Pathfinder Bancorp(PBHC) - 2024 Q2 - Quarterly Report

Financial Position - As of June 30, 2024, the Company and its subsidiaries had total consolidated assets of $1.45 billion, total consolidated liabilities of $1.32 billion, and shareholders' equity of $123.3 million[128]. - The Company is required to consolidate 100% of FitzGibbons Agency, LLC, despite owning only 51% of the membership interest, resulting in a noncontrolling interest of $826,000[128]. - Total assets decreased by $19.6 million, or 1.34%, to $1.45 billion as of June 30, 2024, compared to December 31, 2023[195]. - Total liabilities decreased by $23.5 million, or 1.7%, to $1.32 billion at June 30, 2024[197]. - Shareholders' equity increased by $3.8 million, or 3.2%, to $123.3 million at June 30, 2024, driven by net income of $4.1 million[198]. Loan and Credit Quality - The Bank's position in individually evaluated loans consisted of 58 loans totaling $19.3 million, with 17 loans valued at $3.1 million using the present value of future cash flows method[136]. - The Bank allocated $7.5 million to the allowance for credit losses (ACL) for commercial loans, which represent 52.0% of the Bank's entire loan portfolio totaling $461.2 million[137]. - The total loan delinquency ratio was 4.8% as of June 30, 2024, down from 5.5% at March 31, 2024, and 3.8% at December 31, 2023[181]. - The allowance for credit losses was $16.9 million as of June 30, 2024, compared to $16.0 million at December 31, 2023, with a ratio of 1.89% to total loans[207]. - Potential problem loans totaled $40.6 million at June 30, 2024, an increase of $2.5 million from $43.1 million at December 31, 2023[211]. - The ratio of nonperforming loans to total loans was 2.76% as of June 30, 2024, compared to 1.92% at December 31, 2023[205]. - The total amount of nonaccrual loans was $24.5 million as of June 30, 2024, up from $17.2 million at December 31, 2023[204]. - As of June 30, 2024, total nonperforming assets were $24.6 million, an increase of $7.2 million from $17.4 million at December 31, 2023, and $4.0 million from $20.6 million at June 30, 2023[205]. Income and Earnings - Net income for the second quarter of 2024 was $2.0 million, an increase of $18,000 or 0.9% from the second quarter of 2023[148]. - Basic and diluted earnings per voting common share for the second quarter of 2024 were both $0.32, unchanged from the same period in 2023[148]. - Noninterest income for Q2 2024 was $1.2 million, an increase of $124,000 or 11.4% compared to Q2 2023[183]. - Total noninterest income for the six months ended June 30, 2024, reached $2.9 million, up $269,000 from the same period in 2023[186]. - Recurring noninterest income increased by $155,000 or 13.6% year-over-year, driven by a $79,000 rise in debit card interchange fees[184]. Interest Income and Expenses - Net interest income for the second quarter of 2024 decreased by $252,000 or 2.6% to $9.5 million compared to the second quarter of 2023[148]. - Total interest income for the six months ended June 30, 2024, was $5.968 million, an increase from $5.714 million in the same period of 2023[174]. - Total interest expense for the six months ended June 30, 2024, was $6.788 million, compared to $6.387 million for the same period in 2023[174]. - The net interest margin for the second quarter of 2024 was 2.78%, down from 2.96% in the second quarter of 2023[171]. - Average loan yield increased by 44 basis points, contributing to an increase in interest income of $698,000 for the second quarter of 2024[170]. Deposits and Funding - Total deposits at the end of the second quarter of 2024 were $1.10 billion, unchanged from June 30, 2023[148]. - Total deposits decreased by $18.8 million, or 1.7%, from December 31, 2023, primarily due to seasonal fluctuations of municipal depositors[175]. - As of June 30, 2024, 55.9% of the Company's deposit base of $1.10 billion consisted of core deposits, which are considered more stable[175]. - The average cost of deposits acquired in the East Syracuse branch acquisition was approximately 1.99%[146]. - The Company will continue to emphasize retail and business core deposits by providing a full range of deposit product offerings[175]. Expenses and Taxation - The Bank's noninterest expense for the second quarter of 2024 was $7.9 million, an increase of $734,000 or 10.2% from the same period in 2023[157]. - Salaries and employee benefits rose by $493,000 or 12.6% in Q2 2024, attributed to headcount increases and wage inflation[188]. - The effective tax rate decreased to 19.3% for Q2 2024, down from 21.2% in Q2 2023, primarily due to fluctuations in permanent tax differences[191]. - Professional and other services expenses increased by $193,000 or 38.4% in Q2 2024, largely due to nonrecurring expenses related to technology enhancements[188]. Capital and Regulatory Compliance - The Bank met the regulatory definition of a "well-capitalized" institution with a leverage capital ratio exceeding 5% and a Tier 1 risk-based capital ratio exceeding 8% as of June 30, 2024[199]. - Total Tier 1 capital to risk-weighted assets was 14.79% as of June 30, 2024, compared to 13.80% at December 31, 2023[203]. - Total core capital to risk-weighted assets increased to 16.04% at June 30, 2024, from 15.05% at December 31, 2023[203].