Pathfinder Bancorp, Inc. Announces Completion of $25 Million Private Placement of Subordinated Notes

Rhea-AI Summary

Pathfinder Bancorp, Inc. (NASDAQ: PBHC) has completed a private placement of $25 million in 5.50% Fixed to Floating Rate Subordinated Notes. These Notes will mature on October 15, 2030, with a fixed interest rate until October 15, 2025, after which it will be tied to the three-month SOFR plus 532 basis points. This issuance aims to strengthen the Company's capital for growth and replace existing higher-yield debentures without causing shareholder dilution. The offering was facilitated by Performance Trust Capital Partners, LLC.

Positive

• Raised $25 million through a favorable subordinated debt offering.
• The Notes will strengthen capital and support growth initiatives.
• Reduces financial burden by allowing the Company to replace higher-interest debentures.

Negative

• None.

OSWEGO, N.Y., Oct. 14, 2020 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. (“Company”) (NASDAQ: PBHC), the holding company for Pathfinder Bank (“Bank”), today announced the completion of its private placement of $25 million of its 5.50% Fixed to Floating Rate Subordinated Notes (the “Notes”) to certain qualified institutional buyers and accredited institutional investors.

The Notes will have a maturity date of October 15, 2030 and initially bear interest, payable semi-annually, at a fixed annual rate of 5.50% per annum until October 15, 2025. Commencing on that date, the interest rate applicable to the outstanding principal amount due will be reset quarterly to an interest rate per annum equal to the then current three-month secured overnight financing rate (SOFR) plus 532 basis points, payable quarterly until maturity. The Company may redeem the Notes at par, in whole or in part, at its option, anytime beginning on October 15, 2025. The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes for the Company.

In connection with the issuance and sale of the Notes, the Company entered into a registration rights agreement with the purchasers of the Notes pursuant to which the Company has agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act of 1933, as amended (the “Securities Act”), with substantially the same terms as the Notes.

Thomas W. Schneider, President and CEO of the Company, stated, “We are pleased with the interest in, and successful closing of, our subordinated debt offering. We have a long history of deploying new capital into our market to expand our position as one of the premier banks in Central New York and the Mohawk Valley region. The terms of this debt issuance are favorable to: (1) providing the Company with a source of capital for further growth, (2) increasing our ability to extinguish all, or part of, a previously issued subordinated callable debenture carrying a higher coupon rate, and (3) strengthening our balance sheet during this uncertain time without dilution to existing shareholders.”

Performance Trust Capital Partners, LLC served as the placement agent for the offering. Luse Gorman, PC served as legal counsel to Pathfinder Bancorp, Inc. This press release is for informational purposes only and shall not constitute an offer to sell, or the solicitation of an offer to buy, any security, nor shall there by any sale in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The indebtedness evidenced by the Notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.

About Pathfinder Bancorp, Inc.

Pathfinder Bank is a New York State chartered commercial bank headquartered in Oswego, whose deposits are insured by the Federal Deposit Insurance Corporation.  The Bank is a wholly owned subsidiary of Pathfinder Bancorp, Inc., (NASDAQ SmallCap Market; symbol: PBHC).  The Bank has ten full-service offices located in its market areas consisting of Oswego and Onondaga County and one limited purpose office in Oneida County.  

Forward-Looking Statements

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" or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may”   This release may contain certain forward-looking statements, which are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Company's earnings in future periods.  Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products, and services.  

As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following additional risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

• demand for our products and services may decline, making it difficult to grow assets and income;
• if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
• collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
• our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
• the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
• as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
• a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;
• our cyber security risks are increased as the result of an increase in the number of employees working remotely;
• we rely on third party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and
• Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

The Company disclaims any obligation to revise or update any forward-looking statements contained in this press release to reflect future events or developments.       

Investor/Media Contacts

Thomas W. Schneider – President, CEO
Walter F. Rusnak, Senior Vice President, CFO
Telephone:  (315) 343-0057

FAQ

What is the recent bond offering by Pathfinder Bancorp, Inc. (PBHC)?

Pathfinder Bancorp has completed a $25 million bond offering of 5.50% Fixed to Floating Rate Subordinated Notes.

What are the terms of the subordinated notes issued by PBHC?

The subordinated notes have a maturity date of October 15, 2030, with a fixed interest rate of 5.50% until October 15, 2025.

How will the new subordinated notes impact Pathfinder Bancorp's capital?

The new subordinated notes are intended to qualify as Tier 2 capital and strengthen the Company's balance sheet without diluting existing shareholders.

What is the purpose of the Notes issued by Pathfinder Bancorp?

The Notes are aimed at providing capital for growth and replacing previously issued debt with a higher coupon rate.