Pathfinder Bancorp(PBHC) - 2025 Q2 - Quarterly Results

Pathfinder Bancorp, Inc. Q2 2025 Earnings Release Second Quarter 2025 Highlights 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] 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 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][8][9] - 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] Noninterest Income 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][13] - 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] - 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] Noninterest Expense 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] - The efficiency ratio improved to 65.66% from 67.19% in the linked quarter and 74.36% in the year-ago period[22] Financial Condition 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][25] Asset Quality 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] 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] - 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] Cash Dividend 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] - The annualized dividend yield is 2.61% based on the June 30, 2025 closing stock price of $15.34[37] Selected Financial Tables 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% |