Pathfinder Bancorp, Inc. Announces Second Quarter 2025 Results
OSWEGO, N.Y., July 30, 2025 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. ("Pathfinder" or the "Company") (NASDAQ:PBHC) announced its financial results for the second quarter ended June 30, 2025.
The holding company for Pathfinder Bank ("the Bank") reported net income attributable to common shareholders of $31,000, or less than $0.01 per diluted share in the second quarter of 2025, compared to $3.0 million or $0.47 per diluted share in the first quarter of 2025 and $2.0 million or $0.32 per share in the second quarter of 2024.
Second Quarter 2025 Highlights and Key Developments
The Company continued to undertake proactive measures in the second quarter to mitigate credit risk and enhance asset quality metrics for the long term. These included the July 2025 sale of $9.3 million in nonperforming and classified loans associated with one local commercial relationship for a pre-tax loss of $3.1 million recorded as a second quarter 2025 lower of cost or market adjustment to loans held for sale ("LOCOM HFS adjustment"), representing $0.40 per diluted share net of tax, as well as $2.6 million in net charge offs ("NCOs") that are reflected in provision expense of $1.2 million.
Nonperforming loans declined to $11.7 million at period end, improving by 11.7% during the second quarter and 52.3% from June 30, 2024. Nonperforming loans also declined to 1.28% of total loans at period end, improving from 1.45% on March 31, 2025 and 2.76% on June 30, 2024.
Total deposits were $1.22 billion at period end, compared to $1.26 billion on March 31, 2025 and $1.10 billion on June 30, 2024. During the second quarter of 2025, total balances declined on reductions in higher-cost time and money market accounts, as well as regular municipal deposit seasonality. Core deposits grew to 78.47% of total deposits at period end from 78.31% on March 31, 2025 and 67.98% on June 30, 2024.
Total loans were $909.7 million at period end, reflecting the move of $3.2 million in balances to held-for-sale status for the July 2025 sale of nonperforming and classified loans, compared to $912.2 million on March 31, 2025 and $888.3 million on June 30, 2024. Commercial loans grew to $549.1 million or 60.4% of total loans at period end, compared to $542.7 million on March 31, 2025 and $527.2 million on June 30, 2024.
Net interest income was $10.8 million and net interest margin ("NIM") was 3.11% in the second quarter of 2025. Linked quarter results reflected 2024 interest recovered from loans removed from nonaccrual status and income from prepayment fees, adding approximately $347,000 to net interest income of $11.4 million and 10 basis points to NIM of 3.31%. Second quarter 2024 net interest income was $9.5 million and NIM was 2.78%.
The efficiency ratio was 65.66%, compared to 67.19% in the linked quarter and 74.36% in the year-ago period. The efficiency ratio, which is not a financial metric under generally accepted accounting principles ("GAAP"), is a measure that the Company believes is helpful to understanding its level of non-interest expense as a percentage of total revenue.
Pre-tax, pre-provision ("PTPP") net income was $4.2 million, compared to $4.2 million in the linked quarter and $2.8 million in the year-ago period. PTPP net income, which is not a financial metric under GAAP, is a measure that the Company believes is helpful to understanding profitability without giving effect to income taxes and provision for credit losses.
"Pathfinder's more exacting approach to proactive credit risk mitigation continues to be implemented, with measures taken to proactively address certain loans experiencing credit deterioration resulting in elevated charge offs and the sale of nonperforming and classified commercial loans associated with a single in-market commercial relationship," said President and Chief Executive Officer James A. Dowd. "These steps were taken as part of our ongoing efforts to enhance Pathfinder's asset quality and resilience over the long term."
Dowd added, "Growing our Central New York core deposit franchise remains an ongoing area of focus, as it continues to serve as a valuable source of low-cost funding for local, relationship-based lending opportunities with small- and middle-market businesses and consumers in our attractive regional markets."
Net Interest Income and Net Interest Margin Second quarter 2025 net interest income was $10.8 million, a decrease of $597,000, or 5.2%, from the first quarter of 2025. The decrease from the linked quarter was due in part to approximately $347,000 of first quarter 2025 net interest income attributed to 2024 interest recovered from loans removed from nonaccrual status and income from prepayment fees.
A decrease in interest and dividend income of $259,000 from the linked quarter was attributed to average yield decreases of 22 basis points on loans, which benefited by 15 basis points from 2024 interest recovered from loans removed from nonaccrual status and income from prepayment fees in the first quarter of 2025. The interest and dividend income decrease was also attributed to 5 basis points on fed funds sold and interest-earning deposits, and 11 basis points on all interest-earning assets, partially offset by average yield increases on taxable and tax-exempt securities of 3 and 76 basis points, respectively. In addition, average loan balances declined by $4.9 million, while average balances of lower-yielding taxable securities increased by $18.5 million. The corresponding decrease in loan interest income and federal funds sold and interest-earning deposits was $566,000 and $21,000, respectively, partially offset by increases in taxable and tax-exempt securities income of $337,000 and $63,000, respectively. An increase in interest expense from the first quarter of 2025 of $338,000 was primarily attributed to a 5 basis point increase in the average cost of interest bearing deposits.
Net interest margin was 3.11% in the second quarter of 2025 compared to 3.31% in the first quarter 2025. The decrease of 20 basis points reflected lower average loan yields and higher average interest bearing deposit costs in the second quarter of 2025, as well as approximately 10 basis points of first quarter 2025 margin attributed to 2024 interest recovered from loans removed from nonaccrual status and income from prepayment fees.
Second quarter 2025 net interest income was $10.8 million, an increase of $1.3 million, or 14.1%, from the second quarter of 2024. An increase in interest and dividend income of $160,000 was primarily attributed to average yield increases of 11 basis points on loans and a $25.9 million increase in average loan balances. The corresponding increase in loan interest income was $617,000. A decrease in interest expense of $1.2 million was attributed to reductions in the average cost of interest bearing deposits and total interest-bearing liabilities of 40 basis points and 45 basis points, respectively, as well as reductions in brokered deposits and short-term borrowings expense associated with paydowns of brokered deposits and borrowings utilizing a portion of the low-cost liquidity provided by core deposit growth.
Net interest margin was 3.11% in the second quarter of 2025 compared to 2.78% in the second quarter of 2024. The increase of 33 basis points reflected higher average loan yields and lower average deposit and borrowing costs in the second quarter of 2025, as compared to the year-ago period.
Noninterest Income Second quarter 2025 noninterest income includes the $3.1 million LOCOM HFS adjustment, with an after-tax effect of $2.5 million or $0.40 per diluted share. Nonperforming and classified loans associated with one local commercial relationship dating back to 2013, with an original principal balance of $9.3 million and a June 30, 2025 principal balance of $6.3 million were sold in July 2025 for $3.2 million to an undisclosed financial buyer.
Second quarter 2025 noninterest income totaled negative $1.5 million, reflecting the $3.1 million LOCOM HFS adjustment, and no longer includes contributions from the insurance agency business sold in October 2024. Noninterest income was $1.2 million in the linked quarter and $1.2 million, including $260,000 in insurance revenue, in the year-ago period.
Compared to the linked quarter, second quarter 2025 noninterest income reflected increases of $179,000 in debit card interchange fees and $6,000 in service charges on deposit accounts, as well as a decrease of $6,000 in earnings and gain on bank owned life insurance ("BOLI"). Compared to the linked quarter, second quarter 2025 noninterest income also reflected increases of $202,000 in net unrealized gains on marketable equity securities, as well as decreases of $8,000 in net realized losses on sales and redemptions of investment securities and $4,000 in loan servicing fees.
Compared to the year-ago period, second quarter 2025 noninterest income included increases of $50,000 in service charges on deposit accounts, as well as decreases of $11,000 in earnings and gain on BOLI, and $11,000 in debit card interchange fees. Compared to the year-ago period, second quarter 2025 noninterest income also reflected an increase of $559,000 in net unrealized gains on marketable equity securities, as well as decreases of $16,000 in net realized gains on sales and redemptions of investment securities and $15,000 in loan servicing fees.
Noninterest ExpenseNoninterest expense totaled $8.1 million in the second quarter of 2025, including $595,000 in costs associated with the East Syracuse branch acquired in July 2024 and excluding costs for the insurance agency business sold in October 2024. Noninterest expense was $8.4 million in the linked quarter, including East Syracuse branch costs of $577,000, and $7.9 million in the year-ago period, including insurance agency costs of $232,000.
Salaries and benefits were $4.5 million in the second quarter of 2025, in line with the linked quarter and increased $126,000 from the year-ago period. The increase from the second quarter of 2024 was primarily attributed to the July 2024 East Syracuse Branch Acquisition, which had $116,000 of total salary and benefit expenses in the second quarter of 2025. Excluding the East Syracuse branch, salaries and benefits increased $10,000 from the year-ago period. This increase from the second quarter of 2024 was primarily attributed to a $183,000 increase in stock-based compensation, partially offset by a $106,000 decrease in employee benefits, a $51,000 decrease in salaries and benefits expenses, and a $16,000 decrease in director compensation.
Building and occupancy was $1.2 million in the second quarter of 2025, decreasing $117,000 from the linked quarter and increasing $316,000 from the year-ago quarter. The decrease from the linked quarter reflected lower costs associated with building maintenance primarily related to snow removal. The increase from the first quarter of last year was primarily due to ongoing facilities-related costs associated with operating the East Syracuse branch acquired in July 2024.
Data processing expense was $667,000 in the second quarter of 2025, in line with the linked quarter and increasing $117,000 from the year-ago period. The increase from the second quarter of 2024 was primarily attributed to the ongoing operations of the East Syracuse branch acquired in July 2024.
No FDIC assessment expense was recorded in the second quarter of 2025, due to modest over-accruals in prior periods, compared to $229,000 and $228,000 in the linked and year-ago periods, respectively. The Company anticipates more normalized FDIC assessments in the future and expects this expense to range between $220,000 to $230,000 per quarter in the second half of 2025.
Annualized noninterest expense represented 2.18% of average assets in the second quarter of 2025, compared to 2.33% and 2.19% in the linked and year-ago periods. The efficiency ratio was 65.66%, compared to 67.19% and 74.36% in the linked and year-ago periods, respectively. The efficiency ratio, which is not a financial metric under GAAP, is a measure that the Company believes is helpful to understanding its level of non-interest expense as a percentage of total revenue.
Net IncomeFor the second quarter of 2025, net income attributable to common shareholders was $31,000, or less than $0.01 per basic and diluted share. Linked quarter net income was $3.0 million, or $0.48 per basic share and $0.47 per diluted share. Second quarter 2024 net income totaled $2.0 million or $0.32 per basic and diluted share.
Statement of Financial ConditionAs of June 30, 2025, the Company's statement of financial condition reflects total assets of $1.51 billion, compared to $1.50 billion and $1.45 billion recorded on March 31, 2025 and June 30, 2024, respectively.
Loans totaled $909.7 million on June 30, 2025, after $3.2 million in balances were moved to held-for-sale status for the July 2025 sale of nonperforming and classified loans, resulting in a decrease of $2.4 million or 0.3% from March 31, 2025. Total loans increased $21.5 million or 2.4% from one year prior. Consumer and residential loans totaled $362.1 million, decreasing 2.4% during the second quarter and increasing 0.2% from one year prior. Commercial loans totaled $549.1 million, increasing 1.2% during the second quarter and 4.1% from one year prior, despite the recent loan sale.
With respect to liabilities, deposits totaled $1.22 billion on June 30, 2025, decreasing 3.4% on reductions in higher-cost time and money market accounts, as well as regular municipal deposit seasonality, during the second quarter and increasing 11.0% from one year prior.
Shareholders' equity totaled $124.4 million on June 30, 2025, decreasing $483,000 or 0.4% in the second quarter and increasing $1.1 million or 0.9% from one year prior. The second quarter 2025 decrease primarily reflects a $599,000 decrease in retained earnings, a $426,000 decrease in accumulated other comprehensive loss ("AOCL"), and a $542,000 increase in additional paid in capital. Noncontrolling interest, previously included in equity on the Statements of Financial Condition, was eliminated in October 2024 upon the sale of the Company's 51% insurance agency ownership interest.
Asset QualityThe Company's asset quality metrics reflect ongoing efforts the Bank is undertaking as part of its commitment to continuously improve its credit risk management approach.
Nonperforming loans were $11.7 million, or 1.28% of total loans on June 30, 2025, compared to $13.2 million or 1.45% on March 31, 2025 and $24.5 million or 2.76% on June 30, 2024. Continued improvement in nonperforming loans in the second quarter of 2025 primarily resulted from the recent sale of loans associated with one local commercial relationship dating to 2013.
NCOs after recoveries were $2.6 million or an annualized 1.14% of average loans in the second quarter of 2025, with gross charge offs for consumer loans, purchased loan pools, and commercial loans, offsetting recoveries in each of these categories. NCOs were $340,000 or an annualized 0.15% of average loans in the linked quarter and $66,000 or 0.03% in the prior year period.
Provision for credit loss expense was $1.2 million in the second quarter of 2025 primarily reflecting NCOs in the period, partially offset by reductions related to quantitative and qualitative factors in the Company's reserve model. The provision was $457,000 and $290,000 in the linked and year-ago quarters, respectively.
The Company believes it is sufficiently collateralized and reserved, with an Allowance for Credit Losses ("ACL") of $16.0 million on June 30, 2025, compared to $17.4 million on March 31, 2025 and $16.9 million on June 30, 2024. As a percentage of total loans, ACL represented 1.76% on June 30, 2025, 1.91% on March 31, 2025, and 1.90% on June 30, 2024. Liquidity The Company has diligently ensured a strong liquidity profile as of June 30, 2025 to meet its ongoing financial obligations. The Bank's liquidity management, as evaluated by its cash reserves and operational cash flows from loan repayments and investment securities, remains robust and is effectively managed by the institution's leadership.
The Bank's analysis indicates that expected cash inflows from loans and investment securities are more than sufficient to meet all projected financial obligations. Total deposits were $1.22 billion on June 30, 2025, compared to $1.26 billion on March 31, 2025 and $1.10 billion on June 30, 2024. Decreases in total deposits primarily reflect reductions in higher-cost time and money market accounts, as well as regular municipal deposit seasonality. Core deposits grew to 78.47% of total deposits on June 30, 2025, compared to 78.31% on March 31, 2025 and 67.98% on June 30, 2024. The Bank continues to implement strategic initiatives to enhance its core deposit franchise, including targeted marketing campaigns and customer engagement programs aimed at deepening banking relationships and enhancing deposit stability.
On June 30, 2025, Pathfinder Bancorp had an available additional funding capacity of $124.5 million with the Federal Home Loan Bank of New York, which complements its liquidity reserves. Moreover, the Bank maintains additional unused credit lines totaling $46.5 million, which provide a buffer for additional funding needs. These facilities, including access to the Federal Reserve's Discount Window, are part of a comprehensive liquidity strategy that ensures flexibility and readiness to respond to any funding requirements.
Cash Dividend DeclaredOn June 30, 2025, Pathfinder's Board of Directors declared a cash dividend of $0.10 per share for holders of both voting common and non-voting common stock.
In addition, this dividend also extends to the notional shares of the Company's warrants. Shareholders registered by July 18, 2025 will be eligible for the dividend, which is scheduled for disbursement on August 8, 2025. This distribution aligns with Pathfinder Bancorp's philosophy of consistent and reliable delivery of shareholder value.
Evaluating the Company's market performance, the closing stock price as of June 30, 2025 stood at $15.34 per share. This positions the annualized dividend yield at 2.61%.
About Pathfinder Bancorp, Inc.Pathfinder Bancorp, Inc. (NASDAQ:PBHC) is the bank holding company for Pathfinder Bank, which serves Central New York customers throughout Oswego, Syracuse, and their neighboring communities. Strategically located branches, as well as diversified consumer, mortgage, and commercial loan portfolios, reflect the state-chartered Bank's commitment to in-market relationships and local customer service. The Company also offers investment services to individuals and businesses. More information is available at pathfinderbank.com and ir.pathfinderbank.com.
Forward-Looking Statements Certain statements contained herein are "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," or "may." These forward-looking statements are based on current beliefs and expectations of the Company's and the Bank's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's and the Bank's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to: risks related to the real estate and economic environment, particularly in the market areas in which the Company and the Bank operate; fiscal and monetary policies of the U.S. Government; inflation; changes in government regulations affecting financial institutions, including regulatory compliance costs and capital requirements; fluctuations in the adequacy of the allowance for credit losses; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; the risk that the Company may not be successful in the implementation of its business strategy; changes in prevailing interest rates; credit risk management; asset-liability management; and other risks described in the Company's filings with the Securities and Exchange Commission, which are available at the SEC's website, www.sec.gov.
This release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant's historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet, or statement of cash flows (or equivalent statements) of the registrant; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the release of the non-GAAP financial measures to the most directly comparable GAAP financial measure.
PATHFINDER BANCORP, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2025
2024
SELECTED BALANCE SHEET DATA:
June 30,
March 31,
December 31,
September 30,
June 30,
ASSETS:
Cash and due from banks
$
16,183
$
18,606
$
13,963
$
18,923
$
12,022
Interest-earning deposits
15,292
32,862
17,609
16,401
19,797
Total cash and cash equivalents
31,475
51,468
31,572
35,324
31,819
Available-for-sale securities, at fair value
300,951
284,051
269,331
271,977
274,977
Held-to-maturity securities, at amortized cost
157,892
155,704
158,683
161,385
166,271
Marketable equity securities, at fair value
4,881
4,401
4,076
3,872
3,793
Federal Home Loan Bank stock, at cost
5,278
2,906
4,590
5,401
8,702
Loans held-for-sale
3,161
-
-
-
-
Loans, net of deferred fees
909,723
912,150
918,986
921,660
888,263
Less: Allowance for credit losses
15,983
17,407
17,243
17,274
16,892
Loans receivable, net
893,740
894,743
901,743
904,386
871,371
Premises and equipment, net
19,047
19,233
19,009
18,989
18,878
Assets held-for-sale
-
-
-
-
3,042
Operating lease right-of-use assets
1,115
1,356
1,391
1,425
1,459
Finance lease right-of-use assets
16,280
16,478
16,676
16,873
4,004
Accrued interest receivable
6,889
6,748
6,881
6,806
7,076
Foreclosed real estate
83
-
-
-
60
Intangible assets, net
5,675
5,832
5,989
6,217
76
Goodwill
5,056
5,056
5,056
5,752
4,536
Bank owned life insurance
31,045
24,889
24,727
24,560
24,967
Other assets
22,551
22,472
25,150
20,159
25,180
Total assets
$
1,505,119
$
1,495,337
$
1,474,874
$
1,483,126
$
1,446,211
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Interest-bearing deposits
$
1,030,155
$
1,061,166
$
990,805
$
986,103
$
932,132
Noninterest-bearing deposits
191,732
203,314
213,719
210,110
169,145
Total deposits
1,221,887
1,264,480
1,204,524
1,196,213
1,101,277
Short-term borrowings
75,500
27,000
61,000
60,315
127,577
Long-term borrowings
20,977
17,628
27,068
39,769
45,869
Subordinated debt
30,206
30,156
30,107
30,057
30,008
Accrued interest payable
813
844
546
236
2,092
Operating lease liabilities
1,313
1,560
1,591
1,621
1,652
Finance lease liabilities
16,566
16,655
16,745
16,829
4,359
Other liabilities
13,444
12,118
11,810
16,986
9,203
Total liabilities
1,380,706
1,370,441
1,353,391
1,362,026
1,322,037
Shareholders' equity:
Voting common stock shares issued and outstanding
4,788,109
4,761,182
4,745,366
4,719,788
4,719,788
Voting common stock
$
48
$
48
$
47
$
47
$
47
Non-voting common stock
14
14
14
14
14
Additional paid in capital
53,645
53,103
52,750
53,231
53,182
Retained earnings
79,564
80,163
77,816
73,670
78,936
Accumulated other comprehensive loss
(8,858
)
(8,432
)
(9,144
)
(6,716
)
(8,786
)
Unearned ESOP shares
-
-
-
-
(45
)
Total Pathfinder Bancorp, Inc. shareholders' equity
124,413
124,896
121,483
120,246
123,348
Noncontrolling interest
-
-
-
854
826
Total equity
124,413
124,896
121,483
121,100
124,174
Total liabilities and shareholders' equity
$
1,505,119
$
1,495,337
$
1,474,874
$
1,483,126
$
1,446,211
The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.
Six Months Ended June 30,
2025
2024
SELECTED INCOME STATEMENT DATA:
2025
2024
Q2
Q1
Q4
Q3
Q2
Interest and dividend income:
Loans, including fees
$
26,778
$
24,757
$
13,106
$
13,672
$
13,523
$
14,425
$
12,489
Debt securities:
Taxable
10,707
11,343
5,522
5,185
5,312
5,664
5,736
Tax-exempt
867
1,006
465
402
445
469
498
Dividends
114
307
21
93
164
149
178
Federal funds sold and interest-earning deposits
157
219
68
89
82
492
121
Total interest and dividend income
38,623
37,632
19,182
19,441
19,526
21,199
19,022
Interest expense:
Interest on deposits
14,263
15,037
7,318
6,945
7,823
7,633
7,626
Interest on short-term borrowings
1,040
2,340
495
545
700
1,136
1,226
Interest on long-term borrowings
137
395
72
65
136
202
201
Interest on subordinated debt
958
980
483
475
490
496
489
Total interest expense
16,398
18,752
8,368
8,030
9,149
9,467
9,542
Net interest income
22,225
18,880
10,814
11,411
10,377
11,732
9,480
Provision for (benefit from) credit losses:
Loans
1,677
1,014
1,173
504
988
9,104
304
Held-to-maturity securities
5
(59
)
5
-
(5
)
(31
)
(74
)
Unfunded commitments
(28
)
61
19
(47
)
5
(104
)
60
Total provision for credit losses
1,654
1,016
1,197
457
988
8,969
290
Net interest income after provision for credit losses
20,571
17,864
9,617
10,954
9,389
