Pathfinder Bancorp, Inc. · NASDAQ:PBHC
Pathfinder Bancorp — Shareholder Meeting (June 2024)
57 slides from Pathfinder Bancorp's shareholder meeting presentation, Jun 6, 2024
Slide 1: 2024 Annual Meeting of Shareholders Presentation
2024 Annual Meeting of Shareholders Presentation Chris R. Burritt Chairman of the Board James A. “Jim” Dowd President & CEO Walter F. Rusnak Senior VP & CFO June 6, 2024 | NASDAQ:PBHC
Slide 2: Welcoming Remarks
Welcoming Remarks Chris R. Burritt Chairman of the Board
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 – 2024 Annual Meeting of Shareholders
Agenda – 2024 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, Questions & Answers to Follow Results of Shareholder Vote Meeting Adjournmen
Slide 5: Board of Directors
Pathfinder Bancorp, Inc. Director Since Eric Allyn 2022 David A. Ayoub 2012 William A. Barclay 2011 Chris R. Burritt 1986 Meghan Crawford-Hamlin 2022 James A. Dowd 2023 John P. Funiciello 2011 Adam C. Gagas 2014 Melanie Littlejohn 2016 John F. Sharkey, III 2014 Lloyd “Buddy” Stemple 2005 Board of Di
Slide 6: Executive Officers
Name Title Current Position Since James A. Dowd, CPA President & Chief Executive Officer 2022 Ronald Tascarella Executive Vice President & Chief Banking Officer 2006 Justin K. Bigham, CPA Senior Vice President & Advisor To The CEO (Will become Chief Financial Officer on July 1, 2024) 2024 Robert G.
Slide 7: Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm Jamie L. Card, CPA Partner, Bonadio & Company, LLP
Slide 8: Business of 2024 Annual Meeting of Shareholders
The election of three directors for a three-year term: John P. Funiciello Tony Scavuzzo Lloyd “Buddy” Stemple The approval of the Pathfinder Bancorp, Inc. 2024 Equity Incentive Plan The approval of an advisory nonbinding resolution regarding the compensation of our named executive Officers (“Say-on-
Slide 9: Executive Management Presentation
Executive Management Presentation James A. Dowd President and Chief Executive Officer Walter F. Rusnak Senior Vice President and Chief Financial Officer
Slide 10: Table of Contents
Introduction to Pathfinder Bancorp, Inc. Corporate Financial Highlights Market Performance Strategy and Conclusions Table of Contents
Slide 11: Introduction to Pathfinder Bancorp, Inc.
Company Overview Key Milestones Corporate Highlights Introduction to Pathfinder Bancorp, Inc.
Slide 12: Company Overview
Founded in 1859 Bank holding company of Pathfinder Bank 11 full-service locations and one loan production office serving customers throughout the Central New York area Established track record of organic growth since completion of 2nd step mutual conversion in 2014 132% growth in loans 388% growth i
Slide 13: Dominant Market Position in Oswego County with Expanding Presence in Onondaga County
Dominant Market Position in Oswego County with Expanding Presence in Onondaga County deposit market share rank #1 48.6% deposit market share $864M total deposits Growing presence in Onondaga County with four locations totaling $246 million in deposits and #11 deposit market share at June 30, 2023. F
Slide 14: Track Record of Measured Growth and Increasing Earnings
Track Record of Measured Growth and Increasing Earnings 2014 Raised $26M in 2nd step conversion becoming a 100% publicly owned institution Opened downtown Syracuse branch 2015 Issued $10M in subordinated debt 2017 Growth momentum continues with 18% annual loan and deposit growth 2019 Completed $20M
Slide 15: Corporate Highlights
Corporate Highlights Experienced Management Team Backed by a Leading Institutional Investor Senior management has decades of experience in the community banking industry The Board of Directors and management own 23.1% of the voting shares(1). An affiliate of Castle Creek Capital LLC owns 31.7% of th
Slide 16: Corporate Highlights: Well-Capitalized
Corporate Highlights Well-Capitalized The Bank has a Tier 1 leverage ratio of 10.11% and total RBC ratio of 15.05% as of December 31, 2023 The Company has been proactive in supplementing capital ratios for future growth as exhibited by our subordinated debt issuances in 2015 and 2020, and an equity
Slide 17: Corporate Highlights: High Insider Ownership
Corporate Highlights: High Insider Ownership Indicates Shareholder Alignment Source: Pathfinder Proxy Statement Note: Data as of the record date of April 12, 2023, and includes all options that vest within 60 days of the record date Strong levels of ownership across senior management & the board of
Slide 18: Well Diversified Real Estate Lending, Proven Loan Growth
Well Diversified Real Estate Lending, Proven Loan Growth with Focus on Commercial Loans 7.7% Total Loans CAGR through Dec. 2023 Q1 2024 Loan Composition Loans ($ millions) Total Loans $892 million 9.8% Commercial Loans CAGR through Dec. 2023
Slide 19: Well Diversified Loan Portfolio
Well Diversified Loan Portfolio: No Significant Real Estate Loan Collateral Concentrations The future credit-related performance of a loan portfolio generally depends upon (1) the types of loans within the portfolio, (2) concentrations by loan type within the portfolio, (3) collateral concentrations
Slide 20: Well-Diversified Deposit Base
Well-Diversified Deposit Base Deposits ($ millions) Q1 2024 Deposit Composition 77.8% loan / deposit ratio Total Deposits: $1.15 billion 7.5% Total Deposits CAGR Through Dec. 2023 4.1% Core Deposits CAGR Through Dec. 2023
Slide 21: Technology
Technology Pathfinder actively seeks to be an effective adopter of proven, cost-effective technologies. Our Technology Steering function has strong engagement from external advisors, our board of directors and all levels of management We are investing in customer-facing technologies at a measured pa
Slide 22: Experienced and Seasoned Management Team
Experienced and Seasoned Management Team Significant Experience & Insider Ownership Senior management has decades of experience in the community banking industry President & CEO James Dowd has over 29 years of banking experience and previously served as COO Significant levels of ownership across sen
Slide 23: Transaction Overview
TRANSACTION OVERVIEW Branch Location: 6611 Manlius Center Road, East Syracuse, NY, 13057 Total Deposits: $198 Million* Cost of Deposits: 1.84%* # of Accounts: 11,000 +* Total Loans: $32 Million* Branch Portfolio Yield: 5.71%* Closing Premium: 5.8% premium for core deposits**delivered at closing, No
Slide 24: Positioned for Unprecedented Growth: Syracuse MSA
Positioned for Unprecedented Growth Embracing Our Market’s Promising Landscape Syracuse MSA Demographic Trends Geography Key Employers Industries Syracuse MSA covers over 3,000 square miles comprised of three counties: Madison Onondaga Oswego Key existing employers in the Central New York area inclu
Slide 25: Positioned for Unprecedented Growth: Micron Mega-Complex
Positioned for Unprecedented Growth Embracing Syracuse’s Promising Landscape In 2022, Micron announced its plans to build the largest semiconductor fabrication facility in the history of the United States. Micron intends to invest up to $100 billion over the next 20-plus years to construct a new meg
Slide 26: Positioned for Unprecedented Growth
Positioned for Unprecedented Growth Embracing Our Market’s Promising Landscape
Slide 27: Positioned for Unprecedented Growth: Tech Hub and Venture Capital
#3 on Top 10 most promising tech hub (Syracuse, Utica/Rome) in U.S $1,329 per capita (2012-2021) ~ vs $27 per capita (2000-2010) Significant increases in the number of venture capital firms investing in our market increased from 66 (2000-2005) to 254 (2020-2024) 40,143 total employment 8% of all reg
Slide 28: Positioned for Unprecedented Growth: Downtown Syracuse
147% Growth (2003 - 2023) 8% increase in population in 2023 Added 11 new businesses in 2024 with 16 additional businesses in the current pipeline. Added 24 new housing units in 2024, with another 408 in the pipeline. At completion of these projects, downtown population will grow by 14%. 2.4% city po
Slide 29: Corporate Financial Highlights
Corporate Financial Highlights Walter F. Rusnak, SVP, Chief Financial Officer
Slide 30: Navigating Unprecedented Headwinds: Yield Curve Inversion
Navigating Unprecedented Headwinds: Sustained Yield Curve Inversion In Last Five Quarters The average spread between shorter-term interest rates and longer-term interest rates is a significant driver of the financial performance of depository institutions. The Treasury Yield Curve(1) is currently in
Slide 31: ROAA Measured Against Average 2-5 Year Yield Curve
Navigating Unprecedented Headwinds Sustained Yield Curve Inversion In Last Five Quarters Pathfinder ROAA Measured Against The Average 2-5 Year Yield Curve A plausible way to view how effectively a financial institution is navigating the challenges presented by changes in the absolute level of intere
Slide 32: Improving Profitability: Increasing ROAA and ROAE
Improving Profitability: Increasing ROAA and ROAE Trend in returns on average equity were positive since the second half of 2019 through December 31, 2022. The first quarter 2024 decrease in ROAA and ROAE is largely related to increases in the provision for credit losses associated with a single lar
Slide 33: Revenue and Operating Expense Trends
Revenue and Operating Expense Trends (000’s) Annual expenses increased $8,301 from the year ended December 31, 2017 to the year ended December 31, 2023 (39.4%), a CAGR of 5.7% Annual revenues increased $15,740 from the year ended December 31, 2017 to the year ended December 31, 2023 (61.9%), a CAGR
Slide 34: Increased Profitability Levels and Metrics
Increased Profitability Levels and Metrics Earnings Growth Return on Average Assets and Average Equity Net Interest Income and Net Interest Margin (1) CAGR calculations based on full year 2023 net income and EPS 18.3% Net Income CAGR1 10.5% Fully Diluted EPS CAGR1
Slide 35: Disciplined Expense Management
29.6% Disciplined Expense Management Employed To Partially Mitigate Industrywide Margin Compression Continued focus on expense controls has improved operating results Deposits per Branch ($ millions) Non-interest Expense / Average Assets
Slide 36: Asset Quality Actively Managed And Carefully Monitored
Asset Quality Actively Managed And Carefully Monitored Reserve Levels Consistent With Asset Quality Metrics NCOs / Average Loans NPLs / Loans (National average is 1.08% and 0.81% for all real estate and commercial loans, respectively, at March 31, 2024 per FDIC aggregate data) In late 2023, Pathfind
Slide 37: Asset Quality Carefully Managed with Robust Reserve Levels
Asset Quality Carefully Managed with Robust Reserve Levels Allowance for Credit Losses / Loans Allowance for Credit Losses / NPLs Higher NPLs drive robust reserve levels
Slide 38: Well-Capitalized with Increasing Dividend
Well-Capitalized with Increasing Dividend Tangible Book Value per Share (“TBVPS”) Dividends per Common Share Bank Tier 1 Leverage Ratio Source: Company reports, S&P Capital IQ Pro CAGR calculation based on annualized Q1 2024 dividend 6% TBVPS CAGR 10% Dividend CAGR
Slide 39: Tangible Book Value Per Common Share and Market Price Per Share
Tangible Book Value Per Common Share and Market Price Per Share Note: Tangible Book Value at March 31, 2023 included a $0.36 per share nonrecurring reduction related to the adoption of the Current Expected Credit Loss Model (CECL) on January 1, 2023.
Slide 40: Tangible Book Value Per Share and Earnings Per Share
Tangible Book Value Per Common Share and Earnings Per Share (EPS) – Fully Diluted Note: Tangible Book Value at March 31, 2023 includes a $0.36 per share nonrecurring reduction related to the adoption of the Current Expected Credit Loss Model (CECL) on January 1, 2023.
Slide 41: Industry Challenges: Pressure on All Bank Stocks
Industry Challenges Pressure on All Bank Stocks With Increased Uncertainty
Slide 42: Investor Challenges: Pressure on All Bank Stocks
Investor Challenges Pressure on All Bank Stocks with Increased Uncertainty – The Most Recent Five Quarters Mark-to-Market Adjusted Capital Balance Sheet Liquidity Core Deposit Franchise Quality Net Interest Margin (NIM) Credit Quality Commercial Real Estate Concentrations Long Term Earning Power
Slide 43: Pathfinder's Positioning: Capital and Liquidity
Industry Challenges Pathfinder’s Positioning Mark-to-Market Adjusted Capital The Bank’s regulatory capital is $145.4 million, or 10.1% of Bank assets; Even if 100% of the current mark-to-market regulatory adjustment for available-for-sale securities was disallowed, the Bank’s regulatory capital woul
Slide 44: Pathfinder's Positioning: Core Deposit Franchise and NIM
Industry Challenges Pathfinder’s Positioning Core Deposit Franchise Quality Pathfinder enjoys a dominant deposit market share in Oswego County and continues to attract new deposit customers in the attractive Onondaga County market Two relatively new and well-positioned branches now open in Onondaga
Slide 45: Pathfinder's Positioning: Credit Quality and CRE
Industry Challenges Pathfinder’s Positioning Credit Quality Pathfinder has a high level of reserves in place within its Allowance for Credit Losses and a very conservative approach to managing both credit decisioning and borrower relationships Appropriate staffing and other resources have been added
Slide 46: A Note On Liquidity
A Note On Liquidity Large regional bank failures (primarily, on the West Coast) in 2023 garnered substantial press coverage and intensive regulatory scrutiny These issues were isolated to a limited number of failed regional banks and did not cause major issues within the community banking space The
Slide 47: Market Performance
Market Performance Share Price Performance vs. Peers Market-Based Expectations
Slide 48: Relative 3- and 5-Year Stock Price Performance vs. Peer Median
PBHC: Relative 3-and 5-Year Stock Price Performance vs. Peer Median 1Y TSR: 16.5-%pts underperformance to S&P500 0.2-%pts outperformance to peer median 3Y TSR: 6.8-%pts underperformance to S&P 500 0.3-%pts underperformance to peer median 5Y TSR: 12.7-%pts underperformance to S&P 500 0.8-% pts underp
Slide 49: Stock Price Performance
Note: Market data as of May 23, 2024 Source: S&P Capital IQ Pro, Raymond James Financial, Inc. Stock price performance Annual stock price performance S&P 500 PBHC KRE Stock Price Performance
Slide 50: Financial Comparison 2022 vs. 2024Q1
Financial Comparison | 2022 vs. 2024Q1 Source: S&P Capital IQ Pro, Raymond James Financial, Inc. Note: Peer group based on PBHC’s 2024 Proxy (excluding merger targets); median values shown Return on average assets Net interest margin Return on average equity Efficiency ratio 2022Y 2024Q1 annualized
Slide 51: Strategy Update: Refined Focus on Profitability Drivers
Strategy Update Refined Focus on Profitability Drivers We have identified our six most impactful opportunities for the next three to five years: Expense allocation and control; Accelerate digitization; Generate additional fee income consistent with our customer service orientation; Increase non-matu
Slide 52: Pathfinder Bancorp: Investment Thesis
Pathfinder Bancorp: Investment Thesis The community banking industry in aggregate is priced below many other sectors Perhaps, warranted in the current economic environment, but these factors will normalize PBHC trades well below peers currently as measured by its market price (MP) compared to its ta
Slide 53: Concluding Thoughts
Concluding Thoughts Well run community banks can profitably serve their customers in many ways and will continue to be sound long-term investments for their shareholders Pathfinder’s focus on small business customers, along with an increasing ability to meet the needs of targeted consumer segments,
Slide 54: Questions and Discussion
Questions and Discussion 54
Slide 55: Voting Results
Voting Results Chris R. Burritt, Chairman Inspector of Elections Report William O’Brien, Corporate Secretary
Slide 56: Meeting Adjourned, Thank You For Attending
2024 Annual Meeting of Shareholders | June 6, 2024 Meeting Adjourned Thank You For Attending
Slide 57: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures Used In This Presentation