Pathfinder Bancorp, Inc. Q2 2025 Earnings Release [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights%20and%20Key%20Developments) Proactive credit risk mitigation via a major loan sale improved asset quality but drove a $3.1 million pre-tax loss, reducing net income to $31,000 Q2 2025 Key Financial Results | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income (attributable to common shareholders) | $31,000 | $3.0 million | $2.0 million | | Diluted EPS | < $0.01 | $0.47 | $0.32 | - The company sold **$9.3 million** in nonperforming and classified loans in July 2025, recording a **$3.1 million pre-tax loss** in Q2 2025, which amounted to **$0.40 per diluted share** after tax[4](index=4&type=chunk) Asset Quality and Balance Sheet Highlights (as of June 30, 2025) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Loans | $11.7 million | $13.2 million | $24.5 million | | Nonperforming Loans / Total Loans | 1.28% | 1.45% | 2.76% | | Total Deposits | $1.22 billion | $1.26 billion | $1.10 billion | | Core Deposits / Total Deposits | 78.47% | 78.31% | 67.98% | | Total Loans | $909.7 million | $912.2 million | $888.3 million | [Net Interest Income and Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income decreased from the prior quarter due to a one-time benefit in Q1, though it increased year-over-year on higher loan yields NII and NIM Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $10.8 million | $11.4 million | $9.5 million | | Net Interest Margin (NIM) | 3.11% | 3.31% | 2.78% | - The decrease in NII from Q1 2025 was partly due to a **$347,000 benefit** in the first quarter from interest recovered on nonaccrual loans and prepayment fees, which had inflated Q1 NII and NIM by **10 basis points**[6](index=6&type=chunk)[8](index=8&type=chunk)[9](index=9&type=chunk) - Compared to Q2 2024, NII increased by **$1.3 million (14.1%)**, attributed to a **$25.9 million increase** in average loan balances and a **45 basis point reduction** in the average cost of total interest-bearing liabilities[10](index=10&type=chunk) [Noninterest Income](index=3&type=section&id=Noninterest%20Income) A $3.1 million loss adjustment on a nonperforming loan sale drove noninterest income to a negative $1.5 million for the quarter - A **$3.1 million pre-tax loss** (LOCOM HFS adjustment) was recorded on the sale of nonperforming and classified loans, resulting in a total noninterest loss of **$1.5 million** for the quarter[12](index=12&type=chunk)[13](index=13&type=chunk) - The loan portfolio sold had an original principal of **$9.3 million** and a balance of **$6.3 million** at June 30, 2025; it was sold for **$3.2 million** in July 2025[12](index=12&type=chunk) - Excluding the loan sale adjustment, noninterest income saw increases in debit card interchange fees and unrealized gains on marketable equity securities compared to the linked quarter[14](index=14&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense decreased from the prior quarter to $8.1 million, aided by lower maintenance costs and the absence of an FDIC assessment Noninterest Expense Comparison | Period | Total Noninterest Expense | | :--- | :--- | | Q2 2025 | $8.1 million | | Q1 2025 | $8.4 million | | Q2 2024 | $7.9 million | - **No FDIC assessment expense** was recorded in Q2 2025 due to prior over-accruals; this expense is expected to normalize to a range of **$220,000 to $230,000** per quarter in H2 2025[21](index=21&type=chunk) - The **efficiency ratio improved to 65.66%** from 67.19% in the linked quarter and 74.36% in the year-ago period[22](index=22&type=chunk) [Financial Condition](index=5&type=section&id=Statement%20of%20Financial%20Condition) Total assets remained stable at $1.51 billion, while deposits decreased due to managed reductions in higher-cost accounts Balance Sheet Summary (as of June 30, 2025) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $1.51 billion | $1.50 billion | $1.45 billion | | Total Loans | $909.7 million | $912.2 million | $888.3 million | | Total Deposits | $1.22 billion | $1.26 billion | $1.10 billion | | Shareholders' Equity | $124.4 million | $124.9 million | $123.3 million | - Commercial loans grew by **1.2%** during the quarter to **$549.1 million**, representing **60.4% of total loans**[4](index=4&type=chunk)[25](index=25&type=chunk) [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality improved significantly with nonperforming loans falling to 1.28%, though net charge-offs increased due to the loan sale Key Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Loans | $11.7 million | $13.2 million | $24.5 million | | NPLs / Total Loans | 1.28% | 1.45% | 2.76% | | Net Charge-Offs (Annualized) | 1.14% | 0.15% | 0.03% | | ACL / Total Loans | 1.76% | 1.91% | 1.90% | - The provision for credit loss expense was **$1.2 million** in Q2 2025, primarily reflecting the period's net charge-offs[31](index=31&type=chunk) [Liquidity](index=6&type=section&id=Liquidity) The company maintains a strong liquidity profile, supported by a growing core deposit base and significant available funding capacity - Core deposits grew to **78.47% of total deposits**, up from 67.98% a year prior, enhancing deposit stability and providing low-cost funding[34](index=34&type=chunk) - The company has available additional funding capacity of **$124.5 million** with the FHLB of New York and another **$46.5 million** in unused credit lines[35](index=35&type=chunk) [Cash Dividend](index=6&type=section&id=Cash%20Dividend%20Declared) The Board declared a quarterly cash dividend of $0.10 per share, representing a 2.61% annualized yield - A cash dividend of **$0.10 per share** was declared[36](index=36&type=chunk) - The annualized dividend yield is **2.61%** based on the June 30, 2025 closing stock price of **$15.34**[37](index=37&type=chunk) [Selected Financial Tables](index=8&type=section&id=PATHFINDER%20BANCORP%2C%20INC.%20Selected%20Financial%20Information%20(Unaudited)) This section presents detailed unaudited financial statements and key performance metrics for the quarter and comparative periods Selected Balance Sheet Data (in thousands) | Account | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total assets | $1,505,119 | $1,495,337 | $1,446,211 | | Loans, net | $893,740 | $894,743 | $871,371 | | Total deposits | $1,221,887 | $1,264,480 | $1,101,277 | | Total equity | $124,413 | $124,896 | $124,174 | Selected Income Statement Data (in thousands) | Account | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net interest income | $10,814 | $11,411 | $9,480 | | Total provision for credit losses | $1,197 | $457 | $290 | | Total noninterest (loss) income | ($1,518) | $1,197 | $1,211 | | Total noninterest expense | $8,061 | $8,433 | $7,908 | | Net income (loss) attributable to Pathfinder | $31 | $2,974 | $2,000 | Selected Ratios | Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Return on average assets | 0.01% | 0.81% | 0.56% | | Return on average common equity | 0.10% | 9.64% | 6.49% | | Net interest margin | 3.11% | 3.31% | 2.78% | | Efficiency ratio (non-GAAP) | 65.66% | 67.19% | 74.36% |

Core Insights - Pathfinder Bancorp reported a significant decline in net income for the second quarter of 2025, with net income attributable to common shareholders at $31,000, down from $3.0 million in the previous quarter and $2.0 million in the same quarter last year [2][21] - The company undertook proactive measures to mitigate credit risk, including the sale of $9.3 million in nonperforming and classified loans, which resulted in a pre-tax loss of $3.1 million [7][11] - Nonperforming loans decreased to $11.7 million, representing 1.28% of total loans, showing improvement from 1.45% in the previous quarter and 2.76% a year ago [27][30] Financial Performance - Net interest income for the second quarter of 2025 was $10.8 million, a decrease of 5.2% from the first quarter, but an increase of 14.1% from the second quarter of 2024 [5][9] - The net interest margin (NIM) was 3.11%, down from 3.31% in the first quarter of 2025, but up from 2.78% in the second quarter of 2024 [8][10] - Total deposits were $1.22 billion, a decrease from $1.26 billion in the previous quarter, but an increase of 11.0% from the same period last year [24][32] Asset Quality - The company recorded net charge-offs of $2.6 million, with a provision for credit loss expense of $1.2 million in the second quarter of 2025 [28][29] - The Allowance for Credit Losses (ACL) was $16.0 million, representing 1.76% of total loans, down from 1.91% in the previous quarter [30] - The efficiency ratio improved to 65.66%, compared to 67.19% in the linked quarter and 74.36% in the year-ago period, indicating better management of non-interest expenses [20] Liquidity and Capital - The company maintained a strong liquidity profile with total assets of $1.51 billion as of June 30, 2025, compared to $1.50 billion in the previous quarter [22] - Core deposits increased to 78.47% of total deposits, up from 78.31% in the previous quarter and 67.98% a year ago, reflecting a focus on low-cost funding [32] - Shareholders' equity totaled $124.4 million, a slight decrease from the previous quarter but an increase from the same period last year [25] Dividend Declaration - The Board of Directors declared a cash dividend of $0.10 per share, scheduled for disbursement on August 8, 2025, with an annualized dividend yield of 2.61% based on the closing stock price of $15.34 as of June 30, 2025 [35][36]

PART I - FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements present the company's financial position, operations, and cash flows, with total assets reaching **$1.50 billion** and Q1 2025 net income increasing to **$3.0 million** [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) The consolidated statements of condition show total assets increased to **$1.50 billion** by March 31, 2025, driven by higher cash and deposits, while total liabilities reached **$1.37 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Total cash and cash equivalents | $51,468 | $31,572 | | Available-for-sale securities, at fair value | $284,051 | $269,331 | | Loans receivable, net | $894,743 | $901,743 | | **Total assets** | **$1,495,337** | **$1,474,874** | | **Liabilities & Equity** | | | | Total deposits | $1,264,480 | $1,204,524 | | Total borrowings (Short & Long-term) | $44,628 | $88,068 | | **Total liabilities** | **$1,370,441** | **$1,353,391** | | **Total shareholders' equity** | **$124,896** | **$121,483** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income show Q1 2025 net income increased to **$3.0 million** from **$2.1 million** in Q1 2024, primarily due to higher net interest income and lower credit loss provisions Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net interest income | $11,411 | $9,400 | | Total provision for credit losses | $457 | $726 | | Net interest income after provision | $10,954 | $8,674 | | Total noninterest income | $1,197 | $1,737 | | Total noninterest expense | $8,433 | $7,706 | | Net income attributable to Pathfinder Bancorp Inc. | $2,974 | $2,120 | | Voting Earnings per common share - basic | $0.48 | $0.34 | | Voting Earnings per common share - diluted | $0.41 | $0.34 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows indicate a **$19.9 million** increase in cash and cash equivalents for Q1 2025, driven by strong operating and financing cash inflows Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash inflows from operating activities | $5,697 | $504 | | Net cash outflows from investing activities | ($1,872) | ($7,404) | | Net cash inflows (outflows) from financing activities | $16,071 | ($12,609) | | **Change in cash and cash equivalents** | **$19,896** | **($19,509)** | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, investment and loan portfolio composition, allowance for credit losses, fair value measurements, and derivative instruments - The company's investment portfolio consists of Available-for-Sale (AFS) securities valued at **$284.1 million** and Held-to-Maturity (HTM) securities with an amortized cost of **$155.7 million** as of March 31, 2025. The AFS portfolio had unrealized losses of **$10.3 million**, while the HTM portfolio had unrealized losses of **$7.0 million**, primarily due to changes in the interest rate environment, not credit deterioration[33](index=33&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The loan portfolio totaled **$912.2 million** as of March 31, 2025, with commercial loans (real estate, lines of credit, C&I) representing the largest segment at **$542.7 million (59.5%)**[48](index=48&type=chunk) - Nonaccrual loans decreased significantly to **$13.2 million (1.5% of total loans)** at March 31, 2025, from **$22.1 million (2.4% of total loans)** at December 31, 2024, mainly due to three large commercial loans returning to accrual status[68](index=68&type=chunk) - The Allowance for Credit Losses (ACL) on loans was **$17.4 million** as of March 31, 2025, up slightly from **$17.2 million** at year-end 2024. The company recorded a **$504,000** provision for credit losses on loans during Q1 2025[78](index=78&type=chunk) - The company utilizes interest rate swaps as fair value hedges for portions of its investment and loan portfolios to manage interest rate risk. As of March 31, 2025, the fair value of these derivative hedges was a net asset of **$3.1 million**[114](index=114&type=chunk)[115](index=115&type=chunk)[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **$0.9 million** increase in Q1 2025 net income, driven by higher net interest income and improved asset quality, with the net interest margin expanding to **3.31%** - Net income for Q1 2025 was **$3.0 million**, an increase of **$854,000** from Q1 2024. The primary drivers were a **$1.2 million** decrease in interest expense and an **$831,000** increase in interest income[157](index=157&type=chunk) - Net interest margin expanded to **3.31%** in Q1 2025 from **2.75%** in Q1 2024, driven by a **36 basis point** decrease in the average cost of interest-bearing liabilities and a **19 basis point** increase in the average yield on interest-earning assets[158](index=158&type=chunk)[159](index=159&type=chunk)[171](index=171&type=chunk) - Noninterest income decreased by **$540,000** year-over-year, primarily due to the loss of **$397,000** in revenue from the insurance agency sold in October 2024[161](index=161&type=chunk)[182](index=182&type=chunk) - Noninterest expense increased by **$727,000 (9.4%)** year-over-year, largely due to a **$531,000** increase in building and occupancy costs associated with the East Syracuse branch acquired in July 2024[163](index=163&type=chunk)[185](index=185&type=chunk) [Application of Critical Accounting Estimates](index=53&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) Management highlights critical accounting estimates including the allowance for credit losses, deferred income taxes, and fair value measurements, emphasizing judgment in the **$542.7 million** commercial loan portfolio - The Allowance for Credit Losses (ACL) is a critical estimate. Management notes that for the commercial loan portfolio, which represents **59.0%** of total loans, a hypothetical **25%** change in the qualitative factors used in the ACL calculation could increase or decrease the allowance by approximately **$1.1 million**[147](index=147&type=chunk) - At March 31, 2025, the Bank had **44 individually evaluated loans** totaling **$15.8 million**. Of these, **30 loans** totaling **$14.9 million** were valued based on collateral analysis, while **14 loans** totaling **$923,000** were valued using the discounted cash flow method[146](index=146&type=chunk) [Net Interest Income](index=59&type=section&id=Net%20Interest%20Income) Net interest income increased by **$2.0 million** to **$11.4 million** in Q1 2025, with the net interest margin improving significantly to **3.31%** due to lower funding costs Net Interest Income and Margin Analysis | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net interest income (in thousands) | $11,411 | $9,400 | | Net interest rate spread | 2.73% | 2.18% | | Net interest margin | 3.31% | 2.75% | Rate/Volume Analysis of Net Interest Income Change (Q1 2025 vs Q1 2024, in thousands) | Component | Change Due to Volume | Change Due to Rate | Total Change | | :--- | :--- | :--- | :--- | | Total interest income | $177 | $654 | $831 | | Total interest expense | ($437) | ($743) | ($1,180) | | **Net change in net interest income** | **$614** | **$1,397** | **$2,011** | [Loan and Asset Quality and Allowance for Credit Losses](index=71&type=section&id=Loan%20and%20Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses) Asset quality improved significantly in Q1 2025, with nonperforming assets decreasing to **$13.2 million** and the allowance for credit losses on loans reaching **$17.4 million** Nonperforming Assets (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total nonaccrual loans | $13,232 | $22,084 | | Total nonperforming assets | $13,232 | $22,084 | | Nonperforming loans to total loans | 1.45% | 2.40% | | Nonperforming assets to total assets | 0.88% | 1.50% | - The allowance for credit losses on loans was **$17.4 million** at March 31, 2025, compared to **$17.2 million** at December 31, 2024. The ratio of ACL to total loans was **1.91%** at quarter-end[209](index=209&type=chunk) [Liquidity and Capital](index=68&type=section&id=Liquidity%20and%20Capital) The company maintained strong liquidity and capital, supported by a **$60.0 million** increase in deposits and capital ratios well above 'well-capitalized' minimums - At March 31, 2025, the company had total available credit lines of approximately **$224.5 million**, with **$179.8 million** unused and available[222](index=222&type=chunk) Pathfinder Bank Regulatory Capital Ratios | Ratio | March 31, 2025 | Minimum To Be "Well-Capitalized" | | :--- | :--- | :--- | | Total Core Capital (to Risk-Weighted Assets) | 14.86% | 10.00% | | Tier 1 Capital (to Risk-Weighted Assets) | 13.61% | 8.00% | | Tier 1 Common Equity (to Risk-Weighted Assets) | 13.61% | 6.50% | | Tier 1 Capital (to Assets) | 9.80% | 5.00% | - Shareholders' equity increased by **$3.4 million** to **$124.9 million** at March 31, 2025, primarily due to **$2.3 million** in retained earnings and a **$712,000** decrease in accumulated other comprehensive loss[199](index=199&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Pathfinder Bancorp, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - A smaller reporting company is not required to provide the information relating to this item[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[229](index=229&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended March 31, 2025[230](index=230&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) As of March 31, 2025, the company is not involved in any legal proceedings expected to materially adversely affect its financial condition or operations - At March 31, 2025, the Company is not currently a named party in a legal proceeding, the outcome of which would have a material and adverse effect on the financial condition or results of operations of the Company[231](index=231&type=chunk) [Item 1A. Risk Factor](index=61&type=section&id=Item%201A.%20Risk%20Factor) As a smaller reporting company, Pathfinder Bancorp, Inc. is exempt from providing risk factor disclosures - A smaller reporting company is not required to provide the information relating to this item[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock in Q1 2025, with **74,292 shares** remaining available under the existing repurchase plan Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Remaining Under Plan | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $ - | 74,292 | | Feb 2025 | 0 | $ - | 74,292 | | Mar 2025 | 0 | $ - | 74,292 | [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) The report includes filed exhibits such as CEO and CFO certifications and Interactive Data Files for financial statements

[Executive Summary & Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights%20and%20Key%20Developments) Pathfinder Bancorp reported strong Q1 2025 results with net income of **$3.0 million**, or **$0.41 per diluted share**, driven by significant growth in net interest income and margin, fueled by strong core deposit growth, reduced borrowings, and improved asset quality Quarterly Earnings Comparison | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income (attributable to common shareholders) | $3.0 million | $3.9 million* | $2.1 million | | Diluted EPS | $0.41 | $0.63* | $0.34 | *Q4 2024 included a $1.4 million net gain from an asset sale. Q1 2025 Key Performance Indicators | Indicator | Value / Change | Note | | :--- | :--- | :--- | | Total Deposits | $1.26 billion | +10.3% YoY | | Core Deposits | 78.31% of total | Up from 69.17% YoY | | Borrowings | $44.6 million | -67.5% YoY | | Nonperforming Loans | $13.2 million | -32.7% YoY | | NPLs to Total Loans | 1.45% | Down from 2.20% YoY | | Net Interest Income | $11.4 million | +$2.0 million YoY | | Net Interest Margin (NIM) | 3.31% | Up from 2.75% YoY | | Efficiency Ratio | 66.84% | Improved from 68.29% YoY | - CEO James A. Dowd highlighted that the solid results reflect a strong balance sheet, a growing core deposit franchise, and disciplined pricing, with the company focused on a long-term strategy to enhance loan portfolio quality and optimistic about regional growth opportunities[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) The company's financial performance in Q1 2025 was characterized by a **10.0% sequential increase** in net interest income to **$11.4 million** and a significant expansion in net interest margin to **3.31%**, with noninterest income normalizing to **$1.2 million** and an improved efficiency ratio of **66.84%** [Net Interest Income and Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income (NII) for Q1 2025 was **$11.4 million**, a **10.0% increase** from the linked quarter, while net interest margin (NIM) expanded by **29 basis points to 3.31%**, primarily due to a **$1.1 million decrease** in interest expense and a **$347,000 benefit** from recovered interest and prepayment fees NII and NIM Performance | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $11.4 million | $10.4 million | $9.4 million | | Net Interest Margin | 3.31% | 3.02% | 2.75% | - The increase in NII and NIM was driven by a **$1.1 million decrease** in interest expense from the linked quarter, reflecting lower costs for deposits and borrowings[5](index=5&type=chunk)[6](index=6&type=chunk) - A benefit of approximately **$347,000** from recovered interest on nonaccrual loans and prepayment fees added **10 basis points** to NIM[7](index=7&type=chunk) [Noninterest Income](index=3&type=section&id=Noninterest%20Income) Q1 2025 noninterest income was **$1.2 million**, a significant decrease from **$4.9 million** in the linked quarter, which included a **$3.2 million pre-tax gain** from the sale of the company's insurance agency in October 2024 - Noninterest income totaled **$1.2 million** in Q1 2025, no longer including contributions from the insurance agency business, which was sold in October 2024, and the linked quarter (Q4 2024) included a **$3.2 million pre-tax gain** from this sale[9](index=9&type=chunk) - Compared to the linked quarter, key changes included a **$264,000 reduction** in debit card interchange fees and a **$257,000 decrease** in net realized gains on sales of investment securities[10](index=10&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense for Q1 2025 was **$8.4 million**, a slight decrease from **$8.5 million** in the linked quarter, primarily because Q1 2025 no longer includes expenses from the divested insurance agency, while the efficiency ratio improved to **66.84%** - Total noninterest expense was **$8.4 million** in Q1 2025, no longer including costs for the insurance agency, which amounted to **$456,000** in Q4 2024 and **$285,000** in Q1 2024[12](index=12&type=chunk) - Salaries and benefits rose by **$327,000** from the linked quarter to **$4.5 million**, driven by increases in stock-based compensation and payroll tax[13](index=13&type=chunk) - Building and occupancy expenses increased by **$531,000** from the year-ago quarter, primarily due to costs associated with the East Syracuse branch acquired in July 2024[14](index=14&type=chunk) - The efficiency ratio improved to **66.84%** in Q1 2025, compared to **72.01%** in the linked quarter and **68.29%** in the year-ago period[16](index=16&type=chunk) [Net Income](index=4&type=section&id=Net%20Income) The company reported net income attributable to common shareholders of **$3.0 million** for Q1 2025, translating to **$0.48 per basic** and **$0.41 per diluted share**, compared to **$3.9 million** in Q4 2024 and **$2.2 million** in Q1 2024 Net Income and EPS Summary | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income (Common Shareholders) | $3.0 million | $3.9 million | $2.2 million | | Basic EPS | $0.48 | $0.63 | $0.34 | | Diluted EPS | $0.41 | $0.63 | $0.34 | [Financial Condition](index=4&type=section&id=Statement%20of%20Financial%20Condition) As of March 31, 2025, total assets grew to **$1.50 billion**, with total deposits increasing by **10.3% year-over-year to $1.26 billion**, facilitating a significant **67.5% year-over-year reduction** in total borrowings to **$44.6 million**, while total loans stood at **$912.2 million** and shareholders' equity increased to **$124.9 million** [Loans](index=4&type=section&id=Loans) Total loans were **$912.2 million** at the end of Q1 2025, a slight **0.7% decrease** from the prior quarter but a **2.3% increase year-over-year**, with commercial loans growing **3.3% year-over-year to $542.7 million** Loan Portfolio Composition (in millions) | Loan Category | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Commercial Loans | $542.7 | $539.7 | $525.6 | | Consumer & Residential | $371.0 | $380.3 | $366.5 | | **Total Loans** | **$912.2** | **$919.0** | **$891.5** | [Deposits and Borrowings](index=4&type=section&id=Deposits%20and%20Borrowings) Deposits grew strongly to **$1.26 billion**, up **5.0%** in the quarter and **10.3%** from the prior year, enabling the company to significantly reduce higher-cost borrowings to **$44.6 million**, a **49.3% decrease** in the quarter and a **67.5% decrease year-over-year** Deposits and Borrowings (in millions) | Liability | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | Total Deposits | $1,260.0 | $1,204.5 | $1,146.1 | | Total Borrowings | $44.6 | $88.1 | $137.4 | [Shareholders' Equity](index=4&type=section&id=Shareholders%20Equity) Shareholders' equity increased by **2.8%** during the quarter to **$124.9 million** as of March 31, 2025, primarily driven by a **$2.3 million increase** in retained earnings and a **$712,000 decrease** in accumulated other comprehensive loss (AOCL) - Total shareholders' equity rose to **$124.9 million**, an increase of **$3.4 million (2.8%)** in Q1 2025, mainly due to a **$2.3 million increase** in retained earnings[21](index=21&type=chunk) [Asset Quality and Liquidity](index=5&type=section&id=Asset%20Quality%20and%20Liquidity) The company demonstrated significant improvements in asset quality, with nonperforming loans dropping **40.1%** from the previous quarter to **1.45% of total loans**, while the Allowance for Credit Losses was bolstered to **1.91% of total loans**, and liquidity remains strong, supported by a growing core deposit base of **78.31%** and substantial available borrowing capacity [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality metrics improved markedly in Q1 2025, with nonperforming loans (NPLs) decreasing to **$13.2 million** from **$22.1 million** in the prior quarter, lowering the NPL to total loans ratio to **1.45%**, and the Allowance for Credit Losses (ACL) was increased to **$17.4 million**, or **1.91% of total loans** Nonperforming Loans (NPLs) | Metric | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | NPLs (in millions) | $13.2 | $22.1 | $19.7 | | NPLs / Total Loans | 1.45% | 2.40% | 2.20% | - Net charge-offs were **$340,000**, or an annualized **0.15% of average loans**, in Q1 2025, down from **$1.0 million** in the linked quarter[23](index=23&type=chunk) - The Allowance for Credit Losses (ACL) stood at **$17.4 million**, representing **1.91% of total loans**, an increase from **1.88%** in the prior quarter[25](index=25&type=chunk) [Liquidity](index=5&type=section&id=Liquidity) The company maintains a strong liquidity position, with core deposits growing to **78.31% of total deposits**, enhancing funding stability, and access to **$133.3 million** in additional funding from the Federal Home Loan Bank of New York and **$46.6 million** in other unused credit lines - Core deposits grew to **78.31% of total deposits** as of March 31, 2025, up from **76.86%** at year-end 2024 and **69.17%** a year prior, enhancing deposit stability[27](index=27&type=chunk) - The company has significant additional funding capacity, including **$133.3 million** with the FHLB of New York and another **$46.6 million** in unused credit lines[28](index=28&type=chunk) [Shareholder Information](index=6&type=section&id=Shareholder%20Information) Pathfinder Bancorp's Board of Directors declared a quarterly cash dividend of **$0.10 per share**, demonstrating a continued commitment to delivering shareholder value, representing an annualized dividend yield of **2.43%** based on the closing stock price on March 31, 2025 [Dividend Declaration](index=6&type=section&id=Cash%20Dividend%20Declared) The Board of Directors declared a cash dividend of **$0.10 per share** for both voting and non-voting common stock, payable on May 9, 2025, to shareholders of record as of April 18, 2025, with an annualized dividend yield of **2.43%** - A cash dividend of **$0.10 per share** was declared for holders of both voting and non-voting common stock[30](index=30&type=chunk) - The annualized dividend yield is **2.43%**, based on the closing stock price of **$16.44** on March 31, 2025[31](index=31&type=chunk) [Financial Tables (Unaudited)](index=8&type=section&id=Financial%20Tables%20(Unaudited)) This section contains the detailed unaudited financial data supporting the Q1 2025 results, including consolidated balance sheets, income statements, key performance ratios, asset quality details, loan and deposit compositions, average balance and yield information, and reconciliations of non-GAAP financial measures [Selected Balance Sheet Data](index=8&type=section&id=Selected%20Balance%20Sheet%20Data) Presents the unaudited consolidated balance sheets as of March 31, 2025, and for the four preceding quarters, detailing assets, liabilities, and shareholders' equity[37](index=37&type=chunk) [Selected Income Statement Data](index=9&type=section&id=Selected%20Income%20Statement%20Data) Provides the unaudited consolidated income statements for Q1 2025 and the four preceding quarters, breaking down interest income, interest expense, noninterest income/expense, and net income[39](index=39&type=chunk) [Financial Highlights and Ratios](index=10&type=section&id=Financial%20Highlights) Contains key performance ratios for Q1 2025 and the four preceding quarters, including profitability (ROA, ROE), net interest margin, efficiency ratio, per share data, and capital ratios for both the company and the bank[41](index=41&type=chunk) [Asset Quality, Loan and Deposit Composition](index=11&type=section&id=Asset%20Quality,%20Loan%20and%20Deposit%20Composition) Details asset quality metrics (charge-offs, nonperforming loans), loan composition by type, and deposit composition by account type for Q1 2025 and the four preceding quarters[45](index=45&type=chunk) [Selected Average Balances and Yields](index=12&type=section&id=Selected%20Average%20Balances) Presents selected average balances for assets and liabilities, and the corresponding average yields and costs for Q1 2025, Q4 2024, and Q1 2024, which are used to calculate net interest margin[46](index=46&type=chunk) [Non-GAAP Reconciliations](index=13&type=section&id=NON-GAAP%20RECONCILIATIONS) Provides reconciliations of non-GAAP financial measures (e.g., tangible book value per share, tangible common equity to tangible assets, pre-tax pre-provision net income, efficiency ratio) to their most directly comparable GAAP measures for Q1 2025 and the four preceding quarters[48](index=48&type=chunk)

Core Insights - Pathfinder Bancorp, Inc. reported a net income of $3.0 million or $0.41 per diluted share for Q1 2025, an increase from $2.1 million or $0.34 per share in Q1 2024 [2][19] - The company's net interest income rose to $11.4 million, a 10.0% increase from the previous quarter, driven by improved operating efficiency and growth in core deposits and commercial loans [5][6] - Total deposits reached $1.26 billion, reflecting a 5.0% growth in Q1 2025 and a 10.3% increase year-over-year [6][22] Financial Performance - Net interest margin expanded to 3.31% in Q1 2025 from 3.02% in the previous quarter and 2.75% in the same period last year, attributed to reduced deposit and borrowing costs [9][40] - Noninterest income for Q1 2025 totaled $1.2 million, down from $4.9 million in the linked quarter, primarily due to the absence of contributions from the sold insurance agency [10][11] - Noninterest expense was $8.4 million in Q1 2025, slightly down from $8.5 million in the previous quarter but up from $7.7 million in the year-ago period [13][14] Asset Quality - Nonperforming loans decreased to $13.2 million or 1.45% of total loans, improving from $22.1 million or 2.40% in the previous quarter [24][25] - The allowance for credit losses stood at $17.4 million, representing 1.91% of total loans, compared to 1.88% in the previous quarter [26][27] Liquidity and Capital - The company maintained a strong liquidity profile with total deposits of $1.26 billion and additional funding capacity of $133.3 million with the Federal Home Loan Bank of New York [29][30] - Shareholders' equity increased to $124.9 million, reflecting a 2.8% growth in Q1 2025 [23] Dividend Declaration - The Board of Directors declared a cash dividend of $0.10 per share, scheduled for disbursement on May 9, 2025, with an annualized dividend yield of 2.43% based on the closing stock price of $16.44 as of March 31, 2025 [31][32]

[PART I](index=3&type=section&id=PART%20I) [Business Overview](index=3&type=section&id=Item%201.%20Business) Pathfinder Bancorp, Inc. operates Pathfinder Bank, a commercial bank with $1.47 billion in assets, focusing on lending and deposits [General Overview](index=3&type=section&id=General) Pathfinder Bancorp, Inc. is a bank holding company for Pathfinder Bank, reporting **$1.47 billion** in assets and **$1.20 billion** in deposits at year-end 2024 Consolidated Financial Highlights (as of Dec 31, 2024) | Metric | Amount | | :---------------------- | :--------------- | | Total Consolidated Assets | $1.47 billion | | Total Deposits | $1.20 billion | | Shareholders' Equity | $121.5 million | - The Company's primary business is its 100% ownership of Pathfinder Bank, a New York-chartered commercial bank regulated by the NYSDFS and the FDIC[10](index=10&type=chunk)[14](index=14&type=chunk) - The Company sold its majority interest in the FitzGibbons Agency in October 2024 for total consideration of **$2.8 million**, recognizing a pre-tax gain of **$3.2 million**[17](index=17&type=chunk) [Market Area and Competition](index=4&type=section&id=Market%20Area%20and%20Competition) The Company operates 13 offices in New York, holding the largest deposit market share in Oswego County at **47.7%** - The bank operates seven branches in Oswego County, five in Onondaga County, and one limited purpose office in Oneida County, NY[19](index=19&type=chunk) - The local economy is expected to benefit from significant investments in semiconductor manufacturing, particularly near existing branches in Clay and Cicero, NY[20](index=20&type=chunk) Deposit Market Share (as of June 30, 2024) | Market Area | Market Share | Rank | | :-------------------------- | :----------- | :-------- | | Oswego County | 47.7% | 1st | | Onondaga County | 2.1% | N/A | | Combined Oswego & Onondaga | 7.9% | 5th of 15 | [Lending Activities](index=6&type=section&id=Lending%20Activities) The Company's primary lending activities focus on commercial and residential real estate loans, with a strategy to grow commercial portfolios - The company's primary lending activities are originating commercial real estate, commercial loans, and one-to-four family residential real estate loans[25](index=25&type=chunk) - A strategic focus is to increase commercial real estate and commercial business lending, typically with adjustable or floating rates, to diversify the portfolio and manage interest rate risk[25](index=25&type=chunk)[26](index=26&type=chunk)[33](index=33&type=chunk) - The bank's lending limit to a single borrower is generally **15%** of unimpaired capital and surplus (**$23.4 million** at year-end 2024) for unsecured loans, with an additional **10%** (**$15.6 million**) if secured by readily marketable collateral[52](index=52&type=chunk) [Asset Quality](index=12&type=section&id=Asset%20Quality) Asset quality is managed through continuous review, risk grading, and the CECL methodology adopted on January 1, 2023 - The Company adopted the Current Expected Credit Loss (CECL) methodology for its Allowance for Credit Losses (ACL) on January 1, 2023[67](index=67&type=chunk) - The transition to CECL resulted in a one-time, after-tax adjustment of **$2.1 million** to retained earnings, which included establishing new reserves for held-to-maturity investments and unfunded commitments[71](index=71&type=chunk) - The ACL calculation has three main components: specific allowances for individually evaluated loans, quantitative factors for pooled loans based on historical loss patterns correlated with econometric data, and qualitative adjustments for forward-looking conditions[73](index=73&type=chunk) [Investment Activities](index=19&type=section&id=Investment%20Activities) Investment activities are governed by a Board-approved policy focused on safety, liquidity, and interest rate risk management - The investment policy's objectives are to manage interest rate risk, generate reasonable returns, provide liquidity, and reduce overall credit risk[81](index=81&type=chunk)[82](index=82&type=chunk) - The portfolio includes a broad range of debt securities, such as U.S. Government and agency obligations, mortgage-backed securities, and corporate bonds, classified as either held-to-maturity (HTM) or available-for-sale (AFS)[83](index=83&type=chunk)[84](index=84&type=chunk) - The Company invests in mortgage-backed securities and collateralized mortgage obligations guaranteed by government-sponsored enterprises (Fannie Mae, Freddie Mac, Ginnie Mae) as well as private issuers to achieve positive spreads and geographic diversification[87](index=87&type=chunk) [Sources of Funds](index=21&type=section&id=Sources%20of%20Funds) Primary funds come from local deposits, supplemented by FHLBNY advances, brokered deposits, and reciprocal programs - Deposits are the primary source of funds, supplemented by FHLBNY advances and brokered deposits[92](index=92&type=chunk) - The Company uses reciprocal deposit programs (CDARS and ICS) to offer customers FDIC insurance above standard limits[94](index=94&type=chunk)[95](index=95&type=chunk) - The Company has **$5.0 million** in trust preferred securities maturing in 2037 and **$25.0 million** in 5.50% fixed-to-floating rate subordinated debt maturing in 2030, which qualify as Tier 1 and Tier 2 capital, respectively[98](index=98&type=chunk)[100](index=100&type=chunk) [Supervision and Regulation](index=22&type=section&id=Supervision%20and%20Regulation) Pathfinder Bank is extensively regulated by NYSDFS, FDIC, and the Federal Reserve, and was well-capitalized as of December 31, 2024 - Pathfinder Bank is regulated by the New York State Department of Financial Services (NYSDFS) and the Federal Deposit Insurance Corporation (FDIC) The holding company is regulated by the Federal Reserve Board[101](index=101&type=chunk) - The Bank must meet minimum capital standards, including a common equity Tier 1 ratio of **4.5%**, a Tier 1 ratio of **6.0%**, and a total capital ratio of **8.0%** It must also maintain a capital conservation buffer of **2.5%**[110](index=110&type=chunk)[114](index=114&type=chunk) - The Bank is subject to prompt corrective action regulations, which establish five capital categories As of December 31, 2024, Pathfinder Bank was classified as "well-capitalized"[118](index=118&type=chunk)[121](index=121&type=chunk) - The Company has elected to be a "financial holding company" and qualifies for the Federal Reserve's Small Bank Holding Company Policy Statement, exempting it from risk-based capital rules at the holding company level[138](index=138&type=chunk) [Federal and State Taxation](index=34&type=section&id=Federal%20and%20State%20Taxation) The Company is subject to federal and New York State income taxes, filing a combined state franchise tax return - The Company uses the liability method to account for deferred income taxes, recognizing future tax consequences of differences between financial statement carrying amounts and their tax bases[148](index=148&type=chunk) - The Company files a combined New York State franchise tax return, with a tax rate of **6.5%** for business income up to **$5 million** and **7.25%** for income above that threshold[157](index=157&type=chunk) - Pre-1988 tax bad debt reserves of approximately **$1.3 million** remain subject to recapture into taxable income under certain conditions, such as non-dividend distributions or stock repurchases[152](index=152&type=chunk) [Human Capital Resources](index=37&type=section&id=Human%20Capital%20Resources) As of December 31, 2024, the Company employed 186 team members, emphasizing a values-driven culture and competitive benefits Employee Headcount and Turnover | Metric | 2024 | 2023 | 2022 | | :--------------------- | :------ | :------ | :------ | | Total Headcount | 186 | 174 | 174 | | Voluntary Turnover % | 23.7% | 23.4% | 25.0% | - The workforce is comprised of approximately **74%** women None of the employees are represented by a collective bargaining agreement[161](index=161&type=chunk) - The company provides competitive benefits including a 401(k) plan with employer matching and annual contributions, healthcare, paid time off, and an employee assistance program[166](index=166&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Disclosure of risk factors is not required as the company qualifies as a smaller reporting company - Disclosure of risk factors is not required as the company qualifies as a smaller reporting company[169](index=169&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The Company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[170](index=170&type=chunk) [Cybersecurity](index=40&type=section&id=Item%201C.%20Cybersecurity) The Company manages cybersecurity through its ICPP, aligning with FFIEC, FDIC, and NYSDFS guidelines, with no material incidents to date - Cybersecurity is managed via the Information & Cybersecurity Program & Policy (ICPP), overseen by the Information Security Officer, Technology Steering Committee, and the Board of Directors[171](index=171&type=chunk)[172](index=172&type=chunk) - The company uses third-party threat analysis tools, including penetration testing and vulnerability scanning, to measure and manage information security risks[173](index=173&type=chunk) - To date, the Company has not experienced any cybersecurity incidents that have materially and adversely affected its business, financial condition, or results of operations[174](index=174&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) The Company operates 13 offices across three New York counties, with an aggregate net book value of **$19.0 million** for premises and equipment - The Company operates a total of 13 offices across three counties in New York[176](index=176&type=chunk) - The aggregate net book value of the Bank's premises and equipment was **$19.0 million** as of December 31, 2024[176](index=176&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The Company is periodically involved in various claims incidental to its business, not expected to have a material adverse impact - The Company is involved in various legal claims incidental to its business, but management does not expect them to have a material adverse impact on its consolidated financial condition[178](index=178&type=chunk) [Mine Safety Disclosure](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This section is not applicable to the Company - Not applicable[179](index=179&type=chunk) [PART II](index=42&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Company's common stock trades on NASDAQ under "PBHC," with no repurchases in 2024, and intends to continue quarterly dividends - The Company's voting common stock trades on the NASDAQ Capital Market under the symbol "PBHC"[180](index=180&type=chunk) - No shares of common stock were repurchased during the year ended December 31, 2024[180](index=180&type=chunk) - The company has historically paid regular quarterly cash dividends and intends to continue this practice, subject to Board approval and financial conditions[183](index=183&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's 2024 financial condition and results, noting decreased net income due to higher credit loss provisions and expenses [Executive Summary and Results of Operations](index=55&type=section&id=Executive%20Summary%20and%20Results%20of%20Operations) Net income for 2024 fell to **$3.4 million** from **$9.3 million** in 2023, primarily due to increased credit loss provisions and noninterest expenses Key Performance Indicators (2024 vs. 2023) | Metric | 2024 | 2023 | | :-------------------------- | :---------- | :---------- | | Net Income | $3.4 million| $9.3 million| | EPS (Basic & Diluted) | $0.54 | $1.51 | | Return on Average Assets | 0.23% | 0.67% | | Return on Average Equity | 2.75% | 8.09% | | Provision for Credit Losses | $11.0 million| $2.9 million| - The primary drivers for the decrease in net income were an **$8.1 million** increase in the provision for credit losses and a **$5.0 million** increase in noninterest expense[236](index=236&type=chunk) - Noninterest income increased by **$4.4 million**, largely due to a **$3.2 million** pre-tax gain on the sale of the Company's insurance agency assets in October 2024[241](index=241&type=chunk) - Nonperforming loans to total loans increased to **2.40%** at year-end 2024 from **1.92%** at year-end 2023[244](index=244&type=chunk) [Net Interest Income](index=59&type=section&id=Net%20Interest%20Income) Net interest income increased by **$2.1 million** (**5.3%**) to **$41.0 million** in 2024, with a slight improvement in net interest margin to **2.98%** Net Interest Income and Margin (2024 vs. 2023) | Metric | 2024 | 2023 | Change | | :-------------------------- | :------------ | :------------ | :---------- | | Net Interest Income | $41.0 million | $38.9 million | +5.3% | | Net Interest Margin | 2.98% | 2.95% | +3 bps | | Total Interest Income | $78.4 million | $67.7 million | +15.8% | | Total Interest Expense | $37.4 million | $28.7 million | +30.0% | - The increase in interest income was driven by a $53.4 million increase in average interest-earning assets and a **58 basis point** rise in the average yield on those assets[258](index=258&type=chunk) - The increase in interest expense was due to a higher interest rate environment and competition for deposits, which raised the average rate on interest-bearing liabilities by **68 basis points** to **3.33%**[254](index=254&type=chunk)[259](index=259&type=chunk) [Changes in Financial Condition](index=64&type=section&id=Changes%20in%20Financial%20Condition) Total assets increased by **$9.1 million** to **$1.47 billion**, driven by loan growth and branch acquisition deposits, with shareholders' equity rising to **$121.5 million** - Total assets grew by **$9.1 million** to **$1.47 billion** at December 31, 2024[272](index=272&type=chunk) - Total loans receivable increased by **$21.8 million**, primarily due to growth in commercial real estate loans and home equity lines acquired from the East Syracuse branch purchase[282](index=282&type=chunk)[283](index=283&type=chunk) - Total deposits increased by **$84.5 million** to **$1.20 billion**, mainly from the **$186.0 million** in deposits assumed in the East Syracuse branch acquisition[310](index=310&type=chunk) - Shareholders' equity rose by **$2.0 million** to **$121.5 million**, reflecting net income of **$3.4 million** and a **$0.5 million** decrease in accumulated other comprehensive loss, partially offset by **$2.5 million** in total dividends declared[247](index=247&type=chunk)[334](index=334&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Disclosure of quantitative and qualitative disclosures about market risk is not required as the company qualifies as a smaller reporting company - Disclosure of quantitative and qualitative disclosures about market risk is not required as the company qualifies as a smaller reporting company[350](index=350&type=chunk) [Financial Statements and Supplementary Data](index=86&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the Company's consolidated financial statements for 2024 and 2023, along with management's report and independent auditor's opinion [Report of Independent Registered Public Accounting Firm](index=88&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion on the financial statements, identifying the Allowance for Credit Losses as a critical audit matter - The auditor expressed an unqualified opinion, stating the financial statements are fairly presented in accordance with U.S. GAAP[359](index=359&type=chunk) - The Allowance for Credit Losses on Loans was identified as a critical audit matter due to the high degree of subjective and complex management judgment required in its calculation[363](index=363&type=chunk)[366](index=366&type=chunk) [Consolidated Financial Statements](index=91&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of **$1.47 billion**, net loans of **$901.7 million**, and net income of **$3.4 million** for 2024 Consolidated Statement of Condition Highlights (December 31) | (In thousands) | 2024 | 2023 | | :------------------------- | :---------- | :---------- | | Total Assets | $1,474,874 | $1,465,798 | | Loans Receivable, Net | $901,743 | $881,232 | | Total Deposits | $1,204,524 | $1,120,067 | | Total Liabilities | $1,353,391 | $1,345,542 | | Total Shareholders' Equity | $121,483 | $120,256 | Consolidated Statement of Income Highlights (Year Ended December 31) | (In thousands) | 2024 | 2023 | | :-------------------------------------------- | :--------- | :--------- | | Net Interest Income | $40,989 | $38,919 | | Provision for Credit Losses | $10,973 | $2,930 | | Noninterest Income | $9,561 | $5,190 | | Noninterest Expense | $34,417 | $29,395 | | Net Income Attributable to Pathfinder Bancorp | $3,383 | $9,293 | [Notes to Consolidated Financial Statements](index=97&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including CECL adoption, investment securities, loan portfolio, deposits, and the East Syracuse branch acquisition - The Company adopted the CECL methodology for its Allowance for Credit Losses (ACL) on January 1, 2023, resulting in a **$2.1 million** after-tax charge to retained earnings[398](index=398&type=chunk)[402](index=402&type=chunk) - The allowance for credit losses on loans was **$17.2 million** (**1.88%** of year-end loans) at Dec 31, 2024, up from **$16.0 million** (**1.78%** of year-end loans) at Dec 31, 2023[466](index=466&type=chunk)[306](index=306&type=chunk) - On July 19, 2024, the Bank acquired the East Syracuse branch from Berkshire Bank, assuming **$186.0 million** in deposits and acquiring **$29.9 million** in loans The transaction resulted in **$6.3 million** of core deposit intangible and **$1.2 million** of goodwill[610](index=610&type=chunk)[611](index=611&type=chunk) - As of December 31, 2024, the Bank was categorized as "well-capitalized" under regulatory standards, exceeding all minimum capital requirements including the capital conservation buffer[571](index=571&type=chunk)[572](index=572&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=181&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The Company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[622](index=622&type=chunk) [Controls and Procedures](index=181&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of December 31, 2024, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[624](index=624&type=chunk) - No material changes were made to internal controls over financial reporting during the fourth quarter of 2024[625](index=625&type=chunk) [PART III](index=181&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=181&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information required by this item is incorporated by reference from the Company's Proxy Statement for the Annual Meeting of Shareholders[628](index=628&type=chunk) [Executive Compensation](index=183&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2025 Proxy Statement - Information required by this item is incorporated by reference from the Company's Proxy Statement for the Annual Meeting of Shareholders[633](index=633&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=183&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the 2025 Proxy Statement - Information required by this item is incorporated by reference from the Company's Proxy Statement for the Annual Meeting of Shareholders[631](index=631&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=183&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information required by this item is incorporated by reference from the Company's Proxy Statement for the Annual Meeting of Shareholders[631](index=631&type=chunk) [Principal Accounting Fees and Services](index=183&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2025 Proxy Statement - Information required by this item is incorporated by reference from the Company's Proxy Statement for the Annual Meeting of Shareholders[632](index=632&type=chunk) [PART IV](index=184&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=184&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K report - The Company's consolidated financial statements are filed as part of this report under Item 8[634](index=634&type=chunk) - A list of exhibits filed with the report is provided, including articles of incorporation, bylaws, material agreements, and required certifications[634](index=634&type=chunk)[635](index=635&type=chunk)[637](index=637&type=chunk) [Form 10-K Summary](index=188&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[636](index=636&type=chunk)

[Financial Results for Fourth Quarter and Full Year 2024](index=1&type=section&id=Financial%20Results%20for%20Fourth%20Quarter%20and%20Full%20Year%202024) Pathfinder Bancorp reported strong Q4 2024 net income, significantly boosted by an insurance agency sale, contrasting with a full-year decline in net income compared to 2023 [Fourth Quarter and Full Year 2024 Highlights](index=1&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202024%20Highlights) Pathfinder Bancorp achieved strong Q4 2024 net income, significantly boosted by an insurance agency sale, despite a full-year decline in net income compared to 2023, driven by deposit growth and margin expansion Q4 and Full Year 2024 Key Financial Results | Metric | Q4 2024 ($) | Q3 2024 ($) | Q4 2023 ($) | Full Year 2024 ($) | Full Year 2023 ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $4.3M | ($4.6M) | $2.5M | $3.8M | $9.3M | | EPS | $0.69 | ($0.75) | $0.41 | $0.60 | $1.51 | - Q4 2024 net income included a significant benefit of approximately **$1.4 million** from the gain on the sale of its insurance agency, net of taxes and transaction-related expenses[2](index=2&type=chunk) Q4 2024 vs. Prior Periods - Key Metrics | Metric | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Provision Expense ($ thousands) | 988 | 9,000 | 265 | | Net Interest Income ($ millions) | 10.8 | 11.7 | 9.2 | | Net Interest Margin (%) | 3.15 | 3.34 | 2.74 | | Non-interest Income ($ millions) | 4.9 | 1.7 | 1.3 | | Non-interest Expense ($ millions) | 8.5 | 10.3 | 7.0 | - Total deposits grew to **$1.20 billion**, an increase of **7.5%** from December 31, 2023. Total loans stood at **$919.0 million**, with commercial loans growing to **$539.7 million**[8](index=8&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management emphasized that core net interest income growth and margin expansion drove Q4 earnings, alongside strategic investments in middle-market talent and a continued focus on expense and credit risk management for long-term value - Core net interest income growth and net interest margin expansion were key contributors to Q4 earnings[6](index=6&type=chunk) - The company is investing in talent to serve middle-market businesses in the Syracuse area, with the recently acquired East Syracuse branch contributing significantly[6](index=6&type=chunk) - Management is committed to managing operating expenses and continuously improving its credit risk management approach to build long-term shareholder value[6](index=6&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section analyzes the company's financial performance, focusing on net interest income, noninterest income, and noninterest expense trends and their drivers [Net Interest Income and Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Q4 2024 net interest income decreased quarter-over-quarter due to a prior one-time payment but increased significantly year-over-year, driven by higher loan yields and lower funding costs, while net interest margin followed a similar trend Net Interest Income and Margin Comparison | Metric | Q4 2024 | Q3 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income ($ millions) | 10.8 | 11.7 | 9.2 | | Net Interest Margin (%) | 3.15 | 3.34 | 2.74 | - The QoQ decrease in NII and NIM was primarily due to an **$887,000** catch-up interest payment in Q3 2024, which benefited the linked quarter's NIM by **25 basis points**[7](index=7&type=chunk)[9](index=9&type=chunk) - The YoY increase in NII of **18.1%** was driven by a **$1.2 million** increase in interest and dividend income and a **$463,000** decrease in interest expense, attributed to a better deposit mix and lower borrowing costs[10](index=10&type=chunk) [Noninterest Income](index=3&type=section&id=Noninterest%20Income) Noninterest income significantly increased in Q4 2024, primarily due to a substantial gain from the sale of the company's insurance agency, with underlying noninterest income remaining relatively stable quarter-over-quarter and showing moderate year-over-year growth - Noninterest income for Q4 2024 was **$4.9 million**, which included a **$3.2 million** pre-tax gain from the sale of the company's insurance agency[12](index=12&type=chunk) - Excluding the gain on sale, noninterest income grew by **$30,000** from Q3 2024 and **$419,000** from Q4 2023[12](index=12&type=chunk) - Compared to the linked quarter, changes included a **$194,000** decrease in BOLI earnings (due to a prior death benefit) and increases in net realized gains on securities[14](index=14&type=chunk) [Noninterest Expense](index=4&type=section&id=Noninterest%20Expense) Noninterest expense decreased quarter-over-quarter due to the absence of prior one-time acquisition costs, but increased year-over-year primarily driven by higher salaries, benefits, and occupancy costs associated with increased headcount and a new branch Noninterest Expense Comparison | Period | Total Noninterest Expense ($ millions) | Key Items | | :--- | :--- | :--- | | Q4 2024 | 8.5 | Includes $456 thousand in insurance agency sale costs | | Q3 2024 | 10.3 | Includes $1.6 million in branch acquisition costs | | Q4 2023 | 7.0 | Baseline for comparison | - Salaries and benefits decreased by **$839,000** from the linked quarter but increased by **$446,000** from the prior-year quarter due to higher headcount[18](index=18&type=chunk) - Building and occupancy costs increased by **$390,000** from Q4 2023, primarily due to operating the newly acquired branch[19](index=19&type=chunk) - The efficiency ratio was **69.42%** in Q4 2024, improving from **75.28%** in Q3 2024 but higher than **67.25%** in Q4 2023[21](index=21&type=chunk) [Statement of Financial Condition](index=4&type=section&id=Statement%20of%20Financial%20Condition) This section details the company's financial position, including assets, liabilities, and equity, highlighting key changes in loans, deposits, and borrowings [Assets, Liabilities, and Equity](index=4&type=section&id=Assets%2C%20Liabilities%2C%20and%20Equity) As of December 31, 2024, total assets remained stable, with total deposits increasing and total borrowings significantly reduced year-over-year, while shareholders' equity also saw an increase Balance Sheet Highlights (as of Dec 31, 2024) | Metric | Dec 31, 2024 ($) | Sep 30, 2024 ($) | Dec 31, 2023 ($) | | :--- | :--- | :--- | :--- | | Total Assets | $1.47 billion | $1.48 billion | $1.47 billion | | Total Loans | $919.0 million | $921.7 million | $897.2 million | | Total Deposits | $1.20 billion | $1.20 billion | $1.12 billion | | Total Borrowings | $88.1 million | $100.1 million | $175.6 million | | Shareholders' Equity | $121.9 million | $120.2 million | $119.5 million | - Commercial loans grew **1.0%** during Q4 and **3.0%** from the prior year, reaching **$539.7 million**[23](index=23&type=chunk) - The increase in shareholders' equity for the full year was primarily driven by a **$2.1 million** increase in retained earnings[25](index=25&type=chunk) [Asset Quality and Liquidity](index=5&type=section&id=Asset%20Quality%20and%20Liquidity) This section evaluates the bank's asset quality, including nonperforming loans and charge-offs, and assesses its liquidity position and funding capacity [Asset Quality](index=5&type=section&id=Asset%20Quality) Asset quality metrics showed an increase in nonperforming loans at year-end, while net charge-offs significantly decreased quarter-over-quarter following a prior loan review, with the Allowance for Credit Losses remaining robust Asset Quality Metrics | Metric | Dec 31, 2024 (%) | Sep 30, 2024 (%) | Dec 31, 2023 (%) | | :--- | :--- | :--- | :--- | | Nonperforming Loans / Total Loans | 2.40 | 1.75 | 1.92 | | Net Charge-Offs (Annualized) | 0.44 | 3.82 | 0.05 | | Allowance for Credit Losses (ACL) / Total Loans | 1.88 | 1.87 | 1.78 | - Provision for credit loss expense was **$988,000** in Q4 2024, compared to a large **$9.0 million** provision in Q3 2024 which was taken to replenish reserves after a loan portfolio review[28](index=28&type=chunk) - The Allowance for Credit Losses (ACL) stood at **$17.2 million** as of December 31, 2024[29](index=29&type=chunk) [Liquidity](index=5&type=section&id=Liquidity) The company maintained a strong liquidity profile as of December 31, 2024, characterized by stable total deposits, a high percentage of core deposits, sufficient cash inflows, and significant available funding capacity - The bank's leadership effectively manages a robust liquidity profile, with expected cash inflows sufficient to meet all projected financial obligations[31](index=31&type=chunk) - Core deposits represented **76.87%** of total deposits on December 31, 2024, an improvement from **69.83%** on December 31, 2023[32](index=32&type=chunk) - The company has available additional funding capacity of **$113.8 million** with the FHLB of New York and another **$43.3 million** in unused credit lines[33](index=33&type=chunk) [Shareholder Information](index=6&type=section&id=Shareholder%20Information) This section provides details on the company's dividend declaration and related shareholder metrics [Cash Dividend Declared](index=6&type=section&id=Cash%20Dividend%20Declared) The Board of Directors declared a cash dividend of $0.10 per share, payable in February 2025, resulting in a 2.29% dividend yield based on the December 31, 2024 closing stock price - A cash dividend of **$0.10** per share was declared for all common stock holders[34](index=34&type=chunk) - The dividend is payable on February 7, 2025, to shareholders of record by January 17, 2025[35](index=35&type=chunk) - The dividend yield is **2.29%** based on the closing stock price of **$17.50** on December 31, 2024[36](index=36&type=chunk) [Selected Financial Tables](index=8&type=section&id=Selected%20Financial%20Tables) This section provides comprehensive unaudited financial tables, including balance sheet, income statement, key ratios, asset quality, and average balances, offering detailed financial insights [Selected Financial Information (Unaudited)](index=8&type=section&id=Selected%20Financial%20Information%20(Unaudited)) This section provides detailed, unaudited balance sheet and income statement data for recent periods, breaking down assets, liabilities, equity, and various income and expense components Selected Balance Sheet Data (December 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $1,474,874 | | Loans, net | $901,743 | | Total Deposits | $1,204,393 | | Total Shareholders' Equity | $121,860 | Selected Income Statement Data (Q4 2024) | Account | Amount (in thousands) | | :--- | :--- | | Net Interest Income | $10,820 | | Provision for Credit Losses | $988 | | Noninterest Income | $4,906 | | Noninterest Expense | $8,544 | | Net Income Attributable to PBHC | $4,284 | [Financial Highlights and Ratios](index=10&type=section&id=Financial%20Highlights%20and%20Ratios) This section presents key performance ratios for recent periods, encompassing profitability, margin analysis, operational efficiency, capital adequacy, and per-share data Key Performance Ratios (Q4 2024) | Ratio | Value | | :--- | :--- | | Return on average assets (ROA) (%) | 1.17 | | Return on average common equity (ROE) (%) | 14.09 | | Net interest margin (NIM) (%) | 3.15 | | Efficiency ratio (non-GAAP) (%) | 69.42 | | Book value per common share ($) | 19.90 | [Asset Quality, Loan and Deposit Composition](index=11&type=section&id=Asset%20Quality%2C%20Loan%20and%20Deposit%20Composition) This section provides detailed tables on asset quality metrics and the composition of the loan and deposit portfolios over recent quarters, categorized by loan type and deposit category Asset Quality Ratios (December 31, 2024) | Ratio | Value (%) | | :--- | :--- | | Net loan charge-offs to average loans (annualized) | 0.44 | | Allowance for credit losses to period end loans | 1.88 | | Nonperforming loans to period end loans | 2.40 | - As of December 31, 2024, the largest loan categories were Commercial real estate (**$377.6 million**) and 1-4 family residential mortgages (**$251.4 million**)[49](index=49&type=chunk) [Selected Average Balances and Yields](index=12&type=section&id=Selected%20Average%20Balances%20and%20Yields) This section details average balances of interest-earning assets and interest-bearing liabilities, along with their associated yields and costs, providing insight into net interest margin components Average Yields and Costs (Q4 2024) | Metric | Value (%) | | :--- | :--- | | Average Yield on Loans | 5.87 | | Average Yield on Total Interest-Earning Assets | 5.69 | | Average Cost of Total Interest-Bearing Liabilities | 3.16 | | Net Interest Rate Spread | 2.53 | | Net Interest Margin | 3.15 | [Non-GAAP Reconciliations](index=13&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures, including calculations for tangible book value, tangible common equity, and efficiency ratios - Tangible book value per common share (a non-GAAP measure) was **$18.10** at December 31, 2024, compared to a GAAP book value of **$19.90**[52](index=52&type=chunk) - Pre-tax, pre-provision net income (a non-GAAP measure) was **$3.76 million** for Q4 2024[52](index=52&type=chunk)

Core Financial Performance - Pathfinder Bancorp reported a net income of $4.3 million or $0.69 per share for the fourth quarter of 2024, benefiting from a $1.4 million gain on the sale of its insurance agency [2][3] - The company experienced a net loss of $4.6 million or $0.75 per share in the third quarter of 2024, primarily due to a $9.0 million provision expense related to a loan portfolio review [3] - For the full year 2024, net income was $3.8 million or $0.60 per share, compared to $9.3 million or $1.51 per share in 2023 [3] Net Interest Income and Margin - Fourth quarter 2024 net interest income was $10.8 million, a decrease of 7.8% from the third quarter, but an increase of 18.1% from the fourth quarter of 2023 [6][8] - The net interest margin (NIM) for the fourth quarter was 3.15%, down from 3.34% in the previous quarter but up from 2.74% in the same period last year [7][10] Non-Interest Income and Expenses - Non-interest income totaled $4.9 million in the fourth quarter, including a $3.2 million pre-tax gain from the insurance agency sale, compared to $1.7 million in the linked quarter [11][12] - Non-interest expenses were $8.5 million in the fourth quarter, decreasing by $1.7 million from the linked quarter but increasing by $1.5 million from the year-ago period [15] Asset Quality and Provision for Credit Losses - Nonperforming loans increased to $22.1 million or 2.40% of total loans as of December 31, 2024, compared to 1.75% in the previous quarter [25] - Provision for credit loss expense was $988,000 in the fourth quarter, significantly lower than the $9.0 million in the third quarter [27][28] Deposits and Loans - Total deposits reached $1.20 billion, growing by $8.1 million or 2.7% annualized from the previous quarter and by $84.3 million or 7.5% year-over-year [9][23] - Total loans were $919.0 million at the end of the fourth quarter, a slight decrease from the previous quarter but an increase of 2.4% from the year prior [22] Shareholder Equity and Dividends - Shareholders' equity totaled $121.9 million, reflecting a $1.6 million increase in the fourth quarter [24] - A cash dividend of $0.10 per share was declared, with a dividend yield of 2.29% based on the closing stock price of $17.50 as of December 31, 2024 [32][34]

Core Financial Performance - Pathfinder Bancorp reported a net income of $4.3 million or $0.69 per share for the fourth quarter of 2024, benefiting from a $1.4 million gain on the sale of its insurance agency [2][3] - The company experienced a net loss of $4.6 million or $0.75 per share in the third quarter of 2024, compared to a net income of $2.5 million or $0.41 per share in the fourth quarter of 2023 [3] - For the full year 2024, net income was $3.8 million or $0.60 per share, down from $9.3 million or $1.51 per share in 2023 [3] Net Interest Income and Margin - Fourth quarter 2024 net interest income was $10.8 million, a decrease of 7.8% from the third quarter but an increase of 18.1% from the fourth quarter of 2023 [6][9] - The net interest margin (NIM) for the fourth quarter was 3.15%, down from 3.34% in the previous quarter but up from 2.74% in the same period last year [8][10] - Full-year net interest income was $41.4 million in 2024, compared to $38.9 million in 2023 [7] Non-Interest Income and Expenses - Non-interest income totaled $4.9 million in the fourth quarter of 2024, including a $3.2 million pre-tax gain from the insurance agency sale, compared to $1.7 million in the linked quarter [11][12] - Non-interest expense was $8.5 million in the fourth quarter, decreasing from $10.3 million in the linked quarter but increasing from $7.0 million in the year-ago period [15] - Salaries and benefits accounted for $4.1 million in the fourth quarter, reflecting a decrease from the linked quarter but an increase from the year-ago period [17] Asset Quality and Provision for Credit Losses - Nonperforming loans were $22.1 million or 2.40% of total loans as of December 31, 2024, up from 1.75% in the previous quarter [25] - Provision for credit loss expense was $988,000 in the fourth quarter, significantly lower than $9.0 million in the linked quarter [27] - The allowance for credit losses (ACL) was $17.2 million, representing 1.88% of total loans [28] Liquidity and Deposits - Total deposits were $1.20 billion at the end of the fourth quarter, reflecting a 2.7% annualized growth from the previous quarter and a 7.5% increase from the year-ago period [23][30] - The company maintained a strong liquidity profile with an available additional funding capacity of $113.8 million with the Federal Home Loan Bank of New York [31] Shareholder Value - A cash dividend of $0.10 per share was declared on December 23, 2024, with a dividend yield of 2.29% based on a closing stock price of $17.50 per share as of December 31, 2024 [32][33]

Financial Position - As of September 30, 2024, the Company and its subsidiaries had total consolidated assets of $1.48 billion, total consolidated liabilities of $1.36 billion, and shareholders' equity of $120.2 million[160]. - Total assets increased by $17.3 million or 1.18% to $1.48 billion at September 30, 2024, primarily due to increases in total loans and intangible assets[224]. - Total liabilities increased by $16.5 million or 1.23% to $1.36 billion at September 30, 2024, mainly due to increases in total deposits and finance lease liabilities[228]. - Shareholders' equity increased by $751,000 or 0.6% to $120.2 million at September 30, 2024, primarily due to a decrease in accumulated other comprehensive loss[231]. Loan and Credit Quality - The Bank's position in individually evaluated loans consisted of 49 loans totaling $19.6 million, with 16 loans valued at $3.1 million using the present value of future cash flows method[170]. - The Bank allocated $9.8 million to the allowance for credit losses (ACL) for commercial loans, which represent 57.9% of the Bank's entire loan portfolio[171]. - The provision for credit losses was $9.0 million in Q3 2024, significantly higher than $0.8 million in Q3 2023, with net charge-offs of $8.7 million representing 1.29% of average loans[187]. - Nonperforming loans decreased by 34.0% to $16.2 million, or 1.8% of total loans, as of September 30, 2024[204]. - The ratio of delinquent loans to total loans increased to 4.1% as of September 30, 2024, up from 3.8% at December 31, 2023, with delinquent loans increasing by $3.9 million[207]. - The allowance for credit losses was $17.3 million as of September 30, 2024, compared to $16.0 million at December 31, 2023, reflecting a ratio of 1.87% to total loans[240]. - Total nonperforming loans to total loans was 1.75% as of September 30, 2024, compared to 1.92% at December 31, 2023[238]. Income and Expenses - Net income for Q3 2024 decreased to a net loss of $4.6 million or $0.75 per share, compared to a net income of $2.2 million or $0.35 per share in Q3 2023[184]. - Net interest income for Q3 2024 was $11.7 million, an increase of 16.6% from Q3 2023, driven by a $3.5 million increase in interest and dividend income[185]. - Noninterest income increased by 43.1% to $1.7 million in Q3 2024, with notable increases in interchange fees and earnings on bank-owned life insurance[188]. - Noninterest expense totaled $10.3 million in Q3 2024, an increase of $2.6 million from Q3 2023, primarily due to transaction-related expenses from the East Syracuse branch acquisition[189]. - The efficiency ratio for Q3 2024 was 75.28%, impacted by acquisition-related expenses, compared to 67.93% in Q3 2023[190]. - Salaries and benefits were $5.0 million in Q3 2024, increasing $805,000 or 19.4% from the year-ago quarter, driven by transaction-related bonuses and higher personnel costs[214]. - Professional and other services expense was $1.8 million in Q3 2024, up $1.3 million or 269.9% from the previous year, mainly attributed to branch acquisition-related expenses[213]. Deposits and Funding - Total deposits increased by $76.1 million, or 6.8%, from December 31, 2023, primarily due to $186.0 million in deposits from the East Syracuse branch acquisition[199]. - Core deposits, which exclude certificates of deposit of $250,000 or more, accounted for 77.45% of the Company's total deposit base of $1.20 billion[199]. - Total deposits increased to $1,196.2 million as of September 30, 2024, up from $1,120.1 million at December 31, 2023, representing a growth of 6.8%[201]. - The average cost of deposits acquired in the East Syracuse branch acquisition was approximately 1.99%[181]. - The Company had $222.3 million in outstanding commitments to extend credit and standby letters of credit as of September 30, 2024[252]. - A significant decrease in deposits could lead the Company to seek alternative funding sources, potentially increasing interest expenses[248]. Capital and Ratios - As of September 30, 2024, total core capital to risk-weighted assets was $147,211 thousand, representing a ratio of 14.52%[234]. - Total Tier 1 capital to risk-weighted assets was $134,471 thousand, with a ratio of 13.26% as of September 30, 2024[237]. - The ratio of total capital to risk-weighted assets was 13.26% as of September 30, 2024, down from 13.80% at December 31, 2023[237]. - The total Tier 1 common equity to risk-weighted assets ratio was 13.26% as of September 30, 2024, down from 13.80% at December 31, 2023[237]. Other Key Developments - On October 1, 2024, the Company completed the sale of its interest in FitzGibbons to Marshall & Sterling Enterprises, Inc.[160]. - The Company maintains a noncontributory defined benefit pension plan, which has been frozen since May 14, 2012, to reduce earnings volatility[174]. - Management performed an annual evaluation of goodwill and intangible assets for possible impairment, determining that the carrying value of goodwill was not impaired as of December 31, 2023[180]. - The Company invests excess funds in short-term interest-earning assets to maintain liquidity for lending requirements[247]. - The Company maintains a quality control program for closed loans, considering potential repurchase risks to be minimal[246]. - The management continuously monitors liquidity and reported compliance with liquidity policy guidelines as of September 30, 2024[251].