Pathfinder Bancorp(PBHC) - 2024 Q3 - Quarterly Report

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].