UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
_____________________________

FORM 10-Q

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

       For the quarterly period ended June 30, 2015

OR
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
     For the transition period from _______ to _______
 
 

PATHFINDER BANCORP, INC.
(Exact Name of Company as Specified in its Charter)

Maryland
(State of Other Jurisdiction of Incorporation)
001-36695
(Commission File No.)
38-3941859
(I.R.S. Employer Identification No.)
 

214 West First Street, Oswego, NY 13126
(Address of Principal Executive Office) (Zip Code)

(315) 343-0057
(Issuer's Telephone Number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES T         NO *                                         

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES T         NO *

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer *                                             Accelerated filer *                                                    Non-accelerated filer *                                                  Smaller reporting company  T
                                                                                  (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YES *     NO T

As of August 10, 2015, there were 4,352,203 shares issued and outstanding of the registrant's common stock.



 

 
PATHFINDER BANCORP, INC.
INDEX



PART I - FINANCIAL INFORMATION
 
PAGE NO.
       
Item 1.
Consolidated Financial Statements (Unaudited)
   
   
3
   
4
   
5
   
6
   
7
   
8
       
Item 2.
 
32
 
and Results of Operations (Unaudited)
   
       
Item 3.
 
48
       
Item 4.
 
49
       
 
50
       
Item 1.
Legal Proceedings
   
Item 1A.
Risk Factors
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
   
Item 3.
Defaults upon Senior Securities
   
Item 4.
Mine Safety Disclosures
   
Item 5.
Other information
   
Item 6.
Exhibits
   
       
 
51
       
       
 
 
PART I -  FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements
Pathfinder Bancorp, Inc.
Consolidated Statements of Condition
(Unaudited)

   
June 30,
   
December 31,
 
(In thousands, except share and per share data)
 
2015
   
2014
 
ASSETS:
       
Cash and due from banks
 
$
7,182
   
$
6,822
 
Interest earning deposits
   
10,228
     
4,534
 
Total cash and cash equivalents
   
17,410
     
11,356
 
Available-for-sale securities, at fair value
   
102,361
     
88,073
 
Held-to-maturity securities, at amortized cost (fair value of $44,875 and $42,139, respectively)
   
43,893
     
40,875
 
Federal Home Loan Bank stock, at cost
   
3,356
     
3,454
 
Loans
   
403,411
     
387,538
 
Less: Allowance for loan losses
   
5,900
     
5,349
 
Loans receivable, net
   
397,511
     
382,189
 
Premises and equipment, net
   
13,238
     
13,200
 
Accrued interest receivable
   
1,966
     
1,849
 
Foreclosed real estate
   
361
     
261
 
Intangible assets, net
   
222
     
175
 
Goodwill
   
4,536
     
4,367
 
Bank owned life insurance
   
10,506
     
10,356
 
Other assets
   
4,965
     
4,869
 
Total assets
 
$
600,325
   
$
561,024
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY:
               
Deposits:
               
Interest-bearing
 
$
397,923
   
$
360,906
 
Noninterest-bearing
   
59,652
     
54,662
 
Total deposits
   
457,575
     
415,568
 
Short-term borrowings
   
48,000
     
55,100
 
Long-term borrowings
   
14,000
     
11,000
 
Junior subordinated debentures
   
5,155
     
5,155
 
Accrued interest payable
   
60
     
63
 
Other liabilities
   
5,461
     
4,934
 
Total liabilities
   
530,251
     
491,820
 
Shareholders' equity:
               
Preferred stock - SBLF, par value $0.01 per share; $1,000 liquidation preference;
               
13,000 shares authorized; 13,000 shares issued and outstanding
   
13,000
     
13,000
 
Common stock, par value $0.01; 25,000,000 authorized  shares;
               
4,352,203 shares issued and shares outstanding
   
44
     
44
 
Additional paid in capital
   
28,614
     
28,534
 
Retained earnings
   
31,996
     
31,085
 
Accumulated other comprehensive loss
   
(2,319
)
   
(2,119
)
Unearned ESOP
   
(1,664
)
   
(1,754
)
Total Pathfinder Bancorp, Inc. shareholders' equity
   
69,671
     
68,790
 
Noncontrolling interest
   
403
     
414
 
Total equity
   
70,074
     
69,204
 
Total liabilities and shareholders' equity
 
$
600,325
   
$
561,024
 
                 
The accompanying notes are an integral part of the consolidated financial statements.
               
 
 
 
Pathfinder Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)

   
For the three
   
For the three
   
For the six
   
For the six
 
   
months ended
   
months ended
   
months ended
   
months ended
 
(In thousands, except per share data)
 
June 30, 2015
   
June 30, 2014
   
June 30, 2015
   
June 30, 2014
 
Interest and dividend income:
               
Loans, including fees
 
$
4,551
   
$
4,104
   
$
8,950
   
$
8,168
 
Debt securities:
                               
Taxable
   
516
     
466
     
975
     
886
 
Tax-exempt
   
190
     
194
     
387
     
389
 
Dividends
   
40
     
17
     
69
     
50
 
Interest earning time deposits
   
-
     
2
     
-
     
4
 
Federal funds sold and interest earning deposits
   
5
     
1
     
7
     
2
 
       Total interest income
   
5,302
     
4,784
     
10,388
     
9,499
 
Interest expense:
                               
Interest on deposits
   
483
     
497
     
928
     
1,026
 
Interest on short-term borrowings
   
35
     
21
     
72
     
39
 
Interest on long-term borrowings
   
105
     
148
     
206
     
295
 
       Total interest expense
   
623
     
666
     
1,206
     
1,360
 
          Net interest income
   
4,679
     
4,118
     
9,182
     
8,139
 
Provision for loan losses
   
401
     
275
     
784
     
520
 
          Net interest income after provision for loan losses
   
4,278
     
3,843
     
8,398
     
7,619
 
Noninterest income:
                               
Service charges on deposit accounts
   
288
     
305
     
554
     
584
 
Earnings and gain on bank owned life insurance
   
65
     
66
     
149
     
126
 
Loan servicing fees
   
41
     
67
     
93
     
120
 
Net gains on sales and redemptions of investment securities
   
49
     
24
     
101
     
26
 
Net (losses)/gains on sales of loans and foreclosed real estate
   
(4
)
   
26
     
(4
)
   
30
 
Debit card interchange fees
   
136
     
129
     
259
     
243
 
Other charges, commissions & fees
   
377
     
261
     
665
     
575
 
          Total noninterest income
   
952
     
878
     
1,817
     
1,704
 
Noninterest expense:
                               
Salaries and employee benefits
   
2,356
     
2,187
     
4,738
     
4,384
 
Building occupancy
   
441
     
364
     
944
     
771
 
Data processing
   
354
     
399
     
742
     
764
 
Professional and other services
   
229
     
173
     
449
     
348
 
Advertising
   
114
     
99
     
236
     
231
 
FDIC assessments
   
102
     
100
     
197
     
195
 
Audits and exams
   
59
     
61
     
120
     
125
 
Other expenses
   
577
     
380
     
1,030
     
852
 
          Total noninterest expenses
   
4,232
     
3,763
     
8,456
     
7,670
 
Income before income taxes
   
998
     
958
     
1,759
     
1,653
 
Provision for income taxes
   
290
     
275
     
514
     
451
 
Net income attributable to noncontrolling interest and Pathfinder Bancorp, Inc.
   
708
     
683
     
1,245
     
1,202
 
Net income attributable to noncontrolling interest
   
14
     
7
     
22
     
37
 
Net income attributable to Pathfinder Bancorp Inc.
   
694
     
676
     
1,223
     
1,165
 
Preferred stock dividends
   
33
     
30
     
65
     
30
 
Net income available to common shareholders
 
$
661
   
$
646
   
$
1,158
   
$
1,135
 
                                 
Earnings per common share - basic
 
$
0.16
   
$
0.15
   
$
0.28
   
$
0.27
 
Earnings per common share - diluted
 
$
0.16
   
$
0.15
   
$
0.28
   
$
0.27
 
Dividends per common share
 
$
0.03
   
$
0.03
   
$
0.06
   
$
0.06
 

The accompanying notes are an integral part of the consolidated financial statements.
 
 

Pathfinder Bancorp, Inc.
 
Consolidated Statements of Comprehensive Income
 
(Unaudited)
 
                 
   
For the three months ended
   
For the six months ended
 
(In thousands)
 
June 30, 2015
   
June 30, 2014
   
June 30, 2015
   
June 30, 2014
 
                 
Net Income
 
$
708
   
$
683
   
$
1,245
   
$
1,202
 
                                 
Other Comprehensive Income (Loss)
                               
                                 
Retirement Plans:
                               
Net unrealized gain on retirement plans
   
45
     
11
     
90
     
22
 
                                 
Unrealized holding gains on financial derivative:
                               
Change in unrealized holding losses on financial derivative
   
(5
)
   
(4
)
   
(6
)
   
(7
)
Reclassification adjustment for interest expense included in net income
   
15
     
15
     
31
     
30
 
Net unrealized gain on financial derivative
   
10
     
11
     
25
     
23
 
                                 
Unrealized holding (losses) gains on available for sale securities
                               
Unrealized holding (losses) gains arising during the period
   
(878
)
   
310
     
(413
)
   
631
 
Reclassification adjustment for net (losses) gains included in net income
   
(49
)
   
(24
)
   
(101
)
   
(26
)
Net unrealized (loss) gain on available for sale securities
   
(927
)
   
286
     
(514
)
   
605
 
                                 
Accretion of net unrealized loss on securities transferred to held-to-maturity (1)
   
32
     
29
     
65
     
59
 
                                 
Other comprehensive (loss) income,  before tax
   
(840
)
   
337
     
(334
)
   
709
 
Tax effect
   
336
     
(135
)
   
134
     
(284
)
Other comprehensive (loss) income, net of tax
   
(504
)
   
202
     
(200
)
   
425
 
Comprehensive income
 
$
204
   
$
885
   
$
1,045
   
$
1,627
 
Comprehensive income attributable to noncontrolling interest
 
$
14
   
$
7
   
$
22
   
$
37
 
Comprehensive income attributable to Pathfinder Bancorp, Inc.
 
$
190
   
$
878
   
$
1,023
   
$
1,590
 
                                 
                                 
Tax Effect Allocated to Each Component of Other Comprehensive Loss
                               
Retirement plan net losses recognized in plan expenses
 
$
(18
)
 
$
(5
)
 
$
(36
)
 
$
(9
)
Change in unrealized holding  losses on financial derivative
   
2
     
2
     
2
     
3
 
Reclassification adjustment for interest expense included in net income
   
(6
)
   
(6
)
   
(12
)
   
(12
)
Unrealized holding gains (losses) arising during the period
   
351
     
(124
)
   
165
     
(253
)
Reclassification adjustment for net gains included in net income
   
20
     
10
     
41
     
10
 
Accretion of net unrealized loss on securities transferred to held-to-maturity (1)
   
(13
)
   
(12
)
   
(26
)
   
(23
)
Income tax effect related to other comprehensive income
 
$
336
   
$
(135
)
 
$
134
     
(284
)
                                 
(1) The accretion of the unrealized holding losses in accumulated other comprehensive loss at the date of transfer at September 30, 2013 partially offsets the amortization of the difference between the par value and the fair value of the investment securities at the date of transfer, and is an adjustment of yield.
                               
                                 
The accompanying notes are an integral part of the consolidated financial statements.
                               





Pathfinder Bancorp, Inc.
 
Consolidated Statements of Changes in Shareholders' Equity
 
Six months ended June 30, 2015 and June 30, 2014
 
                                     
                   
Accumulated
                 
           
Additional
       
Other Com-
           
Non-
     
   
Preferred
   
Common
   
Paid in
   
Retained
   
prehensive
   
Unearned
   
Treasury
   
controlling
     
 (In thousands, except share and per share data)
 
Stock
   
Stock
   
Capital
   
Earnings
   
Loss
   
ESOP
   
Stock
   
Interest
   
Total
 
                                     
 Balance, January 1, 2015
 
$
13,000
   
$
44
   
$
28,534
   
$
31,085
   
$
(2,119
)
 
$
(1,754
)
 
$
-
   
$
414
   
$
69,204
 
                                                                         
 Net income
   
-
     
-
     
-
     
1,223
     
-
     
-
     
-
     
22
     
1,245
 
                                                                         
 Other comprehensive loss, net of tax
   
-
     
-
     
-
     
-
     
(200
)
   
-
     
-
     
-
     
(200
)
 
                                                                       
 Preferred stock dividends - SBLF
   
-
     
-
     
-
     
(65
)
   
-
     
-
     
-
     
-
     
(65
)
                                                                         
 ESOP shares earned (12,222 shares)
   
-
     
-
     
38
     
-
     
-
     
90
     
-
     
-
     
128
 
                                                                         
 Stock based compensation
   
-
     
-
     
42
     
-
     
-
     
-
     
-
     
-
     
42
 
                                                                         
 Common stock dividends declared ($0.06 per share)
   
-
     
-
     
-
     
(247
)
   
-
     
-
     
-
     
-
     
(247
)
                                                                         
 Distributions from affiliates
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
(33
)
   
(33
)
 Balance, June 30, 2015
 
$
13,000
   
$
44
   
$
28,614
   
$
31,996
   
$
(2,319
)
 
$
(1,664
)
 
$
-
   
$
403
   
$
70,074
 
                                                                         
 Balance, January 1, 2014
 
$
13,000
   
$
30
   
$
8,226
   
$
28,788
   
$
(1,745
)
 
$
(826
)
 
$
(4,761
)
 
$
358
   
$
43,070
 
                                                                         
 Net income
   
-
     
-
     
-
     
1,165
     
-
     
-
     
-
     
37
     
1,202
 
                                                                         
 Other comprehensive income, net of tax
   
-
     
-
     
-
     
-
     
425
     
-
     
-
     
-
     
425
 
                                                                         
 Preferred stock dividends - SBLF
   
-
     
-
     
-
     
(30
)
   
-
     
-
     
-
     
-
     
(30
)
                                                                         
 ESOP shares earned (6,250 shares)
   
-
     
-
     
36
     
-
     
-
     
55
     
-
     
-
     
91
 
                                                                         
 Stock based compensation
   
-
     
-
     
42
     
-
     
-
     
-
     
-
     
-
     
42
 
                                                                         
 Common stock dividends declared ($0.06 per share)
   
-
     
-
     
-
     
(152
)
   
-
     
-
     
-
     
-
     
(152
)
 Balance, June 30, 2014
 
$
13,000
   
$
30
   
$
8,304
   
$
29,771
   
$
(1,320
)
 
$
(771
)
 
$
(4,761
)
 
$
395
   
$
44,648
 
                                                                         
The accompanying notes are an integral part of the consolidated financial statements.
                                                 



 

Pathfinder Bancorp, Inc.
 
Consolidated Statements of Cash Flows
 
(Unaudited)
 
   
For the six months ended June 30,
 
(In thousands)
 
2015
   
2014
 
OPERATING ACTIVITIES
       
Net income attributable to Pathfinder Bancorp, Inc.
 
$
1,223
   
$
1,165
 
Adjustments to reconcile net income to net cash flows from operating activities:
         
Provision for loan losses
   
784
     
520
 
Realized losses (gains) on sales, redemptions and calls of:
               
Real estate acquired through foreclosure
   
4
     
(30
)
Loans
   
(4
)
   
-
 
Available-for-sale investment securities
   
(101
)
   
(26
)
Depreciation
   
465
     
399
 
Amortization of mortgage servicing rights
   
7
     
7
 
Amortization of deferred loan costs
   
82
     
59
 
Earnings on bank owned life insurance
   
(149
)
   
(126
)
Net amortization of premiums and discounts on investment securities
   
436
     
339
 
Amortization of intangible assets
   
9
     
6
 
Stock based compensation and ESOP expense
   
170
     
133
 
Net change in accrued interest receivable
   
(117
)
   
(60
)
Net change in other assets and liabilities
   
687
     
(840
)
Net cash flows from operating activities
   
3,496
     
1,546
 
INVESTING ACTIVITIES
               
Purchase of investment securities available-for-sale
   
(47,485
)
   
(25,688
)
Purchase of investment securities held-to-maturity
   
(5,034
)
   
(8,767
)
Net proceeds from (purchases of) Federal Home Loan Bank stock
   
98
     
(44
)
Proceeds from maturities and principal reductions of
               
investment securities available-for-sale
   
15,933
     
7,378
 
Proceeds from maturities and principal reductions of
               
investment securities held-to-maturity
   
2,015
     
399
 
Proceeds from sales, redemptions and calls of:
               
Available-for-sale investment securities
   
16,481
     
506
 
Real estate acquired through foreclosure
   
171
     
273
 
Acquisition of insurance agency
   
(225
)
   
-
 
Purchase of bank owned life insurance
   
-
     
(1,780
)
Net change in loans
   
(16,463
)
   
(17,989
)
Purchase of premises and equipment
   
(503
)
   
(1,051
)
Net cash flows from investing activities
   
(35,012
)
   
(46,763
)
FINANCING ACTIVITIES
               
Net change in demand deposits, NOW accounts, savings accounts,
               
money management deposit accounts, MMDA accounts and escrow deposits
   
45,933
     
29,707
 
Net change in time deposits and brokered deposits
   
(3,926
)
   
8,316
 
Net change in short-term borrowings
   
(7,100
)
   
1,000
 
Proceeds from (repayments of) long-term borrowings
   
3,000
     
(55
)
Cash dividends paid to preferred shareholder - SBLF
   
(65
)
   
(30
)
Cash dividends paid to common shareholders
   
(261
)
   
(157
)
Change in noncontrolling interest, net
   
(11
)
   
37
 
Net cash flows from financing activities
   
37,570
     
38,818
 
Change in cash and cash equivalents
   
6,054
     
(6,399
)
Cash and cash equivalents at beginning of period
   
11,356
     
16,575
 
Cash and cash equivalents at end of period
 
$
17,410
   
$
10,176
 
CASH PAID DURING THE PERIOD FOR:
               
Interest
 
$
1,209
   
$
1,379
 
Income taxes
   
462
     
331
 
NON-CASH INVESTING ACTIVITY
               
Real estate acquired in exchange for loans
   
275
     
392
 
                 
The accompanying notes are an integral part of the consolidated financial statements.
         

Notes to Consolidated Financial Statements (Unaudited)
 
Page - 7 -


Note 1:  Basis of Presentation

The accompanying unaudited consolidated financial statements of Pathfinder Bancorp, Inc., (the "Company"), Pathfinder Bank (the "Bank") and its other wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions for Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes necessary for a complete presentation of consolidated financial condition, results of operations and cash flows in conformity with generally accepted accounting principles.  In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included.  Certain amounts in the 2014 consolidated financial statements may have been reclassified to conform to the current period presentation.  These reclassifications impacted share and per share data as a result of the Conversion and Offering that occurred on October 16, 2014 and reported by the Company in its Annual Report on Form 10-K filed on March 18, 2015, and are further detailed in Note 3 to these unaudited consolidated financial statements located elsewhere on this form.  These reclassifications had no effect on net income or comprehensive income as previously reported.

The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by other third-party sources, when available.  When third party information is not available, valuation adjustments are estimated in good faith by management.

Although the Company owns, through its subsidiary Pathfinder Risk Management Company, Inc., 51% of the membership interest in FitzGibbons Agency, LLC ("Agency"), the Company is required to consolidate 100% of the Agency within the consolidated financial statements.  The Agency's financial statements include the acquisition of the Huntington Agency which occurred in the first quarter of 2015.  The 49% of which the Company does not own is accounted for separately as noncontrolling interests within the consolidated financial statements.

On May 8, 2015, the Company announced that the Bank filed an application with the New York State Department of Financial Services ("NYSDFS") and the Federal Deposit Insurance Corporation ("FDIC") to combine with the Bank's wholly-owned subsidiary, Pathfinder Commercial Bank, a New York State-chartered commercial bank.  Prior to or simultaneously with the combination, Pathfinder Commercial Bank's charter will be amended such that Pathfinder Commercial Bank will become a full-service commercial bank, rather than a limited purpose commercial bank, which it currently is, and its name will be changed to "Pathfinder Bank".  The transaction is expected to be completed in either the third or fourth quarter of 2015 and will have little impact on the current activities or investments of the Bank and Pathfinder Commercial Bank, although the Bank expects some annual cost savings as a result of the conversion.

Note 2:   New Accounting Pronouncements

In May 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2015-07 Fair Value Measurement (Topic 820).  This ASU addressed the diversity in practice related to how certain investments measured at net asset value with future redemption dates are categorized.  The amendments remove the requirement to categorize investments for which fair values are measured using the net asset value per share practical expedient. It also limits disclosures to investments for which the entity has elected to measure the fair value using the practical expedient.   The amendments are effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years.  A reporting entity should apply the amendments retrospectively to all periods presented. The retrospective approach requires that an investment for which fair value is measured using the net asset value per share practical expedient be removed from the fair value hierarchy in all periods presented in an entity's financial statements. Earlier application is permitted.  The Company does not expect a material impact on its consolidated statements of condition, results of operations, or cash flows.

 
In June 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ASU 2015-10 Technical Corrections and Improvements.  The amendments cover a wide range of topics in the Codification and represent changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.  The Company does not expect a material impact on its consolidated statements of condition, results of operations, or cash flows.

Note 3:   Earnings per Common Share

Basic earnings per share are calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.  Net income available to common shareholders is net income to Pathfinder Bancorp, Inc. less the total of preferred dividends declared. Diluted earnings per share include the potential dilutive effect that could occur upon the assumed exercise of issued stock options using the Treasury Stock method.  Anti-dilutive stock options, not included in the computation below, were -0- for the three months ended June 30, 2015 and 8,236 for the six months ended June 30, 2015 and 10,000 in the three and six month periods ended June 30, 2014.  Unallocated common shares held by the ESOP are not included in the weighted-average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.

The following table sets forth the calculation of basic and diluted earnings per share.  Historical share and per share data have been adjusted by the exchange ratio of 1.6472 used in the Conversion and Offering.


   
Three months ended
   
Six months ended
 
   
June 30,
   
June 30,
 
(In thousands, except per share data)
 
2015
   
2014
   
2015
   
2014
 
Basic Earnings Per Common Share
               
Net income available to common shareholders
 
$
661
   
$
646
   
$
1,158
   
$
1,135
 
Weighted average common shares outstanding
   
4,120
     
4,172
     
4,117
     
4,169
 
Basic earnings per common share
 
$
0.16
   
$
0.15
   
$
0.28
   
$
0.27
 
                                 
Diluted Earnings Per Common Share
                               
Net income available to common shareholders
 
$
661
   
$
646
   
$
1,158
   
$
1,135
 
Weighted average common shares outstanding
   
4,120
     
4,172
     
4,117
     
4,169
 
Effect of assumed exercise of stock options
   
67
     
43
     
62
     
40
 
Diluted weighted average common shares outstanding
   
4,187
     
4,215
     
4,179
     
4,209
 
Diluted earnings per common share
 
$
0.16
   
$
0.15
   
$
0.28
   
$
0.27
 





 
Note 4:   Investment Securities

The amortized cost and estimated fair value of investment securities are summarized as follows:

 
 
June 30, 2015
 
       
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
(In thousands)
 
Cost
   
Gains
   
Losses
   
Value
 
Available-for-Sale Portfolio
               
Debt investment securities:
               
US Treasury, agencies and GSEs
 
$
28,889
   
$
12
   
$
(161
)
 
$
28,740
 
State and political subdivisions
   
8,137
     
91
     
(10
)
   
8,218
 
Corporate
   
18,342
     
85
     
(147
)
   
18,280
 
Residential mortgage-backed - US agency
   
29,336
     
236
     
(271
)
   
29,301
 
Collateralized mortgage obligations - US agency
   
15,856
     
152
     
(156
)
   
15,852
 
Total
   
100,560
     
576
     
(745
)
   
100,391
 
Equity investment securities:
                               
Mutual funds:
                               
Ultra short mortgage fund
   
643
     
2
     
-
     
645
 
Large cap equity fund
   
456
     
168
     
-
     
624
 
Other mutual funds
   
183
     
226
     
-
     
409
 
Common stock - financial services industry
   
270
     
22
     
-
     
292
 
Total
   
1,552
     
418
     
-
     
1,970
 
Total available-for-sale
 
$
102,112
   
$
994
   
$
(745
)
 
$
102,361
 
                                 
Held-to-Maturity Portfolio
                               
Debt investment securities:
                               
US Treasury, agencies and GSEs
 
$
7,846
   
$
81
   
$
(53
)
 
$
7,874
 
State and political subdivisions
   
21,260
     
690
     
-
     
21,950
 
Corporate
   
3,420
     
61
     
-
     
3,481
 
Residential mortgage-backed - US agency
   
8,460
     
94
     
(4
)
   
8,550
 
Collateralized mortgage obligations - US agency
   
2,907
     
113
     
-
     
3,020
 
Total held-to-maturity
 
$
43,893
   
$
1,039
   
$
(57
)
 
$
44,875
 


 


 
 
December 31, 2014
 
       
Gross
   
Gross
   
Estimated
 
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
(In thousands)
 
Cost
   
Gains
   
Losses
   
Value
 
Available-for-Sale Portfolio
               
Debt investment securities:
               
US Treasury, agencies and GSEs
 
$
17,896
   
$
3
   
$
(149
)
 
$
17,750
 
State and political subdivisions
   
8,346
     
110
     
(13
)
   
8,443
 
Corporate
   
13,763
     
116
     
(19
)
   
13,860
 
Residential mortgage-backed - US agency
   
30,321
     
403
     
(149
)
   
30,575
 
Collateralized mortgage obligations - US agency
   
15,432
     
168
     
(124
)
   
15,476
 
Total
   
85,758
     
800
     
(454
)
   
86,104
 
Equity investment securities:
                               
Mutual funds:
                               
Ultra short mortgage fund
   
643
     
5
     
-
     
648
 
Large cap equity fund
   
456
     
193
     
-
     
649
 
Other mutual funds
   
183
     
196
     
-
     
379
 
Common stock - financial services industry
   
270
     
23
     
-
     
293
 
Total
   
1,552
     
417
     
-
     
1,969
 
Total available-for-sale
 
$
87,310
   
$
1,217
   
$
(454
)
 
$
88,073
 
                                 
Held-to-Maturity Portfolio
                               
Debt investment securities:
                               
US Treasury, agencies and GSEs
 
$
4,834
   
$
58
   
$
-
   
$
4,892
 
State and political subdivisions
   
22,610
     
824
     
(9
)
   
23,425
 
Corporate
   
2,487
     
33
     
(17
)
   
2,503
 
Residential mortgage-backed - US agency
   
8,043
     
242
     
-
     
8,285
 
Collateralized mortgage obligations - US agency
   
2,901
     
133
     
-
     
3,034
 
Total held-to-maturity
 
$
40,875
   
$
1,290
   
$
(26
)
 
$
42,139
 


The amortized cost and estimated fair value of debt investments at June 30, 2015 by contractual maturity are shown below.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

   
Available-for-Sale
   
Held-to-Maturity
 
   
Amortized
   
Estimated
   
Amortized
   
Estimated
 
 
 
Cost
   
Fair Value
   
Cost
   
Fair Value
 
(In thousands)
               
Due in one year or less
 
$
6,881
   
$
6,925
   
$
196
   
$
196
 
Due after one year through five years
   
39,480
     
39,450
     
8,382
     
8,428
 
Due after five years through ten years
   
8,027
     
7,901
     
16,516
     
16,888
 
Due after ten years
   
980
     
962
     
7,432
     
7,793
 
Sub-total
   
55,368
     
55,238
     
32,526
     
33,305
 
Residential mortgage-backed - US agency
   
29,336
     
29,301
     
8,460
     
8,550
 
Collateralized mortgage obligations - US agency
   
15,856
     
15,852
     
2,907
     
3,020
 
Totals
 
$
100,560
   
$
100,391
   
$
43,893
   
$
44,875
 

The Company's investment securities' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

 
June 30, 2015
 
 
Less than twelve months
 
Twelve months or more
 
Total
 
 
Number of
     
Number of
     
Number of
     
 
Individual
 
Unrealized
 
Fair
 
Individual
 
Unrealized
 
Fair
 
Individual
 
Unrealized
 
Fair
 
 
Securities
 
Losses
 
Value
 
Securities
 
Losses
 
Value
 
Securities
 
Losses
 
Value
 
(Dollars in thousands)
                 
Available-for-Sale
                 
US Treasury, agencies and GSE's
   
11
   
$
(106
)
 
$
14,844
     
5
   
$
(55
)
 
$
5,941
     
16
     
(161
)
 
$
20,785
 
State and political subdivisions
   
15
     
(9
)
   
2,200
     
2
     
(1
)
   
504
     
17
     
(10
)
   
2,704
 
Corporate
   
13
     
(147
)
   
11,513
     
-
     
-
     
-
     
13
     
(147
)
   
11,513
 
Residential mortgage-backed - US agency
   
7
     
(115
)
   
9,705
     
5
     
(156
)
   
5,169
     
12
     
(271
)
   
14,874
 
Collateralized mortgage obligations - US agency
   
4
     
(83
)
   
5,925
     
3
     
(73
)
   
1,971
     
7
     
(156
)
   
7,896
 
Totals
   
50
   
$
(460
)
 
$
44,187
     
15
   
$
(285
)
 
$
13,585
     
65
   
$
(745
)
 
$
57,772
 
Held-to-Maturity
                                                                       
US Treasury, agencies and GSE's
   
2
   
$
(53
)
 
$
2,946
     
-
   
$
-
   
$
-
     
2
   
$
(53
)
 
$
2,946
 
State and political subdivisions
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Corporate
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Residential mortgage-backed - US agency
   
2
     
(4
)
   
1,705
     
-
     
-
     
-
     
2
     
(4
)
   
1,705
 
Collateralized mortgage obligations - US agency
   
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
     
-
 
Totals
   
4
   
$
(57
)
 
$
4,651
     
-
   
$
-
   
$
-
     
4
   
$
(57
)
 
$
4,651
 
                                                                         
                                                                         
 
December 31, 2014
 
 
Less than twelve months
 
Twelve months or more
 
Total
 
 
Number of
                 
Number of
                 
Number of
                 
 
Individual
 
Unrealized
 
Fair
 
Individual
 
Unrealized
 
Fair
 
Individual
 
Unrealized
 
Fair
 
 
Securities
 
Losses
 
Value
 
Securities
 
Losses
 
Value
 
Securities
 
Losses
 
Value
 
(Dollars in thousands)
                                                                       
Available-for-Sale
                                                                       
US Treasury, agencies and GSE's
   
7
   
$
(18
)
 
$
7,991
     
7
   
$
(131
)
 
$
7,856
     
14
   
$
(149
)
 
$
15,847
 
State and political subdivisions
   
19
     
(13
)
   
3,047
     
1
     
-
     
90
     
20
     
(13
)
   
3,137
 
Corporate
   
7
     
(19
)
   
4,520
     
-
     
-
     
-
     
7
     
(19
)
   
4,520
 
Residential mortgage-backed - US agency
   
2
     
(8
)
   
1,424
     
6
     
(141
)
   
6,256
     
8
     
(149
)
   
7,680
 
Collateralized mortgage obligations - US agency
   
3
     
(22
)
   
2,692
     
5
     
(102
)
   
3,963
     
8
     
(124
)
   
6,655
 
Totals
   
38
   
$
(80
)
 
$
19,674
     
19
   
$
(374
)
 
$
18,165
     
57
   
$
(454
)
 
$
37,839
 
Held-to-Maturity
                                                                       
US Treasury, agencies and GSE's
   
-
   
$
-
   
$
-
     
-
   
$
-
   
$
-
     
-
   
$
-
   
$
-
 
State and political subdivisions
   
1
     
(9
)
   
1,463
     
-
     
-