Pathfinder Bancorp(PBHC) - 2024 Q1 - Quarterly Report

Financial Position - As of March 31, 2024, the Company and its subsidiaries had total consolidated assets of $1.45 billion, total consolidated liabilities of $1.33 billion, and shareholders' equity of $121.8 million[134]. - The Company reported a total deposit base of $1.146 billion as of March 31, 2024, compared to $1.125 billion on December 31, 2023[182]. - Total assets decreased by $12.1 million or 0.8% to $1.45 billion as of March 31, 2024, driven by lower interest-earning deposits and loans[159]. - Total liabilities decreased by $14.5 million, or 1.1%, to $1.33 billion at March 31, 2024, mainly due to a decrease in borrowed funds[204]. - Shareholders' equity increased by $2.3 million, or 1.9%, to $121.8 million at March 31, 2024, driven by recorded net income of $2.1 million[206]. Loan and Credit Quality - The Bank's position in individually evaluated loans consisted of 72 loans totaling $23.2 million, with 17 loans valued at $1.6 million using the present value of future cash flows method[144]. - The Bank allocated $7.8 million to the allowance for credit losses (ACL) for commercial loans, which represent 56.0% of the Bank's entire loan portfolio totaling $438.6 million[145]. - Nonperforming loans to total loans increased to 2.2% at March 31, 2024, compared to 1.9% at December 31, 2023[159]. - The ratio of delinquent loans to total loans increased to 5.5% at March 31, 2024, compared to 3.7% at December 31, 2023, with delinquent loans increasing by $15.3 million[188]. - The allowance for credit losses increased to $16.7 million at March 31, 2024, compared to $16.0 million at December 31, 2023, with a ratio of 1.87% to total loans[216]. Income and Earnings - The Company recorded net income of $2.1 million for Q1 2024, a decrease of $479,000 or 18.4% compared to $2.6 million in Q1 2023[159]. - Basic and diluted earnings per share decreased to $0.34, down $0.09 from $0.43 in the same quarter last year[159]. - The Company's noninterest income for Q1 2024 was $1.7 million, reflecting an increase of $145,000 compared to Q1 2023[164]. - Total noninterest expense for Q1 2024 was $7.7 million, an increase of $182,000 or 2.4% compared to the same period in 2023[166]. - The effective income tax rate decreased to 19.7% for Q1 2024, down from 20.0% in Q1 2023[159]. Interest Income and Expenses - Net interest income after provision for credit losses decreased by $602,000 or 6.5% to $8.7 million, primarily due to a $50.4 million increase in average interest-bearing liabilities[159]. - Interest and dividend income increased by $3.6 million or 23.7% to $18.6 million for Q1 2024, driven by a $1.6 million increase in loan interest income and a $1.9 million increase from investment securities[175]. - Interest expense for Q1 2024 rose by $4.1 million to $9.2 million, mainly due to a 138 basis points increase in average rates paid on interest-bearing liabilities[178]. - The net interest margin for Q1 2024 was 2.75%, a decrease of 27 basis points from 3.02% in Q1 2023[159]. - For Q1 2024, net interest income decreased by $568,000 or 5.7% to $9.4 million compared to $10.0 million in Q1 2023, primarily due to a 138 basis points increase in the average cost of interest-bearing liabilities[174]. Regulatory Compliance and Capital - The Company exceeded all regulatory required minimum capital ratios, including capital buffer requirements, as of March 31, 2024[208]. - As of March 31, 2024, total core capital to risk-weighted assets was 15.65%, up from 15.05% as of December 31, 2023[211]. - The ratio of total capital to risk-weighted assets was 14.39% as of March 31, 2024, up from 13.80% at December 31, 2023[211]. - Total Tier 1 capital was $145.454 million as of March 31, 2024, compared to $142.927 million at December 31, 2023[211]. Management and Operational Strategies - Management considers the allowance for credit losses, deferred income taxes, and pension obligations as areas requiring significant judgment and could be subject to revision[142]. - The Company plans to continue emphasizing retail and business core deposits to enhance market penetration in the Syracuse area[181]. - Management performed an annual evaluation of goodwill for possible impairment and determined that the carrying value of goodwill was not impaired as of December 31, 2023[153]. - The Company has frozen participation and benefit accruals under its defined benefit pension plan to reduce earnings volatility[148]. - The Company maintains a noncontributory defined benefit pension plan covering most employees, based on years of service and final average salary[148].