Pathfinder Bancorp, Inc. Announces Third Quarter 2025 Results

Results reflect ongoing efforts to mitigate credit risk and enhance asset quality metrics for the long term, as well as the continued growth of Pathfinder’s core deposit franchise, deliberate liability pricing, net interest margin resilience, and operating expense discipline

OSWEGO, N.Y., Oct. 30, 2025 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. (“Pathfinder” or the “Company”) (NASDAQ: PBHC) announced its financial results for the third quarter ended September 30, 2025.

The holding company for Pathfinder Bank (“the Bank”) reported net income attributable to common shareholders of $626,000, or $0.10 per diluted share in the third quarter of 2025, compared to $31,000 or less than $0.01 per diluted share in the second quarter of 2025. The Company recorded a net loss attributable to common shareholders of $4.6 million or $0.75 per share in the third quarter of 2024.

Third Quarter 2025 Highlights and Key Developments

• Provision expense was $3.5 million, compared to $1.2 million in the quarter ended June 30, 2025 (the "linked quarter") and $9.0 million in the year-ago period, reflecting proactive measures that remain ongoing to mitigate credit risk and enhance asset quality metrics for the long term. These include a prudent increase in reserves during the third quarter of 2025, in conjunction with an ongoing comprehensive portfolio review that the Company initiated in September, encompassing performing and nonperforming loans of $500,000 or more, representing approximately 90% of all outstandings. This review is expected to be completed by the end of 2025.

• Allowance for credit losses increased to $18.7 million at period end, increasing $2.7 million during the third quarter and $1.4 million from September 30, 2024. Net charge offs (“NCOs”) were $670,000 in the third quarter of 2025, declining 74.2% from the linked quarter and 92.3% from the year-ago period.

• Loans totaled $898.5 million at period end, compared to $909.7 million on June 30, 2025, and $921.7 million on September 30, 2024. Commercial loans were $543.7 million or 60.5% of total loans at period end, compared to $549.1 million on June 30, 2025, and $534.5 million on September 30, 2024.

• Total deposits grew to $1.23 billion at period end, compared to $1.22 billion on June 30, 2025, and $1.20 billion on September 30, 2024. During the third quarter of 2025, total balances increased on growth in core deposits, more than offsetting reductions in higher-cost time deposits. Core deposits grew to $960.1 million, or 78.37% of total deposits at period end, from $958.8 million on June 30, 2025, and $926.4 million on September 30, 2024.

• Net interest income was $11.6 million and net interest margin (“NIM”) was 3.34%, including loan and investment prepayment penalties contributing a combined $260,000 to net interest income and 7 basis points to NIM. For the linked quarter, net interest income and NIM were $10.8 million and 3.11%, respectively. In the year-ago period, a catch-up interest payment contributed $887,000 to net interest income of $11.7 million and 25 basis points to NIM of 3.34%.

• Noninterest income was $1.5 million, including a net death benefit of $32,000 on bank owned life insurance (“BOLI”). For the linked quarter, noninterest income was negative $1.5 million, including a pre-tax loss of $3.1 million recorded as a lower of cost or market adjustment to loans held for sale (“LOCOM HFS adjustment”). In the year-ago period, noninterest income was $1.7 million, including a net death benefit of $175,000 on BOLI.

• The efficiency ratio was 68.77%, compared to 65.66% in the linked quarter and 75.78% 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 $4.1 million, compared to $4.2 million in the linked quarter and $3.3 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. 
  
  

“Recent asset quality related to certain legacy loans has resulted in unacceptable levels of credit volatility,” said President and Chief Executive Officer James A. Dowd. “We’re committed to advancing our dynamic credit risk management framework, emphasizing enhanced portfolio analytics, rigorous policy standards, stringent underwriting criteria, and a measured approach to new loan production that favors local consumer and small and mid-sized businesses lending over highly concentrated credit relationships. In addition, we initiated a new, comprehensive review of the entire loan portfolio, scheduled to be completed by year end, which we believe will enable us to make significant strides toward reducing the volatility of credit costs in 2026 and beyond, clearing a path for consistent and sustainable improvement in earnings over time.”

Dowd added, “Third quarter results also underscore the benefits of our disciplined approach to balance sheet management. We’ve made steady progress in expanding Pathfinder’s core deposit base across our Oswego and Onondaga county markets with a deliberate approach to pricing, providing the Bank with a stable, relationship-driven source of funding to support community-based lending.”

Net Interest Income and Net Interest Margin
Third quarter 2025 net interest income was $11.6 million, an increase of $786,000, or 7.3%, from the second quarter of 2025. An increase in interest and dividend income of $554,000 from the linked quarter was attributed to an average yield increase of 16 basis points on all interest-earning assets. A 34 basis point increase in loan yields included a 9 basis point benefit from $200,000 in loan prepayment penalty income in the third quarter of 2025. An overall 14 basis point decrease in taxable securities yield included a 5 basis point benefit from $60,000 in investment prepayment penalty income in the third quarter of 2025. In addition, average balances of loans, taxable securities and tax-exempt securities declined by $4.6 million, $3.8 million and $334,000, respectively. The increases in loan interest income, dividends, and federal funds sold and interest-earning deposits were $693,000, $23,000, and $63,000, respectively, partially offset by decreases in taxable and tax-exempt securities income of $215,000 and $10,000, respectively. A decrease in interest expense from the second quarter of 2025 of $232,000 was primarily attributed to a 7 basis point decline in the average cost of total interest-bearing liabilities, highlighted by a 10 basis point reduction in the cost of interest-bearing deposits that resulted from the Bank’s deliberate pricing adjustments.

NIM was 3.34% in the third quarter of 2025, compared to 3.11% in the second quarter of 2025. The increase of 23 basis points reflected lower average interest-bearing deposit costs in the third quarter of 2025, as well as 7 basis points attributed to prepayment penalty income.

Third quarter 2025 net interest income was $11.6 million, a decrease of $132,000, or 1.1%, from the year-ago period, or an increase of $755,000, or 7.0%, when excluding an $887,000 third quarter 2024 catch-up interest payment associated with purchased loan pool positions. A decrease in interest and dividend income of $1.5 million was attributed to the third quarter 2024 catch-up interest payment, as well as declines in the average yield on total interest-bearing assets, loans, and fed funds sold and interest-bearing deposits of 36 basis points, 22 basis points, and 148 basis points, respectively. Average loan balances also declined by $7.7 million from the year-ago period, with a corresponding decrease in loan interest income of $626,000. A decrease in interest expense of $1.3 million was primarily attributed to a 45 basis point decline in the average cost of total interest-bearing liabilities, highlighted by a 39 basis point reduction in the cost of interest bearing deposits, as well as paydowns of brokered deposits and borrowings utilizing a portion of the low-cost liquidity provided by core deposits acquired as part of last year’s East Syracuse branch transaction.

NIM was 3.34% in the third quarter of 2025 with 7 basis points attributed to prepayment penalty income, compared to 3.34% in the third quarter of 2024 with 25 basis points from the catch-up interest payment received in the third quarter of 2024. As a result of the declining rate environment and the 2024 East Syracuse branch acquisition, NIM reflected lower average deposit and borrowing costs in the third quarter of 2025, offset by lower average yields on earning assets, as compared to the year-ago period.

Noninterest Income
Third quarter 2025 noninterest income totaled $1.5 million. In the linked quarter, noninterest income was negative $1.5 million, reflecting a pre-tax loss of $3.1 million on the sale of nonperforming and classified loans recorded as a second quarter 2025 LOCOM HFS adjustment. In the year-ago period, noninterest income was $1.7 million, including $367,000 in third quarter 2024 revenue from the insurance agency business sold in October 2024.

Compared to the linked quarter, third quarter 2025 noninterest income reflected increases of $130,000 in earnings and gain on BOLI driven by a $32,000 net death benefit, as well as the timing of new policy purchases and like-kind exchanges of existing policies. In addition, third quarter 2025 noninterest income, compared to the linked quarter, included increases in debit card interchange fees of $37,000 and service charges on deposit accounts of $24,000. Compared to the linked quarter, third quarter 2025 noninterest income also reflected gains on sales of loans and foreclosed real estate of $38,000, an increase in loan servicing fees of $16,000, a decrease of $275,000 in net unrealized gains on marketable equity securities, and a $12,000 increase in net realized losses on sales and redemptions of investment securities.

Compared to the third quarter of 2024, noninterest income reflected a decrease of $75,000 in earnings and gains on BOLI. The decline reflects the impact of new BOLI policy purchases made during the current year and differences in net death benefits recorded in the third quarter of 2025 and the year-ago period of $32,000 and $175,000, respectively. In addition, third quarter 2025 noninterest income, compared to the year-ago period, included a $12,000 increase in service charges on deposit accounts and a decrease of $83,000 in debit card interchange fees. Compared to the year-ago period, third quarter 2025 noninterest income also reflected increases of $83,000 in net unrealized gains on marketable equity securities, $34,000 in loan servicing fees, and $31,000 in gains on sales of loans and foreclosed real estate, as well as a decrease of $176,000 in net realized losses on sales and redemptions of investment securities.

Noninterest Expense
Noninterest expense totaled $8.9 million in the third quarter of 2025, increasing $875,000 from $8.1 million in the linked quarter and decreasing $1.3 million from $10.3 million in the year-ago period. The decrease from the year-ago period was primarily due to $1.6 million in one-time transaction-related expenses for last year’s East Syracuse branch acquisition, in addition to $308,000 in costs associated with the insurance agency business sold in October 2024.

Salaries and benefits were $5.0 million in the third quarter of 2025, increasing $480,000 from the linked quarter and $46,000 from the year-ago period. The increase from the second quarter of 2025 was due to one additional workday in the quarter driving an additional $100,000 of salaries, an increase in medical claims of $146,000 expected to be reimbursed by stop loss insurance, an increase in retirement plan costs of $89,000, as well as an increase of $152,000 related to reduced salary deferrals linked to reduced loan origination activities. The increase of $46,000 from the year-ago period was primarily due to an increase in medical claims expected to be reimbursed by stop loss insurance.

Building and occupancy was $1.4 million in the third quarter of 2025, increasing $169,000 from the linked quarter and $265,000 from the year-ago quarter. The increase from the linked quarter reflected a $133,000 increase due to periodic building maintenance, as well as increases in property taxes of $17,000 and utilities costs of $7,000. The increase from the year-ago period was primarily due to a $121,000 increase in building maintenance during the third quarter of 2025, and higher costs related to building and land leases, property taxes, and utilities of $54,000, $46,000, and $27,000, respectively. These increases from the year-ago period were primarily due to timing of ongoing facilities-related costs associated with operating the East Syracuse branch acquired early in the third quarter of 2024.

Data processing expense was $641,000 in the third quarter of 2025, decreasing $26,000 from the linked quarter and $31,000 from the year-ago period. The decrease from the linked quarter reflects lower costs primarily associated with check and ATM processing charges. The decrease from the year-ago period was driven by decreases of $78,000 in data processing supplies and $24,000 in ATM processing costs, partially offset by year-over-year increases in recurring data processing costs amounting to $71,000, primarily due to software upgrades completed as part of the Company’s ongoing technology modernization initiatives.

FDIC assessment expense was $171,000 in the third quarter of 2025 and zero in the linked quarter due to modest over-accruals in prior periods, compared to $228,000 in the year-ago period.

Annualized noninterest expense represented 2.40% of average assets in the third quarter of 2025, compared to 2.18% and 2.75% in the linked and year-ago periods. The efficiency ratio was 68.77%, compared to 65.66% and 75.78% 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 Income
For the third quarter of 2025, net income attributable to common shareholders was $626,000, or $0.10 per basic and diluted share. Linked quarter net income was $31,000, or less than $0.01 per basic and diluted share. For the third quarter of 2024 the company reported a net loss of $4.6 million or $0.75 per basic and diluted share.

Statement of Financial Condition
As of September 30, 2025, the Company’s statement of financial condition reflects total assets of $1.47 billion, compared to $1.51 billion and $1.48 billion recorded on June 30, 2025, and September 30, 2024, respectively.

Loans totaled $898.5 million on September 30, 2025, decreasing $11.2 million or 1.2% during the third quarter and $23.1 million or 2.5% from one year prior. Consumer and residential loans totaled $356.2 million on September 30, 2025, decreasing $6.0 million or 1.6% during the third quarter and $32.5 million or 8.4% from one year prior. Commercial loans totaled $543.7 million on September 30, 2025, decreasing $5.4 million or 1.0% during the third quarter and increasing $9.2 million or 1.7% from one year prior.

With respect to liabilities, deposits totaled $1.23 billion on September 30, 2025, increasing 0.3% during the third quarter and 2.4% from one year prior.

Shareholders’ equity totaled $126.3 million on September 30, 2025, increasing $1.9 million or 1.5% in the third quarter and increasing $6.1 million or 5.1% from one year prior. The third quarter 2025 increase primarily reflects a $1.6 million decrease in accumulated other comprehensive loss (“AOCL”), a $4,000 decrease in retained earnings, and a $329,000 increase in additional paid in capital. Noncontrolling interest, previously included in equity in the Statements of Financial Condition, was eliminated in October 2024 upon the sale of the Company’s 51% insurance agency ownership interest.

Asset Quality
The 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 $23.3 million, or 2.59% of total loans on September 30, 2025, compared to $11.7 million or 1.28% on June 30, 2025, and $16.2 million or 1.75% on September 30, 2024. The increase is the result of two loans associated with two local commercial relationships dating back to 2021 moving to nonperforming status.

NCOs after recoveries declined to $670,000, or an annualized 0.30% of average loans in the third quarter of 2025, from $2.6 million or 1.14% in the linked quarter and $8.7 million or 3.82% in the year-ago period.

Provision for credit loss expense was $3.5 million in the third quarter of 2025, reflecting an increase in credit loss reserves in the period. The increase is the result of two large commercial real estate relationships. The provision was $1.2 million and $9.0 million 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 $18.7 million on September 30, 2025, compared to $16.0 million on June 30, 2025, and $17.3 million on September 30, 2024. As a percentage of total loans, ACL represented 2.08% on September 30, 2025, 1.76% on June 30, 2025, and 1.87% on September 30, 2024.

Liquidity
The Company has diligently ensured a strong liquidity profile as of September 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 $1.23 billion on September 30, 2025, compared to $1.22 billion on June 30, 2025, and $1.20 billion on September 30, 2024. Core deposits represented 78.37% of total deposits on September 30, 2025, compared to 78.47% on June 30, 2025, and 77.45% on September 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 September 30, 2025, Pathfinder Bancorp had an available additional funding capacity of $138.3 million with the Federal Home Loan Bank of New York, which complements its liquidity reserves. Moreover, the Bank maintains additional unused credit lines totaling $53.3 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 Declared
On September 29, 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 October 17, 2025 will be eligible for the dividend, which is scheduled for disbursement on November 7, 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 September 30, 2025 stood at $15.68 per share. This positions the annualized dividend yield at 2.55%.

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. 

^{The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.}

_{¹ Although the Company owned 51% of its membership interest in FitzGibbons Agency, LLC (“Agency”) the Company is required to consolidate 100% of the Agency within the consolidated financial statements. The Company sold its 51% membership interest in the Agency in October 2024.
² The $3,169,000 consolidated gain on asset sale equals $1,616,000 associated with the Company’s 51% interest in the Agency plus $1,553,000 associated with the 49% noncontrolling interest.
³ The loss reflects a valuation adjustment “Lower-of-cost-or-market" adjustment on loans held for sale to their estimated market value based on active sale negotiations.
⁴ Diluted earnings per share for the first quarter of 2025 has been updated to $0.47, from the $0.41 reported previously.}

_{The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.}

_{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 Construction and development, multifamily, and non-owner occupied CRE loans as a percentage of Pathfinder Bank total capital.
⁴ Includes 11 full-service branches and one motor bank for periods after June 30, 2024. Includes 10 full-service branches and one motor bank for all periods prior.
⁵ Basic and diluted earnings per share are calculated based upon the two-class method. Weighted average shares outstanding do not include unallocated ESOP shares.
⁶ Diluted earnings per share for the first quarter of 2025 has been updated to $0.47, from the $0.41 reported previously.}

_{The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.}

_{The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.}