Pathfinder Bancorp, Inc. · NASDAQ:PBHC
Pathfinder Bancorp — Shareholder Meeting (June 2021)
47 slides from Pathfinder Bancorp's shareholder meeting presentation, Jun 4, 2021
Slide 1: 2021 Annual Meeting of Shareholders Presentation
2021 Annual Meeting of Shareholders Presentation NASDAQ: PBHC June 4, 2021 Chris R. Burritt Thomas W. “Tom” Schneider Walter F. Rusnak Chairman of the Board President, CEO & Director Senior VP & CFO 1
Slide 2: Welcoming Remarks
Welcoming Remarks Chris R. Burritt Chairman of the Board 2
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation may contain the words or phrases “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, ”project” or similar expressions that are intended to identify “forward-looking statements” within the meaning of the Private Securiti
Slide 4: Agenda – 2021 Annual Meeting of Shareholders
Agenda – 2021 Annual Meeting of Shareholders Introduction of Directors, Management and Guests Conduct of the Meeting Notice and proxy Report of Inspector of Elections Meeting proposals Call for vote Management Presentation and Written Questions & Verbal Answers to Follow Results of Shareholder Vote
Slide 5: Board of Directors
Board of Directors Director Since David A. Ayoub 2012 William A. Barclay 2011 Chris R. Burritt 1986 John P. Funiciello 2011 Adam C. Gagas 2014 George P. Joyce 2000 Melanie Littlejohn 2016 Thomas W. Schneider, President & CEO 2001 John F. Sharkey, III 2014 Lloyd “Buddy” Stemple 2005 5
Slide 6: Executive Officers
Executive Officers Current Position Since Thomas W. Schneider President & CEO 2000 James A. Dowd, CPA Executive Vice President & Chief Operating Officer 2016 Ronald Tascarella Executive Vice President & Chief Banking Officer 2006 Calvin L. Corriders Regional President, Syracuse Market, Human Resourc
Slide 7: Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm Tamara L. Gamble, CPA Partner Bonadio & Company, LLP 7
Slide 8: Business of 2021 Annual Meeting of Shareholders
Business of 2021 Annual Meeting of Shareholders The election of three directors, each for a three-year term: John P. Funiciello Thomas W. Schneider Lloyd “Buddy” Stemple An advisory vote on executive compensation (“Say-on-Pay”); An advisory vote on the frequency of future “Say-on-Pay” votes; The rat
Slide 9: Executive Management Presentation
Executive Management Presentation Thomas W. Schneider, President and Chief Executive Officer Walter F. Rusnak, Senior Vice President and Chief Financial Officer 9
Slide 10: Table of Contents
10 Introduction to Pathfinder Bancorp, Inc. Market Performance Corporate Financial Highlights Strategy – Where We Are Going Lower Cost of Funds Control Operating Expenses Increase Recurring Non-Interest Income Table of Contents
Slide 11: Introduction to Pathfinder Bancorp, Inc.
11 Company Overview Key Milestones Corporate Highlights Path to a Simplified Capital Structure Introduction to Pathfinder Bancorp, Inc.
Slide 12: Corporate Overview and Branch Map
12 Branch Map Corporate Overview Originally opened as Oswego City Savings Bank in 1859; became Pathfinder Bank in 2000 Headquartered in Oswego, NY Operates 11 locations in the Central New York area 10 full-service locations in the Syracuse MSA and 1 loan production office in Utica, NY In 2014, conve
Slide 13: Company Overview: Operating in a Stable, Growing Market
13 Company Overview: Operating in a Stable, Growing, Market Syracuse MSA, New York The Syracuse MSA has a population of 663,000 and a median household income of $61,213. The Syracuse MSA Median Household income is anticipated to grow 10.2% between 2020 and 2025. Encompasses over 3,000 square miles c
Slide 14: Company Overview: Expanding Digital Presence
14 Company Overview: Expanding Digital Presence Serving Customers Via Multiple Channels Much Progress Made, but Key Focus on Expanding Pathfinder’s Digital Presence - Especially in Business Banking and Cash Management Services Link accounts to other financial institutions: Mobile deposits: Track spe
Slide 15: Key Milestones
15 Key Milestones 2015 Issued $10 million subordinated loan agreement maturing in 2025 and callable after October 2020 2011 Opened first branch in Onondaga County (Syracuse market) 2018 Total assets increased from $561 million at December 31, 2014 to $933 million at December 31, 2018 2019 Private Pl
Slide 16: Corporate Highlights
16 Corporate Highlights Experienced Management Team Backed by a Leading Institutional Investor Senior management has decades of experience in the community banking industry Appointed President in 2000, Tom Schneider has over 30 years of banking experience; previously served as Chief Financial Office
Slide 17: Corporate Highlights: Management Team
17 Corporate Highlights: Management Team Calvin L. Corriders William D. O’Brien Daniel R. Phillips Walter F. Rusnak Tom Schneider James A. Dowd Ronald Tascarella
Slide 18: Corporate Highlights: High Insider Ownership Shows Confidence
18 Corporate Highlights: High Insider Ownership Shows Confidence Source: Pathfinder Proxy Statement Note: Data as of the record date of March 24, 2021 and includes all options that vest within 60 days of the record date Strong Ownership Across Senior Management & Board of Directors Creates Direct Al
Slide 19: Expanding Market Share
19 Expanding Market Share Source: S&P Global Market Intelligence Note: Deposit data as of June 30, 2020 Largest bank by deposit market share in Oswego County Controls approximately 48% of the county’s deposits Growing presence in Onondaga County with three locations; the newest added in November 201
Slide 20: A Well Diversified Loan Portfolio
20 A Well Diversified Loan Portfolio… Source: SEC EDGAR, S&P Global Market Intelligence Well-diversified loan portfolio primarily comprising of Commercial and Residential Mortgage Loans and Commercial Loans Over past 5 years, this mix has shifted towards more Commercial and Commercial Mortgage Loans
Slide 21: And a Well Diversified Deposit Base
21 … And a Well Diversified Deposit Base Source: SEC EDGAR, S&P Global Market Intelligence Well-diversified deposit mix, recently improving trends in increasing the levels of strategically-important Demand Deposits
Slide 22: Consistent Loan and Deposit Growth
22 Consistent Loan and Deposit Growth Source: SEC EDGAR Note: “2021 YTD” data as of March 31,2021 ‘15-’20 CAGR = 14.5% ‘15-’20 CAGR = 15.2% ‘15-’20 CAGR = 7.0% ‘15-’20 CAGR = 13.9%
Slide 23: Well Capitalized Based on Regulatory Capital Ratios
23 Well Capitalized Based on Regulatory Capital Ratios Source: SEC EDGAR Note: Dotted line marks what is considered well capitalized
Slide 24: Pathfinder Is Well-Capitalized Following the Equity Class Simplification
24 Pathfinder Is Well-Capitalized Following the Equity Class Simplification Approved by Shareholders Today, Investors Will Soon Have a Clearer Picture of the Company’s Capital Structure Pathfinder well-capitalized at $102 million and $147 million ($137 million on a pro forma basis per footnote 1) of
Slide 25: Market Performance
25 Market Performance Share Price Performance Performance vs. Peers Market-Based Expectations
Slide 26: PBHC Share Price Performance
26 PBHC Share Price Performance: Performance Lagging Peers Historically, But Improving Recent Performance Source: S&P Global Market Intelligence as of 5/31/21 Pathfinder and KBW Regional Banking Index underperforming S&P 500 over 3 and 5 years, but outperforming last year and YTD.
Slide 27: Tangible Book Value Per Share and Market Price Per Share
27 Tangible Book Value Per Common and Fully-Converted Preferred Share and Market Price Per Share
Slide 28: Tangible Book Value Per Share and Earnings Per Share
28 Tangible Book Value Per Common and Fully-Converted Preferred Share and Earnings Per Share (EPS) – Fully Diluted
Slide 29: Valuation Multiples Against Key Peers
29 Valuation Multiples Against Key Peers Source: S&P Global Market Intelligence as of 5/31/21 Note: PBHC Dividend Yield is Forward Dividend Yield following the increase in the quarterly cash dividend to $0.07 per share in March 2021
Slide 30: Value Variance to Peer Assessment
Value Variance to Peer Assessment Total Capitalization – Liquidity Convertible Preferred Shares Tangible Common Equity to Tangible Assets Ratio (TCE/TA) Historical Earnings Performance prior to July 2019 Non-Performing Asset Ratios at December 31, 2020 and March 31, 2021 Investor Relations Activity
Slide 31: Corporate Financial Highlights
31 Corporate Financial Highlights Walter F. Rusnak, SVP, Chief Financial Officer
Slide 32: Improving Profitability: Increasing ROAA and ROAE
32 Improving Profitability: Increasing ROAA and ROAE Source: SEC EDGAR Note: “2021 YTD” data as of March 31,2021 Return on Average Equity consistently higher Y/Y except for 2019
Slide 33: Revenue and Operating Expense Trends
33 Revenue and Operating Expense Trends (000’s) Revenues increased $11,941 from the year ended December 2015 to the year ended December 31, 2020 (55.6%) Expenses increased $7,603 from the year ended December 31, 2015 to the year ended December 31, 2020 (43.5%)
Slide 34: Improving Efficiency Ratio and Non-Interest Expenses
34 Improving Efficiency Ratio and Non-Interest Expenses Source: SEC EDGAR, S&P Global Market Intelligence Note: “2021 YTD” data as of March 31,2021 Efficiency Ratio (lower is better) and Non-Interest Expenses both improving through March 2021.
Slide 35: Future Risks of Net Interest Margin Compression
35 Future Risks of Net Interest Margin Compression Partially Mitigated by Improving Funding Costs Net NIE / AA = (Total Noninterest Expense – Total Noninterest Income excluding gains/losses) / Avg. Assets Source: SEC EDGAR Q2 drop in NIM due to low yielding PPP loans, recovered in Q3, but now loans
Slide 36: Nonperforming Loans Have Increased But Will Likely Improve
36 Nonperforming Loans (NPLs) Have Increased But Will Likely Improve as 2021 Progresses Reserves Increased as a Percentage of Total Loans Although Lowest in Past 6 Years vs. NPLs Source: SEC EDGAR Note: “2021 YTD” data as of March 31,2021. Loan charge-offs annualized to make comparable
Slide 37: Strategy – Key Performance Metrics Update
37 Strategy – Key Performance Metrics Update
Slide 38: Strategic Plan Shifting Focus
38 Strategic Plan Shifting Focus: Concepts Introduced at the May 2019 Shareholders’ Meeting: Lower Cost of Funds Rebalance deposit mix: Non-maturity deposits Business Accounts Digital Banking/Treasury Management Control Operating Expenses Reduce net income pressure resulting from potential margin co
Slide 39: Strategic Plan – One Year Results: Deposit Mix and Cost
39 Strategic Plan – 3 Year Horizon: One Year Results Deposit Mix and Cost (dollars in thousands) These improvements were significantly influenced by changes in retail customer’s activities and by business deposits associated with Paycheck Protection Program (PPP) loan originations. These factors wer
Slide 40: Strategic Plan – One Year Results: Manage Operating Expenses
40 Strategic Plan – 3 Year Horizon: One Year Results Manage Operating Expenses Year over Year (dollars in thousands)
Slide 41: Strategic Plan – One Year Results: Enhanced Fee Income
41 Strategic Plan – 3 Year Horizon: One Year Results Enhanced Fee Income Year over Year (dollars in thousands)
Slide 42: COVID-19 – Response and Impact
42 COVID-19 – Response and Impact
Slide 43: COVID-19: Response and Impact
43 COVID-19: Response and Impact Operational and Risk Management Systems Performed Well Effective response to all safety and security rules and guidelines Live test of Full Business Continuity Planning No disruption of services Full compliance with all CARES ACT, Federal and State Executive Orders,
Slide 44: Questions and Discussion
Questions and Discussion Pathfinder y
Slide 45: Voting Results
Voting Results Chris R. Burritt, Chairman Inspector of Elections Report, William O’Brien, Corporate Secretary 45
Slide 46: Meeting Adjourned, Thank You for Attending
2018 Annual Meeting of Shareholders Meeting Adjourned Thank You for Attending 46 2021 Annual Meeting of Shareholders
Slide 47: Appendix: Reconciliation of Non-GAAP Financial Measures
47 Appendix: Reconciliation of Non-GAAP Financial Measures Used In This Presentation