Pathfinder Bancorp, Inc. · NASDAQ:PBHC
Pathfinder Bancorp — Shareholder Meeting (June 2023)
54 slides from Pathfinder Bancorp's shareholder meeting presentation, Jun 1, 2023
Slide 1: 2023 Annual Meeting of Shareholders Presentation
‘Pathfinder 2023 ANNUAL MEETING OF SHAREHOLDERS PRESENTATION NASDAQ: PBHC JUNE 1, 2023 CHRIS R. BURRITT JAMES A. “JIM” DOWD WALTER F. RUSNAK Chairman of the Board President & CEO Senior VP & CFO LOCAL. COMMUNITY. TRUST.
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 – 2023 Annual Meeting of Shareholders
Agenda – 2023 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
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 John P. Funiciello 2011 Adam C. Gagas 2014 Melanie Littlejohn 2016 John F. Sharkey, III 2014 Lloyd “Buddy” Stemple 2005 James A. Do
Slide 6: Executive Officers
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 Calvin L. Corriders Regional President, Syracuse Market, Human Resource Director 2017 William O’Brien Senior Vice P
Slide 7: Independent Registered Public Accounting Firm
Independent Registered Public Accounting Firm Jamie L. Card, CPA Tamara L. Gamble, CPA Partners, Bonadio & Company, LLP
Slide 8: Business of 2023 Annual Meeting of Shareholders
Business of 2023 Annual Meeting of Shareholders The election of one director for a one-year term: Chris R. Burritt The election of one new nominee director for a three-year term: James A. Dowd The election of three directors for a three-year term: David A. Ayoub William A. Barclay John F. Sharkey, I
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
Lake Ontario Oswego Syracuse 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%
Slide 13: Dominant Market Position in Oswego County
Dominant Market Position in Oswego County with Expanding Presence in Onondaga County PBHC Branches (11) PBHC Headquarters Onondaga County Albany deposit market share rank #1 49% deposit market share $893M total deposits Growing presence in Onondaga County with three locations totaling $258 million i
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 and management own 23.6%(1) of the voting shares. An affiliate of Castle Creek Capital LLC owns 31.7% of the Company on
Slide 16: Corporate Highlights: High Insider Ownership Shows Alignment
Corporate Highlights: High Insider Ownership Shows 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 directors create
Slide 17: Pathfinder Investment Thesis
Pathfinder Investment Thesis Management believes that the current industry-wide headwinds are transitory Personally invested and experienced management team and board of directors Significant progress in sustainable profitability since achieving $1 billion in total assets in 2019 Strong balance shee
Slide 18: Proven Loan Growth with Focus on Commercial Loans
Proven Loan Growth with Focus on Commercial Loans 9.1% Total Loans CAGR through Dec. 2022 Q1 2023 Loan Composition Loans ($ millions) Total Loans $910 million $910 11.3% Commercial Loans CAGR through Dec. 2022
Slide 19: Well-Diversified Deposit Base
Well-Diversified Deposit Base Deposits ($ millions) Q1 2023 Deposit Composition 78% loan / deposit ratio Total Deposits: $1.14 billion 9.2% Total Deposits CAGR Through Dec. 2022 7.7% Core Deposits CAGR Through Dec. 2022
Slide 20: Technology
Technology Pathfinder has an active Technology Steering function with strong engagement from external advisors, our board of directors and all levels of management We have also established a project-oriented Digitization Committee to facilitate prioritization and implementation efforts within our te
Slide 21: Technology
Technology Pathfinder will benefit from its interactions within the Castle Creek Capital’s ‘ecosystem’ of financial institutions and emerging financial technology (fintech) companies Technological progress and the emergence of financial technology companies that will partner with community banks con
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 28 years of banking experience and previously served as COO CFO Walter Rusnak has over 30 years of ban
Slide 23: Operating in a Stable, Growing Market
Operating in a Stable, Growing Market 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 include SUNY Upstate Medical University, St. J
Slide 24: Economic Trends in Our Market
Economic Trends in Our Market
Slide 25: Economic Trends in Our Market
Economic Trends in Our Market
Slide 26: Economic Trends in Our Market: Micron Technology Announcement
Economic Trends in Our Market Micron Technology Announcement $27.7B FY2020 annual revenue 13 manufacturing sites and 14 customer labs Founded more than 40 years ago on October 5, 1978 Headquartered in Boise, Idaho, USA Company Overview 135 on the 2020 Fortune 500 4th largest semiconductor company in
Slide 27: Corporate Financial Highlights
Corporate Financial Highlights Walter F. Rusnak, SVP, Chief Financial Officer
Slide 28: 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 2023 decrease in ROAA and ROAE is largely related to increases in the provision for credit losses associated with a single lar
Slide 29: Revenue and Operating Expense Trends
Revenue and Operating Expense Trends (000’s) Expenses increased $7,780 from the year ended December 31, 2017 to the year ended December 31, 2022 (36.9%) Revenues increased $19,124 from the year ended December 2017 to the year ended December 31, 2022 (75.2%) Note: First Quarter 2023 Revenue and Opera
Slide 30: Increased Profitability Levels and Metrics
Increased Profitability Levels and Metrics Earnings Growth Return on Average Assets and Average Equity Net Interest Income and Net Interest Margin (1) CAGR calculations based on annualized Q1 2023 net income and EPS 24.2% Net Income CAGR1 14.9% Fully Diluted EPS CAGR1
Slide 31: Disciplined Expense Management and Enhanced Operational Efficiency
1.3x Disciplined Expense Management and Enhanced Operational Efficiency Diligent focus on expense controls has optimized operating results Efficiency Ratio Deposits per Branch ($ millions) Non-interest Expense / Average Assets
Slide 32: Strong Asset Quality Performance with Robust Reserve Levels
Strong Asset Quality Performance with Robust Reserve Levels NCOs / Average Loans Allowance for Credit Losses / Loans Allowance for Credit Losses / NPLs NPLs / Loans
Slide 33: 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 2023 dividend 5.6% TBVPS CAGR 9.8% Dividend CAGR1
Slide 34: 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 includes a $0.36 per share reduction related to the adoption of the Current Expected Credit Loss Model (CECL) on January 1, 2023.
Slide 35: Tangible Book Value Per Share and Fully Diluted EPS
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 reduction related to the adoption of the Current Expected Credit Loss Model (CECL) on January 1, 2023.
Slide 36: Industry Challenges Pressure on All Bank Stocks
Industry Challenges Pressure on All Bank Stocks With Increased Uncertainty
Slide 37: Investor Challenges Pressure on All Bank Stocks
Investor Challenges Pressure on All Bank Stocks with Increased Uncertainty 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 38: Mark-to-Market Adjusted Capital and Balance Sheet Liquidity
Industry Challenges Pressure on All Bank Stocks with Increased Uncertainty Mark-to-Market Adjusted Capital The Bank’s regulatory capital is $134.7 million, or 9.7% of Bank assets; Even if 100% of the current mark-to-market regulatory adjustment for available-for-sale securities was disallowed, the B
Slide 39: Core Deposit Franchise Quality and Net Interest Margin
Industry Challenges Pressure on All Bank Stocks with Increased Uncertainty Core Deposit Franchise Quality Pathfinder enjoys a dominating deposit market share in Oswego County and continues to attract new deposit customers in Onondaga County Two new and well-positioned branches now open in Onondaga C
Slide 40: Credit Quality, CRE Concentrations, Long Term Earning Power
Industry Challenges Pressure on All Bank Stocks with Increased Uncertainty Credit Quality Pathfinder has a high level of reserves in place in its Allowance for Credit Losses and a very conservative approach to managing both credit decisioning and borrower relationships Commercial Real Estate Concent
Slide 41: Liquidity
Liquidity Recent large regional bank failures (primarily, on the West Coast) have garnered substantial press coverage and intensive regulatory scrutiny The Bank’s management monitors liquidity on a continuous basis through a broad range of internal and externally-sourced programs and considers effec
Slide 42: Liquidity: Uninsured Deposits
Liquidity Uninsured Deposits At March 31, 2023 the Bank had deposits of $1.1 billion, of which $382.7 million were nominally uninsured, as they were above the insurance limits established by the Federal Deposit Insurance Corporation (“FDIC”) on that date. Of the $382.7 million in nominally uninsured
Slide 43: Liquidity: Contingently Available Sources
Liquidity Contingently Available Sources The Company has a number of existing credit facilities available to it. At March 31, 2023, total credit available under the existing lines of credit was approximately $176.3 million at Federal Home Loan Bank of New York, the Federal Reserve Bank, and two othe
Slide 44: Future Risks of Net Interest Margin Compression
Future Risks of Net Interest Margin Compression Partially Mitigated by Balance Sheet Positioning Over the Past 24 Months
Slide 45: Market Performance
Market Performance Share Price Performance vs. Peers Market-Based Expectations
Slide 46: Solid 3- and 5-Year Outperformance vs. Peer Median
PBHC: Solid 3-and 5-Year Outperformance vs. Peer Median 1Y TSR:9.9-%pts underperformance to S&P500 3.3-%pts underperformance to peer median 3Y TSR: 2.3-%pts outperformance to S&P 500 11.4-%pts outperformance to peer median 5Y TSR: 4.6-%pts underperformance to S&P 500 5.5-% ptsoutperformance to peer
Slide 47: PBHC: Year-To-Date Stock Price Performance
PBHC: Year-To-Date (YTD) Stock Price Performance Pathfinder stock has experienced a significant share price decline, along with the rest of the industry since March of this year The SPDR S&P Regional Banking Exchange Traded Fund (ETF) has the following YTD share price change and total returns throug
Slide 48: 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 49: Conclusion
Conclusion Pathfinder can grow significantly in the rapidly-emerging local economic environment The current uncertainties notwithstanding, there remains a place for community focused banks Well run community banks can profitably serve their customers in many ways and will continue to be sound invest
Slide 50: Conclusion
Conclusion Pathfinder’s focus on small business customers, along with an increasing ability to meet the needs of consumers, will facilitate our growth in the next three to five years The value of our franchise is likely to increase, perhaps substantially, as we leverage our current position and bene
Slide 51: Questions and Discussion
PathFinder BANCORP. INC. Questions and Discussion LOCAL. COMMUNITY. TRUST.
Slide 52: Voting Results
Voting Results Chris R. Burritt, Chairman Inspector of Elections Report William O’Brien, Corporate Secretary
Slide 53: Meeting Adjourned – Thank You for Attending
PPathFinder BANCORP. INC. 2023 ANNUAL MEETING OF SHAREHOLDERS JUNE 1, 2023 MEETING ADJOURNED THANK YOU FOR ATTENDING LOCAL. COMMUNITY. TRUST.
Slide 54: Appendix: Reconciliation of Non-GAAP Financial Measures
Appendix: Reconciliation of Non-GAAP Financial Measures Used In This Presentation