.

The purchase and assumption agreement provides for the transfer by Berkshire to Pathfinder of the facility and other associated assets of the branch, approximately $198 million in deposits, and certain consumer and residential loans with outstanding balances of roughly $32 million.

The purchase of the branch by Pathfinder is subject to regulatory approval, associated system conversions, and satisfaction of certain customary closing conditions. The parties expect to close on the purchase and sale of the Berkshire branch by the end of the third quarter of 2024, at which point the branch will be fully converted to operate as a Pathfinder branch office. Pathfinder expects the acquisition to generate a favorable internal rate of return and attractive earnings per share accretion, all within a reasonable tangible book value earn back period. On a pro forma basis, following the branch acquisition, Pathfinder’s total assets will approximate $1.7 billion, and its capital ratios are projected to remain strong and supportive of continued balance sheet growth. Furthermore, the addition of nearly $200 million in low-cost deposits will improve Pathfinder’s liquidity profile and balance sheet flexibility.

James A. Dowd, President and Chief Executive Officer of Pathfinder Bancorp, Inc and Pathfinder Bank, stated, “We are pleased to enter into this agreement with Berkshire Bank. This has given us a unique yet strategically aligned opportunity to help us achieve a higher level of financial performance for our shareholders by gaining meaningful access into a market with attractive growth opportunities. The East Syracuse branch's ideal physical location and significant physical space relative to our other branches will help strengthen our local presence by enhancing convenience for our existing customers, while simultaneously providing the flexibility for team expansion. Moreover, it positions us for business growth by offering a comprehensive range of consumer and business services to an expanded market area.”

Dowd continues, “Pathfinder and Berkshire have been active community-based financial institutions dedicated to serving their local markets for a combined 340-plus years. By acquiring a branch location from an organization that aligns with our relationship-driven values, we believe we have found the ideal strategic move to advance our customer- and community-centric approach. We warmly welcome the existing customers of the East Syracuse branch, offering an extensive product set and a network of 11 additional regional branch locations for their banking needs. We're also excited to welcome the current Berkshire branch employees. We place a high value on personal connections and trust, and understand the importance of both when it comes to fostering successful, long-lasting relationships. We’re committed to retaining all current branch employees, and we remain focused on ensuring a seamless transition while building on the valued franchise Berkshire has established at this location. We'll be in touch with both existing customers and staff every step of the way.”

Pathfinder Bank traces its local roots back to 1859 and currently employs over 175 with 11 locations in Oswego and Onondaga Counties, including two along Route 31 in Cicero and Clay, two in the city of Syracuse, and an additional loan production office in Utica. Pathfinder Bank is committed to its vision of being the trusted local bank, led by local decision-makers dedicated to serving the communities in which they live, work, and play.

Janney Montgomery Scott LLC and Troutman Pepper Hamilton Sanders LLP are acting as financial advisor and legal advisor, respectively, to Pathfinder.

ABOUT PATHFINDER BANCORP

Pathfinder Bancorp, Inc. (NASDAQ: PBHC), a Maryland corporation headquartered in Oswego, New York, is the parent company for Pathfinder Bank. Pathfinder Bank is a $1.5 billion commercial bank chartered by the New York State Department of Financial Services. Pathfinder was founded in 1859 and currently operates 11 full-service offices located in its market areas consisting of Oswego and Onondaga Counties and one limited purpose office in Oneida County. Through Pathfinder is focused on serving the needs of businesses and community members with high quality products and unsurpassed service. More information about Pathfinder Bancorp, Inc. can be accessed online at www.Pathfinderbank.com. Member FDIC.

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," "pro forma,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are based on current beliefs and expectations of the Company’s and the Bank’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s and the Bank’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from those set forth in or implied by the forward-looking statements as a result of numerous factors, and depend on the Company’s and the Bank’s ability to close the proposed branch acquisition in a timely manner and to realize the anticipated benefits of the transaction. For a discussion of such factors, please see Pathfinder's most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC's website at www.sec.gov.

The branch sale is subject to regulatory approval and other conditions. The foregoing description of the branch sale reflects loan and deposit balances as of January 31, 2024, and the actual amounts of loans and deposits that are acquired under the purchase and assumption agreement are subject to change prior to closing. Targeted financial benefits are subject to uncertainty, including but not limited to the pro forma results and underlying assumptions related to the branch sale, and may be affected or offset by other conditions related to the Company's operation. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Pathfinder does not undertake any obligation to update forward-looking statements.

Pathfinder Bancorp, Inc. Contact: James A. Dowd
President & CEO
315-207-8002
jadowd@pathfinderbank.com

FAQ

What branch is Pathfinder Bancorp, Inc. acquiring according to the press release?

Pathfinder Bancorp, Inc. is acquiring the East Syracuse branch of Berkshire Bank.

What are the key assets included in the acquisition mentioned in the press release?

The acquisition includes approximately $198 million in deposits and certain consumer and residential loans with outstanding balances of roughly $32 million.

When is the expected closing date for the purchase and sale of the Berkshire branch?

The parties expect to close on the purchase and sale of the Berkshire branch by the end of the third quarter of 2024.

How will the acquisition impact Pathfinder's total assets?

On a pro forma basis, following the branch acquisition, Pathfinder's total assets will approximate $1.7 billion.

Who are the financial and legal advisors to Pathfinder in this acquisition?

Janney Montgomery Scott LLC is acting as the financial advisor, and Troutman Pepper Hamilton Sanders LLP is the legal advisor to Pathfinder.