2024
Transition Period Report
investors.pioneerny.com
Dear Fellow Stockholders,
The last six months have been marked by continued transformation and progress toward our strategic initiatives, including our strategy of being "More Than a Bank." Despite ongoing challenges and uncertainty in the broader economic landscape, we continue to achieve significant milestones and deliver solid financial performance.
At the heart of our success is our distinctive business strategy to operate as a diversified financial institution focused on our relationship-based model of creating customer advocacy through our highly engaged employees, which we believe drives growth through new customer acquisition, deepened existing customer relationships, and further market penetration.
I am proud to share these accomplishments with you:
Financial Strength
We were pleased to report Pioneer's results for the six months ended December 31, 2024, with net income of $9.6 million, as we transitioned our fiscal year end from June 30 to December 31. We experienced positive momentum for the period with growth in net interest income and noninterest income. Net interest income was $35.5 million and noninterest income was $8.8 million for the six months ended December 31, 2024.
We benefited from solid loan growth coupled with growth in our diversified deposit base during the six months ended December 31, 2024. Net loans receivable of $1.43 billion at December 31, 2024 was up 6.7% from June 30, 2024. Deposits totaled $1.59 billion at December 31, 2024 and were up 2.3% from June 30, 2024. We also remained focused on growing noninterest income through our diversified products and services, and generated 15% of our revenues from noninterest income sources for the six months ended December 31, 2024.
We remain committed to maintaining a strong liquidity position and our earnings for the six months ended December 31, 2024 allowed us to continue to build capital, while returning value to our stockholders through our stock repurchase program. Total shareholders' equity was $304.6 million at December 31, 2024.
Strategic Focus Driving Growth
We have continued to thrive through our focused approach to executing on key elements of our business strategy, including strategically growing through deepening customer relationships, maintaining an appropriate balance in the overall loan portfolio, diversifying our products and services to increase noninterest income, working to increase our share of lower-cost core deposits, evaluating opportunities for selective acquisitions, and our ongoing focus on our commitment to an engaged workforce.
Commitment to Our Customers and Communities
At Pioneer, we remain committed to delivering exceptional service in both our digital and physical channels. Our investments in technology and branch renovations help ensure that our customers can access secure, efficient, and convenient financial solutions. Moreover, our community initiatives continue to flourish. Over the past year, our employees have contributed significantly to volunteer efforts and our financial contributions to local non-profits through Pioneer's Charitable Foundation have made a tangible impact on the communities we serve.
Celebrating Milestones
This past year marked the fifth anniversary of our listing on the Nasdaq Stock Market. This milestone is a testament to the hard work of our dedicated team and the trust our stakeholders have placed in us. Our listing on the Nasdaq Stock Market reflects our commitment to transparency, innovation, and sustainable growth.
Looking Ahead
As we look forward, our focus remains on driving long-term value for our stockholders, customers, and employees. We will continue to invest in initiatives that promote employee engagement, customer advocacy, and community development as we pursue financial success. The progress we have made this year reinforces our commitment to meeting the diverse needs of our stakeholders.
Thank you for your continued trust and support as we move All Together Forward.
Sincerely,
Thomas L. Amell
President and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KT
-
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Year Ended _______
OR
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from July 1, 2024 to December 31, 2024
Commission File Number: 001-38991
Pioneer Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland | 83-4274253 | ||
(State or other jurisdiction of incorporation | (I.R.S. Employer Identification No.) | ||
or organization) | |||
652 Albany Shaker Road, Albany New York | 12211 | ||
(Address of principal executive offices) | (Zip code) | ||
(518) 730-3025 |
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: | |||||
Trading | |||||
Title of each class | Symbol(s) | Name of each exchange on which registered | |||
Common Stock, par value $0.01 | PBFS | The Nasdaq Stock Market, LLC | |||
Securities registered pursuant to Section 12(g) of the Act: None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes տ No ց Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes տ No ց
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ց No տ
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such
files). Yes ց No տ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer տ Accelerated filer ց Non-accelerated filer տ Smaller reporting company ց Emerging growth company տ
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. տ
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ց
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. տ
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). տ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes տ No ց
The aggregate value of the voting and non-voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the common stock of $10.01 as of June 30, 2024 was $107.77 million.
As of March 7, 2025 there were 25,848,091 shares outstanding of the registrant's common stock.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant incorporates by reference its definitive Proxy Statement with respect to its 2025 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of its fiscal year, into (Part III) of this Annual Report on Form 10-K.
TABLE OF CONTENTS | ||
ITEM 1. | Business | 3 |
ITEM 1A. | Risk Factors | 33 |
ITEM 1B. | Unresolved Staff Comments | 52 |
ITEM 1C. | Cybersecurity | 52 |
ITEM 2. | Properties | 54 |
ITEM 3. | Legal Proceedings | 54 |
ITEM 4 | Mine Safety Disclosures | 54 |
ITEM 5 | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of | |
Equity Securities | 55 | |
ITEM 6. | [Reserved] | 56 |
ITEM 7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 57 |
ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk | 75 |
ITEM 8. | Financial Statements and Supplementary Data | 75 |
ITEM 9. | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 149 |
ITEM 9A. | Controls and Procedures | 149 |
ITEM 9B. | Other Information | 151 |
ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 151 |
ITEM 10. | Directors, Executive Officers and Corporate Governance | 151 |
ITEM 11. | Executive Compensation | 151 |
ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. . . | 151 |
ITEM 13. | Certain Relationships and Related Transactions, and Director Independence | 152 |
ITEM 14. | Principal Accountant Fees and Services | 152 |
ITEM 15. | Exhibits and Financial Statement Schedules | 153 |
ITEM 16. | Form 10-K Summary | 155 |
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As used in this Transition Report on Form 10-K, "Pioneer" or the "Company" refers to Pioneer Bancorp, Inc., Pioneer Bank, National Association and its consolidated subsidiaries collectively, except where the context indicates the reference relates solely to the registrant Pioneer Bancorp, Inc.
PART I
ITEM 1. | Business |
Forward Looking Statements
This Transition Report on Form 10-K contains 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, which can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "plan," "seek," "expect" or words of similar meaning, or future or conditional verbs, such as "will," "would," "should," "could," or "may." A forward-looking statement is neither a prediction nor a guarantee of future events. Certain forward-looking statements are included in this Form 10-K, principally in the sections captioned "Business," "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These forward-looking statements include, but are not limited to:
- statements of our goals, intentions and expectations;
- statements regarding our business plans, prospects, growth and operating strategies;
- statements regarding the expected quality of our loan and investment portfolios; and
- estimates of our risks, contingencies and future costs and benefits.
These forward-looking statements are based on the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
In addition, the factors described under the headings "Critical Accounting Policies and Estimates" in Part II, Item 7, and "Risk Factors" in Part I, Item 1A, as well as other possible factors not listed, could cause our actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:
- inflation and changes in market interest rates that could reduce our margins and yields, reduce the fair value of financial instruments or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make, whether held in our portfolio or sold in the secondary market;
- risks related to the variety of litigation, investigations, and other proceedings described in the "Legal Proceedings" section of this report, including associated legal expenses;
- general economic conditions, either nationally or in our market area, that are worse than expected, including any resulting changes in consumer spending, borrowing and savings habits;
- increased competition, including competition among other institutions within our market area as well as other non-traditional competitors;
- changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of our allowance for credit losses;
- our ability to access cost-effective funding;
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- fluctuations in real estate values and both residential and commercial real estate market conditions;
- demand for loans and deposits in our market area;
- changes in our partnership with a third-party mortgage banking company;
- our ability to continue to implement our business strategies, including entering new markets successfully, capitalizing on growth opportunities, and attracting and retaining key employees;
- changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, and any future FDIC insurance premium increases or special assessments;
- our ability to manage market risk, credit risk and operational risk;
- the imposition of tariffs or other domestic or international governmental polices;
- our ability to successfully integrate into our operations any assets, liabilities, systems, personnel or customers we have or may in the future acquire, including our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
- our ability to maintain our reputation;
- our ability to prevent or mitigate fraudulent activity;
- fluctuations or adverse changes in the stock market, which may have a significant adverse effect on transaction fees, client activity and client investment portfolio gains and losses related to our wealth management business;
- certain events in the recent past involving the failure of financial institutions which have adversely affected market sentiment toward regional banks, which may result in decreased deposits and increased regulatory costs that could adversely affect our liquidity, our business, and the market price of our common stock;
- a breach in security of our information systems, including the occurrence of a cyber incident or a deficiency in cyber security;
- political instability or civil unrest, acts of war or terrorism or pandemics;
- changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board (the "FASB"), the Securities and Exchange Commission (the "SEC") or the Public Company Accounting Oversight Board;
- our ability to attract and retain key employees;
- our ability to evaluate the amount and timing of recognition of future tax assets and liabilities;
- our compensation expense associated with equity benefits allocated or awarded to our employees; and
- changes in the financial condition, results of operations or future prospects of issuers of securities that we own.
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Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. We disclaim any obligation to revise or update any forward-looking statements contained in this Transition Report on Form 10-K to reflect future events or developments, except as required by applicable law.
Pioneer Bancorp, Inc.
The Company is a Maryland corporation organized in March 2019 and operates principally through its wholly- owned subsidiary, Pioneer Bank, National Association (the "Bank"). The Bank was first chartered in 1889 as a New York state chartered savings bank and following approval by the Office of the Comptroller of the Currency (the "OCC") converted to a national bank on April 1, 2024. On July 17, 2019, the Company became the holding company for the Bank, when it closed its stock offering in connection with the completion of the reorganization of the Bank into the two-tier mutual holding company form of organization. The Company's common stock is traded on the Nasdaq Capital Market under the symbol "PBFS."
The Company files interim, quarterly and annual reports with the SEC. The SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers such as the Company that file electronically with the SEC. All filed SEC reports and interim filings can also be obtained from the Bank's website (www.pioneerny.com), on the "Investor Relations" page, without charge.
The executive offices of the Company are located at 652 Albany Shaker Road, Albany, New York 12211, and its telephone number is (518) 730-3025. The Company is subject to comprehensive regulation and examination by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board").
Pioneer Bancorp, MHC
Pioneer Bancorp, MHC was formed as a New York mutual holding company and will, for as long as it is in existence, own a majority of the outstanding shares of the Company's common stock.
Pioneer Bancorp, MHC's principal assets are the common stock of the Company it received in the reorganization and offering and $100,000 in cash in initial capitalization. Presently, it is expected that the only business activity of Pioneer Bancorp, MHC will be to own a majority of the Company's common stock. Pioneer Bancorp, MHC is authorized, however, to engage in any other business activities that are permissible for mutual holding companies under New York law, including investing in loans and securities. Pioneer Bancorp, MHC is subject to comprehensive regulation and examination by the Federal Reserve Board and is chartered by the New York State Department of Financial Services (the "NYSDFS").
Pioneer Bank, National Association
General
The Bank operates 22 retail banking offices in Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren Counties, as well as a wealth management office in Columbia County in New York. We attract deposits from the general public and municipalities and use those funds along with advances from the Federal Home Loan Bank of New York ("FHLBNY") and funds generated from operations to originate commercial real estate loans, commercial and industrial loans, commercial construction loans and home equity loans and lines of credit and, to a lesser extent, consumer loans. Since January 2016, all of our residential mortgage loans have been purchased through our relationship with an unaffiliated mortgage banking company. We also invest in securities, which consist primarily of U.S. Treasury obligations, securities of various government agencies and government-sponsored enterprises, including mortgage-backed securities and collateralized mortgage obligations, municipal obligations and corporate debt securities. We offer a variety of deposit accounts, including demand accounts, savings accounts, money market accounts, certificate of deposit accounts and municipal deposit banking services. Municipal deposit banking services were previously provided through a limited purpose commercial bank subsidiary, Pioneer Commercial Bank. On September 16, 2024, the OCC approved the merger of Pioneer Commercial Bank with and into the Bank with the Bank as the resulting entity (the "Commercial Bank Merger"). The Commercial Bank Merger closed on October 1, 2024. Following the completion of the Commercial Bank
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Merger, the Bank now directly offers full municipal deposit banking services which were previously provided through Pioneer Commercial Bank. The Bank also sells commercial and consumer insurance products and employee benefit products and services through Pioneer Insurance Agency, Inc. and provides wealth management services through its subsidiary, Pioneer Financial Services, Inc.
At December 31, 2024, we had consolidated total assets of $1.98 billion, total deposits of $1.59 billion and shareholders' equity of $304.6 million. The Bank is subject to comprehensive regulation and examination by the OCC and by the Federal Deposit Insurance Corporation (the "FDIC") as the Bank's insurer of deposit accounts. Our website address is www.pioneerny.com. Information on this website is not and should not be considered a part of this Transition Report on Form 10-K.
Change in Fiscal Year End
On October 15, 2024, the board of directors of the Company approved an amendment to Article VI, Section 5 of its Bylaws to change its fiscal year end from June 30 to December 31. Accordingly, we are filing this Transition Report on Form 10-K for the six month transition period ended December 31, 2024, including audited consolidated financial statements as of and for the six months ended December 31, 2024.
Primary Market Area and Customers
Our primary market area encompasses Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren Counties where our offices are located, and their contiguous counties, which are located in the Capital Region of New York (the "Capital Region") and include the cities of Albany, the capital of New York, Schenectady and Troy. The Capital Region has a diversified economy and representative industries include educational services, technology and health care, along with a strong state government workforce. Large employers in the Capital Region include GE Vernova, Regeneron Pharmaceuticals, Inc., GlobalFoundries, Albany Med Health System, St. Peter's Health Partners, Northeast Grocery Inc., Rensselaer Polytechnic Institute and the State of New York.
The total population in our primary market area in 2024 was approximately 1.0 million, as estimated by Claritas, which provides demographic data based on U.S. Census and other data sources. Of the six counties in our market area, Saratoga County had the highest level of median household income, estimated at $92,464 in 2024 and projected to grow 2.3% through 2029, and Greene County had the lowest median household income, estimated at $74,182 in 2024 and projected to grow 12.8% through 2029, compared to the 2024 estimated median household income of $80,617 and $75,781 for New York and the United States as a whole, respectively.
As of December 31, 2024, unemployment rates, according to the New York State Department of Labor, were 3.0% for Albany County, 3.6% for Greene County, 3.1% for Rensselaer County, 2.8% for Saratoga County, 3.4% for Schenectady County and 4.0% for Warren County. As of December 31, 2024, the unemployment rates for the United States, New York State and the Capital Region of New York were 3.8%, 4.1% and 3.1%, respectively.
We believe that we have developed products and services that will meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary, to expand the range of products and services that we offer to be more competitive in our market area. Our marketing strategies focus on the strength of our knowledge of local consumer and small business markets, as well as expanding relationships with current customers and reaching out to develop new, profitable business relationships.
Competition
We face significant competition for deposits and loans. Our most direct competition for deposits has historically come from the numerous financial institutions operating in our market area (including other community banks and credit unions), many of which are significantly larger than we are and have greater resources. We also face competition for investors' funds from other sources such as brokerage firms, money market funds and mutual funds, as well as securities, such as Treasury bills, offered by the Federal Government. Based on FDIC data, at June 30, 2024 (the latest date for which information is available), we had 4.16% of the FDIC insured deposit market share in Albany County among the 21
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institutions with offices in the county, 18.93% of the FDIC insured deposit market share in Rensselaer County among the 12 institutions with offices in the county, 3.34% of the FDIC insured deposit market share in Saratoga County among the 17 institutions with offices in the county, 1.08% of the FDIC insured deposit market share in Greene County among the seven institutions with offices in the county, 4.58% of the FDIC insured deposit market share in Schenectady County among the 13 institutions with offices in the county and 0.27% of the FDIC insured deposit market share in Warren County among the 10 institutions with offices in the county. In all six counties, either large regional banks (e.g., Key Bank, Citizens Bank, M&T Bank and TD Bank) and/or New York City money center banks (e.g. Bank of America and JP Morgan Chase) have a large presence.
Our competition for loans comes primarily from the competitors referenced above and from other financial service providers, such as mortgage companies and mortgage brokers. Competition for loans also comes from the increasing number of non-depository financial service companies participating in the mortgage market, such as insurance companies, securities companies, financial technology companies, specialty finance firms and technology companies.
We expect competition to remain intense in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the financial services industry. Technological advances, for example, have lowered barriers to entry, allowed banks to expand their geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial technology companies, to offer products and services that traditionally have been provided by banks. Competition for deposits and the origination of loans could limit our growth in the future.
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Lending Activities
General. Our principal lending activity has been originating commercial real estate loans (including multi-family real estate loans), commercial and industrial loans, commercial construction loans and home equity loans and lines of credit. Beginning in January 2016, we entered into a strategic partnership with Homestead Funding Corp. (the "Mortgage Banking Company"), an unaffiliated mortgage banking company, to outsource our residential mortgage loan originations, underwriting and closing processes. Through this partnership, we refer our customers to the Mortgage Banking Company and then we decide whether we want to purchase the residential mortgage loans originated by the Mortgage Banking Company for our portfolio.
Our commercial lending efforts focus on the small-to-medium sized business market, targeting borrowers with outstanding loan balances that typically range between $500,000 to $10.0 million. We focus primarily on commercial real estate loans, commercial and industrial loans and commercial construction loans in our market area. As part of our commercial lending strategy, we plan to continue to use our commercial relationships to increase our commercial transactional deposit accounts.
Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.
At December 31, 2024 | At June 30, | |||||||||||||||||
2024 | 2023 | |||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||
Commercial: | (Dollars in | thousands) | ||||||||||||||||
Commercial real estate | $ | 414,835 | 28.5 % $ | 406,201 | 29.7 % $ | 411,165 | 36.6 % | |||||||||||
Commercial and industrial | 108,474 | 7.5 % | 101,207 | 7.4 % | 97,307 | 7.6 % | ||||||||||||
Commercial construction(1) | 130,959 | 9.0 % | 118,373 | 8.7 % | 92,714 | 8.0 % | ||||||||||||
Residential mortgages | 689,569 | 47.3 % | 633,779 | 46.4 % | 463,196 | 38.3 % | ||||||||||||
Home equity loans and lines of credit | 94,928 | 6.5 % | 92,765 | 6.8 % | 85,477 | 7.3 % | ||||||||||||
Consumer | 17,564 | 1.2 % | 13,545 | 1.0 % | 16,779 | 2.2 % | ||||||||||||
. . . . . . . . . . . . . . . . . .Total loans receivable | 1,456,329 | 100.0 | % | 1,365,870 | 100.0 | % | 1,166,638 | 100.0 | % | |||||||||
. . . . . . . . . . . . .Allowance for credit losses | (21,754) | (21,801) | (22,469) | |||||||||||||||
Total loans receivable, net | $ | 1,434,575 | $ | 1,344,069 | $ | 1,144,169 |
- Represents amounts disbursed at December 31, 2024 and June 30, 2024 and 2023. The undrawn amounts of the commercial construction loans totaled $80.6 million, $52.7 million and $28.9 million at December 31, 2024 and June 30, 2024 and 2023, respectively.
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