Pathfinder Bancorp(PBHC) - 2025 Q1 - Quarterly Results

Executive Summary & Highlights 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] Financial Performance Analysis 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 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][6] - A benefit of approximately $347,000 from recovered interest on nonaccrual loans and prepayment fees added 10 basis points to NIM[7] Noninterest Income 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] - 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] Noninterest Expense 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] - 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] - 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] - 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] Net Income 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 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 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 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 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] Asset Quality and Liquidity 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 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] - 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] 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] - 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] Shareholder Information 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 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] - The annualized dividend yield is 2.43%, based on the closing stock price of $16.44 on March 31, 2025[31] Financial Tables (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 Presents the unaudited consolidated balance sheets as of March 31, 2025, and for the four preceding quarters, detailing assets, liabilities, and shareholders' equity[37] Selected Income Statement Data 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] Financial Highlights and Ratios 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] Asset Quality, Loan and Deposit Composition 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] Selected Average Balances and Yields 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] Non-GAAP Reconciliations 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]