PBHC Pathfinder Bancorp Inc

Pathfinder Bancorp, Inc. (“Pathfinder” or the “Company”) (NASDAQ: PBHC) announced its financial results for the third quarter ended September 30, 2024.

The holding company for Pathfinder Bank (“the Bank”) reported a third quarter 2024 net loss attributable to common shareholders of $4.6 million or $0.75 per share, compared to net income available to common shareholders of $2.0 million or $0.32 per share in the second quarter of 2024 and $2.2 million or $0.35 per share in the third quarter of 2023.

Third Quarter 2024 Highlights and Key Developments

• The net loss reflected $9.0 million in provision expense that primarily resulted from a comprehensive loan portfolio review that the Bank elected to undertake as part of its commitment to continuously improve its credit risk management approach. Following its conclusion, the Company recorded net charge offs of $8.7 million in the quarter and reduced nonperforming loans by 34.0% to $16.2 million at period end, or 1.8% of total loans. The allowance for credit losses on September 30, 2024 represented 1.87% and 106.8% of total and nonperforming loans, respectively.
• Net interest income increased for the third consecutive quarter to $11.7 million, including the benefit of a catch-up interest payment of $887,000. Net interest income increased $2.3 million from $9.5 million in the linked quarter ended June 30, 2024 and $1.7 million from $10.1 million in the third quarter of 2023. Net interest margin (“NIM”) expanded for the third consecutive quarter to 3.34%, including the benefit of 25 basis points from the catch-up interest payment. NIM increased 56 basis points from the linked quarter and 27 basis points from the year-ago period.
• Non-interest income was $1.7 million, including a net death benefit of $175,000 on bank owned life insurance ("BOLI"), compared to $1.2 million in each of the linked and year-ago quarters.
• Non-interest expense was $10.3 million, including $1.6 million in transaction-related expenses for the previously announced July 2024 closing of the East Syracuse branch acquisition, in addition to third quarter 2024 operating costs of approximately $462,000 associated with Pathfinder’s newest location. Non-interest expense was $7.9 million in the linked quarter and $7.7 million in the year-ago period.
• Pre-tax, pre-provision net income was $3.4 million, including the effect of transaction-related expenses, compared to $2.8 million in the linked quarter and $3.6 million in the year-ago period. Pre-tax, pre-provision net income, which is not a financial metric under generally accepted accounting principles (“GAAP”), is a measure that the Company believes is helpful to understanding profitability without giving effect to income taxes and provision for credit losses.
• Total deposits were $1.20 billion at period end, compared to $1.10 billion on June 30, 2024 and $1.13 billion on September 30, 2023. The Bank’s loan-to-deposit ratio was 77.1% on September 30, 2024.
• Total loans were $921.7 million at period end, compared to $888.3 million on June 30, 2024 and $896.1 million on September 30, 2023.

“Pathfinder is well positioned for organic growth opportunities in our attractive Central New York markets, having closed the third quarter with significantly reduced levels of nonperformers, healthy reserves, strong capital ratios, and abundant liquidity,” said President and Chief Executive Officer James A. Dowd. “Having completed a thorough, top-to-bottom review of the loan portfolio at the end of September, we believe it is sufficiently collateralized and reserved. Going forward, we intend to take a more exacting loss-mitigation approach, and Pathfinder's ongoing underwriting and credit risk management processes can be expected to reflect the combined expertise of our entire management team and professional staff, including our recently appointed Chief Credit Officer Joseph Serbun and Chief Financial Officer Justin Bigham.”

Dowd added, “Our financial performance also reflects the positive impact of Pathfinder Bank’s in-market core deposit franchise and immediate contributions from our recent East Syracuse branch acquisition, including higher loan and deposit balances, lower funding costs, revenue growth, and NIM expansion.  Looking ahead, as we end 2024 and begin the new year, we intend to tightly manage operating expenses and expect continued benefits from our core deposit franchise as a source of low-cost, relationship-based funding for commercial and retail loan growth in our local markets.”

East Syracuse Branch AcquisitionAs previously announced, Pathfinder Bank completed the purchase of its East Syracuse branch on July 19, 2024, assuming $186.0 million in associated deposits and acquiring $30.6 million in assets including $29.9 million in loans. Acquired assets include a core deposit intangible (“CDI”) valued at $6.3 million, and the valuation of acquired loans resulted in an estimated discount of $1.8 million.

The addition of the East Syracuse branch significantly increased the Bank's customer base, which expanded the number of Pathfinder's relationships by approximately 25% and grew non-brokered deposits by 21.5%.

At acquisition, the average cost of deposits assumed with the branch acquisition was 1.99% (excluding the CDI) and as of September 30, 2024, the Bank retained approximately 97% of deposit balances. The Company utilized a portion of the low-cost liquidity provided by the transaction to pay down $74.4 million in borrowings and $106.0 million in high-cost brokered deposits during the third quarter of 2024.

Insurance Business DivestitureOn October 15, 2024, Pathfinder announced that it sold its interest in the FitzGibbons Agency, LLC, which contributed $28,000 to the Company’s net income and 24 basis points to its consolidated efficiency ratio in the third quarter of 2024, to Marshall & Sterling Enterprises, Inc. Reflecting an active insurance brokerage market and the FitzGibbons Agency’s success since initiating its partnership with the Bank 13 years ago, Pathfinder will receive approximately $2.0 million from the sale, which closed on October 1, 2024, and the Company expects to recognize a portion of that amount as a net gain in the fourth quarter of 2024.

Net Interest Income and Net Interest Margin Third quarter 2024 net interest income was $11.7 million, an increase of 23.8% from the second quarter of 2024. An increase in interest and dividend income of $2.2 million was primarily attributed to average yield increases of 67 basis points on loans including 39 basis points from an $887,000 catch-up interest payment associated with purchased loan pool positions, 97 basis points on fed funds sold and interest-earning deposits, and 45 basis points on all earning assets. The corresponding increase in loan interest income and federal funds sold and interest-earning deposits was $1.9 million and $371,000, respectively. A decrease in interest expense of $75,000 was attributed to 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 the Bank’s East Syracuse branch acquisition.

Net interest margin was 3.34% in the third quarter of 2024 compared to 2.78% in the second quarter of 2024. The increase of 56 basis points was driven by improvements in earning asset yields and funding costs, as well as 25 basis points attributed to the catch-up interest payment received in the third quarter of 2024.

Third quarter 2024 net interest income was $11.7 million, an increase of 16.6% from the third quarter of 2023. An increase in interest and dividend income of $3.5 million was primarily attributed to average yield increases of 74 basis points on loans including 39 basis points from the catch-up interest payment, 67 basis points on taxable investment securities, 227 basis points on fed funds sold and interest-earning deposits, and 65 basis points on all earning assets. The corresponding increase in loan interest income, taxable investment securities, and federal funds sold and interest-earning deposits was $2.0 million, $1.2 million, and $426,000, respectively. Increased interest and dividend income was partially offset by an increase in interest expense of $1.9 million.  This increase in interest expense was predominantly the result of higher interest rates and balances associated with borrowing and higher average rates paid on interest-bearing deposits, compared to the third quarter of 2023.

Net interest margin was 3.34% in the third quarter of 2024 compared to 3.07% in the third quarter of 2023. The increase of 27 basis points was driven by improvements in earning asset yields and lower average borrowings, partially offset by higher funding costs, as well as 25 basis points attributed to the catch-up interest payment received in the third quarter of 2024.

Noninterest Income Noninterest income totaled $1.7 million in the third quarter of 2024, an increase of $496,000 or 41.0% from the second quarter of 2024 and an increase of $514,000 or 43.1% from the third quarter of 2023.

Compared to the linked quarter, noninterest income growth included increases of $194,000 in earnings and gain on BOLI including the net death benefit of $175,000, $109,000 in debit card interchange fees, and $62,000 in service charges on deposit accounts, as well as a $33,000 decrease in loan servicing fees. Noninterest income growth from the linked quarter also reflected an increase of $204,000 in net realized losses on sales and redemptions of investment securities, as well as increases of $201,000 in net realized gains on sales of marketable equity securities and $50,000 in gains on sales of loans and foreclosed real estate.

Compared to the year-ago quarter, noninterest income growth for the third quarter of 2024 included increases of $278,000 in interchange fees, $196,000 in earnings and gain on BOLI including the net death benefit of $175,000 on BOLI, and $49,000 in service charges on deposit accounts, as well as a $20,000 decrease in loan servicing fees. Noninterest income growth from the year-ago quarter also reflected a $178,000 increase in net realized losses on sales and redemptions of investment securities, as well as increases of $101,000 in net realized gains on sales of marketable equity securities and $49,000 in gains on sales of loans and foreclosed real estate.

Prior to the October 1, 2024 sale of the Company’s insurance agency asset, it contributed $367,000 to noninterest income in the third quarter of 2024, compared to $260,000 and $310,000 in the linked and year-ago quarters, respectively.  Noninterest ExpenseNoninterest expense totaled $10.3 million in the third quarter of 2024, increasing $2.4 million and $2.6 million from the linked and year-ago quarters, respectively. The increase was primarily due to $1.6 million in transaction-related expenses for the East Syracuse branch acquisition, in addition to third quarter 2024 operating costs of approximately $462,000 associated with operating Pathfinder Bank’s newest location.

Professional and other services expense was $1.8 million in the third quarter, increasing $1.1 million and $1.3 million from the linked and year-ago quarters, respectively. The increase was primarily attributed to branch acquisition-related expenses.

Salaries and benefits were $5.0 million in the third quarter of 2024, increasing $560,000 and $805,000 from the linked and year-ago quarters, respectively. The increase was primarily due to $141,000 transaction-related bonuses to employees, $115,000 reduced salary cost deferrals (“ASC 310-20”) associated with reduced lending volumes, and $80,000 of ongoing personnel-related costs associated with operating the branch acquired early in the third quarter of 2024. The remaining increase was primarily driven by higher salaries and benefits costs associated with merit increases and wage inflation.

Building and occupancy was $1.1 million in the third quarter of 2024, increasing $220,000 and $266,000 from the linked and year-ago quarters, respectively. These increases were due to ongoing facilities-related costs of approximately $322,000 associated with operating the branch acquired early in the third quarter of 2024, partially offset by seasonal reductions in building and occupancy expense categories when compared to the second quarter of 2024.

Prior to the October 1, 2024 sale of the Company’s insurance agency asset, it incurred $308,000 of noninterest expense in the third quarter of 2024, compared to $232,000 and $273,000 in the linked and year-ago quarters, respectively. For the third quarter of 2024, annualized noninterest expense represented 2.75% of average assets, including 8 basis points from insurance agency expense and 43 basis points from acquisition-related expenses.  The efficiency ratio was 75.28%, including 24 basis points and 1,186 basis points attributed to the insurance business and acquisition-related expenses, 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. For the linked and year-ago quarters, annualized noninterest expense represented 2.19% and 2.20% of average assets, respectively. The efficiency ratio was 74.08% and 67.93% in the linked and year-ago periods.

Statement of Financial ConditionAs of September 30, 2024, the Company’s statement of financial condition reflects total assets of $1.48 billion, compared to $1.45 billion and $1.40 billion recorded on June 30, 2024 and September 30, 2023, respectively.

The increase in assets during the third quarter of 2024 was primarily due to higher total loan balances, including $29.9 million in primarily consumer, residential, and home equity loans acquired with the East Syracuse branch transaction in the third quarter of 2024.

Loans totaled $921.7 million on September 30, 2024, increasing 3.8% during the third quarter and 2.9% from one year prior. Consumer and residential loans totaled $388.7 million, increasing 7.6% during the third quarter and 4.8% from one year prior. Commercial loans totaled $534.5 million, increasing 1.4% during the third quarter and 1.7% from one year prior.

With respect to liabilities, deposits totaled $1.20 billion on September 30, 2024, increasing 8.6% during the third quarter and 6.1% from one year prior. The increase in deposits during the third quarter of 2024 reflects $186.0 million assumed with the East Syracuse branch acquisition, offset by a reduction of $106.0 million in brokered deposits utilizing lower-cost liquidity provided by the transaction, as well as seasonal fluctuations in municipal deposits. The Company also utilized liquidity provided by the transaction to reduce short-term borrowings, which totaled $60.3 million on September 30, 2024 as compared to $127.6 million on June 30, 2024 and $56.7 million on September 30, 2023.

Shareholders equity totaled $120.3 million on September 30, 2024, down $3.1 million or 2.5% in the third quarter and $6.5 million or 5.7% from one year prior. The decrease reflects lower retained earnings attributed primarily to the elevated third quarter 2024 provision expense’s impact on net income in the period, which more than offset a significant reduction in accumulated other comprehensive loss (“AOCL”). AOCL improved to $6.7 million on September 30, 2024, declining $2.1 million or 23.6% during the third quarter and $6.6 million or 49.7% from one year prior, reflecting a favorable change in the interest rate environment.

Asset QualityThe Company’s asset quality metrics reflect the comprehensive loan portfolio review completed at the end of the third quarter of 2024.

Nonperforming loans were reduced by 34.0% in the third quarter of 2024 to $16.2 million or 1.75% of total loans on September 30, 2024. Nonperforming loans were $24.5 million or 2.76% of total loans on June 30, 2024 and $16.2 million or 1.80% of total loans on September 30, 2023.

Gross loan charge offs totaled $8.8 million in the third quarter of 2024, following completion of the portfolio review. Gross loan charge offs included $4.9 million for 13 nonperforming commercial loans, as well as $2.5 million for nonperforming positions primarily associated with secured solar purchased loan pools acquired in 2021.

Net charge offs (“NCOs”) after recoveries were $8.7 million or an annualized 1.29% of average loans in the third quarter of 2024, compared to $66,000 or 0.02% in the linked quarter and $3.8 million or 0.61% in the prior year period.

The $9.0 million provision for credit losses expense in the third quarter of 2024 primarily resulted from a replenishment of the allowance for credit losses (“ACL”) for commercial loan reserves and an adjustment to the lifetime loss estimate for solar purchased loan pool positions, which followed completion of the Company’s loan portfolio review. The Company believes it is sufficiently collateralized and reserved, with its ACL of $17.3 million on September 30, 2024 increasing by $382,000 from June 30, 2024 and $1.5 million from September 30, 2023. As a percentage of total loans, ACL represented 1.87% on September 30, 2024, 1.90% on June 30, 2024, and 1.76% on September 30, 2023.

Liquidity The Company has diligently ensured a strong liquidity profile as of September 30, 2024 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 increased to $1.20 billion on September 30, 2024 from $1.10 billion on June 30, 2024 and $1.13 billion on September 30, 2023. Core deposits increased to 77.45% of total deposits on September 30, 2024, from 67.98% on June 30, 2024 and 69.83% on September 30, 2023. This further underscores the success of the Bank’s 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.

At the end of the current quarter, Pathfinder Bancorp had an available additional funding capacity of $105.2 million with the Federal Home Loan Bank of New York, which complements its liquidity reserves. Moreover, the Bank maintains additional unused credit lines totaling $27.3 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 September 30, 2024, 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 October 18, 2024 will be eligible for the dividend, which is scheduled for disbursement on November 8, 2024. 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 September 30, 2024 stood at $15.83 per share. This positions the dividend yield at an attractive 2.53%.

About Pathfinder Bancorp, Inc.Pathfinder Bancorp, Inc. (NASDAQ: PBHC) is the commercial bank holding company for Pathfinder Bank, which serves Central New York customers throughout Oswego, Syracuse and their neighboring communities. Strategically located branches averaging approximately $100 million in deposits per location, 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. At September 30, 2024, the Oswego-headquartered Company had assets of $1.48 billion, loans of $921.7 million, and deposits of $1.20 billion. 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.

PATHFINDER BANCORP, INC.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
		2024												2023
SELECTED BALANCE SHEET DATA:		September 30,				June 30,				March 31,				December 31,				September 30,
ASSETS:
Cash and due from banks		$	18,923			$	12,022			$	13,565			$	12,338			$	12,822
Interest-earning deposits			16,401				19,797				15,658				36,394				11,652
Total cash and cash equivalents			35,324				31,819				29,223				48,732				24,474
Available-for-sale securities, at fair value			271,977				274,977				279,012				258,716				206,848
Held-to-maturity securities, at amortized cost			161,385				166,271				172,648				179,286				185,589
Marketable equity securities, at fair value			3,872				3,793				3,342				3,206				3,013
Federal Home Loan Bank stock, at cost			5,401				8,702				7,031				8,748				5,824
Loans			921,660				888,263				891,531				897,207				896,123
Less: Allowance for credit losses			17,274				16,892				16,655				15,975				15,767
Loans receivable, net			904,386				871,371				874,876				881,232				880,356
Premises and equipment, net			18,989				18,878				18,332				18,441				18,491
Assets held-for-sale			-				3,042				3,042				3,042				3,042
Operating lease right-of-use assets			1,425				1,459				1,493				1,526				1,559
Finance lease right-of-use assets			16,873				4,004				4,038				4,073				4,108
Accrued interest receivable			6,806				7,076				7,170				7,286				6,594
Foreclosed real estate			-				60				82				151				189
Intangible assets, net			6,217				76				80				85				88
Goodwill			5,752				4,536				4,536				4,536				4,536
Bank owned life insurance			24,560				24,967				24,799				24,641				24,479
Other assets			20,159				25,180				23,968				22,097				31,459
Total assets		$	1,483,126			$	1,446,211			$	1,453,672			$	1,465,798			$	1,400,649
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Interest-bearing deposits		$	986,103			$	932,132			$	969,692			$	949,898			$	953,143
Noninterest-bearing deposits			210,110				169,145				176,421				170,169				174,710
Total deposits			1,196,213				1,101,277				1,146,113				1,120,067				1,127,853
Short-term borrowings			60,315				127,577				91,577				125,680				56,698
Long-term borrowings			39,769				45,869				45,869				49,919				53,915
Subordinated debt			30,057				30,008				29,961				29,914				29,867
Accrued interest payable			236				2,092				1,963				2,245				1,731
Operating lease liabilities			1,621				1,652				1,682				1,711				1,739
Finance lease liabilities			16,829				4,359				4,370				4,381				4,391
Other liabilities			16,986				9,203				9,505				11,625				10,013
Total liabilities			1,362,026				1,322,037				1,331,040				1,345,542				1,286,207
Shareholders' equity:
Voting common stock shares issued and outstanding			4,719,788				4,719,788				4,719,788				4,719,288				4,713,353
Voting common stock			47				47				47				47				47
Non-Voting common stock			14				14				14				14				14
Additional paid in capital			53,231				53,182				53,151				53,114				52,963
Retained earnings			73,670				78,936				77,558				76,060				74,282
Accumulated other comprehensive loss			(6,716	)			(8,786	)			(8,862	)			(9,605	)			(13,356	)
Unearned ESOP shares			-				(45	)			(90	)			(135	)			(180	)
Total Pathfinder Bancorp, Inc. shareholders' equity			120,246				123,348				121,818				119,495				113,770
Noncontrolling interest			854				826				814				761				672
Total equity			121,100				124,174				122,632				120,256				114,442
Total liabilities and shareholders' equity		$	1,483,126			$	1,446,211			$	1,453,672			$	1,465,798			$	1,400,649

The above information is preliminary and based on the Company's data available at the time of presentation.

		Nine Months Ended September 30,								2024												2023
SELECTED INCOME STATEMENT DATA:		2024				2023				Q3				Q2				Q1				Q4				Q3
Interest and dividend income:
Loans, including fees		$	39,182			$	34,919			$	14,425			$	12,489			$	12,268			$	12,429			$	12,470
Debt securities:
Taxable			17,007				12,408				5,664				5,736				5,607				5,092				4,488
Tax-exempt			1,475				1,441				469				498				508				506				507
Dividends			456				341				149				178				129				232				140
Federal funds sold and interest-earning deposits			711				226				492				121				98				69				66
Total interest and dividend income			58,831				49,335				21,199				19,022				18,610				18,328				17,671
Interest expense:
Interest on deposits			22,670				15,885				7,633				7,626				7,411				7,380				6,223
Interest on short-term borrowings			3,476				1,624				1,136				1,226				1,114				1,064				674
Interest on long-term borrowings			597				619				202				201				194				231				222
Interest on subordinated debt			1,476				1,447				496				489				491				494				492
Total interest expense			28,219				19,575				9,467				9,542				9,210				9,169				7,611
Net interest income			30,612				29,760				11,732				9,480				9,400				9,159				10,060
Provision for (benefit from) credit losses:
Loans			10,118				2,675				9,104				304				710				316				798
Held-to-maturity securities			(90	)			(24	)			(31	)			(74	)			15				(74	)			5
Unfunded commitments			(43	)			14				(104	)			60				1				23				30
Total provision for credit losses			9,985				2,665				8,969				290				726				265				833
Net interest income after provision for credit losses			20,627				27,095				2,763				9,190				8,674				8,894				9,227
Noninterest income:
Service charges on deposit accounts			1,031				913				392				330				309				336				343
Earnings and gain on bank owned life insurance			685				466				361				167				157				164				165
Loan servicing fees			279				238				79				112				88				69				99
Net realized (losses) gains on sales and redemptions of investment securities			(320	)			60				(188	)			16				(148	)			2				(13	)
Net realized gains (losses) on sales of marketable equity securities			31				(208	)			62				(139	)			108				(47	)			(39	)
Gains on sales of loans and foreclosed real estate			148				183				90				40				18				(2	)			41
Loss on sale of premises and equipment			(36	)			-				(36	)			-				-				-				-
Debit card interchange fees			610				455				300				191				119				161				22
Insurance agency revenue			1,024				1,001				367				260				397				303				310
Other charges, commissions & fees			1,203				764				280				234				689				332				265
Total noninterest income			4,655				3,872				1,707				1,211				1,737				1,318				1,193
Noninterest expense:
Salaries and employee benefits			13,687				12,243				4,959				4,399				4,329				3,677				4,154
Building and occupancy			2,864				2,699				1,134				914				816				864				868
Data processing			1,750				1,519				672				550				528				499				483
Professional and other services			3,078				1,531				1,820				696				562				488				492
Advertising			386				516				165				116				105				155				144
FDIC assessments			685				663				228				228				229				222				222
Audits and exams			416				476				123				123				170				259				159
Insurance agency expense			825				817				308				232				285				216				273
Community service activities			111				151				20				39				52				49				55
Foreclosed real estate expenses			82				76				27				30				25				35				44
Other expenses			1,989				1,660				803				581				605				580				759
Total noninterest expense			25,873				22,351				10,259				7,908				7,706				7,044				7,653
(Loss) income before provision for income taxes			(591	)			8,616				(5,789	)			2,493				2,705				3,168				2,767
(Benefit) provision for income taxes			(160	)			1,772				(1,173	)			481				532				590				573
Net (loss) income attributable to noncontrolling interest and Pathfinder Bancorp, Inc.			(431	)			6,844				(4,616	)			2,012				2,173				2,578				2,194
Net income attributable to noncontrolling interest			93				87				28				12				53				42				18
Net (loss) income attributable to Pathfinder Bancorp Inc.		$	(524	)		$	6,757			$	(4,644	)		$	2,000			$	2,120			$	2,536			$	2,176
Voting Earnings per common share - basic and diluted		$	(0.09	)		$	1.10			$	(0.75	)		$	0.32			$	0.34			$	0.41			$	0.35
Series A Non-Voting Earnings per common share- basic and diluted		$	(0.09	)		$	1.10			$	(0.75	)		$	0.32			$	0.34			$	0.41			$	0.35
Dividends per common share (Voting and Series A Non-Voting)		$	0.30			$	0.27			$	0.10			$	0.10			$	0.10			$	0.09			$	0.09

The above information is preliminary and based on the Company's data available at the time of presentation.

		Nine Months Ended September 30,								2024												2023
FINANCIAL HIGHLIGHTS:		2024				2023				Q3				Q2				Q1				Q4				Q3
Selected Ratios:
Return on average assets			-0.05	%			0.65	%			-1.25	%			0.56	%			0.59	%			0.72	%			0.63	%
Return on average common equity			-0.57	%			7.88	%			-14.79	%			6.49	%			7.01	%			8.72	%			7.50	%
Return on average equity			-0.57	%			7.88	%			-14.79	%			6.49	%			7.01	%			8.72	%			7.50	%
Return on average tangible common equity (1)			-0.59	%			8.23	%			-15.28	%			6.78	%			7.32	%			9.01	%			7.75	%
Net interest margin			2.97	%			3.02	%			3.34	%			2.78	%			2.75	%			2.74	%			3.07	%
Loans/deposits			77.05	%			79.45	%			77.05	%			80.66	%			77.79	%			80.10	%			79.45	%
Core deposits/deposits (2)			77.45	%			69.83	%			77.45	%			67.98	%			69.17	%			69.83	%			69.83	%
Annualized non-interest expense/average assets			2.39	%			2.16	%			2.75	%			2.19	%			2.16	%			2.01	%			2.20	%
Efficiency ratio (1)			72.70	%			66.58	%			75.28	%			74.08	%			68.29	%			67.25	%			67.93	%
Other Selected Data:
Average yield on loans			5.82	%			5.17	%			6.31	%			5.64	%			5.48	%			5.55	%			5.57	%
Average cost of interest bearing deposits			3.12	%			2.23	%			3.11	%			3.21	%			3.07	%			3.10	%			2.65	%
Average cost of total deposits, including non-interest bearing			2.64	%			1.88	%			2.59	%			2.72	%			2.61	%			2.63	%			2.24	%
Deposits/branch (4)		$	99,684			$	102,532			$	99,684			$	100,116			$	104,192			$	101,824			$	102,532
Pre-tax, pre-provision net income (1)		$	9,714			$	11,221			$	3,368			$	2,767			$	3,579			$	3,431			$	3,613
Total revenue (1)		$	35,587			$	33,572			$	13,627			$	10,675			$	11,285			$	10,475			$	11,266
Share and Per Share Data:
Cash dividends per share		$	0.30			$	0.27			$	0.10			$	0.10			$	0.10			$	0.09			$	0.09
Book value per common share		$	19.71			$	18.67			$	19.71			$	20.22			$	19.97			$	19.59			$	18.67
Tangible book value per common share (1)		$	17.75			$	17.91			$	17.75			$	19.46			$	19.21			$	18.83			$	17.91
Basic and diluted weighted average shares outstanding - Voting			4,708				4,640				4,714				4,708				4,701				4,693				4,671
Basic and diluted earnings per share - Voting (3)		$	(0.09	)		$	1.10			$	(0.75	)		$	0.32			$	0.34			$	0.41			$	0.35
Basic and diluted weighted average shares outstanding - Series A Non-Voting			1,380				1,380				1,380				1,380				1,380				1,380				1,380
Basic and diluted earnings per share - Series A Non-Voting (3)		$	(0.09	)		$	1.10			$	(0.75	)		$	0.32			$	0.34			$	0.41			$	0.35
Common shares outstanding at period end			6,100				6,094				6,100				6,100				6,100				6,100				6,094
Pathfinder Bancorp, Inc. Capital Ratios:
Company tangible common equity to tangible assets (1)			7.36	%			7.82	%			7.36	%			8.24	%			8.09	%			7.86	%			7.82	%
Company Total Core Capital (to Risk-Weighted Assets)			15.55	%			17.00	%			15.55	%			16.19	%			16.23	%			16.17	%			17.00	%
Company Tier 1 Capital (to Risk-Weighted Assets)			11.84	%			12.39	%			11.84	%			12.31	%			12.33	%			12.30	%			12.39	%
Company Tier 1 Common Equity (to Risk-Weighted Assets)			11.33	%			12.91	%			11.33	%			11.83	%			11.85	%			11.81	%			12.91	%
Company Tier 1 Capital (to Assets)			8.29	%			9.21	%			8.29	%			9.16	%			9.16	%			9.35	%			9.21	%
Pathfinder Bank Capital Ratios:
Bank Total Core Capital (to Risk-Weighted Assets)			14.52	%			14.76	%			14.52	%			16.04	%			15.65	%			15.05	%			14.76	%
Bank Tier 1 Capital (to Risk-Weighted Assets)			13.26	%			13.51	%			13.26	%			14.79	%			14.39	%			13.80	%			13.51	%
Bank Tier 1 Common Equity (to Risk-Weighted Assets)			13.26	%			13.51	%			13.26	%			14.79	%			14.39	%			13.80	%			13.51	%
Bank Tier 1 Capital (to Assets)			9.13	%			10.11	%			9.13	%			10.30	%			10.13	%			10.11	%			10.11	%

(1) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.(2) Non-brokered deposits excluding certificates of deposit of $250,000 or more.(3) Basic and diluted earnings per share are calculated based upon the two-class method. Weighted average shares outstanding do not include unallocated ESOP shares.(4) Includes 11 full-service branches and one motor bank for September 30, 2024. Includes 10 full-service branches and one motor bank for all periods prior.

The above information is preliminary and based on the Company's data available at the time of presentation.

		Nine Months Ended September 30,								2024												2023
ASSET QUALITY:		2024				2023				Q3				Q2				Q1				Q4				Q3
Total loan charge-offs		$	8,992			$	4,365			$	8,812			$	112			$	68			$	211			$	3,874
Total recoveries			174				252				90				46				38				103				45
Net loan charge-offs			8,818				4,113				8,722				66				30				108				3,829
Allowance for credit losses at period end			17,274				15,767				17,274				16,892				16,655				15,975				15,767
Nonperforming loans at period end			16,170				16,173				16,170				24,490				19,652				17,227				16,173
Nonperforming assets at period end		$	16,170			$	16,362			$	16,170			$	24,550			$	19,734			$	17,378			$	16,362
Annualized net loan charge-offs to average loans			1.29	%			0.61	%			1.29	%			0.02	%			0.01	%			0.47	%			0.61	%
Allowance for credit losses to period end loans			1.87	%			1.76	%			1.87	%			1.90	%			1.87	%			1.78	%			1.76	%
Allowance for credit losses to nonperforming loans			106.83	%			97.49	%			106.83	%			68.98	%			84.75	%			92.73	%			97.49	%
Nonperforming loans to period end loans			1.75	%			1.80	%			1.75	%			2.76	%			2.20	%			1.92	%			1.80	%
Nonperforming assets to period end assets			1.09	%			1.17	%			1.09	%			1.70	%			1.36	%			1.19	%			1.17	%

		2024												2023
LOAN COMPOSITION:		September 30,				June 30,				March 31,				December 31,				September 30,
1-4 family first-lien residential mortgages		$	255,235			$	250,106			$	252,026			$	257,604			$	252,956
Residential construction			4,077				309				1,689				1,355				2,090
Commercial real estate			378,805				370,361				363,467				358,707				362,822
Commercial lines of credit			64,672				62,711				67,416				72,069				73,497
Other commercial and industrial			88,247				90,813				91,178				89,803				85,506
Paycheck protection program loans			125				136				147				158				169
Tax exempt commercial loans			2,658				3,228				3,374				3,430				3,451
Home equity and junior liens			52,709				35,821				35,723				34,858				34,666
Other consumer			76,703				75,195				77,106				79,797				81,319
Subtotal loans			923,231				888,680				892,126				897,781				896,476
Deferred loan fees			(1,571	)			(417	)			(595	)			(574	)			(353	)
Total loans		$	921,660			$	888,263			$	891,531			$	897,207			$	896,123

		2024												2023
DEPOSIT COMPOSITION:		September 30,				June 30,				March 31,				December 31,				September 30,
Savings accounts		$	129,053			$	106,048			$	111,465			$	113,543			$	118,406
Time accounts			352,729				368,262				378,103				377,570				359,011
Time accounts in excess of $250,000			140,181				117,021				114,514				95,272				96,686
Money management accounts			11,520				12,154				11,676				12,364				13,052
MMDA accounts			250,007				193,915				215,101				224,707				235,165
Demand deposit interest-bearing			97,344				128,168				134,196				119,321				125,585
Demand deposit noninterest-bearing			210,110				169,145				176,434				170,169				174,712
Mortgage escrow funds			5,269				6,564				4,624				7,121				5,236
Total deposits		$	1,196,213			$	1,101,277			$	1,146,113			$	1,120,067			$	1,127,853

The above information is preliminary and based on the Company's data available at the time of presentation.

		Nine Months Ended September 30,								2024								2023
SELECTED AVERAGE BALANCES:		2024				2023				Q3				Q2				Q3
Interest-earning assets:
Loans		$	898,361			$	900,917			$	914,467			$	885,384			$	895,900
Taxable investment securities			427,311				371,615				415,751				434,572				376,455
Tax-exempt investment securities			29,499				31,077				30,382				28,944				27,831
Fed funds sold and interest-earning deposits			20,161				11,750				42,897				13,387				11,395
Total interest-earning assets			1,375,332				1,315,359				1,403,497				1,362,287				1,311,581
Noninterest-earning assets:
Other assets			99,200				99,431				103,856				98,746				102,738
Allowance for credit losses			(16,511	)			(18,043	)			(16,537	)			(16,905	)			(19,028	)
Net unrealized losses on available-for-sale securities			(10,184	)			(12,919	)			(9,161	)			(10,248	)			(13,275	)
Total assets		$	1,447,837			$	1,383,828			$	1,481,655			$	1,433,880			$	1,382,016
Interest-bearing liabilities:
NOW accounts		$	100,922			$	94,116			$	102,868			$	92,918			$	90,992
Money management accounts			11,782				14,651				11,828				12,076				14,503
MMDA accounts			217,580				241,550				227,247				214,364				218,601
Savings and club accounts			115,875				127,490				127,262				107,558				121,710
Time deposits			521,832				472,614				514,050				524,276				493,907
Subordinated loans			29,978				29,793				30,025				29,977				29,837
Borrowings			129,943				99,029				122,129				141,067				110,780
Total interest-bearing liabilities			1,127,912				1,079,243				1,135,409				1,122,236				1,080,330
Noninterest-bearing liabilities:
Demand deposits			177,202				174,143				195,765				171,135				169,825
Other liabilities			19,382				16,100				24,855				17,298				15,768
Total liabilities			1,324,496				1,269,486				1,356,029				1,310,669				1,265,923
Shareholders' equity			123,341				114,342				125,626				123,211				116,093
Total liabilities & shareholders' equity		$	1,447,837			$	1,383,828			$	1,481,655			$	1,433,880			$	1,382,016

		Nine Months Ended September 30,								2024								2023
SELECTED AVERAGE YIELDS:		2024				2023				Q3				Q2				Q3
Interest-earning assets:
Loans			5.82	%			5.17	%			6.31	%			5.64	%			5.57	%
Taxable investment securities			5.45	%			4.57	%			5.59	%			5.44	%			4.92	%
Tax-exempt investment securities			6.67	%			6.18	%			6.17	%			6.88	%			7.29	%
Fed funds sold and interest-earning deposits			4.70	%			2.56	%			4.59	%			3.62	%			2.32	%
Total interest-earning assets			5.70	%			5.00	%			6.04	%			5.59	%			5.39	%
Interest-bearing liabilities:
NOW accounts			1.06	%			0.45	%			1.09	%			1.14	%			0.55	%
Money management accounts			0.11	%			0.11	%			0.10	%			0.10	%			0.11	%
MMDA accounts			3.64	%			2.51	%			3.54	%			3.74	%			3.00	%
Savings and club accounts			0.26	%			0.21	%			0.25	%			0.26	%			0.22	%
Time deposits			4.01	%			3.05	%			4.09	%			4.03	%			3.55	%
Subordinated loans			6.56	%			6.48	%			6.61	%			6.53	%			6.60	%
Borrowings			4.18	%			3.02	%			4.38	%			4.05	%			3.24	%
Total interest-bearing liabilities			3.34	%			2.42	%			3.34	%			3.40	%			2.82	%
Net interest rate spread			2.36	%			2.58	%			2.70	%			2.19	%			2.57	%
Net interest margin			2.97	%			3.02	%			3.34	%			2.78	%			3.07	%
Ratio of average interest-earning assets to average interest-bearing liabilities			121.94	%			121.88	%			123.61	%			121.39	%			121.41	%

The above information is preliminary and based on the Company's data available at the time of presentation.

		Nine Months Ended September 30,								2024												2023
NON-GAAP RECONCILIATIONS:		2024				2023				Q3				Q2				Q1				Q4				Q3
Tangible book value per common share:
Total equity										$	120,246			$	123,348			$	121,818			$	119,495			$	113,770
Intangible assets											(11,969	)			(4,612	)			(4,616	)			(4,621	)			(4,624	)
Tangible common equity (non-GAAP)											108,277				118,736				117,202				114,874				109,146
Common shares outstanding											6,100				6,100				6,100				6,100				6,094
Tangible book value per common share (non-GAAP)										$	17.75			$	19.46			$	19.21			$	18.83			$	17.91
Tangible common equity to tangible assets:
Tangible common equity (non-GAAP)										$	108,277			$	118,736			$	117,202			$	114,874			$	109,146
Tangible assets											1,471,157				1,441,599				1,449,056				1,461,177				1,396,025
Tangible common equity to tangible assets ratio (non-GAAP)											7.36	%			8.24	%			8.09	%			7.86	%			7.82	%
Return on average tangible common equity:
Average shareholders' equity		$	123,341			$	114,342			$	125,626			$	123,211			$	121,031			$	116,265			$	116,093
Average intangible assets			4,642				4,631				4,691				4,614				4,619				4,623				4,627
Average tangible equity (non-GAAP)			118,699				109,711				120,935				118,597				116,412				111,642				111,466
Net income (loss)			(524	)			6,757				(4,644	)			2,000				2,120				2,536				2,176
Net income (loss), annualized		$	(700	)		$	9,034			$	(18,475	)		$	8,044			$	8,527			$	10,061			$	8,633
Return on average tangible common equity (non-GAAP) (1)			-0.59	%			8.23	%			-15.28	%			6.78	%			7.32	%			9.01	%			7.75	%
Revenue, pre-tax, pre-provision net income, and efficiency ratio:
Net interest income		$	30,612			$	29,760			$	11,732			$	9,480			$	9,400			$	9,159			$	10,060
Total noninterest income			4,655				3,872				1,707				1,211				1,737				1,318				1,193
Net realized (gains) losses on sales and redemptions of investment securities			(320	)			60				(188	)			16				(148	)			2				(13	)
Revenue (non-GAAP) (2)			35,587				33,572				13,627				10,675				11,285				10,475				11,266
Total non-interest expense			25,873				22,351				10,259				7,908				7,706				7,044				7,653
Pre-tax, pre-provision net income (non-GAAP) (3)		$	9,714			$	11,221			$	3,368			$	2,767			$	3,579			$	3,431			$	3,613
Efficiency ratio (non-GAAP) (4)			72.70	%			66.58	%			75.28	%			74.08	%			68.29	%			67.25	%			67.93	%

(1) Return on average tangible common equity equals annualized net income (loss) divided by average tangible equity(2) Revenue equals net interest income plus total noninterest income less net realized gains or losses on sales and redemptions of investment securities(3) Pre-tax, pre-provision net income equals revenue less total non-interest expense(4) Efficiency ratio equals noninterest expense divided by revenue

The above information is preliminary and based on the Company's data available at the time of presentation.

Investor/Media Contacts James A. Dowd, President, CEOJustin K. Bigham, Senior Vice President, CFOTelephone: (315) 343-0057