-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OSFq1e9KTVzpCNzvb5V0UbLzzw7/HZAdejxK32XfPclpm9Sc3zEvslEpAp8/XnY/ SHaFAhae+X4zI/qS56qjrA== 0000950109-98-005106.txt : 19981116 0000950109-98-005106.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950109-98-005106 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PATHFINDER BANCORP INC CENTRAL INDEX KEY: 0001046188 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 161540137 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23601 FILM NUMBER: 98749314 BUSINESS ADDRESS: STREET 1: 214 W FIRST ST CITY: OSWEGO STATE: DE ZIP: 13126 BUSINESS PHONE: 3153430057 MAIL ADDRESS: STREET 1: 214 W FIRST ST CITY: OSWEGO STATE: DE ZIP: 13126 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 1998 SEC Exchange Act No. 000-23601 --------- Pathfinder Bancorp, Inc. ------------------------------------------------ (Exact name of bank as specified in its charter) New York -------------------------------------------------------- (State or jurisdiction of incorporation or organization) 16-1540137 --------------------------------------- (I.R.S. Employer Identification Number) 214 W. 1st Street Oswego, New York 13126 - --------------------------------------- ---------- (Address of principal executive office) (Zip Code) Bank's telephone number, including area code: (315) 343-0057 -------------- Not Applicable ------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Bank (1) has filed all reports required to be filed by Section 13 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 X No ______ --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: There were 2,779,999 shares of the Company's common stock outstanding as of November 10, 1998. PATHFINDER BANCORP, INC. INDEX
PART 1 FINANCIAL INFORMATION PAGE Item 1. Financial Statements . Consolidated Balance Sheets 1 . Consolidated Statements of Income 2 . Consolidated Statements of Shareholders' Equity 3 . Consolidated Statements of Cash Flows 4, 5 . Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial 7 - 15 Condition and Results of Operations PART II OTHER INFORMATION 16 SIGNATURES
PATHFINDER BANCORP, INC. CONSOLIDATED STATEMENTS OF CONDITION September 30, 1998 (unaudited) and December 31, 1997
September 30, December 31, 1998 1997 ------------ ------------ ASSETS ------ Cash and due from banks $ 4,668,149 $ 4,334,072 Federal funds sold -- -- ------------ ------------ Total cash and cash equivalents 4,668,149 4,334,072 Investment securities 44,475,330 56,821,317 Mortgage loans held-for-sale 2,757,178 1,547,354 Loans: Real Estate 114,413,620 110,416,494 Consumer and other 11,126,293 10,763,277 ------------ ------------ Total loans 125,539,913 121,179,771 Less: Allowance for loan losses 879,161 827,521 Unearned discounts and origination fees 233,032 314,322 ------------ ------------ Loans Receivable, net 124,427,720 120,037,928 Premises and equipment 4,362,839 3,720,270 Accrued interest receivable 1,290,324 1,443,175 Other real estate 1,185,687 766,619 Intangible assets 3,368,060 3,604,876 Other assets 5,075,903 4,494,775 ------------ ------------ $191,611,190 $196,770,386 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Deposits: Interest bearing $147,870,274 $144,754,879 Non-interest bearing 8,548,393 7,644,262 ------------ ------------ Total deposits 156,418,667 152,399,141 Borrowed funds 10,200,000 18,242,000 Note payable - ESPOP 388,275 430,126 Other liabilities 2,216,873 2,116,384 ------------ ------------ Total liabilities 169,223,815 173,187,651 Shareholders' equity: (1) Common stock, par value $.10 per share; authorized 9,900,000 shares; 2,874,999 shares issued and outstanding 287,500 287,500 Additional paid in capital 7,597,051 7,643,084 Retained earnings 17,721,626 17,156,415 Unearned stock based compensation (1,531,536) (1,836,250) Unearned ESOP shares (363,116) (411,050) Accumulated other comprehensive income 911,430 743,036 Treasury stock, at cost; 138,625 shares (2,235,580) -- ------------ ------------ Total shareholders' equity 22,387,375 23,582,735 ------------ ------------ $191,611,190 $196,770,386 ============ ============
(1) December 31, 1997 amounts reflect impact of reorganization for Pathfinder Bancorp, Inc. and the retroactive effect of the 3 for 2 split declared on January 13, 1998 and paid on February 5, 1998 The accompanying notes are an integral part of the financial statements 1 PATHFINDER BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME For the three months and nine months ended September 30, 1998 and September 30, 1997 (unaudited)
For the three months ended For the nine months ended ---------------------------- ------------------------------ September 30, September 30, September 30, September 30, 1998 1997 1998 1997 ------------- ------------- ------------- -------------- INTEREST INCOME: Loans $2,714,167 $2,527,898 $8,152,218 $ 7,426,811 Interest and dividends on investments: U.S. Treasury and agencies 35,123 101,451 171,806 309,496 State and political subdivisions 78,307 94,932 257,306 277,123 Corporate 219,957 377,179 792,835 1,136,813 Marketable equity securities 26,864 49,063 76,149 70,893 Mortgage-backed 322,532 399,775 1,034,776 1,175,129 Federal funds sold and interest-bearing deposits 74,740 40,067 112,115 165,827 ---------- ---------- ----------- ----------- Total interest income 3,471,690 3,590,365 10,597,205 10,562,082 INTEREST EXPENSE: Interest on deposits 1,576,295 1,590,827 4,647,020 4,732,368 Interest on borrowed funds 184,435 149,158 665,171 373,962 ---------- ---------- ----------- ----------- Total interest expense 1,760,730 1,739,985 5,312,191 5,106,330 ---------- ---------- ----------- ----------- Net interest income 1,710,960 1,850,380 5,285,014 5,455,752 Provision for loan losses 110,462 57,539 251,003 184,890 ---------- ---------- ----------- ----------- Net interest income after provision for loan losses 1,600,498 1,792,841 5,034,011 5,270,862 ---------- ---------- ----------- ----------- OTHER INCOME: Service charges on deposit accounts 145,156 123,228 384,388 373,860 Mortgage servicing fees 10,148 9,865 34,145 33,004 Net gain (loss) on securities and loan sales (11,295) 74,996 258,750 247,049 Other charges, commission and fees 87,090 96,761 264,392 369,616 ---------- ---------- ----------- ----------- Total other income 231,099 304,850 941,675 1,023,529 ---------- ---------- ----------- ----------- OTHER EXPENSES: Salaries and employee benefits (a) 790,301 645,873 2,326,966 1,874,892 Building occupancy 148,757 163,348 470,251 501,915 Data processing expenses 111,385 101,628 336,344 281,764 Professional and other services 87,134 163,683 405,502 426,995 Deposit insurance premiums 7,821 7,318 27,867 24,936 Amortization of intangible asset (b) 78,939 78,939 236,827 236,817 Other expenses 290,851 245,263 815,562 652,254 ---------- ---------- ----------- ----------- Total other expenses 1,515,188 1,406,053 4,609,309 3,999,573 ---------- ---------- ----------- ----------- Income before income taxes 316,409 691,638 1,366,377 2,294,818 Provision for income taxes (c) 86,334 212,133 390,824 678,097 ---------- ---------- ----------- ----------- Net income $ 230,075 $ 479,505 $ 975,553 $ 1,616,721 ---------- ---------- ----------- ----------- Other comprehensive income, net of tax: Unrealized gains on securities: 36,948 144,853 197,015 180,604 Unrealized holding gains arising during period Less: reclassification adjustment for gains included in net income -- -- (28,621) -- ---------- ---------- ----------- ----------- Comprehensive income $ 267,023 $ 624,358 $ 1,143,947 $ 1,797,325 ========== ========== =========== =========== Earnings per share - basic $ .08 $ .17 $ . 35 $ .57 ========== ========== =========== =========== Earnings per share - diluted $ .08 $ .17 $ .34 $ .57 ========== ========== =========== ===========
(a) includes non-cash expenses for stock based compensation plans of $147,000 and $32,000 for the three month period ended September 30, 1998 and 1997, respectively, and $467,000 and $77,000 for the nine month period ended September 30, 1998 and 1997, respectively. (b) represents the non-cash amortization of premium paid on deposits acquired (c) includes the tax benefit associated with the realization of non-cash expenses of $68,000 and $33,000 for the three month period ended September 30, 1998 and 1997, respectively, and $211,000 and $94,000 for the nine month period ended September 30, 1998 and 1997, respectively. 2 PATHFINDER BANCORP, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1998 (unaudited)
Accum. Common Stock Add'l Unearned Other -------------------- Paid in Retained Stock-Based Compr. Shares Amount Capital Earnings Compensation Income --------- -------- ---------- ----------- ------------ -------- Balance, December 31, 1997 2,874,999 $287,500 $7,643,084 $17,156,415 $(1,836,250) $743,036 Net Income 975,553 Other comprehensive income, net of tax Unrealized gains on securities, net of reclassification adjustment Comprehensive income ESOP shares earned 113,631 Treasury stock purchased Stock awards granted (159,664) Stock based compensation earned 304,714 Change in unrealized net appreciation on investment securities 168,394 Dividends declared (410,342) --------- -------- ---------- ----------- ----------- -------- Balance, September 30, 1998 2,874,999 $287,500 $7,597,051 $17,721,626 $(1,531,536) $911,430 ========= ======== ========== =========== =========== ======== Unearned ESOP Treasury Shares Stock Total --------- ------------ ----------- Balance, December 31, 1997 $(411,050) $ - $23,582,735 Net Income 975,553 Other comprehensive income, net of tax Unrealized gains on securities, net of reclassification adjustment Comprehensive income ESOP shares earned 47,934 161,565 Treasury stock purchased (2,395,244) (2,395,244) Stock awards granted 159,664 0 Stock based compensation earned 304,714 Change in unrealized net appreciation on investment securities 168,394 Dividends declared (410,342) --------- ----------- ----------- Balance, September 30, 1998 $(363,116) $(2,235,580) $22,387,375 ========= =========== ===========
The accompanying notes are an integral part of the financial statements 3 PATHFINDER BANCORP, INC. STATEMENTS OF CASH FLOW September 30, 1998 and September 30, 1997 (unaudited)
September 30, September 30, 1998 1997 ------------ ------------ OPERATING ACTIVITIES: Net Income $ 975,553 $ 1,616,721 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan, investment and other real estate losses 251,003 184,890 Deferred compensation 152,484 128,869 ESOP shares earned 161,565 77,196 Stock based compensation earned 304,714 -- Deferred income taxes -- (126,808) Realized (gain) loss on sale of: Real estate acquired through foreclosure 13,303 -- Loans (3,196) -- Available-for-sale securities (205,709) (247,049) Depreciation 167,545 184,706 Amortization of intangibles 236,817 236,817 Net amortization of premiums and discounts on investment securities (29,272) 54,146 Decrease (increase) in interest receivable 152,851 (200,509) (Increase) decrease in other assets (520,195) 128,663 (Decrease) in other liabilities (277,016) (172,511) ------------ ---------- Net cash provided by operating activities 1,380,447 1,865,131 ------------ ---------- INVESTING ACTIVITIES: Purchase of investment securities available for sale (3,405,778) (8,132,250) Proceeds from maturities and principle reductions of investment securities held to maturity 3,770,000 1,250,000 Proceeds from maturities and principle reductions of investment securities available for sale 12,056,283 5,105,114 Proceeds from sale of: Real estate acquired through foreclosure 333,761 464,018 Loans 6,723,836 -- Available-for-sale securities 420,129 792,354 Net increase in loans (13,054,549) (6,191,407) Purchase of premises and equipment (810,114) (415,614) Increase in surrender value of life insurance (110,779) (169,321) Other investing activities (232,997) -- ------------ ---------- Net cash provided by (used in) investing activities 5,689,792 (7,297,106) ------------ ----------
4 STATEMENT OF CASH FLOWS (continued)
September 30, September 30, 1998 1997 ------------ ------------ FINANCING ACTIVITIES: Net increase (decrease) in demand deposits, NOW accounts savings accounts, money market deposit accounts and escrow deposits $ 2,081,495 $(4,047,702) Net increase in time deposits 1,938,030 1,129,368 Net repayments of short term borrowings (8,042,000) -- Proceeds from short term borrowings -- 4,300,000 Repayments of borrowings (41,850) (41,850) Cash dividends (276,593) (354,690) Treasury stock acquired (2,395,244) -- ----------- ------------ Net cash (used in) provided by financing activities (6,736,162) 985,126 Decrease in cash and cash equivalents 334,077 (4,446,849) Cash and cash equivalents at beginning of period 4,334,072 8,352,959 ----------- ------------ Cash and cash equivalents at end of period $ 4,668,149 $ 3,906,110 =========== ============ CASH PAID DURING THE PERIOD FOR: Interest $ 5,407,043 $ 5,021,295 Income taxes 451,000 799,868 NON-CASH INVESTING ACTIVITY: Transfer of loans to other real estate $ 533,135 $ 323,087 Change in unrealized depreciation in securities available for sale 280,657 301,007 NON-CASH FINANCING ACTIVITY: Dividends declared and unpaid $133,749 $ 130,792
The accompanying notes are an integral part of the financial statements 5 PATHFINDER BANCORP, INC. Notes to Financial Statements (1) Basis of Presentation - ------------------------- The accompanying unaudited financial statements were prepared in accordance with the instructions for Form 10-Q and Regulation S-X and, therefore, do not include information for footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The following material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" is written with the presumption that the users of the interim financial statements have read, or have access to, the Bank's latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 1997 and for the three year period then ended. Therefore, only material changes in financial condition and results of operations are discussed in the remainder of part 1. All adjustments (consisting of only normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the financial statements have been included in the results of operations for the three months and nine months ended September 30, 1998 and 1997. Operating results for the three months and nine months ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. (2) Earnings per Share - ---------------------- Earnings per share are based on the weighted average number of common shares outstanding during the period. For purposes of computing earnings per share, only Employee Stock Option Plan ("ESOP") shares that have been committed to be released are considered outstanding. Earnings per share have been computed based upon net income for the three months ended September 30, 1998 and 1997, using 2,754,088 and 2,799,924, weighted average common shares outstanding, respectively. Year-to-date earnings per share have been computed based upon net income for the nine months ended September 30, 1998 and 1997 using 2,771,996 and 2,797,085 weighted average common shares. (3) New Accounting Pronouncements - --------------------------------- Effective January 1, 1998, the Company adopted statement of Financial Accounting Standards No. 130 "Reporting Comprehensive Income". This pronouncement requires the Company to report the effects of unrealized investment holding gains or losses on comprehensive income. 6 Pathfinder Bancorp, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operation General On December 30, 1997, Oswego City Savings Bank completed its reorganization into the mid-tier holding company form of mutual holding company ownership. Throughout the Management's Discussion and Analysis the term, "the Company", refers to the consolidated entity of Pathfinder Bancorp, Inc. and Oswego City Savings Bank for the periods prior to December 30, 1997. At September 30, 1998, Pathfinder Bancorp, Inc.'s only business was the 100% ownership of Oswego City Savings Bank. The Company's net income is primarily dependent on its net interest income, which is the difference between interest income earned on its investments in mortgage loans, investment securities and other loans, and its cost of funds consisting of interest paid on deposits and borrowed funds. The Company's net income also is affected by its provision for loan losses, as well as by the amount of non interest income, including income from fees and service charges, net gains and losses on sales of securities, and non interest expense such as employee compensation and benefits, deposit insurance premiums, occupancy and equipment costs, data processing and income taxes. Earnings of the Company also are affected significantly by general economic and competitive conditions, particularly changes in market interest rates, government policies and actions of regulatory authorities, which events are beyond the control of the Company. In particular, the general level of market rates tends to be highly cyclical. Proposed Merger - --------------- On September 5, 1997, the Board of Directors of the Company, in conjunction with the Board of Trustees of Oswego County Savings Bank ("County Savings"), a New York State chartered mutual savings bank headquartered in Oswego, New York, announced the adoption of a definitive merger agreement under which the banks will be combined. The proposed transaction is subject to regulatory approval, as well as approval of the shareholders of Pathfinder Bancorp, Inc.. On May 13, 1998, applications for the merger were filed with the Federal Deposit Insurance Corporation, the Federal Reserve Bank, and the New York State Banking Department. On September 21, 1998, a Form S-2 registration statement was filed with the Securities Exchange Commission. As of September 30, 1998, Oswego County Savings Bank had total assets of approximately $109.8 million, deposits of $95.8 million and net worth of $11.4 million. Upon completion of the proposed merger, the Company's total assets and deposits will increase commensurately. Refer to the "Recent Events" for additional information regarding the proposed merger. Year 2000 - --------- The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. The Company's computer programs that have date sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. Left unresolved, the year 2000 issue could result in a system failure or miscalculations causing disruptions of operations including, but not limited to, a temporary inability to process transactions, calculate interest, or engage in similar normal business activities. In early 1997, the Company formed a Year 2000 committee to address the issues surrounding the problem. The committee has adopted a policy statement and plan of action to identify, correct, test, and implement solutions to ensure that the Company's systems are ready to process in the year 2000 and beyond. The policy statement comprises three phases: the assessment phase, the renovation phase, and the validation phase. During 1997, the Company completed its assessment phase and has identified its computer and electronic software systems that will require modification or replacement. The committee has 7 determined that the required changes are minimal, and that such changes will resolve the Company's Year 2000 computer systems issues. The committee has segregated the issues between those that affect information technology ("IT") and those that do not ("non-IT"). Testing for non-IT systems is 90% complete at September 30, 1998. Testing and implementation of solutions for IT commenced in September 1998 with a goal to be fully tested by December 31, 1998. The Company will utilize both internal and external resources to program, replace, and test the software for Year 2000 modifications. The Company is also communicating with its third party data processing vendors, as well as its significant suppliers and commercial customers, to determine the Company's exposure should any of these parties fail to resolve their own significant Year 2000 issues. The committee is evaluating the risk from these third parties and, where appropriate, will establish action plans to reduce or eliminate the risk. In some cases, the Company will rely on third party information which may be inaccurate and unverifiable. Should third party entities, including Federal and State governments and agencies fail to resolve their own Year 2000 issues, an adverse effect on the Company could result. The committee is also responsible for the creation and maintenance of a contingency plan for all mission critical system application functions by which the company would operate if remedial action is insufficient. The contingency plan will also address operational policies and procedures in the event of electrical power supply and/or telephone service failures associated with the year 2000 issue. The expected completion date of the contingency plan is December 31, 1998. The costs of the remedial actions and the date on which the Company plans to complete the Year 2000 modifications, are based on management's best estimates and assumptions including the continued availability of third party services, their modification plans, and other factors. Costs related to the Year 2000 issue will be expensed as they are incurred, except for the cost, if any for new hardware or software that is purchased which will be capitalized and expensed in conformity with generally accepted accounting principles. At September 30, 1998, the costs the Company incurred to address the year 2000 issue have not been significant. In connection with the Merger, the Company will incur costs to integrate County Savings computer operations with the Company's computer system. The computer and programming upgrades necessary to accommodate this integration will incorporate Year 2000 compliance. Management of the Company estimates that the costs to complete a comprehensive upgrade of computer operation including the expanded capacity and modification to incorporate County Savings computer operations will be $750,000, of which, $575,000 has been spent as of September 30, 1998. There can be no assurance that the Company's third party data service providers will be able to satisfactorily address the year 2000 issue, or that the cost of integrating County Savings computer system with the Company's, and making sure that the integrated computer system is year 2000 compliant will not exceed management's estimate. This Quarterly Report contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among other things, changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market areas and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically declines any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. For other matters affecting the Company, Including events which may affect the Company's operations and financial performance, see "Recent Events". 8 The following discussion reviews the financial condition at September 30, 1998 and the results of operations of the Company for the three months and nine months ended September 30, 1998. FINANCIAL CONDITION Assets - ------ Total assets decreased approximately $5.2 million, or 2.6%, to $191.6 million at September 30, 1998 from $196.8 million at December 31, 1997. The decrease in total assets was primarily incurred as a result as reductions in the Company's securities portfolio from maturities, calls and prepayment's were used to pay down repurchase agreement borrowings. Total investment securities declined by $12.3 million and borrowed funds were reduced by $8.0 million. Reductions in the investment portfolio were also used to fund loan production. The decline in asset base also reflects the lack of significant growth and economic development in the Company's market area . For the nine months ended September 30, 1998, loans receivable increased $4.4 million, or 3.6%, to $125.5 million from $121.2 at December 31, 1997. Mortgage loans held-for-sale increased approximately $1.2 million to $2.8 million from $1.5 million at December 31, 1997. The increase in mortgage loans held-for-sale is net of loan sales of approximately $6.6 million. Loan originations were principally funded from the re-deployment of maturing and prepaid investment securities and principal repayments and prepayments on loans held in the Company's portfolio. The demand for the Company's loan products occurred principally on one to four family mortgage loans and commercial real estate loans. Investment securities decreased by approximately $12.3 million, or 21.7%, to $44.5 million at September 30, 1998, from $56.8 million at December 31, 1997. The decrease in investment securities is primarily the result of utilizing maturing investment securities to fund loan originations and reduce short term borrowings, primarily 90 day repurchase agreements. Non-earning assets increased by $1.3 million, or 8.9%, at September 30, 1998 when compared to December 31, 1997. The increase in non-earning assets is principally due to increases in premises and equipment, net of depreciation, of $642,000, other real estate owned of $419,000, and other assets and accrued interest receivable of $428,000. Liabilities - ----------- Total liabilities decreased by $4.0 million, to $169.2 million at September 30, 1998 from $173.2 million at December 31, 1997. The decrease is primarily attributable to a $8.0 million, or 44.1% reduction in borrowed funds, partially offset by an increase in deposits of $4.0 million, or 2.6%. The decrease in borrowed funds is principally the result of paydowns on repurchase agreements collateralrized by mortgage-backed securities. The rapid prepayments on the mortgage-backed securities lowered the collateralization levels of the borrowings. The borrowed funds are part of a strategy to leverage the Company's capital and provide incremental income through the use of wholesale deposits. Additionally, proceeds from the securitzation and sale of pools of originated loans was utilized to payoff $3.0 million in short-term borrowings used to help fund the loan origination. The increased deposit levels consist mainly of inflows into the Company's passbook savings accounts and non-interest bearing checking accounts and interest credited on existing interest-bearing accounts. The increases in these categories are primarily the result of deposits received in association with commercial lending activities and increased penetration within the existing retail customer base. Liquidity and Capital Resources - ------------------------------- Shareholders' equity decreased $1.2 million, or 5.1%, to $22.4 million at September 30, 1998 from $23.6 million at December 31, 1997. The decrease in shareholder's equity is primarily the result of the net acquisition of 138,625 shares of treasury stock as part of the Company's share repurchase program (see "Recent Events") and to fund the Company's Management Retention Plan for a net cost of approximately $2.2 million, combined with dividends declared of $410,000. Partially offsetting the decreases in shareholder's equity were increases resulting from net income totaling $976,000, ESOP and other stock- based compensation earned of $312,000, and net unrealized holding gains on investment securities arising during the period totaling $168,000. 9 The Company's primary sources of funds are deposits, amortization and prepayment of loans and maturities of investment securities and other short-term investments, earnings and funds provided from operations, and borrowings. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. The Company manages the pricing of deposits to maintain a desired deposit balance. In addition, the Company invests excess funds in short-term interest-bearing instruments and other assets, which provide liquidity to meet lending requirements. For additional information about cash flows from the Company's operating, financing, and investing activities, see Statements of Cash Flows included in the Financial Statements. The Company adjusts its liquidity levels in order to meet funding needs of deposit outflows, payment of real estate taxes on mortgage loans and loan commitments. The Company also adjusts liquidity as appropriate to meet its assets and liability management objectives. Management of Market Risk - Interest Rate Risk - ---------------------------------------------- The Company's most significant form of market risk is interest rate risk, as the majority of the Company's assets and liabilities are sensitive to changes in interest rates. The Company's mortgage loan portfolio, consisting primarily of loans on residential real property located in Oswego County, is subject to risks associated with the local economy. The Company's interest rate risk management program focuses primarily on evaluating and managing the composition of the Company's assets and liabilities in the context of various interest rate scenarios. Factors beyond management's control, such as market interest rates and competition, also have an impact on interest income and interest expense. The extent to which such assets and liabilities are "interest rate sensitive" can be measured by an institution's interest rate sensitivity "gap". An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and that amount of interest-bearing liabilities maturing or repricing within that time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income while a positive gap would tend to positively affect net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to positively affect net interest income while a positive gap would tend to adversely affect net interest income. The Company does not maintain in its portfolio fixed interest rate loans with terms exceeding 20 years. In addition, ARM loans are originated with terms that provide that the interest rate on such loans cannot adjust below the initial rate. Generally, the Company tends to fund longer term loans and mortgage-backed securities with shorter term time deposits, repurchase agreements, and advances. The impact of this asset/liability mix creates an inherent risk to earnings in a rising interest rate environment. In a rising interest rate environment, the Company's cost of shorter term deposits may rise faster than its earnings on longer term loans and investments. Additionally, the prepayment of principal on real estate loans and mortgage- backed securities tends to decrease as rates rise, providing less available funds to invest in the higher rate environment. Conversely, as interest rates decrease the prepayment of principal on real-estate loans and mortgage-backed securities tends to increase, causing the Company to invest funds in a lower rate environment. The potential impact on earnings from this mismatch, is mitigated to a large extent by the size and stability of the Company's savings accounts. Savings accounts have traditionally provided a source of relatively low cost funding that have demonstrated historically a low sensitivity to interest rate changes. The Company generally matches a percentage of these, which are deemed core, against longer term loans and investments. In addition, the Company has sought to extend the terms of its time deposits. In this regard, the Company has on occasion offered certificates of deposits with three and four year terms which allow depositors to make a one-time election, at any time during the term of the certificate of deposit, to adjust the rate of the certificate of deposit to the then prevailing rate for a certificate of deposit with the same term. The Company has further sought to reduce the term of a portion of its rate sensitive assets by originating one year ARM loans, five year/one year ARM loans (mortgage loans which are fixed rate for the first five years and adjustable annually thereafter), and by maintaining a relatively short term investment securities 10 (original maturities of three to five years) portfolio with staggered maturities. The Company manages its interest rate sensitivity by monitoring (through simulation and net present value techniques) the impact on it's GAP position, net interest income, and the market value of portfolio equity to changes in interest rates on its current and forecast mix of assets and liabilities. The Company has an Asset-Liability Management Committee which is responsible for reviewing the Company's assets and liability policies, setting prices and terms on rate-sensitive products, and monitoring and measuring the impact of interest rate changes on the Company's earnings. The Committee meets monthly on a formal basis and reports to the Board of Directors on interest rate risks and trends, as well as liquidity and capital ratios and requirements. The Company does not have a targeted gap range, rather the Board of Directors has set parameters of percentage change by which net interest margin and the market value of portfolio equity are affected by changing interest rates. The Board and management deem these measures to be a more significant and realistic means of measuring interest rate risk. The results of these techniques are outlined below the GAP table. At September 30, 1998, the total interest bearing liabilities maturing or repricing within one year exceeded total interest-earning assets maturing or repricing in the same period by $11.6 million, representing a cumulative one-year gap ratio of a negative 7.21%. Simulation and net present value analysis demonstrate percentage changes to net interest income and net portfolio value of a negative 8.89% and a negative 19.66%, respectively, in an upward 200 basis point parallel shift in the yield curve. Results of Operations - --------------------- The Company had net income of approximately $230,000, and $480,000 for the three months ended September 30, 1998, and 1997, respectively. Net income for the nine months ended September 30, 1998 and 1997 amounted to $976,000 and $1.6 million, respectively. The decrease in net income for the three months ended September 30, 1998, resulted primarily from decreases in net interest income of $139,000, or 7.5%, and noninterest income of $74,000, or 24.2%, and increases in provisions for loan losses of $53,000, or 92.0%, and operating expenses of $109,000, or 7.8%, partially offset by a reduction in income tax provision of $126,000. As a result of the decrease in net income between the comparative periods, return on average assets and return on average shareholders' equity were .47% and 4.11%, respectively, for the three months ended September 30, 1998 compared to 1.00% and 8.52% for the third quarter of 1997. Interest Income - --------------- Interest income totaled $3.5 million for the quarter ended September 30, 1998, as compared to $3.6 million for the quarter ended September 30, 1997, a decrease of $119,000, or 3.3%. The decrease resulted primarily from a decrease in the yield on average interest-earning assets to 7.94% for the three months ended September 30, 1998 from 8.26% in the prior year period, partially offset by an increase of $884,000 million in average interest-earning assets. The yield reduction is principally the result of mortgage loan originations at rates over 100 basis points below the weighted average coupon of the existing loan portfolio which lowered the total portfolio yield, and the reinvestment of security principal maturity's and prepayments at rates over 75 basis points less than the existing portfolio yield. The decline in yield on investments and mortgages was caused by a general decline in market interest rates. To illustrate, the yield on 1 year and 30 year treasury bonds declined by 124 basis points and 108 basis points, respectively from December 31, 1997 to September 30, 1998. Interest income totaled $10.6 million for the nine months ended September 30, in both 1998 and 1997. An increase of $2.2 million in average interest-earning assets was offset by a decrease in the yield on average interest-earning assets to 8.00% from 8.08% Interest income on loans receivable totaled $2.7 million and $2.5 million for the three months ended September 30, 1998 and 1997, respectively. The $186,000, or 7.4%, increase resulted primarily from an increase in the average balance of loans receivable of $12.6 million, partially offset by a decrease in the 11 average yield on loans receivable to 8.57% from 8.87%. For the nine months ended September 30, 1998 and 1997, interest income on loans receivable increased $725,000, or 9.8%, to $8.2 million from $7.4 million. Average loans receivable increased $12.8 million while the yield on average loans receivable decreased to 8.59% from 8.71% for the nine months ended September 30, 1998 compared to the same period in 1997. The increase in the average balance in loans receivable was primarily due to the origination of 15 and 30 year term one-to-four family fixed rate mortgage loans held for sale to the secondary market and one-to-four family adjustable rate mortgage loans retained in the Company's portfolio. The origination of mortgage loans held for sale into the secondary market is part of a new program begun by the Company in the fourth quarter of 1997. The origination of adjustable rate mortgage loans is primarily comprised of "5/1 ARMS" which have interest rates which are fixed for the first five years and are adjustable annually thereafter, and amortize over 30 years. To a lesser degree, the Company also experienced an increase in the origination of commercial real estate and business loans. The decrease in the yield on average loans receivable was attributable to the lower rates charged on mortgage loans held for sale, the initial rates charged on 5/1 ARMS, and the downward repricing of the one year adjustable rate mortgage portfolio caused by the relatively lower interest rate environment. Interest income on the mortgage-backed securities portfolio decreased by $77,000, or 19.3%, to $323,000 for the three months ended September 30, 1998, from $400,000 for the three months ended September 30, 1997. The decrease in interest income on mortgage-backed securities resulted generally from a decrease in the average balance on mortgage-backed securities of $4.2 million and a decrease in the average yield on mortgage-backed securities to 6.70% from 6.80%. For the nine months ended September 30, 1998 and 1997, interest income on mortgage-backed securities was $1.0 million and $1.2 million, respectively, a decrease of $140,000, or 11.9%. The decrease in interest income resulted primarily from a decrease of $2.4 million, or 10.3%, in the average balance of mortgage-backed securities and a reduction in the average yield on mortgage-backed securities to 6.62% from 6.74%. The decrease in the average balance of mortgage- backed securities resulted from the scheduled amortization and prepayments of principal on the underlying mortgage loans. Prepayments accelerated during the third quarter of 1998 as the decline in interest rates on new mortgages fostered significant refinancing activity. The cash flow from the mortgage-backed securities portfolio was utilized to fund the origination of loans by the Company. The decrease in the average yield on mortgage-backed securities was the result of prepayments being more predominant on the higher coupon collateral than on those mortgage loans with lower fixed rates. Interest income on investment securities, on a tax equivalent basis, decreased $267,000, or 40.5%, for the three months ended September 30, 1998 to $393,000 from $660,000 for the same period in 1997. The decrease resulted primarily from a decrease in the average balance of investment securities of $11.3 million, as well as, a decrease in the average yield on investment securities to 6.63% from 7.33% for the quarters ended September 30, 1998 and 1997, respectively. The decrease in the average balance of investment securities resulted primarily from the reinvestment of funds from maturing and called securities into loan originations. The average yield on investment securities declined as higher coupon securities purchased three to five years ago were either called due to the lower interest rate environment or matured. For the nine months ended September 30, 1998, interest income on investment securities decreased $504,000, or 26.6%, to $1.4 million compared to $1.9 million for the same period in 1997. The decrease resulted primarily from a decrease in the average balance of investment securities of $7.7 million, as well as a decrease in the yield on average investments, on a tax equivalent basis, to 6.66% from 7.10%. Interest income on interest-earning deposits increased $35,000, or 87.5%, to $75,000 from $40,000 for the three months ended September 30, 1998 and 1997, respectively. The increase was primarily the result of an increase of $3.8 million in the average balance of interest-earning deposits, partially offset by a reduction in the average yield on interest-earning deposits to 5.04% from 7.35%. For the nine months ended September 30, 1998 and 1997, interest income on interest-earning deposits decreased $54,000, or 32.5%, to $112,000 compared to $166,000 for the same period in 1997. The decrease in interest income on interest- earning deposits was primarily the result of a $482,000 decrease in the average balance of interest-earning deposits and a decrease in the average yield on interest-earning deposits to 5.07% from 6.46%. The decrease in the average balance on interest-earning deposits was primarily due to loan demand exceeding 12 deposit inflows and a strategy to maintain lower levels of federal funds sold due to the availability of borrowings and a shortening in the maturity structure of the investment portfolio. The decrease in the average yield on interest-earning deposits was principally due the decrease in the federal funds rate brought about by the general reduction in interest rates. Interest Expense - ---------------- Interest expense for the quarter ended September 30, 1998 increased by approximately $21,000, or 1.2%, to 1.8 million when compared to the same quarter for 1997. The increase in interest expense for the period was the result of a $1.1 million increase in the average balance on interest-bearing liabilities, as well as an increase on the average cost of interest-bearing liabilities to 4.38% from 4.36%. For the nine months ended September 30, 1998, interest expense increased $206,000, or 3.9%, to $5.3 million from $5.1 million for the same period in 1997. The increase in interest expense for the period was the result of a $4.6 million increase in the average balance on interest-bearing liabilities, as well as an increase on the average cost of interest-bearing liabilities to 4.36% from 4.32%. The increase in the average balance and average cost on interest- bearing liabilities was principally the result of the use of borrowed funds. For the nine months ended September 30, 1998 the average balance of borrowed funds was $15.1 million and the average cost of the borrowed funds was 5.85%. For the same period in 1997 the average balance of borrowed funds was $8.4 million and the average cost of the borrowings was 5.92%. The borrowed funds are comprised of repurchase agreements and term borrowing from the Federal Home Loan Bank of New York. The borrowings are being utilized to help fund the growth in the Company's loan portfolio and for the purchase of mortgage-backed and investment securities. Net Interest Income - ------------------- Net interest income totaled $1.7 million for the three months ended September 30, 1998 and $1.9 million for the same period in 1997. Net interest income for the quarter ended September 30, 1998 decreased $139,000, or 7.5%, compared to the same period in the prior year. The decline in net interest income for the quarter ended September 30, 1998 occurred because of a sharp decline in long and intermediate term interest rates which resulted in a compression of the Company's net interest rate spread. The yield on the 1 year and 30year treasury bonds declined by 124 basis points and 108 basis points, respectively during the nine months ended September 30, 1998, while interest rates on overnight funds remained relatively stable resulting in a flattening of the yield curve. In such an interest rate environment, the Company's yield on earning assets will tend to decrease faster than the cost of interest bearing liabilities. This is evident in the reduction of net interest rate spread to 3.56% for the quarter ended September 30, 1998 from 3.90% at the end of the prior year period. Volume increases, particularly in real estate loans, partially offset the decline in net interest rate spread. For the nine months ended September 30, 1998 and 1997, respectively, net interest income was $5.3 million and $5.5 million, a decrease of $171,000, or 3.1%. The ratio of average interest earning assets to average interest-bearing liabilities declined to 109.75% through September 30, 1998 from 111.51% for the nine months ended September 30, 1997, while the net interest rate spread fell to 3.64% from 3.77% when comparing the nine months ended September 30, 1998 to the same period in 1997. Provision for Loan Losses - ------------------------- The Company maintains an allowance for loan losses based upon a quarterly evaluation of known and inherent risks in the loan portfolio, which includes a review of the balances and composition of the loan portfolio as well as analyzing the level of delinquencies in each segment of the loan portfolio. Loan loss provisions are based upon management's estimate of the fair value of the collateral and the Company's actual loss experience, as well as standards applied by the FDIC. The Company established a provision for possible loan losses for the three months ended September 30, 1998 of $110,000 as compared to a provision of $58,000 for the three months ended September 30, 1997. For the nine months ended September 30, 1998 and 1997, the provision for possible loan losses was $251,000 and $185,000, respectively. The 13 increase in provision for loan losses reflects higher net charge-offs for the period as well as the increased risks associated with expanded commercial lending. The Company's ratios of allowance for loan losses to total loans receivable and to non-performing loans at September 30, 1998 was .69% and 58.41%, respectively. Non-interest Income - ------------------- Non-interest income consists of servicing income, fee income and gain (loss) on sales of investment securities and other operating income. Non-interest income decreased approximately $74,000, or 24.2%, to $231,000 for the three months ended September 30, 1998 as compared to $305,000 for the prior year period. This decrease is primarily attributable to a decrease of $86,000, or 115.1%, in net securities gains and losses, and a $8,000 decrease in fees derived from commissions on investment services, partially offset by a 22,000, or 17.8% increase in deposit account service charges. The decrease in net securities gains and losses results from a loss incurred in the mark to market recognition of unrealized market value depreciation in the Company's investment in the IIMF mutual fund. The decline in commissions on investment services results from a lower volume of transactions in the Company's investment services unit for the quarter ended September 30, 1998 when compared to the same period in 1997. Non-interest income decreased approximately $82,000, or 8.0%, to $942,000 for the nine months ended September 30, 1998 when compared to $1.0 million for the same period in 1997. This decrease is primarily comprised of a decrease of $105,000 in other commissions and fees, partially offset by an $11,000, or 2.8%, increase in service charges on deposit accounts and a $12,000 increase in net securities gains. The reduction in other commissions and fees is principally caused by lower commissions from the Company's investment services unit of $57,000, reduced increases of $40,000 in the Company's cash surrender value on life insurance policies, and a recovery from prior period of approximately $23,000. The net securities gains are derived from the recognition of unrealized market value appreciation of the Company's investment in a mutual fund and the sale of two general obligation municipal bonds. Increases in deposit account service charges are the result of higher deposit levels and increased commercial deposit activity. Non-interest Expense - -------------------- Non-interest expense increased $109,000, or 7.8%, to $1.5 million for the three months ended September 30, 1998, as compared to the same period in 1997. This increase was primarily attributable to a $144,000, or 22.4%, increase in compensation and employee benefits, a $10,000, or 9.6%, increase in data processing costs, and a $46,000 increase in other expenses, partially offset by reduction of $15,000 in occupancy expense and $77,000 decrease in professional services. The increase in salaries and employee benefits is principally due to the amortization of stock based compensation plans which resulted in expense recognition for the quarter of $147,000. The increase in data processing expenses and other expenses is principally due to technological upgrades to expand mainframe capacity and the installation of a wide area network. These upgrades are essential in order for the Company to enhance its competitiveness and prepare for the assimilation of Oswego County Savings Bank's operation as a result of the impending merger. For the nine months ended September 30, 1998, non-interest expense increased $610,000, or 15.2%, to $4.6 million from $4.0 million for the nine months ended September 30, 1997. This increase was primarily attributable to a $442,000, or 23.6%, increase in compensation and employee benefits, a $55,000 increase in data processing costs, and a $163,000 increase in other expenses, partially offset by expense reductions of $32,000 in occupancy expense and $21,000 in professional services. The principal causes of these increases are the same as those attributable to the third quarter explanations which are outlined above. The amount of expense recognition associated with the Company's stock based compensation plans amounted to $467,000 for the first three quarter of 1998. The Company's efforts to prepare its data processing systems for the impact of the Year 2000 were not a significant component of expense in the first three quarters of 1998 and are not expected to materially impact earnings in the future. For further information regarding the Company's efforts and costs associated with the Year 2000 issue, see "General - Year 2000". 14 Income Taxes - ------------ Income taxes decreased approximately $126,000, or 59.3%, for the quarter ended September 30, 1998 as compared to the same period in the prior year. This decrease was directly attributable to a $375,000 decrease in the Company's pretax income. For the nine months ended September 30, 1998 and 1997, income tax expense was $391,000 and $678,000, respectively. RECENT EVENTS Share Repurchase Program - ------------------------ On August 21, 1998, the Company announced the adoption of a share repurchase program to acquire up to 132,000 share of the Company's common stock, which represents approximately 10% of the common stock held by minority shareholders (shares not held by the mutual holding company parent). At September 30, 1998, the Company had purchased 95,000 shares commensurate with the plan at an aggregate cost of $1.4 million. Pending Merger - -------------- On May 14, 1998, the Company announced the filing of regulatory applications in connection with the merger of Oswego County Savings into Oswego City Savings Bank. As part of the merger, the Company will offer common stock in a subscription offering to account holders of Oswego County Savings Bank as of December 31, 1996 (eligible account holders) and others in accordance with a Stock issuance Plan jointly adopted by the Company and Oswego County Savings Bank. It was further announced that the boards of the two institutions have agreed that commensurate with the merger, Oswego City Savings Bank will change its name to Pathfinder Bank. Reorganization - -------------- On January 14, 1997, the Board of Directors adopted an Agreement and Plan of Reorganization to reorganize the Bank and its existing mutual holding company into a two-tier mutual holding company structure (the "Reorganization") with the establishment of a Delaware chartered corporation as the stock holding company parent of the Bank. Upon completion of the Reorganization, Pathfinder Bancorp, MHC, the Bank's existing mutual holding company, will own a majority of the common stock of the new stock holding company (Pathfinder Bancorp, Inc., which will own 100% of the common stock of Oswego City Savings Bank). On December 30, 1997, the Reorganization was implemented pursuant to the Agreement and Plan of Reorganization approved by the Bank's stockholders and regulatory authorities. Pursuant to the Reorganization, each share of Bank common stock held by existing stockholders of the Bank was exchanged for a share of common stock of Pathfinder Bancorp, Inc.. The Reorganization of the Bank was structured as a tax-free reorganization and accounted for in a manner similar to a pooling of interests. Stock Split - ----------- On January 13, 1998, the Board of Directors of Pathfinder Bancorp, Inc. declared a three for two stock split in the form of a dividend on the holdings company's outstanding common stock. The stock split was paid on February 5, 1998 to shareholders of record as of January 26, 1998. The stock split has been applied retroactively to the financial statements presented in this report. 15 PART II - OTHER INFORMATION LEGAL PROCEEDINGS From time to time, the Bank is involved as a plaintiff or defendant in various legal actions incident to its business. None of these actions individually or in the aggregate is believed to be material to the financial condition of the Bank CHANGES IN SECURITIES On January 13,1998 the Board of Directors of Pathfinder Bancorp, Inc. declared a three-for-two stock split in the form of a dividend on the Bank's outstanding common stock. The stock split was paid on February 5, 1998 to shareholders of record January 26, 1998. DEFAULTS UPON SENIOR SECURITIES Not applicable SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None OTHER INFORMATION On June 8, 1998, the Board of Directors declared a $.05 cash dividend to shareholders of record as of June 30, 1998, payable on July 15, 1998. EXHIBITS AND REPORTS None 16 SIGNATURES Under the requirements of the Securities Exchange Act of 1934, the bank has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PATHFINDER BANCORP, INC. Date: November 10, 1998 /s/ Chris C. Gagas -------------------- ------------------------------------ Chris C. Gagas Chairman, President, Chief Executive Officer Date: November 10, 1998 /s/ Thomas W. Schneider -------------------- ------------------------------------ Thomas W. Schneider Executive Vice President, Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1998 SEP-30-1998 4,668 0 0 0 43,199 1,276 1,296 128,064 879 191,611 156,419 10,200 2,217 388 0 0 288 22,100 191,611 8,152 2,445 0 10,597 4,647 5,312 5,285 251 259 4,609 1,366 0 0 0 976 .35 .34 7.92 1,505 0 0 0 828 210 11 879 0 0 879
EX-27.2 3 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS JUN-30-1999 SEP-30-1999 307 4,236 0 0 58 2,837 2,875 37,039 293 45,572 35,596 0 435 0 0 0 8 9,583 45,572 756 47 63 866 429 429 437 0 0 278 194 121 0 0 121 .22 .22 3.95 938 0 0 0 293 0 0 293 293 0 0
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