Pathfinder Bancorp(US:PBHC)2026-03-30 21:39Financial Performance - As of December 31, 2025, Pathfinder Bancorp, Inc. had total consolidated assets of $1.43 billion, total deposits of $1.18 billion, and shareholders' equity of $122.5 million[18]. - Net interest income for the year ended December 31, 2025, was $44,335, compared to $40,989 in 2024, reflecting an increase of 8.2%[207]. - Provision for credit losses increased to $16,342 in 2025 from $10,973 in 2024, indicating a rise of 48.5%[207]. - Net (loss) income attributable to Pathfinder Bancorp, Inc. was $(1,933) in 2025, a decrease from $3,383 in 2024[207]. - Total noninterest income decreased significantly to $2,495 in 2025 from $9,561 in 2024, a decline of 73.9%[207]. - Total interest expense for 2025 was $32,318, down from $37,368 in 2024, a decrease of 13.8%[207]. - The efficiency ratio improved to 69.12% in 2025 from 72.53% in 2024, indicating better cost management[208]. - Cash dividends declared remained stable at $0.40 per share in both 2025 and 2024[207]. - Total equity (GAAP) for Pathfinder Bancorp, Inc. increased to $122,451,000 in 2025 from $121,483,000 in 2024, reflecting a growth of 0.79%[211]. - The book value per common share decreased slightly to $19.80 in 2025 from $19.83 in 2024, a decline of 0.15%[211]. - The dividend payout ratio was negative at (269.03%) in 2025, compared to 78.28% in 2024, indicating a significant loss in net income available to common shareholders[211]. - Total Tier 1 Capital to risk-weighted assets ratio was 13.45% in 2025, slightly up from 13.40% in 2024, showing a stable capital position[212]. - Total Capital to risk-weighted assets ratio improved to 14.72% in 2025 from 14.65% in 2024, reflecting a stronger capital base[212]. - The allowance for credit losses was $12,663,000 in 2025, compared to $13,007,000 in 2024, indicating a decrease in provisions for potential loan losses[212]. - Average adjusted assets for 2025 were reported at $1,423,170,000, compared to $1,439,200,000 in 2024, showing a slight decrease in asset base[212]. - The return on average common equity was (1.54%) in 2025, down from 2.75% in 2024, indicating a decline in profitability[211]. Market Position and Competition - The Bank holds a 43.9% market share of all deposits in Oswego County and 3.7% in Onondaga County, with a combined market share of 8.6% across both counties[29]. - The Bank's competition includes commercial banks, savings institutions, credit unions, and emerging fintech companies, which may impact future market dynamics[27]. - Pathfinder Bancorp, Inc. maintains a strategy to build profitable consumer and commercial customer relationships while competing through high service levels and a wide range of financial products[28]. Lending Activities - The Bank's primary lending activities include commercial real estate loans, which are expected to grow with target loan sizes ranging from $500,000 to $2.0 million[31]. - The Company has focused on increasing its commercial lending, with commercial loans typically secured by business assets and having adjustable rates indexed to the prime interest rate[36]. - Residential real estate loans are offered with terms up to 30 years, adhering to Federal National Mortgage Association guidelines, with maximum conforming loan limits of $806,500 as of December 31, 2025[37]. - The company provides tax-exempt loans to local governments and municipalities, enhancing yield due to federal tax exemption[42]. - Home equity loans are generally limited to a loan-to-value ratio of 80%, or up to 90% if the company holds the first mortgage[44]. - The company faces greater credit-related risks with consumer loans, particularly those that are unsecured or secured by depreciating assets[47]. - The company has modified three loans totaling $15.2 million for borrowers experiencing financial difficulty during the year ended December 31, 2025[64]. Credit Risk Management - The allowance for credit losses (ACL) reflects management's estimate of losses inherent in credit-exposed asset portfolios, including loans and unfunded commitments[71]. - The company adheres to federal and New York State laws regarding consumer loan collections, with a focus on resolving delinquencies[59]. - The company has established internal policies limiting total credit exposure to any one borrower to 10% of Tier 1 and 2 capital[58]. - The company may purchase pools of collateralized consumer loans from financial institutions outside its primary market area to enhance portfolio performance[48]. - The company’s loan origination activity may be adversely affected by rising interest rates and overall local economic health[49]. - The company’s internal loan review process includes a risk grading system to assess the quality of its loan portfolio[60]. - The Allowance for Credit Losses (ACL) is maintained at a level deemed adequate for anticipated losses, with quarterly evaluations performed by management[72]. - The ACL consists of three components: specific allowances for individually evaluated loans, quantitative factors for pooled loans, and qualitative factors for overall credit quality[73]. - Individually evaluated loans are assessed based on unique risk characteristics, with credit losses measured using discounted cash flow methods or collateral-dependent valuation techniques[74]. - Quantitative factors for ACL estimation utilize historical loss rates and econometric factors, predicting future charge-offs based on national unemployment rates[78]. - Qualitative factors considered include economic trends, delinquency levels, and changes in lending policies, with adjustments made quarterly to reflect forward-looking projections[79]. Investment and Funding - The investment policy focuses on safety, liquidity, and potential returns, with oversight from the Asset Liability Management Committee[81]. - The investment portfolio aims to manage interest rate risk while generating reasonable returns and includes a variety of debt securities[82]. - The bank's primary funding source is deposits, supplemented by advances from the FHLB-NY and brokered deposits[91]. - The bank participates in reciprocal deposit programs to provide FDIC insurance coverage for deposits exceeding the maximum insurable amount[95]. - Public deposit products are offered to local municipalities, with funding levels varying seasonally based on cash flows[96]. - The Company has issued $5 million of 30-year floating rate Company-obligated pooled capital securities, treated as Tier 1 capital by the FDIC and the Federal Reserve[98]. - Interest expense related to the floating rate junior subordinated deferrable interest debentures was $321,000 in 2025 and $373,000 in 2024[98]. - The 2020 Subordinated Debt of $25 million has a fixed annual interest rate of 5.50% until October 15, 2025, after which it will reset to SOFR plus 5.32%[100][101]. - As of December 31, 2025, the interest expense related to the 2020 Subordinated Debt was $1.7 million, compared to $1.6 million in 2024[102]. Regulatory Compliance - The Company is subject to minimum capital requirements including a total risk-based capital ratio of 8.0% and a Tier 1 risk-based capital ratio of 6.0%[112]. - The Bank did not elect to become subject to the community bank leverage ratio (CBLR) as of December 31, 2025, which was proposed to be lowered to 8%[114]. - The Company’s most recent NYCRA rating was "satisfactory," dated September 30, 2021[111]. - The FDIC increased initial base deposit insurance assessment rates by two basis points effective January 1, 2023, with rates for institutions of Pathfinder Bank's size ranging from 2.5 to 32 basis points[129]. - Pathfinder Bank's latest FDIC CRA rating, dated February 18, 2025, was "satisfactory," indicating compliance with community credit needs[131]. - The Dodd-Frank Act permanently increased the maximum amount of deposit insurance to $250,000 per depositor[127]. - Pathfinder Bank is required to hold a specified amount of shares in the Federal Home Loan Bank System, and it was in compliance with this requirement as of December 31, 2025[132]. - The Federal Reserve Board's policies require that dividends should be paid only out of current earnings and may be restricted if a subsidiary bank becomes undercapitalized[142]. - The FDIC has the authority to appoint a conservator or receiver for an insured bank if it is deemed "critically undercapitalized" for a specified period[127]. - Pathfinder Bank's authority to extend credit to insiders is governed by Sections 22(g) and 22(h) of the Federal Reserve Act, requiring compliance with specific credit terms[125]. - The Gramm-Leach-Bliley Act allows a well-capitalized BHC to opt to become a "financial holding company," enabling broader financial activities[137]. - The FDIC assesses institutions based on financial measures and supervisory ratings, with less risky institutions paying lower assessments[128]. Employee and Community Engagement - As of December 31, 2025, the company employed 187 team members, with 179 full-time and 8 part-time employees, representing a 7.5% increase in headcount from 174 in 2023[161]. - The voluntary turnover rate for 2025 was 17.0%, a decrease from 23.7% in 2024, indicating improved employee retention[161]. - The company has a mission to enhance the value of the bank for shareholders, customers, employees, and communities, emphasizing a commitment to community relationships[159]. - The company provides a competitive compensation and benefits program, including annual bonuses, stock awards, and a 401(k) plan with employer matching contributions[166]. - The company has invested in employee development through training programs and educational reimbursement, promoting internal career advancement[167]. - Approximately 28.3% of the current staff has been with the company for ten years or more, reflecting a commitment to employee retention[168]. Cybersecurity - The company has established a comprehensive Information & Cybersecurity Program & Policy to manage cybersecurity risks, with oversight from the Board of Directors[171]. - The company has not experienced any cybersecurity incidents that have materially affected its business or financial condition[174]. Assets and Properties - The aggregate net book value of the Bank's premises and equipment was $18.0 million as of December 31, 2025[176]. - The Company had 6,185,644 shares of voting common stock outstanding as of December 31, 2025, an increase from 6,125,649 shares in 2024[186]. - The Company raised approximately $20.8 million in gross proceeds from a private placement transaction on May 8, 2019[191]. - The net cash received from the private placement, after expenses, was $19.6 million, which was used to strengthen capital and liquidity positions[197]. - Castle Creek owned approximately 9.7% of the Company's common voting stock as of December 31, 2025[196]. - The Company has 275 shareholders of record as of March 24, 2026[180]. - The Company intends to continue paying regular quarterly cash dividends, subject to various factors including capital requirements[183]. - The Company has 78,784 options, warrants, and rights outstanding with a weighted-average exercise price of $11.06[182]. - The Company has transformed its business from a traditional savings bank to a commercial bank, significantly growing its commercial loan portfolios[187]. - The Company has seven offices in Oswego County and five in Onondaga County, with various owned and leased properties[177]. - Total assets as of December 31, 2025, were $1,426,636, a decrease from $1,474,874 in 2024[207].