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What changed in Pathfinder Bancorp, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Pathfinder Bancorp, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+325 added−344 removedSource: 10-K (2026-03-30) vs 10-K (2025-03-31)

Top changes in Pathfinder Bancorp, Inc.'s 2025 10-K

325 paragraphs added · 344 removed · 253 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

101 edited+13 added−29 removed234 unchanged
Biggest changeManagement performs a quarterly evaluation of the adequacy of the allowance. The allowance is increased by the provision for credit losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are recorded against the allowance for credit losses, and subsequent recoveries, if any, are credited to the allowance.
Biggest changeThe ACL is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is increased by the provision for credit losses, and decreased by charge-offs, net of recoveries.
The Company also invests in mortgage‑backed securities issued or guaranteed by United States Government sponsored enterprises, collateralized mortgage obligations and similar debt securities issued by both government sponsored entities and private (non-governmental) issuers, and asset-backed securities that are generally issued by private entities.
The Company also invests in mortgage‑backed securities issued or guaranteed by United States Government sponsored enterprises, collateralized mortgage obligations and similar debt securities issued by both government sponsored entities and private (non-governmental) issuers, and asset-backed securities that are generally issued by private entities.
This rule amended the Truth in Lending Act and the Real Estate Settlement Procedures Act to integrate several consumer disclosures for mortgage loans; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; • Truth in Savings Act; • Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
This rule amended the Truth in Lending Act and the Real Estate Settlement Procedures Act to integrate several consumer disclosures for mortgage loans; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; - 17 - • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; • Truth in Savings Act; • Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws; • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
The Policy Statement now applies to a BHC with consolidated assets of less than $3 billion that meets the following Qualitative Requirements: (i) it is not engaged in significant non-banking activities either directly or through a non-bank subsidiary; (ii) it does not conduct significant off-balance sheet activities, including securitizations or asset management or administration, either directly or through a non-bank subsidiary; or (iii) it does not have a material amount of debt or equity securities outstanding (other than trust preferred securities) that are registered with the SEC.
The Policy Statement now applies to a BHC with consolidated assets of less than $3 billion that meets the following Qualitative Requirements: (i) it is not engaged in significant non-banking activities either directly or through a non-bank subsidiary; (ii) it does not conduct significant off-balance sheet activities, including securitizations or asset management or administration, either directly or through a non-bank subsidiary; or (iii) it does not have a material amount of debt or equity securities outstanding (other than trust - 18 - preferred securities) that are registered with the SEC.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific allowance for credit losses is not warranted.
Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses - 9 - present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific allowance for credit losses is not warranted.
The ACL is based on three major components which are: (i) specific components for individually evaluated loans, (ii) quantitative factors, applied to pooled loans derived from historical bank-specific and industry loss charge-off patterns that have been correlated to - 10 - prior period econometric factors, and (iii) a broad range of qualitative factors intended to provide further forward-looking perspectives on overall credit quality.
The ACL is based on three major components which are: (i) specific components for individually evaluated loans, (ii) quantitative factors, applied to pooled loans derived from historical bank-specific and industry loss charge-off patterns that have been correlated to prior period econometric factors, and (iii) a broad range of qualitative factors intended to provide further forward-looking perspectives on overall credit quality.
These lenders include commercial banks, savings institutions, credit unions, and mortgage banking companies that also actively compete for local real estate loans. Accordingly, the volume of loan originations may vary from period to period. - 7 - The majority of the fixed rate residential loans that are originated each year meet the underwriting guidelines established by Fannie Mae.
These lenders include commercial banks, savings institutions, credit unions, and mortgage banking companies that also actively compete for local real estate loans. Accordingly, the volume of loan originations may vary from period to period. The majority of the fixed rate residential loans that are originated each year meet the underwriting guidelines established by Fannie Mae.
The communities in which we serve include persons of various race, ethnicity, gender, sexual orientation, - 22 - socio-economic status, age, physical and cognitive ability, religion and political belief. We are committed to valuing and sharing the strength of our differences in a safe and positive environment, while maintaining selection and promotion processes that are without bias.
The communities in which we serve include persons of various race, ethnicity, gender, sexual orientation, socio-economic status, age, physical and cognitive ability, religion and political belief. We are committed to valuing and sharing the strength of our differences in a safe and positive environment, while maintaining selection and promotion processes that are without bias.
The Gramm-Leach-Bliley Act of 1999 specified that a state bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary,” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. Prompt Corrective Regulatory Action.
The Gramm-Leach-Bliley Act of 1999 specified that a state bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to - 15 - conduct in a “financial subsidiary,” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes. Prompt Corrective Regulatory Action.
Residential Construction Loans Our one-to-four family residential real estate loan portfolio also includes residential constructions loans. Our residential construction loans generally have initial terms of up to six months, subject to extension, during which the borrower pays interest only. Upon completion of construction, these loans typically convert to permanent loans secured by the completed residential real estate.
Residential Construction Loans Our one-to-four family residential real estate loan portfolio also includes residential constructions loans. Our residential construction loans generally have initial terms of up to six months, subject to extension, during which the borrower pays interest only. Upon - 6 - completion of construction, these loans typically convert to permanent loans secured by the completed residential real estate.
Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and - 18 - • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
The Dodd-Frank Act codified the source of strength policy. Under the prompt corrective action laws, the ability of a BHC to pay dividends may be restricted if a subsidiary bank - 19 - becomes undercapitalized. These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions.
The Dodd-Frank Act codified the source of strength policy. Under the prompt corrective action laws, the ability of a BHC to pay dividends may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could affect the ability of the Company to pay dividends or otherwise engage in capital distributions.
In addition, extensions of credit in excess of certain limits must be approved by Pathfinder Bank’s Board of Directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. Enforcement. The FDIC has extensive enforcement authority over insured state banks, including Pathfinder Bank.
In addition, extensions of credit in excess of certain limits must be approved by Pathfinder Bank’s Board of Directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved. - 16 - Enforcement. The FDIC has extensive enforcement authority over insured state banks, including Pathfinder Bank.
We have prepared policies, procedures and systems designed to ensure compliance with these regulations. FEDERAL AND STATE TAXATION Deferred Income Tax Assets and Liabilities . Deferred income tax assets and liabilities are determined using the liability method. Under this method, the net deferred tax asset or liability is recognized for the future tax consequences.
We have prepared policies, procedures and systems designed to ensure compliance with these regulations. - 19 - FEDERAL AND STATE TAXATION Deferred Income Tax Assets and Liabilities . Deferred income tax assets and liabilities are determined using the liability method. Under this method, the net deferred tax asset or liability is recognized for the future tax consequences.
The process incorporates a loan risk grading system designed to recognize degrees of risk on individual - 8 - commercial and mortgage loans in the portfolio. Management is responsible for monitoring of asset quality and risk grade designations, which are communicated to the board on a regular basis.
The process incorporates a loan risk grading system designed to recognize degrees of risk on individual commercial and mortgage loans in the portfolio. Management is responsible for monitoring of asset quality and risk grade designations, which are communicated to the board on a regular basis.
Although we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, borrower preference for fixed-rate versus adjustable-rate loans, and the interest rates offered on each type of loan by other lenders in our market area.
Although we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon borrower demand, market interest rates, borrower preference for fixed-rate versus - 7 - adjustable-rate loans, and the interest rates offered on each type of loan by other lenders in our market area.
Furthermore, the repayment of loans secured by commercial real estate properties typically depends upon the successful operation of - 5 - the real property securing the loan. If the cash flows from the property are reduced, the borrower’s ability to repay the loan may be impaired.
Furthermore, the repayment of loans secured by commercial real estate properties typically depends upon the successful operation of the real property securing the loan. If the cash flows from the property are reduced, the borrower’s ability to repay the loan may be impaired.
The expected credit loss experience is determined at the time of purchase and is modified, to the extent necessary, during the life of the purchased loan pools. The Bank does not initially increase the allowance for credit losses on the purchase date of the loan pools.
The expected credit loss experience is determined at - 10 - the time of purchase and is modified, to the extent necessary, during the life of the purchased loan pools. The Bank does not initially increase the allowance for credit losses on the purchase date of the loan pools.
The Bank holds a significant portion of its investment securities in mortgage-backed securities and collateralized mortgage obligations (many, but not all of which are issued by government-sponsored enterprises) and direct federal government and federal agency obligations.
The Bank holds a significant portion of its investment securities - 11 - in mortgage-backed securities and collateralized mortgage obligations (many, but not all of which are issued by government-sponsored enterprises) and direct federal government and federal agency obligations.
However, under current law, pre-1988 tax bad debt reserves remain subject to recapture if Pathfinder Bank makes certain non-dividend distributions, repurchases any of its common stock, pays dividends in excess of earnings and profits, or fails to qualify as a “bank” for tax purposes. At December 31, 2024, our total federal pre-base year bad debt reserve was approximately $1.3 million.
However, under current law, pre-1988 tax bad debt reserves remain subject to recapture if Pathfinder Bank makes certain non-dividend distributions, repurchases any of its common stock, pays dividends in excess of earnings and profits, or fails to qualify as a “bank” for tax purposes. At December 31, 2025, our total federal pre-base year bad debt reserve was approximately $1.3 million.
Based on management’s comprehensive analysis of the loan portfolio, we believe the current level of the allowance for credit losses is adequate. - 11 - INVESTMENT ACTIVITIES Our investment policy is established by the Board of Directors.
Based on management’s comprehensive analysis of the loan portfolio, we believe the current level of the allowance for credit losses is adequate. INVESTMENT ACTIVITIES Our investment policy is established by the Board of Directors.
Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital.
Higher levels of capital are required for asset categories believed to present greater risk. CET1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as CET1 and additional Tier 1 capital.
These requirements also apply to all guarantors on these loans. Loans secured by commercial real estate generally have greater credit risk than one-to-four family residential real estate loans.
These requirements also apply to all guarantors on these loans. - 5 - Loans secured by commercial real estate generally have greater credit risk than one-to-four family residential real estate loans.
The Company had no material derivative contracts not designated as hedging agreements at December 31, 2024 or December 31, 2023. See Note 21 within the Notes to consolidated financial statements contained herein. SOURCES OF FUNDS General Deposits have traditionally been our primary source of funds for use in lending and investment activities.
The Company had no material derivative contracts not designated as hedging agreements at December 31, 2025 or December 31, 2024. See Note 21 within the Notes to consolidated financial statements contained herein. SOURCES OF FUNDS General Deposits have traditionally been our primary source of funds for use in lending and investment activities.
The Company invests primarily in debt securities but will from time to time also invest, within certain regulatory limits, in mutual funds and equity securities. All securities purchased are classified at the time of purchase as either held-to-maturity (HTM) or available-for-sale (AFS). We do not maintain a trading account.
The Company invests primarily in debt securities but will from time to time also invest, within certain regulatory limits, in mutual funds and equity securities. All securities purchased are classified at the time of purchase as either HTM or available-for-sale ("AFS"). We do not maintain a trading account.
The FDIC has authority to increase insurance assessments and adopted a final rule in October 2022 to increase initial base deposit insurance assessment rates by two basis points beginning in the first quarterly assessment period of 2023. As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 3.5 to 32 basis points.
The FDIC has authority to increase insurance assessments and adopted a final rule in October 2022 to increase initial base deposit insurance assessment rates by two basis points beginning in the first quarterly assessment period of 2023. As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 2.5 to 32 basis points.
Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not material at December 31, 2024. Interest rate hedging agreements are recorded at fair value as other assets or liabilities.
Based on adherence to the Company’s credit standards and the presence of the netting, collateral or settlement provisions, the Company believes that the credit risk inherent in these contracts was not material at December 31, 2025. Interest rate hedging agreements are recorded at fair value as other assets or liabilities.
We regularly monitor the credit quality of this portfolio. At December 31, 2024, no securities held by the Bank in this category had been downgraded by a NRSRO. HEDGING ACTIVITIES The Company is exposed to certain risks from both its business operations and changes in economic conditions.
We regularly monitor the credit quality of this portfolio. At December 31, 2025, no securities held by the Bank in this category had been downgraded by a NRSRO. HEDGING ACTIVITIES The Company is exposed to certain risks from both its business operations and changes in economic conditions.
The capital securities of the trust are a pooled trust preferred fund of Preferred Term Securities VI, Ltd., with interest rates that reset quarterly, and are indexed to the 3-month the Secured Overnight Financing Rate ("SOFR") which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, plus 1.91%.
The capital securities of the trust are a pooled trust preferred fund of Preferred Term Securities VI, Ltd., with interest rates that reset quarterly, and are indexed to the three-month the Secured Overnight Financing Rate ("SOFR") which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, plus 1.91%.
Whispering Oaks, through a wholly-owned second-tier subsidiary, is the sole limited partner in an unconsolidated special-purpose real estate management partnership. The partnership currently operates a low-income residential housing facility. The activities of Whispering Oaks resulted in a pre-tax gain of $11,000 in 2024.
Whispering Oaks, through a wholly-owned second-tier subsidiary, is the sole limited partner in an unconsolidated special-purpose real estate management partnership. The partnership currently operates a low-income residential housing facility. The activities of Whispering Oaks resulted in a pre-tax gain of $11,000 in 2025.
All privately issued mortgage-backed securities held by the Bank at December 31, 2024 were either rated at or above the lowest investment grade for credit quality by a nationally-recognized statistical rating organization (a “NRSRO”) or were the most senior tranches of securitizations - 12 - that were not rated by a NRSRO at the time of the securities’ issuance.
All privately issued mortgage-backed securities held by the Bank at December 31, 2025 were either rated at or above the lowest investment grade for credit quality by a nationally-recognized statistical rating organization (a “NRSRO”) or were the most senior tranches of securitizations that were not rated by a NRSRO at the time of the securities’ issuance.
Our commercial real estate underwriting policies provide that such real estate loans are typically made in amounts up to 80% of the appraised value of the property. Commercial real estate loans are offered with interest rates that are generally fixed for up to three or five years then are adjustable based on the FHLBNY advance rate.
Our commercial real estate underwriting policies provide that such real estate loans are typically made in amounts up to 80% of the appraised value of the property. Commercial real estate loans are offered with interest rates that are generally fixed for up to three or five years then are adjustable based on the FHLB-NY advance rate.
For a discussion on mortgage backed securities, see “Mortgage-Backed Securities and Collateralized Mortgage Obligations.” As part of our membership in the FHLBNY, we are required to maintain a dividend-earning investment in FHLBNY stock. This investment is classified separately from securities due to significant restrictions on sale or transfer of the stock.
For a discussion on mortgage-backed securities, see “Mortgage-Backed Securities and Collateralized Mortgage Obligations.” As part of our membership in the FHLB-NY, we are required to maintain a dividend-earning investment in FHLB-NY stock. This investment is classified separately from securities due to significant restrictions on sale or transfer of the stock.
“Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after being designated “critically undercapitalized.” - 16 - At December 31, 2024, Pathfinder Bank was well-capitalized. Transactions with Affiliates and Loans to Insiders.
“Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after being designated “critically undercapitalized.” At December 31, 2025, Pathfinder Bank was well-capitalized. Transactions with Affiliates and Loans to Insiders.
Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for - 15 - institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.
Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income, up to 45% of net unrealized gains on AFS equity securities with readily determinable fair market values.
The Company invests primarily in debt securities but will, within certain regulatory limits, invest from time to time in mutual funds and equity securities. The Bank's principal sources of funds are deposits, principal and interest payments on loans and investments, as well as borrowings from the FHLBNY and correspondent financial institutions.
The Company invests primarily in debt securities but will, within certain regulatory limits, invest from time to time in mutual funds and equity securities. The Bank's principal sources of funds are deposits, principal and interest payments on loans and investments, as well as borrowings from the FHLB-NY and correspondent financial institutions.
These programs, which include certain facilities for which we have participated in since 2009, are employed by the Bank’s management to supplement the funding that the Bank obtains from customer deposits and other borrowings, principally from the FHLBNY, and are used to increase the overall efficiency of the Bank’s funding mix.
These programs, which include certain facilities for which we have participated in since 2009, are employed by the Bank’s management to supplement the funding that the Bank obtains from customer deposits and other borrowings, principally from the FHLB-NY, and are used to increase the overall efficiency of the Bank’s funding mix.
FHLBNY advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending. Trust Preferred Securities and Subordinated Debt The Company has a non-consolidated subsidiary trust, Pathfinder Statutory Trust II, of which the Company owns 100% of the common equity.
FHLB-NY advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending. Trust Preferred Securities and Subordinated Debt The Company has a non-consolidated subsidiary trust, Pathfinder Statutory Trust II, of which the Company owns 100% of the common equity.
Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital.
Additional Tier 1 capital includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (CET1 capital plus additional Tier 1 capital) and Tier 2 capital.
At December 31, 2024, Pathfinder Bank had no reserves subject to recapture in excess of its base year reserves. The Bank continues to be required to use the specific charge-off method to account for tax bad debt deductions. - 20 - Taxable Distributions and Recapture .
At December 31, 2025, Pathfinder Bank had no reserves subject to recapture in excess of its base year reserves. The Bank continues to be required to use the specific charge-off method to account for tax bad debt deductions. Taxable Distributions and Recapture .
We obtain advances primarily from the FHLBNY utilizing the common stock we own in the FHLBNY, qualifying residential mortgage loans held in portfolio, and certain investment securities as collateral provided certain standards related to creditworthiness are met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities.
We obtain advances primarily from the FHLB-NY utilizing the common stock we own in the FHLB-NY, qualifying residential and commercial mortgage loans held in portfolio, and certain investment securities as collateral provided certain standards related to creditworthiness are met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities.
Residential Real Estate Loans We currently offer one-to-four family residential real estate loans, made to borrowers in our general market area, with terms up to 30 years that are generally underwritten according to Federal National Mortgage Association (“Fannie Mae”) guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed-rate and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which as of December 31, 2024, was generally $766,550 for single-family homes in our market area.
Residential Real Estate Loans We currently offer one-to-four family residential real estate loans, made to borrowers in our general market area, with terms up to 30 years that are generally underwritten according to Federal National Mortgage Association (“Fannie Mae”) guidelines, and we refer to loans that conform to such guidelines as “conforming loans.” We generally originate both fixed-rate and adjustable-rate mortgage loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency, which as of December 31, 2025, was generally $806,500 for single-family homes in our market area.
We also rely on advances from the FHLBNY, the Certificates of Deposit Account Registry Service (“CDARS”) provided by an independent third-party, IntraFi Network, and other deposits acquired through unaffiliated third-party financial institutions as forms of brokered deposits.
We also rely on advances from the FHLB-NY, the Certificates of Deposit Account Registry Service (“CDARS”) provided by an independent third-party, IntraFi Network, and other deposits acquired through unaffiliated third-party financial institutions as forms of brokered deposits.
The Bank is subject to supervision and regulation by the NYSDFS, as its chartering agency, and by the FDIC, as its deposit insurer and primary federal regulator. The Bank is a member of the Federal Home Loan Bank of New York (“FHLBNY”) and is also subject to certain regulations by the Federal Home Loan Bank System.
The Bank is subject to supervision and regulation by the NYSDFS, as its chartering agency, and by the FDIC, as its deposit insurer and primary federal regulator. The Bank is a member of the Federal Home Loan Bank of New York (“FHLB-NY”) and is also subject to certain regulations by the Federal Home Loan Bank System.
On October 14, 2020, the Company executed a private placement of $25.0 million of its 5.50% Fixed to Floating Rate non-amortizing Subordinated Debt (the “2020 Subordinated Debt”) to certain qualified institutional buyers and accredited institutional investors.
On October 14, 2020, the Company executed a private placement of $25.0 million of its 5.50% Fixed to Floating Rate non-amortizing Subordinated Debt (the “2020 Subordinated Debt”) to certain qualified institutional investors.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a CET1 risk-based capital ratio of 6.5% or greater, and a leverage ratio of 5.0% or greater .
The 2020 Subordinated Debt has a maturity date of October 15, 2030 and initially bear interest, payable semi-annually, at a fixed annual rate of 5.50% per annum until October 15, 2025.
The 2020 Subordinated Debt has a maturity date of October 15, 2030, and initially was interest-bearing, payable semi-annually, at a fixed annual rate of 5.50% per annum until October 15, 2025.
An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%.
An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a CET1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a CET1 risk-based capital ratio of 4.5% or greater, and a leverage ratio of 4.0% or greater.
Our voluntary turnover rates for the previous five years are as follows: Year Voluntary Turnover % 2024 23.7% 2023 23.4% 2022 25.0% 2021 24.2% 2020 13.2% Culture An open-minded community that engages excellence is fundamental to supporting the Pathfinder Bank vision to be a local bank that the community trusts.
Our voluntary turnover rates for the previous five years are as follows: Year Voluntary Turnover % 2025 17.0% 2024 23.7% 2023 23.4% 2022 25.0% 2021 24.2% - 21 - Culture An open-minded community that engages excellence is fundamental to supporting the Pathfinder Bank vision to be a local bank that the community trusts.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a CET1 risk-based capital ratio of less than 4.5%, or a leverage ratio of less than 4.0%.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management personnel if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management personnel if the institution does not hold a “capital conservation buffer” consisting of 2.5% of CET1 to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
We maintain the necessary levels of short-term liquid assets to accommodate the seasonality associated with public deposits. . - 13 - Borrowings The Bank has a number of existing credit facilities available to it. At December 31, 2024, the Bank had existing lines of credit at FHLBNY, the Federal Reserve Bank (“FRB”), and two other correspondent banks.
We maintain the necessary levels of short-term liquid assets to accommodate the seasonality associated with public deposits. Borrowings The Bank has a number of existing credit facilities available to it. At December 31, 2025, the Bank had existing lines of credit at FHLB-NY, the Federal Reserve Bank (“FRB”), and two other correspondent banks.
We continue to grow and employ team members respectively across our three-county footprint as follows: Date Headcount 12/31/2024 186 12/31/2023 174 12/31/2022 174 12/31/2021 173 12/31/2020 183 At December 31, 2024, approximately 55% of our staff was employed at our bank branch and loan production offices, with the remainder of our team employed within all other functional areas, including our customer-facing electronic commerce and call center units.
We continue to employ team members across our three-county footprint as follows: Date Headcount 12/31/2025 187 12/31/2024 186 12/31/2023 174 12/31/2022 174 12/31/2021 173 At December 31, 2025, approximately 47% of our staff was employed at our bank branch and loan production offices, with the remainder of our team employed within all other functional areas, including our customer-facing electronic commerce and call center units.
Loans to One Borrower Under New York law, New York commercial banks are subject to loans-to-one borrower limits, which are substantially similar as those applicable to national banks, which generally restrict loans to one borrower to an amount equal to 15% of unimpaired capital and unimpaired surplus, which was $23.4 million at December 31, 2024, on an unsecured basis, and an additional amount equal to 10% of unimpaired capital and unimpaired surplus, which was $15.6 million at December 31, 2024, if the loan is secured by readily marketable collateral (generally, financial instruments and bullion, but not real estate), subject to exceptions.
Loans to One Borrower Under New York law, New York commercial banks are subject to loans-to-one borrower limits, which are substantially similar as those applicable to national banks, which generally restrict loans to one borrower to an amount equal to 15% of unimpaired capital and unimpaired surplus, which was $24.5 million at December 31, 2025, on an unsecured basis, and an additional amount equal to 10% of unimpaired capital and unimpaired surplus, which was $16.3 million at December 31, 2025, if the loan is secured by readily marketable collateral (generally, financial instruments and bullion, but not real estate), subject to exceptions.
At December 31, 2024 and 2023, 6,125,649 and 6,099,571 shares of Company common stock (voting and non-voting) were outstanding, respectively. Following shareholder approval obtained on June 4, 2021, the Company converted 1,380,283, or 100%, of its previously-outstanding shares of Series B Convertible Perpetual Preferred Stock to an equal number of Series A Non-Voting Common Stock.
At December 31, 2025 and 2024, 6,185,644 and 6,125,649 shares of Company common stock (voting and non-voting) were outstanding, respectively. - 3 - Following shareholder approval obtained on June 4, 2021, the Company converted 1,380,283, or 100%, of its previously-outstanding shares of Series B Convertible Perpetual Preferred Stock to an equal number of Series A Non-Voting Common Stock.
These fees will be amortized over the life of the 2020 Subordinated Debt through its first redemption date using the effective interest method, giving rise to an effective cost of funds of 6.22% from the issuance date calculated under this method.
These fees were fully amortized over the life of the 2020 Subordinated Debt through its first redemption date using the effective interest method, giving rise to an effective cost of funds of 6.22% from the issuance - 13 - date calculated under this method.
Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
Federal regulations require federally insured depository institutions to meet several minimum capital standards: Total risk-based capital ratio of 8.0%, a Tier 1 risk-based capital ratio of 6.0%, a Common Equity Tier 1 ("CET1") risk-based capital ratio of 4.5%, and a Tier 1 capital to average assets ratio (known as the "leverage ratio") of 4.0%.
The Company’s federal tax returns are statutorily subject to potential audit for the years 2021 through 2024. No federal income tax returns are under audit as of the date of this report. Method of Accounting .
The Company’s federal tax returns are statutorily subject to potential audit for the years 2022 through 2025. No federal income tax returns are under audit as of the date of this report. Method of Accounting .
For the year 2024, the population of our workforce was as follows: Ethnicity % American Indian or Alaska Native 0.5% Asian 1.6% Black or African American 0.5% Hispanic or Latino 2.7% Two or more races (Not Hispanic or Latino) 0.5% White 94.2% Age Range Total 18-25 21 26-35 63 36-45 46 46-55 22 56-65 29 Over 65 5 Grand Total 186 Compensation and Benefits We provide a competitive compensation and benefits program to help meet the needs of our team members.
For the year 2025, the population of our workforce was as follows: Ethnicity % American Indian or Alaska Native 0.5% Asian 1.6% Black or African American 0.5% Hispanic or Latino 2.1% Two or more races (Not Hispanic or Latino) 0.5% White 94.7% Age Range Total 18-25 22 26-35 68 36-45 46 46-55 24 56-65 23 Over 65 4 Grand Total 187 Compensation and Benefits We provide a competitive compensation and benefits program to help meet the needs of our team members.
At December 31, 2024, 26.9% of our current staff had been with us for ten years or more. There is a team assigned to retention efforts as a strategic initiative for 2025 and forward. - 23 - ITEM 1A: RI SK FACTORS Not required of a smaller reporting company. ITEM 1B: UNRESOLV ED STAFF COMMENTS None.
At December 31, 2025, 28.3% of our current staff had been with us for ten years or more. There is a team assigned to retention efforts as a strategic initiative for 2026 and forward. - 22 - ITEM 1A: RI SK FACTORS Not required of a smaller reporting company. ITEM 1B: UNRESOLV ED STAFF COMMENTS None.
As a member of the FHLBNY, Pathfinder Bank is required to acquire and hold a specified amount of shares of capital stock in the FHLBNY. As of December 31, 2024, Pathfinder Bank was in compliance with this requirement.
As a member of the FHLB-NY, Pathfinder Bank is required to acquire and hold a specified amount of shares of capital stock in the FHLB-NY. As of December 31, 2025, Pathfinder Bank was in compliance with this requirement.
At December 31, 2024, the Company had total consolidated assets of $1.47 billion, total deposits of $1.20 billion and shareholders' equity of $121.5 million. - 3 - Pathfinder Bank The Bank is a New York-chartered commercial bank and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) through the Deposit Insurance Fund (“DIF”).
At December 31, 2025, the Company had total consolidated assets of $1.43 billion, total deposits of $1.18 billion and shareholders' equity of $122.5 million. Pathfinder Bank The Bank is a New York-chartered commercial bank and its deposit accounts are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) through the Deposit Insurance Fund (“DIF”).
The New York State franchise tax is imposed in an amount equal to the greater of 6.5% of Business Income for companies with a Business Income Base up to $5 million, or 7.25% for companies with a Business Income Base greater than $5 million, 0.1875% of average Business Capital, or a fixed dollar amount based on New York sourced gross receipts.
The New York State franchise tax is imposed in an amount equal to the greater of 6.5% of Business Income for companies with a Business Income Base up to $5 million, or 7.25% for companies with a Business Income Base greater than $5 million, 0.1875% of average Business Capital, or a fixed dollar amount based on New York sourced gross receipts. - 20 - As a Maryland business corporation, the Company is required to file an annual report with, and pay franchise taxes to, the State of Maryland.
None of these employees are represented by a collective bargaining agreement and management considers its relationship with employees to be good. During fiscal year 2024, we hired 71 employees, of which 56 were full-time, four were part-time, four were temporary, and seven were interns.
None of these employees are represented by a collective bargaining agreement and management considers its relationship with employees to be good. During fiscal year 2025, we hired 55 employees, of which 47 were full-time, four were part-time, one was temporary, and three were interns.
As of June 30, 2024, based on the most recently-available FDIC data, we had the largest market share in Oswego County, representing 47.7% of all deposits, and we additionally held 2.1% of all deposits in Onondaga County.
As of June 30, 2025, based on the most recently-available FDIC data, we had the largest market share in Oswego County, representing 43.9% of all deposits, and we held 3.7% of all deposits in Onondaga County.
Our construction loans generally have rates and terms comparable to residential real estate loans that we originate. - 6 - Tax-exempt Loans We make loans to local governments and municipalities for either tax anticipation or for small expenditure projects, including equipment acquisitions and construction projects.
Our construction loans generally have rates and terms comparable to residential real estate loans that we originate. Tax-exempt Loans We make loans to local governments and municipalities for either tax anticipation or for small expenditure projects, including equipment acquisitions and construction projects. Our municipal loans are generally fixed for a term of one year or less, and are generally unsecured.
The 2020 Subordinated Debt is senior in the Company’s credit repayment hierarchy only to the Company’s common equity and, and any future senior indebtedness and is intended to qualify as Tier 2 capital for regulatory capital purposes for the Company. The Company paid $783,000 in origination and legal fees as part of this transaction.
The 2020 Subordinated Debt is senior in the Company’s credit repayment hierarchy only to the Company’s common equity and any future senior indebtedness and is intended to qualify as Tier 2 capital for regulatory capital purposes for the Company.
The Bank is subject to extensive regulation by NYSDFS, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer.
The Bank’s deposits are insured up to applicable limits by the FDIC. The Bank is subject to extensive regulation by NYSDFS, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer.
During the year ended December 31, 2024, the Company modified one loan with a total outstanding balance of $2.0 million that was considered to be a modified loan to borrowers experiencing financial difficulty.
During the year ended December 31, 2025, the Company modified three loans with a total outstanding balance of $15.2 million that were considered to be a loan modified to borrowers experiencing financial difficulty.
These securities have a five-year call provision. The Company guarantees all of these securities. The Company's equity interest in the trust subsidiary is included in other assets on the Consolidated Statements of Financial Condition at December 31, 2024 and 2023.
These securities have a five-year call provision. The Company paid $321,000 and $373,000 in interest expense related to this issuance in 2025 and 2024, respectively. The Company guarantees all of these securities. The Company's equity interest in the trust subsidiary is included in other assets on the Consolidated Statements of Financial Condition at December 31, 2025 and 2024.
Our municipal loans are generally fixed for a term of one year or less, and are generally unsecured. Interest earned on municipal loans is tax exempt for federal tax purposes, which enhances the overall yield on each loan. Generally, the municipality will have a deposit relationship with us along with the lending relationship.
Interest earned on municipal loans is tax exempt for federal tax purposes, which enhances the overall yield on each loan. Generally, the municipality will have a deposit relationship with us along with the lending relationship.
In addition, when combining both Oswego and Onondaga Counties, we have the fifth largest market share of fifteen institutions, representing 7.9% of the total market.
In addition, when combining both Oswego and Onondaga Counties, we have the fourth largest market share of 14 institutions, representing 8.6% of the total market.
Accordingly, interest expense related to this transaction of $1.6 million was recorded in both the years ended December 31, 2024 and 2023. SUPERVISION AND REGULATION General Pathfinder Bank is a New York-chartered commercial bank and the Company is a Maryland corporation and a registered bank holding company. The Bank’s deposits are insured up to applicable limits by the FDIC.
Accordingly, interest expense related to this indebtedness of $1.7 million and $1.6 million was recorded in the years ended December 31, 2025 and 2024, respectively. SUPERVISION AND REGULATION General Pathfinder Bank is a New York-chartered commercial bank and the Company is a Maryland corporation and a registered bank holding company.
We strive to build and maintain a high-performing culture by creating a work environment that attracts and retains outstanding, engaged team members who embody our company mantra of " Local. Community. Trust. ” Demographics At December 31, 2024, we employed 186 team members, of which 172 were full-time, 10 were part-time, three were interns, and one was temporary.
We strive to build and maintain a high-performing culture by creating a work environment that attracts and retains outstanding, engaged team members who embody our company mantra of " Local. Community. Trust. ” Demographics At December 31, 2025, we employed 187 team members, of which 179 were full-time, and 8 were part-time. Our staff is comprised of approximately 74% women.
Individually Evaluated Loans, Non-performing Loans and Loan Modifications The policy of the Bank is to provide a continuous assessment of the quality of its loan portfolio through the maintenance of an internal and external loan review process.
Commercial loans may experience longer workout times than consumer loans and may trigger a need for complex loan modifications. - 8 - Individually Evaluated Loans, Non-performing Loans and Loan Modifications The policy of the Bank is to provide a continuous assessment of the quality of its loan portfolio through the maintenance of an internal and external loan review process.
As required by statute, the federal banking agencies have adopted final regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement safety and soundness standards. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired.
New York State Community Reinvestment Regulation Pathfinder Bank is also subject to provisions of the New York State Banking Law which imposes continuing and affirmative obligations upon banking institutions organized in New York State to serve the credit needs of its local community (“NYCRA”) which are substantially similar to those imposed by the Federal Community Reinvestment Act (“CRA”).
In November 2023, the NYSDFS amended its cybersecurity regulations to include heightened governance requirements and an expansion of the breadth and depth of required policies and procedures, among other things. - 14 - New York State Community Reinvestment Regulation Pathfinder Bank is also subject to provisions of the New York State Banking Law which imposes continuing and affirmative obligations upon banking institutions organized in New York State to serve the credit needs of its local community (“NYCRA”) which are substantially similar to those imposed by the Federal Community Reinvestment Act (“CRA”).
The variety of deposit accounts that we offer allows us to be competitive in generating deposits and to respond with flexibility to changes in our customers’ demands. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.
We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.
Home values have shown modestly accelerating increases in recent years within the Syracuse, NY metro area, including Onondaga and Oswego Counties. - 4 - Competition Pathfinder Bank encounters strong competition both in attracting deposits and in originating real estate and other loans.
Home values have shown modestly accelerating increases in recent years within the Syracuse, NY metro area, including Onondaga and Oswego Counties. Competition Pathfinder Bank encounters strong competition both in attracting deposits and in originating loans. Our most direct competition for deposits and loans comes from commercial banks, savings institutions and credit unions in our market area.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement is responsible for ensuring that such third parties use suitable information security controls when providing services to us. As part of the oversight of third-party service providers , management will determine whether cybersecurity risks are identified, measured, mitigated, monitored, and reported by such third parties. - 24 -
Biggest changeManagement is responsible for ensuring that such third parties use suitable information security controls when providing services to us. As part of the oversight of third-party service providers , management will determine whether cybersecurity risks are identified, measured, mitigated, monitored, and reported by such third parties. - 23 -
The Company’s Information Technology ("IT") department consists of the Chief Information Officer ("CIO"), who has 16 years of experience with the Company, and other key personnel who have years of experience and various certifications related to assessing and managing cybersecurity risk.
The Company’s Information Technology ("IT") department consists of the Chief Information Officer ("CIO"), who has 17 years of experience with the Company, and other key personnel who have years of experience and various certifications related to assessing and managing cybersecurity risk.
Management has designated the Information Security Officer ("ISO"), who has 15 years of experience, along with the Technology Steering Committee, with implementing and monitoring the ICPP.
Management has designated the Information Security Officer ("ISO"), who has 16 years of experience, along with the Technology Steering Committee, with implementing and monitoring the ICPP.

Item 2. Properties

Properties — owned and leased real estate

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Biggest change(2) The premises are leased with an annual rent of $93,000. (3) The premises are leased with an annual rent of $77,000. (4) The premises are leased with an annual rent of $262,000. (5) The premises are leased with an annual rent of $946,000.
Biggest change(2) The premises are leased with an annual rent of $64,000. (3) The premises are leased with an annual rent of $78,000. (4) The premises are leased with an annual rent of $262,000. (5) The premises are leased with an annual rent of $946,000. (6) The premises are leased with an annual rent of $18,000. - 24 -
Location Opening Date Owned/Leased Main Office 1874 Owned 214 West First Street Oswego, New York 13126 Plaza Branch 1989 Owned (1) 291 State Route 104 East Oswego, New York 13126 Mexico Branch 1978 Owned 3361 Main Street Mexico, New York 13114 Oswego East Branch 1994 Owned 34 East Bridge Street Oswego, New York 13126 Lacona Branch 2002 Owned 1897 Harwood Drive Lacona, New York 13083 Fulton Branch 2003 Owned 5 West First Street South Fulton, New York 13069 Central Square Branch 2005 Owned 3025 East Ave Central Square, New York 13036 Cicero Branch 2011 Owned 6194 State Route 31 Cicero, New York 13039 Pike Block Branch 2014 Leased (2) 109 West Fayette Street Syracuse, New York 13202 Clay Branch 2018 Leased (3) 3775 State Route 31 Liverpool, NY 13090 Southwest Corridor Branch 2022 Leased (4) 506 West Onondaga Street Syracuse, NY 13204 East Syracuse Branch 2024 Leased (5) 6611 Manlius Center Road East Syracuse, NY 13057 Utica Loan Production Office 2017 Leased (6) 258 Genesee Street Utica, New York 13502 (1) The building is owned; the underlying land is leased with an annual rent of $40,000.
Location Opening Date Owned/Leased Main Office 1874 Owned 214 West First Street Oswego, New York 13126 Plaza Branch 1989 Owned (1) 291 State Route 104 East Oswego, New York 13126 Mexico Branch 1978 Owned 3361 Main Street Mexico, New York 13114 Oswego East Branch 1994 Owned 34 East Bridge Street Oswego, New York 13126 Lacona Branch 2002 Owned 1897 Harwood Drive Lacona, New York 13083 Fulton Branch 2003 Owned 5 West First Street South Fulton, New York 13069 Central Square Branch 2005 Owned 3025 East Ave Central Square, New York 13036 Cicero Branch 2011 Owned 6194 State Route 31 Cicero, New York 13039 Pike Block Branch 2014 Leased (2) 109 West Fayette Street Syracuse, New York 13202 Clay Branch 2018 Leased (3) 3775 State Route 31 Liverpool, NY 13090 Southwest Corridor Branch 2022 Leased (4) 506 West Onondaga Street Syracuse, NY 13204 East Syracuse Branch 2024 Leased (5) 6611 Manlius Center Road East Syracuse, NY 13057 Utica Loan Production Office 2017 Leased (6) 258 Genesee Street Utica, New York 13502 (1) The building is owned; the underlying land is leased with an annual rent of $41,000.
The following table sets forth certain information concerning the main office and each branch office of the Bank at December 31, 2024. The aggregate net book value of the Bank's premises and equipment was $19.0 million at December 31, 2024. For additional information regarding the Bank's properties, see Notes 8 and 28 to the consolidated financial statements.
The following table sets forth certain information concerning the main office and each branch office of the Bank at December 31, 2025. The aggregate net book value of the Bank's premises and equipment was $18.0 million at December 31, 2025. For additional information regarding the Bank's properties, see Note 8 to the consolidated financial statements.
Removed
The lease began in July 2024 in connection with the Company's acquisition of the East Syracuse branch. Lease expense for 2024 was $425,0000. (6) The premises are leased with an annual rent of $17,000. - 25 -

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of management, such claims and lawsuits in the aggregate are not expected to have a material adverse impact on the Company's consolidated financial condition and results of operations at December 31, 2024. ITEM 4: MINE SAF ETY DISCLOSURE Not applicable. PART II
Biggest changeIn the opinion of management, such claims and lawsuits in the aggregate are not expected to have a material adverse impact on the Company's consolidated financial condition and results of operations at December 31, 2025. ITEM 4: MINE SAF ETY DISCLOSURE Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company did not repurchase any shares of its common stock for the year ended December 31, 2024. Equity Compensation Plan Information The following table provides information as of December 31, 2024 with respect to shares of voting common stock that may be issued under the Company’s existing equity compensation plans. See Note 15.
Biggest changeDuring the fourth quarter of 2025, the Company did not repurchase any shares of its common stock. Equity Compensation Plan Information The following table provides information as of December 31, 2025 with respect to shares of voting common stock that may be issued under the Company’s existing equity compensation plans. See Note 15.
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s voting common stock trades on the NASDAQ Capital Market under the symbol “PBHC.” There were 292 shareholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms) as of March 24, 2025.
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STO CKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s voting common stock trades on the NASDAQ Capital Market under the symbol “PBHC.” There were 275 shareholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms) as of March 24, 2026.
More details are included within the section titled Regulation and Supervision. ITEM 6: RES ERVED - 26 -
More details are included within the section titled Regulation and Supervision. ITEM 6: RES ERVED - 25 -
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 138,779 $ 11.00 300,000 Equity compensation plans not approved by stockholders N/A N/A N/A Dividends and Dividend History The Company has historically paid regular quarterly cash dividends on its common stock.
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 78,784 $ 11.06 175,000 Equity compensation plans not approved by stockholders N/A N/A N/A Dividends and Dividend History The Company has historically paid regular quarterly cash dividends on its common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAVAILABLE FOR SALE More Than One More Than Five One Year or Less to Five Years to Ten Years Annualized Annualized Annualized Amortized Weighted Amortized Weighted Amortized Weighted (Dollars in thousands) Cost Avg Yield Cost Avg Yield Cost Avg Yield Debt investment securities: US Treasury, agencies and GSEs $ - 0.00 % $ 31,483 1.83 % $ 4,863 7.56 % State and political subdivisions 988 2.59 % 416 3.34 % 4,678 2.15 % Corporate 4,068 5.14 % 5,963 4.78 % - 0.00 % Asset backed securities - 0.00 % - 0.00 % 5,003 6.99 % Total $ 5,056 4.64 % $ 37,862 2.31 % $ 14,544 5.62 % Mortgage-backed securities: Residential mortgage-backed - US agency $ - 0.00 % $ 2,366 0.99 % $ 2,043 5.01 % Collateralized mortgage obligations - US agency - 0.00 % 1,483 2.25 % 4,899 5.66 % Collateralized mortgage obligations - Private label 6,413 7.98 % 9,876 6.67 % 8,307 5.98 % Total $ 6,413 7.98 % $ 13,725 5.21 % $ 15,249 5.75 % Other non-maturity investments: Equity securities $ 206 0.53 % $ - 0.00 % $ - 0.00 % Total $ 206 0.53 % $ - 0.00 % $ - 0.00 % Total investment securities $ 11,675 6.40 % $ 51,587 3.08 % $ 29,793 5.69 % - 42 - More Than Ten Years Total Investment Securities Annualized Annualized Amortized Weighted Amortized Fair Weighted (Dollars in thousands) Cost Avg Yield Cost Value Avg Yield Debt investment securities: US Treasury, agencies and GSEs $ 37,542 5.53 % $ 73,888 $ 70,425 4.09 % State and political subdivisions 29,046 2.49 % 35,128 33,322 2.46 % Corporate 925 5.22 % 10,956 10,881 4.95 % Asset backed securities 13,931 6.23 % 18,934 18,487 6.43 % Total $ 81,444 4.56 % $ 138,906 $ 133,115 4.08 % Mortgage-backed securities: Residential mortgage-backed - US agency $ 36,227 4.87 % $ 40,636 $ 39,171 4.65 % Collateralized mortgage obligations - US agency 7,994 3.40 % 14,376 13,530 4.05 % Collateralized mortgage obligations - Private label 60,830 5.23 % 85,426 83,309 5.68 % Total $ 105,051 4.97 % $ 140,438 $ 136,010 5.22 % Other non-maturity investments: Equity securities $ - 0.00 % $ 206 $ 206 0.53 % Total $ - 0.00 % $ 206 $ 206 0.53 % Total investment securities $ 186,495 4.79 % $ 279,550 $ 269,331 4.65 % HELD-TO-MATURITY More Than One More Than Five One Year or Less to Five Years to Ten Years Annualized Annualized Annualized Amortized Weighted Amortized Weighted Amortized Weighted (Dollars in thousands) Cost Avg Yield Cost Avg Yield Cost Avg Yield Debt investment securities: US Treasury, agencies and GSEs $ - 0.00 % $ 1,498 3.18 % $ - 0.00 % State and political subdivisions 2,427 3.65 % 4,916 2.93 % 8,120 2.22 % Corporate 4,001 3.94 % 27,559 5.23 % 12,068 4.58 % Asset backed securities - 0.00 % 3,390 4.63 % - 0.00 % Total $ 6,428 3.83 % $ 37,363 4.79 % $ 20,188 3.63 % Mortgage-backed securities: Residential mortgage-backed - US agency $ 1,200 3.42 % $ 27 2.98 % $ 4,146 2.17 % Collateralized mortgage obligations - US agency 1,142 3.63 % 4,699 2.77 % - 0.00 % Collateralized mortgage obligations - Private label 9,770 7.25 % 9,058 6.00 % 10,213 6.16 % Total $ 12,112 6.53 % $ 13,784 4.89 % $ 14,359 5.01 % Total investment securities $ 18,540 5.59 % $ 51,147 4.82 % $ 34,547 4.20 % More Than Ten Years Total Investment Securities Annualized Annualized Amortized Weighted Amortized Fair Weighted (Dollars in thousands) Cost Avg Yield Cost Value Avg Yield Debt investment securities: US Treasury, agencies and GSEs $ 2,150 2.57 % $ 3,648 $ 3,648 2.82 % State and political subdivisions 1,690 2.56 % 17,153 17,153 2.66 % Corporate - 0.00 % 43,628 43,628 4.93 % Asset backed securities 9,660 4.35 % 13,050 13,050 4.42 % Total $ 13,500 3.84 % $ 77,479 $ 77,479 4.24 % Mortgage-backed securities: Residential mortgage-backed - US agency $ 4,202 5.25 % $ 9,575 $ 9,575 3.68 % Collateralized mortgage obligations - US agency 6,099 2.87 % 11,940 11,940 2.90 % Collateralized mortgage obligations - Private label 30,905 4.17 % 59,946 59,946 5.29 % Total $ 41,206 4.09 % $ 81,461 $ 81,461 4.75 % Total investment securities $ 54,706 4.03 % $ 158,940 $ 158,940 4.50 % The yield information disclosed above does not give effect to changes in fair value that are reflected in accumulated other comprehensive loss in consolidated shareholders’ equity. - 43 - Loans Receivable Average loans receivable represented 65.8% of the Company’s average interest earning assets in 2024 and accounted for the greatest portion of total interest income.
Biggest changeAVAILABLE-FOR-SALE One Year or Less More Than One to Five Years More Than Five to Ten Years More Than Ten Years Total Investment Securities (Dollars in thousands) Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Fair Value Yield Debt investment securities: US Treasury, agencies and GSEs $ - 0.00 % $ 32,509 2.13 % $ 391 6.41 % $ 34,167 5.40 % $ 67,067 $ 65,015 3.82 % State and political subdivisions 140 3.30 % 528 3.40 % 7,542 1.97 % 27,370 2.58 % 35,580 33,918 2.47 % Corporate 4,066 5.62 % 2,756 4.19 % - 0.00 % 915 5.22 % 7,737 7,942 5.06 % Asset backed securities - 0.00 % - 0.00 % 3,005 5.74 % 12,700 5.16 % 15,705 15,612 5.27 % Total $ 4,206 5.54 % $ 35,793 2.31 % $ 10,938 3.16 % $ 75,152 4.33 % $ 126,089 $ 122,487 3.71 % Mortgage-backed securities: Residential mortgage-backed - US agency $ 2,234 0.85 % $ - 0.00 % $ 1,898 2.20 % $ 45,500 4.90 % $ 49,632 $ 49,015 4.61 % Collateralized mortgage obligations - US agency - 0.00 % 1,345 2.32 % 4,549 5.50 % 12,988 4.13 % 18,882 18,383 4.33 % Collateralized mortgage obligations - Private label 2,252 6.83 % 17,277 6.14 % 7,488 5.22 % 60,815 4.94 % 87,832 86,724 5.25 % Total $ 4,486 3.85 % $ 18,622 5.86 % $ 13,935 4.90 % $ 119,303 4.84 % $ 156,346 $ 154,122 4.94 % Other non-maturity investments: Equity securities $ 206 2.32 % $ - 0.00 % $ - 0.00 % $ - 0.00 % $ 206 $ 206 2.32 % Total $ 206 2.32 % $ - 0.00 % $ - 0.00 % $ - 0.00 % $ 206 $ 206 2.32 % Total investment securities $ 8,898 4.62 % $ 54,415 3.52 % $ 24,873 4.14 % $ 194,455 4.64 % $ 282,641 $ 276,815 4.39 % HELD-TO-MATURITY One Year or Less More Than One to Five Years More Than Five to Ten Years More Than Ten Years Total Investment Securities (Dollars in thousands) Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Yield Amortized Cost Fair Value Yield Debt investment securities: US Treasury, agencies and GSEs $ - 0.00 % $ 1,498 3.18 % $ - 0.00 % $ 2,061 2.52 % $ 3,559 $ 3,397 2.80 % State and political subdivisions 427 3.25 % 5,744 2.54 % 6,767 2.37 % 1,656 2.56 % 14,594 13,375 2.48 % Corporate - 0.00 % 18,977 5.61 % 6,553 6.86 % - 0.00 % 25,530 24,199 5.93 % Asset backed securities - 0.00 % 2,080 3.84 % 416 5.61 % 12,568 4.78 % 15,064 14,206 4.67 % Total $ 427 3.25 % $ 28,299 4.73 % $ 13,736 4.61 % $ 16,285 4.27 % $ 58,747 $ 55,177 4.58 % Mortgage-backed securities: Residential mortgage-backed - US agency $ 9 6.62 % $ - 0.00 % $ 6,526 3.46 % $ 1,105 6.04 % $ 7,640 $ 7,311 3.84 % Collateralized mortgage obligations - US agency - 0.00 % 4,463 2.74 % - 0.00 % 5,572 2.62 % 10,035 9,124 2.67 % Collateralized mortgage obligations - Private label 9,559 3.18 % 12,994 6.65 % 2,106 5.85 % 29,419 3.99 % 54,078 53,586 4.56 % Total $ 9,568 3.18 % $ 17,457 5.65 % $ 8,632 4.04 % $ 36,096 3.84 % $ 71,753 $ 70,021 4.24 % Total investment securities $ 9,995 3.19 % $ 45,756 5.08 % $ 22,368 4.39 % $ 52,381 3.97 % $ 130,500 $ 125,198 4.39 % The yield information disclosed above does not give effect to changes in fair value that are reflected in accumulated other comprehensive loss in consolidated shareholders’ equity. - 42 - Loans Receivable Average loans receivable represented 65.9% of the Company’s average interest earning assets in 2025 and accounted for the greatest portion of total interest income.
If current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established. The - 34 - judgment about the level of future taxable income, including that which is considered capital, is inherently subjective and is reviewed on a continual basis as regulatory and business factors change.
If current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established. The judgment about the level of future taxable income, including that which is considered capital, is inherently subjective and is reviewed on a continual basis as regulatory and business factors change.
The Articles Supplementary authorized 1,505,283 shares of the Non-Voting Common Stock which Castle Creek received in exchange for the Company’s outstanding Series B Preferred Stock on a one for one basis and allowed for the issuance of 125,000 shares of Non-Voting Common Stock that may be issued upon the exercise of the Warrant. - 28 - The preferences, limitations, powers and relative rights of the Non-Voting Common Stock are set forth in the Articles Supplementary, a summary of which follows: Ranking : The Non-Voting Common Stock will rank, as to the payment of dividends and distribution of assets upon dissolution, liquidation or winding up of the Company, (i) pari passu with the Company’s Common Stock, and (ii) subordinate and junior to all other securities of the Company which, by their respective terms, are senior to the Non-Voting Common Stock or the Company’s Common Stock.
The Articles Supplementary authorized 1,505,283 shares of the Non-Voting Common Stock which Castle Creek received in exchange for the Company’s outstanding Series B Preferred Stock on a one for one basis and allowed for the issuance of 125,000 shares of Non-Voting Common Stock that may be issued upon the exercise of the Warrant. - 27 - The preferences, limitations, powers and relative rights of the Non-Voting Common Stock are set forth in the Articles Supplementary, a summary of which follows: Ranking : The Non-Voting Common Stock will rank, as to the payment of dividends and distribution of assets upon dissolution, liquidation or winding up of the Company, (i) pari passu with the Company’s Common Stock, and (ii) subordinate and junior to all other securities of the Company which, by their respective terms, are senior to the Non-Voting Common Stock or the Company’s Common Stock.
Under this method, the net deferred tax asset or liability is recognized for the future tax consequences. This is attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating and capital loss carry forwards.
Under this method, the net deferred tax asset or liability is recognized for the future tax consequences. This is attributable to the differences - 33 - between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating and capital loss carry forwards.
The performance of all purchased loan pools are monitored regularly from detailed reports and remittance reconciliations provided at least monthly by the external servicing entities. The projected credit losses related to purchased loan pools are evaluated prior to purchase and the performance of those loans against expectations are analyzed at least monthly.
The performance of all purchased loan pools is monitored regularly from detailed reports and remittance reconciliations provided at least monthly by the external servicing entities. The projected credit losses related to purchased loan pools are evaluated prior to purchase and the performance of those loans against expectations are analyzed at least monthly.
Determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires - 33 - significant judgment on the use of estimates related to the amount and timing of expected future cash flows on individually evaluated loans, estimated losses on pools of homogeneous loans based on historical loss experience, and environmental factors, all of which may be susceptible to significant change.
Determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires significant judgment on the use of estimates related to the amount and timing of expected future - 32 - cash flows on individually evaluated loans, estimated losses on pools of homogeneous loans based on historical loss experience, and environmental factors, all of which may be susceptible to significant change.
Fair values on our available-for-sale securities may be influenced by a number of factors; including market interest rates, prepayment speeds, discount rates, and the shape of yield curves. Fair values for securities available-for-sale are obtained from an independent third party pricing service. Where available, fair values are based on quoted prices on a nationally recognized securities exchange.
Fair values on our AFS securities may be influenced by a number of factors; including market interest rates, prepayment speeds, discount rates, and the shape of yield curves. Fair values for AFS securities are obtained from an independent third party pricing service. Where available, fair values are based on quoted prices on a nationally recognized securities exchange.
Each share of the Series B Preferred Stock was convertible on a one-for-one basis into either (i) Common Stock under certain circumstances or (ii) non-voting common stock, par value $0.01 per share (which will also be convertible into Common Stock), subject to approval of the creation of such class of non-voting common stock by the Company’s stockholders.
Each share of the Series B Preferred Stock was convertible on a one-for-one basis into either (i) Common Stock under certain circumstances or (ii) non-voting common stock, par value $0.01 per share (which was also convertible into Common Stock), subject to approval of the creation of such class of non-voting common stock by the Company’s stockholders.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before December 31, 2025. The Company is a separate legal entity from the Bank and must provide for its own liquidity.
Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before December 31, 2026. The Company is a separate legal entity from the Bank and must provide for its own liquidity.
Pathfinder Bank maintains a quality control program for closed loans and considers the risks and uncertainties associated with potential repurchase requirements to be minimal. - 46 - Allowance for Credit Losses The allowance for credit losses (ACL) is established through provision for credit losses and reduced by loan charge-offs net of recoveries.
Pathfinder Bank maintains a quality control program for closed loans and considers the risks and uncertainties associated with potential repurchase requirements to be minimal. - 45 - Allowance for Credit Losses The ACL is established through provision for credit losses and reduced by loan charge-offs net of recoveries.
Note 1 to the consolidated financial statements describes the methodology used to determine the allowance for credit losses and a discussion of the factors driving changes in the amount of the allowance for credit losses is included in this report. As noted above, the allowance for credit losses (“ACL”) represents management’s estimate of lifetime losses in the Bank’s loan portfolio.
Note 1 to the consolidated financial statements describes the methodology used to determine the allowance for credit losses and a discussion of the factors driving changes in the amount of the allowance for credit losses is included in this report. As noted above, the ACL represents management’s estimate of lifetime losses in the Bank’s loan portfolio.
As of December 31, 2024, the Bank’s most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well-capitalized”, under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized”, the Bank must maintain specified total risk-based, Tier 1 risk-based and Tier 1 leverage ratios.
As of December 31, 2025, the Bank’s most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well-capitalized”, under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized”, the Bank must maintain specified total risk-based, Tier 1 risk-based and Tier 1 leverage ratios.
As of December 31, 2024, management reported to the Board of Directors that the Bank was in compliance with its liquidity policy guidelines. OFF-BALANCE SHEET ARRANGEMENTS The Bank is also a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
As of December 31, 2025, management reported to the Board of Directors that the Bank was in compliance with its liquidity policy guidelines. OFF-BALANCE SHEET ARRANGEMENTS The Bank is also a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
The Company was required to request stockholder approval to eliminate the Exchange Cap no later than at the 2021 annual meeting of Company shareholders. In addition, at the same meeting, the Company was required to seek shareholder approval to create a class of - 27 - non-voting convertible common stock.
The Company was required to request stockholder approval to eliminate the Exchange Cap no later than at the 2021 annual meeting of Company shareholders. In addition, at the same meeting, the Company was required to seek shareholder approval to create a class of - 26 - non-voting convertible common stock.
The Company's liquidity has been enhanced by its ability to borrow from the FHLBNY, whose competitive advance programs and lines of credit provide the Company with a safe, reliable, and convenient source of funds. A significant decrease in deposits in the future could result in the Company having to seek other sources of funds for liquidity purposes.
The Company's liquidity has been enhanced by its ability to borrow from the FHLB-NY, whose competitive advance programs and lines of credit provide the Company with a safe, reliable, and convenient source of funds. A significant decrease in deposits in the future could result in the Company having to seek other sources of funds for liquidity purposes.
The assumptions used by management are discussed in Note 14 to the consolidated financial statements contained herein. Evaluation of Goodwill . Management performs an annual evaluation of the Company’s goodwill for possible impairment. Based on the results of the 2023 evaluation, management has determined that the carrying value of goodwill is not impaired as of December 31, 2024.
The assumptions used by management are discussed in Note 14 to the consolidated financial statements contained herein. Evaluation of Goodwill . Management performs an annual evaluation of the Company’s goodwill for possible impairment. Based on the results of the 2025 evaluation, management has determined that the carrying value of goodwill is not impaired as of December 31, 2025.
However, the exercise of such Warrant remains subject to certain contractual provisions, and regulatory approval if Castle Creek’s ownership of Common Stock would exceed 9.9%. At December 31, 2024, Castle Creek owned approximately 9.9% of the Company’s common voting stock. The Warrant will receive dividends equal to the amount paid on the Company’s common stock.
However, the exercise of such Warrant remains subject to certain contractual provisions, and regulatory approval if Castle Creek’s ownership of Common Stock would exceed 9.9%. At December 31, 2025, Castle Creek owned approximately 9.7% of the Company’s common voting stock. The Warrant will receive dividends equal to the amount paid on the Company’s common stock.
The Company invests in securities issued by United States Government agencies and sponsored enterprises (“GSE”), mortgage-backed securities, collateralized mortgage obligations, state and municipal obligations, mutual funds, equity securities, investment grade corporate debt instruments, and common stock issued by the FHLBNY.
The Company invests in securities issued by United States Government agencies and sponsored enterprises (“GSE”), mortgage-backed securities, collateralized mortgage obligations, state and municipal obligations, mutual funds, equity securities, investment grade corporate debt instruments, and common stock issued by the FHLB-NY.
On October 14, 2020, the Company executed a private placement of $25.0 million of its 5.50% Fixed to Floating Rate non-amortizing Subordinated Debt (the “2020 Subordinated Debt”) to certain qualified institutional buyers and accredited institutional investors.
On October 14, 2020, the Company executed a private placement of $25.0 million of its 5.50% Fixed to Floating Rate non-amortizing Subordinated Debt (the “2020 Subordinated Debt”) to certain qualified institutional investors.
As part of the purchase, the Company paid a deposit premium on acquired time deposits of $543,000, which is included in the balance of time deposits on the balance sheet and accreted on a straight-line basis over 10 years. Core deposits represented 76.9% of total deposits on December 31, 2024, compared to 69.8% on December 31, 2023.
As part of the purchase, the Company paid a deposit premium on acquired time deposits of $543,000, which is included in the balance of time deposits on the balance sheet and accreted on a straight-line basis over 10 years. Core deposits represented 79.8% of total deposits on December 31, 2025, compared to 76.9% on December 31, 2024.
The 2020 Subordinated Debt has a maturity date of October 15, 2030 and initially bear interest, payable semi-annually, at a fixed annual rate of 5.50% per annum until October 15, 2025.
The 2020 Subordinated Debt has a - 50 - maturity date of October 15, 2030, and initially was interest-bearing, payable semi-annually, at a fixed annual rate of 5.50% per annum until October 15, 2025.
See Note 17 to the consolidated financial statements for the reconciliation of the statutory tax rate to the effective tax rate. Earnings Per Share Basic and diluted earnings per share for the year ended December 31, 2024 were both $0.54, as compared to basic and diluted earnings per share of $1.51 for the year ended December 31, 2023.
See Note 17 to the consolidated financial statements for the reconciliation of the statutory tax rate to the effective tax rate. Earnings Per Share Basic and diluted earnings per share for the year ended December 31, 2025 were both ($0.31), as compared to basic and diluted earnings per share of $0.54 for the year ended December 31, 2024.
There are no conditions or events since that notification that management believes have changed the Bank’s category. The regulations also impose a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
There are no conditions or events since that notification that management believes have changed the Bank’s category. The regulations also impose a “capital conservation buffer” consisting of 2.5% of CET1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
The Company believes that this restriction will not have an impact on the Company's ability to meet its ongoing cash obligations. At December 31, 2024 and 2023, the Company had cash and cash equivalents of $31.6 million and $48.7 million, respectively. The Bank has a number of existing credit facilities available to it.
The Company believes that this restriction will not have an impact on the Company's ability to meet its ongoing cash obligations. At December 31, 2025 and 2024, the Company had cash and cash equivalents of $31.2 million and $31.6 million, respectively. The Bank has a number of existing credit facilities available to it.
The sensitivity and related range of impacts for various judgments on the ACL is a hypothetical analysis and is used to determine management’s judgments or assumptions of qualitative loss factors that were utilized at December 31, 2024 in the final recorded estimation of the ACL on loans recognized on the Statement of Financial Condition.
The sensitivity and related range of impacts for various judgments on the ACL is a hypothetical analysis and is used to determine management’s judgments or assumptions of qualitative loss factors that were utilized at December 31, 2025 in the final recorded estimation of the ACL on loans recognized on the Consolidated Statements of Financial Condition.
Management monitors its loan portfolio closely and has incorporated our current estimate of the ultimate collectability of all loans into the reported allowance for credit losses at December 31, 2024. Overall, the ratio of the allowance for credit losses to year end loans increased to 1.88% at December 31, 2024 from 1.78% at December 31, 2023.
Management monitors its loan portfolio closely and has incorporated our current estimate of the ultimate collectability of all loans into the reported allowance for credit losses at December 31, 2025. Overall, the ratio of the allowance for credit losses to year end loans increased to 3.28% at December 31, 2025 from 1.88% at December 31, 2024.
Management monitors its loan portfolios closely and has incorporated our current estimate of the ultimate collectability of all loans into the reported allowance for credit losses at December 31, 2024. The ratio of the allowance for credit losses to year end loans was 1.88% and 1.78% at December 31, 2024 and December 31, 2023, respectively.
Management monitors its loan portfolios closely and has incorporated our current estimate of the ultimate collectability of all loans into the reported allowance for credit losses at December 31, 2025. The ratio of the allowance for credit losses to year end loans was 3.28% and 1.88% at December 31, 2025 and December 31, 2024, respectively.
The estimation of fair value is significant to several of our assets; including investment securities available-for-sale, interest rate derivative (discussed in detail in Note 22 of the consolidated financial statements), intangible assets, foreclosed real estate, and the value of loan collateral when valuing loans. These are all recorded at either fair value, or the lower of cost or fair value.
The estimation of fair value is significant to several of our assets; including AFS investment securities, interest rate derivatives (discussed in detail in Note 22 of the consolidated financial statements), intangible assets, foreclosed real estate, and the value of loan collateral when valuing loans. These are all recorded at either fair value, or the lower of cost or fair value.
The allowance for credit losses to non-performing loans at December 31, 2024 was 78.1%, compared with 92.7% at December 31, 2023. Noninterest Income The Company's noninterest income is primarily comprised of fees on deposit account balances and transactions, loan servicing, commissions and net gains or losses on sales of securities, loans, and foreclosed real estate.
The allowance for credit losses to non-performing loans at December 31, 2025 was 106.80%, compared with 78.1% at December 31, 2024. Noninterest Income The Company's noninterest income is primarily comprised of fees on deposit account balances and transactions, loan servicing, commissions and net gains or losses on sales of securities, loans, and foreclosed real estate.
These fees will be amortized over the life of the 2020 Subordinated Debt through its first redemption date using the effective interest method, giving - 51 - rise to an effective cost of funds of 6.22% from the issuance date calculated under this method.
These fees were fully amortized over the life of the 2020 Subordinated Debt through its first redemption date using the effective interest method, giving rise to an effective cost of funds of 6.22% from the issuance date calculated under this method.
The Company had 6,125,649 and 6,099,571 shares of voting and non-voting common stock in aggregate outstanding at December 31, 2024 and December 31, 2023, respectively. Since the Conversion, we have substantially transformed our business activities from those of a traditional savings bank to those of a commercial bank.
The Company had 6,185,644 and 6,125,649 shares of voting and non-voting common stock in aggregate outstanding at December 31, 2025 and December 31, 2024, respectively. Since the Conversion, we have substantially transformed our business activities from those of a traditional savings bank to those of a commercial bank.
The ACL could increase (or decrease) by approximately $1.1 million, assuming a 25% negative (or positive) change within the group of qualitative factors used to determine the ACL for commercial loans.
The ACL could increase (or decrease) by approximately $82,000, assuming a 25% negative (or positive) change within the group of qualitative factors used to determine the ACL for commercial loans.
The table below details available sources of liquidity at December 31, 2024.
The table below details available sources of liquidity at December 31, 2025 and December 31, 2024.
On December 23, 2024, the Company announced that its Board of Directors had declared a cash dividend of $0.10 per share on the Company’s voting common and non-voting common stock, and a cash dividend of $0.10 per notional share for the issued Warrant relating to the fiscal quarter ended December 31, 2024.
RECENT EVENTS On December 22, 2025, the Company announced that its Board of Directors had declared a cash dividend of $0.10 per share on the Company’s voting common and non-voting common stock, and a cash dividend of $0.10 per notional share for the issued Warrant relating to the fiscal quarter ended December 31, 2025.
Conversion : Each share of Non-Voting Common Stock will be convertible into one share of the Company’s Common Stock (i) at any time and from time to time at the request of the holder thereof or at the written request of the Company; provided that upon such conversion, the holder, together with all affiliates of the holder, will not own or control in the aggregate more than 9.9% of the Company’s Common Stock (or of any class of the Company’s voting securities), excluding for the purpose of this calculation any reduction in the ownership resulting from transfers by such holder of voting securities (which, for the avoidance of doubt, does not included the Non-Voting Common Stock); or (ii) automatically, without any further action of the part of the holder, on the date that the holder transfers such share of Non-Voting Common Stock to a non-affiliate of the holder in a permissible transfer. - 29 - SELECTED FINANCIAL DATA The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the consolidated financial statements and related notes: At or for the year ended December 31, (In thousands, except per share amounts) 2024 2023 2022 2021 2020 Year End Total assets $ 1,474,874 $ 1,465,798 $ 1,399,921 $ 1,285,177 $ 1,227,443 Investment securities available-for-sale 269,331 258,716 191,726 190,598 128,261 Investment securities held-to-maturity 158,683 179,286 194,402 160,923 171,224 Loans receivable, net 901,743 881,232 882,435 819,524 812,718 Deposits 1,204,524 1,120,067 1,125,430 1,055,346 995,907 Borrowings and subordinated debt 118,175 205,513 145,730 106,661 121,450 Shareholders' equity 121,483 120,256 111,582 110,633 97,722 For the Year Total interest income $ 78,357 $ 67,663 $ 51,098 $ 45,827 $ 42,507 Total interest expense 37,368 28,744 9,695 7,532 10,864 Net interest income 40,989 38,919 41,403 38,295 31,643 Provision for credit losses 10,973 2,930 2,754 1,022 4,707 Net interest income after provision for credit losses 30,016 35,989 38,649 37,273 26,936 Total noninterest income 9,561 5,190 5,914 6,231 6,485 Total noninterest expense 34,417 29,395 28,874 27,495 25,080 Income before income taxes 5,160 11,784 15,689 16,009 8,341 Income tax expense 332 2,362 2,656 3,499 1,295 Net income attributable to noncontrolling interest 1,445 129 101 103 96 Net income attributable to Pathfinder Bancorp, Inc. $ 3,383 $ 9,293 $ 12,932 $ 12,407 $ 6,950 Convertible preferred stock dividends - - - 97 291 Warrant dividends 50 45 45 35 30 Undistributed earnings allocated to participating securities 216 1,729 2,666 2,699 1,224 Net income available to common shareholders $ 3,117 $ 7,519 $ 10,221 $ 9,576 $ 5,405 Per Share Income per share - basic $ 0.54 $ 1.51 $ 2.13 $ 2.07 $ 1.17 Income per share - diluted 0.54 1.51 2.13 2.07 1.17 Book value per common share 19.83 19.59 18.40 18.43 17.56 Tangible book value per common share (a) 18.03 18.83 17.63 17.66 16.53 Cash dividends declared 0.40 0.36 0.36 0.28 0.24 Performance Ratios Return on average assets 0.23 % 0.67 % 0.96 % 0.98 % 0.60 % Return on average equity 2.75 8.09 11.77 11.91 7.43 Average equity to average assets 8.47 8.26 8.17 8.26 8.02 Shareholders' Equity to total assets at end of year 8.24 8.15 7.93 8.58 7.94 Net interest rate spread 2.37 2.47 3.05 3.06 2.68 Net interest margin 2.98 2.95 3.24 3.21 2.88 Average interest-earning assets to average interest-bearing liabilities 122.58 121.63 124.03 124.61 120.49 Noninterest expense to average assets 2.37 2.11 2.15 2.18 2.15 Efficiency ratio (a) (b) 72.53 66.74 60.81 61.80 67.69 Dividend payout ratio 78.28 28.95 20.87 16.17 20.39 Return on average common equity 2.75 8.09 11.77 11.91 8.92 - 30 - At December 31, 2024 2023 2022 2021 2020 Asset Quality Ratios Nonperforming loans to year end loans 2.40 % 1.92 % 1.00 % 1.00 % 2.58 % Nonperforming assets to total assets 1.50 1.19 0.66 0.65 1.74 Allowance for credit losses to year end loans 1.88 1.78 1.71 1.57 1.55 Allowance for credit losses to nonperforming loans 78.08 92.73 169.93 155.99 59.89 Regulatory Capital Ratios (Bank Only) Total capital (to risk-weighted assets) 14.65 % 15.05 % 15.14 % 15.19 % 13.13 % Tier 1 capital (to risk-weighted assets) 13.40 13.80 13.88 13.94 11.87 Tier 1 capital (to adjusted assets) 9.67 10.11 9.67 9.52 8.63 Tier 1 Common Equity (to risk-weighted assets) 13.40 13.80 13.88 13.94 11.87 Number of: Banking offices 13 12 12 11 11 Fulltime equivalent employees 175 164 160 161 176 (a) See table below for reconciliation of the non-GAAP financial measures.
Conversion : Each share of Non-Voting Common Stock will be convertible into one share of the Company’s Common Stock (i) at any time and from time to time at the request of the holder thereof or at the written request of the Company; provided that upon such conversion, the holder, together with all affiliates of the holder, will not own or control in the aggregate more than 9.9% of the Company’s Common Stock (or of any class of the Company’s voting securities), excluding for the purpose of this calculation any reduction in the ownership resulting from transfers by such holder of voting securities (which, for the avoidance of doubt, does not include the Non-Voting Common Stock); or (ii) automatically, without any further action of the part of the holder, on the date that the holder transfers such share of Non-Voting Common Stock to a non-affiliate of the holder in a permissible transfer. - 28 - SELECTED FINANCIAL DATA The following selected consolidated financial data sets forth certain financial highlights of the Company and should be read in conjunction with the consolidated financial statements and related notes: At or for the year ended December 31, (In thousands, except per share amounts) 2025 2024 2023 2022 2021 Year End Total assets $ 1,426,636 $ 1,474,874 $ 1,465,798 $ 1,399,921 $ 1,285,177 Investment securities available-for-sale 276,815 269,331 258,716 191,726 190,598 Investment securities held-to-maturity 130,324 158,683 179,286 194,402 160,923 Loans receivable, net 867,234 901,743 881,232 882,435 819,524 Deposits 1,183,848 1,204,524 1,120,067 1,125,430 1,055,346 Borrowings and subordinated debt 88,229 118,175 205,513 145,730 106,661 Shareholders' equity 122,451 121,483 120,256 111,582 110,633 For the Year Total interest income $ 76,653 $ 78,357 $ 67,663 $ 51,098 $ 45,827 Total interest expense 32,318 37,368 28,744 9,695 7,532 Net interest income 44,335 40,989 38,919 41,403 38,295 Provision for credit losses 16,342 10,973 2,930 2,754 1,022 Net interest income after provision for credit losses 27,993 30,016 35,989 38,649 37,273 Total noninterest income 2,495 9,561 5,190 5,914 6,231 Total noninterest expense 34,581 34,417 29,395 28,874 27,495 (Loss) income before income taxes (4,093 ) 5,160 11,784 15,689 16,009 Income tax (benefit) expense (2,160 ) 332 2,362 2,656 3,499 Net income attributable to noncontrolling interest - 1,445 129 101 103 Net (loss) income attributable to Pathfinder Bancorp, Inc. $ (1,933 ) $ 3,383 $ 9,293 $ 12,932 $ 12,407 Convertible preferred stock dividends - - - - 97 Warrant dividends 50 50 45 45 35 Undistributed earnings allocated to participating securities (1,066 ) 216 1,729 2,666 2,699 Net (loss) income available to common shareholders $ (917 ) $ 3,117 $ 7,519 $ 10,221 $ 9,576 Per Share (Loss) income per share - basic $ (0.31 ) $ 0.54 $ 1.51 $ 2.13 $ 2.07 (Loss) income per share - diluted (0.31 ) 0.54 1.51 2.13 2.07 Book value per common share 19.80 19.83 19.59 18.40 18.43 Tangible book value per common share (a) 18.11 18.03 18.83 17.63 17.66 Cash dividends declared 0.40 0.40 0.36 0.36 0.28 Performance Ratios Return on average assets (0.13 ) % 0.23 % 0.67 % 0.96 % 0.98 % Return on average equity (1.54 ) 2.75 8.09 11.77 11.91 Average equity to average assets 8.58 8.47 8.26 8.17 8.26 Shareholders' Equity to total assets at end of year 8.58 8.24 8.15 7.93 8.58 Net interest rate spread 2.67 2.37 2.47 3.05 3.06 Net interest margin 3.21 2.98 2.95 3.24 3.21 Average interest-earning assets to average interest-bearing liabilities 123.57 122.58 121.63 124.03 124.61 Noninterest expense to average assets 2.36 2.37 2.11 2.15 2.18 Efficiency ratio (a) (b) 69.12 72.53 66.74 60.81 61.80 Dividend payout ratio (269.03 ) 78.28 28.95 20.87 16.17 Return on average common equity (1.54 ) 2.75 8.09 11.77 11.91 - 29 - At December 31, 2025 2024 2023 2022 2021 Asset Quality Ratios Nonperforming loans to year end loans 3.07 % 2.40 % 1.92 % 1.00 % 1.00 % Nonperforming assets to total assets 1.94 1.50 1.19 0.66 0.65 Allowance for credit losses to year end loans 3.28 1.88 1.78 1.71 1.57 Allowance for credit losses to nonperforming loans 106.80 78.08 92.73 169.93 155.99 Regulatory Capital Ratios (Bank Only) Total Capital (to risk-weighted assets) 14.72 % 14.65 % 15.05 % 15.14 % 15.19 % Tier 1 Capital (to risk-weighted assets) 13.45 13.40 13.80 13.88 13.94 Tier 1 Capital (to average assets) 9.41 9.64 10.11 9.67 9.52 Common Equity Tier 1 (to risk-weighted assets) 13.45 13.40 13.80 13.88 13.94 Number of: Banking offices 13 13 12 12 11 Fulltime equivalent employees 175 175 164 160 161 (a) See table below for reconciliation of the non-GAAP financial measures.
The ratio of net charge-offs to average loans therefore increased to 1.09% in 2024 from 0.47% in 2023. Further information on earnings per share can be found in Note 1 to the consolidated financial statements of this Form 10-K. Nonperforming loans to total loans increased to 2.40% at December 31, 2024 as compared to 1.92% at December 31, 2023.
The ratio of net charge-offs to average loans therefore decreased to 0.46% in 2025 from 1.09% in 2024. Further information on earnings per share can be found in Note 1 to the consolidated financial statements of this Form 10-K. Nonperforming loans to total loans increased to 3.07% at December 31, 2025 as compared to 2.40% at December 31, 2024.
Had the loans in nonaccrual status performed in accordance with their original terms, additional interest income of $2.4 million and $989,000 would have been recorded for the years ended December 31, 2024 and December 31, 2023, respectively.
Had the loans in nonaccrual status performed in accordance with their original terms, additional interest income of $1.8 million and $2.4 million would have been recorded for the years ended December 31, 2025 and December 31, 2024, respectively.
The capital securities of the trust are a pooled trust preferred fund of Preferred Term Securities VI, Ltd., with interest rates that reset quarterly, and are indexed to the 3-month the Secured Overnight Financing Rate ("SOFR") which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, plus 1.91%.
The capital securities of the trust are a pooled trust preferred fund of Preferred Term Securities VI, Ltd., with interest rates that reset quarterly, and are indexed to the three-month Secured Overnight Financing Rate ("SOFR") which is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities, plus 1.91%. These securities have a five-year call provision.
Management believes that the current level of the allowance for credit losses, at $17.2 million at December 31, 2024, adequately addresses the current level of risk within the loan portfolio, particularly considering the types and levels of collateralization supporting the substantial majority of the portfolio.
Management believes that the current level of the allowance for credit losses, at $29.4 million at December 31, 2025, adequately addresses the current level of risk within the loan portfolio, particularly considering the types and levels of collateralization supporting the substantial majority of the portfolio.
These financial instruments include commitments to extend credit and standby letters of credit. At December 31, 2024, the Bank had $233.0 million in outstanding commitments to extend credit and standby letters of credit. See Note 18 within the Notes to consolidated financial statements contained herein.
These financial instruments include commitments to extend credit and standby letters of credit. At December 31, 2025, the Bank had $186.3 million in outstanding commitments to extend credit and standby letters of credit. See Note 18 within the Notes to consolidated financial statements contained herein.
The following comments refer to the table of Average Balances and Rates and the Rate/Volume Analysis, both of which follow below. Net interest income, before provision for credit losses, increased $2.1 million, or 5.3%, to $41.0 million in 2024 as compared to $38.9 million in the previous year.
The following comments refer to the table of Average Balances and Rates and the Rate/Volume Analysis, both of which follow below. Net interest income, before provision for credit losses, increased $3.3 million, or 8.2%, to $44.3 million in 2025 as compared to $41.0 million in the previous year.
In estimating the ACL on loans, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate. At December 31, 2024, the Bank held $535.0 million in commercial real estate and commercial & industrial loans (collectively, commercial loans) representing 58.2% of the Bank’s entire loan portfolio.
In estimating the ACL on loans, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate. At December 31, 2025, the Bank held $536.9 million in commercial real estate and commercial & industrial loans (collectively, commercial loans) representing 59.9% of the Bank’s entire loan portfolio.
Such sources could include, but are not limited to, additional borrowings, brokered deposits, negotiated time deposits, the sale of "available-for-sale" investment securities, or the sale of loans. Such actions could result in higher interest expense costs and/or losses on the sale of securities or loans. For the year ended December 31, 2024, cash and cash equivalents decreased by $17.2 million.
Such sources could include, but are not limited to, additional borrowings, brokered deposits, negotiated time deposits, the sale of AFS investment securities, or the sale of loans. Such actions could result in higher interest expense costs and/or losses on the sale of securities or loans. For the year ended December 31, 2025, cash and cash equivalents decreased by $402,000.
Our core deposits, which herein are defined as nonbrokered deposits excluding time accounts in excess of $250,000, were $925.8 million, or 86.7% of nonbrokered deposits, and $782.1 million, or 89.1% of nonbrokered deposits, at December 31, 2024 and December 31, 2023, respectively.
Our core deposits, which herein are defined as nonbrokered deposits excluding time accounts in excess of $250,000, were $947.1 million, or 87.5% of nonbrokered deposits, and $925.8 million, or 86.7% of nonbrokered deposits, at December 31, 2025 and December 31, 2024, respectively.
Through these programs, deposits in excess of the maximum insurable amount are placed with multiple participating financial institutions. Reciprocal deposits totaled $63.5 million at December 31, 2024, compared to $74.0 million at December 31, 2023, and represented 5.9% and 8.4% of total deposits as of the end of each year, respectively.
Through these programs, deposits in excess of the maximum insurable amount are placed with multiple participating financial institutions. Reciprocal deposits totaled $88.1 million at December 31, 2025, compared to $63.5 million at December 31, 2024, and represented 8.1% and 5.9% of nonbrokered deposits as of the end of each year, respectively.
The Company reported net cash outflows from financing activities of $6.0 million generated principally by an increase in customer deposits of $190.9 million, offset by a $64.7 million decrease in short-term borrowings, a decrease in brokered deposits of $106.4 million, a decrease in net proceeds from long-term borrowings of $22.9 million, and an aggregate decrease in net cash of all other financing sources, including dividends paid to common shareholders, and the holder of the Warrant of $2.4 million.
The Company reported net cash outflows from financing activities of $52.5 million generated principally by an increase in customer deposits of $13.7 million, offset by a $17.0 million decrease in short-term borrowings, a decrease in brokered deposits of $34.4 million, a decrease in net proceeds from long-term borrowings of $13.0 million, and an aggregate decrease in net cash of all other financing sources, including dividends paid to common shareholders, and the holder of the Warrant of $2.5 million.
The Bank can exit this funding arrangement, in whole or in part, with 60 days prior notice to the issuing counterparty. Excluding brokered deposits, all other deposits, collectively referred to as nonbrokered deposits, totaled $1.07 billion, or 88.7% of total deposits with an average rate of 2.3% at December 31, 2024.
The Bank can exit this funding arrangement, in whole or in part, with 60 days prior notice to the issuing counterparty. Excluding brokered deposits, all other deposits, collectively referred to as nonbrokered deposits, totaled $1.08 billion, or 91.4% of total deposits with an average rate of 2.0% at December 31, 2025.
Total deposits grew by $84.5 million, or 7.5%, during 2024 to $1.20 billion on December 31, 2024. During 2024, the Company assumed $186.0 million in deposits as a result of the East Syracuse branch acquisition completed July 19, 2024.
Total deposits declined by $20.7 million, or 1.7%, to $1.18 billion on December 31, 2025 as compared to $1.20 billion on December 31, 2024. In 2024, the Company assumed $186.0 million in deposits as a result of the East Syracuse branch acquisition completed July 19, 2024.
The Bank allocated $10.4 million to the ACL for these loans, including $4.3 million derived from the use of qualitative factors in the calculation.
The Bank allocated $23.3 million to the ACL for these loans, including $326,000 derived from the use of qualitative factors in the calculation.
In addition to the term brokered deposits detailed above, the Bank had $2.0 million in overnight brokered funds, derived from a pool of individual depositors, at December 31, 2024. The interest rate paid for these funds is indexed to the overnight Fed funds effective rate plus -0- basis points.
In addition to the term brokered deposits detailed above, the Bank had $5.0 million in overnight brokered funds, derived from a pool of individual depositors, at December 31, 2025. The interest rate paid for these funds is indexed to the overnight Federal funds effective rate.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.
The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.
Additionally, the provision for credit losses in 2024 reflected an increase in nonperforming loans of $4.9 million at December 31, 2024, as compared to December 31, 2023. The Company recorded $10.2 million in total loan charge-offs in 2024 as compared to $4.2 million in 2023.
Additionally, the provision for credit losses in 2025 reflected an increase in nonperforming loans of $5.5 million at December 31, 2025 as compared to December 31, 2024. The Company recorded $4.2 million in net charge-offs in 2025 as compared to $9.8 million in net charge-offs in 2024.
These estimates are based on the determination of known deposit account balances of each depositor and the insurance guidelines provided by the FDIC. At December 31, 2024, time deposit accounts in excess of $250,000 totaled $142.5 million, or 28.3% of time deposits and 11.8% of total deposits.
These balances are based on the determination of known deposit account balances of each depositor and the insurance guidelines provided by the FDIC. At December 31, 2025, time deposit accounts in excess of $250,000 totaled $134.8 million, or 29.8% of time deposits and 11.4% of total deposits.
These securities have a five-year call provision. The Company guarantees all of these securities. The Company's equity interest in the trust subsidiary is included in other assets on the Consolidated Statements of Financial Condition at December 31, 2024 and 2023.
The Company guarantees all of these securities. The Company's equity interest in the trust subsidiary is included in other assets on the Consolidated Statements of Financial Condition at December 31, 2025 and 2024.
Total nonperforming assets increased $4.7 million, or 27.1%, between December 31, 2023 and December 31, 2024, largely driven by an increase of $5.9 million in nonperforming commercial and commercial real estate loans, in addition to an increase of $1.4 million in nonperforming residential real estate loans, offset by a decrease in nonperforming consumer loans of $2.4 million.
Total nonperforming assets increased $5.6 million, or 25.4%, between December 31, 2024 and December 31, 2025, largely driven by an increase of $6.7 million in nonperforming commercial real estate and commercial and industrial loans, offset by a decrease in nonperforming residential loans of $1.2 million.
Total potential problem loans, including individually evaluated loans, were $43.1 million at December 31, 2023, and were comprised of special mention, substandard and doubtful loans of $20.7 million, $20.3 million and $2.1 million, respectively. The Company measures delinquency based on the amount of past due loans as a percentage of total loans.
Total potential problem loans, including individually evaluated loans, were $58.0 million at December 31, 2024, and were comprised of special mention, substandard and doubtful loans of $32.8 million, $23.1 million and $2.1 million, respectively. The Company measures delinquency based on the amount of past due loans as a percentage of total loans.
The Company recorded a provision for credit losses of $11.0 million in 2024 as compared to $2.9 million in the prior year.
The Company recorded a provision for credit losses of $16.3 million in 2025 as compared to $11.0 million in the prior year.
The Company recorded a provision for credit losses of $11.0 million in 2024 as compared to $2.9 million in the prior year.
The Company recorded a provision for credit losses of $16.3 million in 2025 as compared to $11.0 million in the prior year.
The 2020 Subordinated Debt is senior in the Company’s credit repayment hierarchy only to the Company’s common equity and, and any future senior indebtedness and is intended to qualify as Tier 2 capital for regulatory capital purposes for the Company. The Company paid $783,000 in origination and legal fees as part of this transaction.
The 2020 Subordinated Debt is senior in the Company’s credit repayment hierarchy only to the Company’s common equity and any future senior indebtedness and is intended to qualify as Tier 2 capital for regulatory capital purposes for the Company.
(GAAP) (numerator) $ 3,383 $ 9,293 $ 12,932 $ 12,407 $ 6,950 Average equity 122,901 114,824 109,898 104,131 93,586 Average preferred stock - - - - 15,709 Denominator $ 122,901 $ 114,824 $ 109,898 $ 104,131 $ 77,877 Return on average common equity 2.75 % 8.09 % 11.77 % 11.91 % 8.92 % - 32 - At or for the year ended December 31, (In thousands, except per share amounts) 2024 2023 2022 2021 2020 Regulatory Capital Ratios (Bank Only) Total capital (to risk-weighted assets) Total equity (GAAP) $ 140,641 $ 137,943 $ 126,148 $ 121,896 $ 106,720 Goodwill (5,056 ) (4,536 ) (4,536 ) (4,536 ) (4,536 ) Intangible assets (5,989 ) (85 ) (101 ) (117 ) (133 ) Addback: Accumulated other comprehensive income 9,144 9,605 12,172 1,268 2,236 Total Tier 1 Capital $ 138,740 $ 142,927 $ 133,683 $ 118,511 $ 104,287 Allowance for loan and lease losses 13,007 12,995 12,076 10,655 11,002 Total Tier 2 Capital $ 13,007 $ 12,995 $ 12,076 $ 10,655 $ 11,002 Total Tier 1 plus Tier 2 Capital (numerator) $ 151,747 $ 155,922 $ 145,759 $ 129,166 $ 115,289 Risk-weighted assets (denominator) 1,035,557 1,035,747 962,861 850,157 878,380 Total core capital to risk-weighted assets 14.65 % 15.05 % 15.14 % 15.19 % 13.13 % Tier 1 capital (to risk-weighted assets) Total Tier 1 capital (numerator) $ 138,740 $ 142,927 $ 133,683 $ 118,511 $ 104,287 Risk-weighted assets (denominator) 1,035,557 1,035,747 962,861 850,157 878,380 Total capital to risk-weighted assets 13.40 % 13.80 % 13.88 % 13.94 % 11.87 % Tier 1 capital (to adjusted assets) Total Tier 1 capital (numerator) $ 138,740 $ 142,927 $ 133,683 $ 118,511 $ 104,287 Total average assets 1,445,991 1,418,313 1,387,480 1,249,752 1,212,512 Goodwill (5,056 ) (4,536 ) (4,536 ) (4,536 ) (4,536 ) Intangible assets (5,989 ) (85 ) (101 ) (117 ) (133 ) Adjusted assets (denominator) $ 1,434,946 $ 1,413,692 $ 1,382,843 $ 1,245,099 $ 1,207,843 Total capital to adjusted assets 9.67 % 10.11 % 9.67 % 9.52 % 8.63 % Tier 1 Common Equity (to risk-weighted assets) Total Tier 1 capital (numerator) $ 138,740 $ 142,927 $ 133,683 $ 118,511 $ 104,287 Risk-weighted assets (denominator) 1,035,557 1,035,747 962,861 850,157 878,380 Total Tier 1 Common Equity to risk-weighted assets 13.40 % 13.80 % 13.88 % 13.94 % 11.87 % CRITICAL ACCOUNTING ESTIMATES The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.
(GAAP) (numerator) $ (1,933 ) $ 3,383 $ 9,293 $ 12,932 $ 12,407 Average equity (denominator) 125,920 122,901 114,824 109,898 104,131 Return on average common equity (1.54 ) % 2.75 % 8.09 % 11.77 % 11.91 % - 31 - At or for the year ended December 31, (In thousands, except per share amounts) 2025 2024 2023 2022 2021 Regulatory Capital Ratios (Bank Only) Total Capital (to risk-weighted assets) Total equity (GAAP) $ 138,947 $ 140,641 $ 137,943 $ 126,148 $ 121,896 Goodwill (5,056 ) (5,056 ) (4,536 ) (4,536 ) (4,536 ) Intangible assets (5,362 ) (5,989 ) (85 ) (101 ) (117 ) Addback: Accumulated other comprehensive income 5,367 9,144 9,605 12,172 1,268 Total Tier 1 Capital $ 133,896 $ 138,740 $ 142,927 $ 133,683 $ 118,511 Allowance for credit losses (subject to regulatory limits) 12,663 13,007 12,995 12,076 10,655 Total Tier 2 Capital $ 12,663 $ 13,007 $ 12,995 $ 12,076 $ 10,655 Total Tier 1 plus Tier 2 Capital (numerator) $ 146,559 $ 151,747 $ 155,922 $ 145,759 $ 129,166 Risk-weighted assets (denominator) 995,575 1,035,557 1,035,747 962,861 850,157 Total Capital to risk-weighted assets 14.72 % 14.65 % 15.05 % 15.14 % 15.19 % Tier 1 Capital (to risk-weighted assets) Total Tier 1 Capital (numerator) $ 133,896 $ 138,740 $ 142,927 $ 133,683 $ 118,511 Risk-weighted assets (denominator) 995,575 1,035,557 1,035,747 962,861 850,157 Total Tier 1 Capital to risk-weighted assets 13.45 % 13.40 % 13.80 % 13.88 % 13.94 % Tier 1 Capital (to average assets) Total Tier 1 Capital (numerator) $ 133,896 $ 138,740 $ 142,927 $ 133,683 $ 118,511 Total average assets 1,433,594 1,450,254 1,418,313 1,387,480 1,249,752 Goodwill (5,056 ) (5,056 ) (4,536 ) (4,536 ) (4,536 ) Intangible assets (5,362 ) (5,989 ) (85 ) (101 ) (117 ) Average adjusted assets (denominator) $ 1,423,176 $ 1,439,209 $ 1,413,692 $ 1,382,843 $ 1,245,099 Total Tier 1 Capital to average assets 9.41 % 9.64 % 10.11 % 9.67 % 9.52 % Common Equity Tier 1 (to risk-weighted assets) Total Common Equity Tier 1 Capital (numerator) $ 133,896 $ 138,740 $ 142,927 $ 133,683 $ 118,511 Risk-weighted assets (denominator) 995,575 1,035,557 1,035,747 962,861 850,157 Total Common Equity Tier 1 to risk-weighted assets 13.45 % 13.40 % 13.80 % 13.88 % 13.94 % CRITICAL ACCOUNTING ESTIMATES The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.
At December 31, 2023, there were $34.0 million in loans past due including $13.6 million, $3.2 million and $17.2 million in loans 30-59 days, 60-89 days, and 90 days and over past due, respectively. Loans purchased outside of the Bank’s general market area are subject to substantial pre-purchase due diligence.
At December 31, 2024, there were $35.1 million in loans past due including $8.8 million, $4.2 million and $22.1 million in loans 30-59 days, 60-89 days, and 90 days and over past due, respectively. Loans purchased outside of the Bank’s general market area are subject to substantial pre-purchase due diligence.
At December 31, 2024, the Company had $88.1 million of the available lines of credit utilized, including encumbrances supporting the outstanding letters of credit, described above, on its existing lines of credit with the remainder of $157.2 million available.
At December 31, 2025, the Company had $58.0 million of the available lines of credit utilized, including encumbrances supporting the outstanding letters of credit, described above, on its existing lines of credit with the remainder of $186.0 million available.
All of the Company’s investments, with the exception of marketable equity securities, are classified as either available-for-sale or held-to-maturity. The Company does not hold any trading securities.
All of the Company’s investments, with the exception of marketable equity securities, are classified as either AFS or HTM. The Company does not hold any trading securities.
The ratio of delinquent loans to total loans increased to 3.81% at December 31, 2024 as compared to 3.79% at December 31, 2023. This increase was due to an increase of $2.0 million in past due commercial loans, a $728,000 increase in past due residential loans, partially offset by a $1.7 million decrease in past due consumer loans.
The ratio of delinquent loans to total loans increased to 5.91% at December 31, 2025 as compared to 3.81% at December 31, 2024. This increase was due to an increase of $16.6 million in past due commercial loans, and a $1.6 million increase in past due residential loans, partially offset by a $235,000 decrease in past due consumer loans.
Accordingly, interest expense related to this transaction of $1.6 million was recorded in both the years ended December 31, 2024 and 2023. Shareholders' Equity The Company’s shareholders’ equity increased $2.0 million, or 1.7%, to $121.5 million at December 31, 2024 from $119.5 million at December 31, 2023.
Accordingly, interest expense related to this indebtedness of $1.7 million and $1.6 million was recorded in the years ended December 31, 2025 and December 31, 2024, respectively. Shareholders' Equity The Company’s shareholders’ equity increased $968,000 or 0.8%, to $122.5 million at December 31, 2025 from $121.5 million at December 31, 2024.
All other asset categories had a net decrease of $4.8 million. - 41 - Investment Securities The average balance of the investment portfolio represented 33.1% of the Company’s average interest-earning assets in 2024 and is designed to generate a favorable rate of return in consideration of all risk factors associated with debt securities while assisting the Company in meeting its liquidity needs and interest rate risk strategies.
Investment Securities The average balance of the investment portfolio, which represented 33.0% of the Company’s average interest-earning assets in 2025, is designed to generate a favorable rate of return in consideration of all risk factors associated with debt securities while assisting the Company in meeting its liquidity needs and interest rate risk strategies.
The following table indicates the amount of the Company’s time deposit accounts in excess of $250,000 by time remaining until maturity as of December 31, 2024: (In thousands) Remaining Maturity: Three months or less $ 41,958 Three through six months 37,927 Six through twelve months 54,217 Over twelve months 8,371 Total $ 142,473 All municipal deposits, regardless of amount, are effectively insured, either through specific collateralization with securities held in third-party escrow or reciprocal deposit programs, as required under New York State law.
The following table indicates the amount of the Company’s time deposit accounts in excess of $250,000 by time remaining until maturity as of December 31, 2025: (In thousands) Remaining Maturity: Three months or less $ 52,136 Three through six months 50,218 Six through twelve months 28,050 Over twelve months 4,375 Total $ 134,779 All municipal deposits, regardless of amount, are effectively insured, either through specific collateralization with securities held in third-party escrow or reciprocal deposit programs, as required under New York State law.
The Company's sources of immediately available liquidity of $327.1 million represent 219.5% and $149.0 million of the Company's net estimated uninsured deposits. Net estimated uninsured deposits exclude collateralized and certain other deposit accounts. When compared to 2023, the $78.6 million increase in sources of immediately available liquidity was primarily attributed to the decrease in FHLB borrowed fund balances.
The Company's sources of immediately available liquidity of $384.9 million represent 238.9% and $161.1 million of the Company's net estimated uninsured deposits. Net estimated uninsured deposits exclude collateralized and certain other deposit accounts. When compared to 2024, the $42.8 million increase in sources of immediately available liquidity was primarily attributed to the decrease in FHLB borrowed fund balances.
The following table sets forth our brokered deposit balances and rates at December 31, 2024: (Dollars in thousands) Balance Average Rate Maturity Year: 2025 $ 89,224 3.60 % 2026 41,296 2.80 % 2027 5,751 2.93 % 2028 - 0.00 % 2029 - 0.00 % $ 136,271 3.33 % Included in the brokered deposit balances, detailed above, are $33.1 million in deposits that can be called at the Bank's discretion, should that become economically advantageous in the future.
The following table sets forth our brokered deposit balances and rates at December 31, 2025: (Dollars in thousands) Balance Average Rate Maturity Year: 2026 $ 96,167 3.02 % 2027 5,746 2.22 % 2028 - 0.00 % 2029 - 0.00 % 2030 - 0.00 % $ 101,913 2.97 % Included in the brokered deposit balances, detailed above, are $5.0 million in deposits that can be called at the Bank's discretion, should that become economically advantageous in the future.
At December 31, 2024, total credit available under the existing lines of credit was approximately $245.3 million at FHLBNY, the FRB, and two other correspondent banks.
At December 31, 2025, total credit available under the existing lines of credit was approximately $244.0 million at FHLB-NY, the FRB, and two other correspondent banks.
The Company provides, as supplemental information, such non-GAAP measures included in this document as described immediately below. - 31 - At or for the year ended December 31, (In thousands, except per share amounts) 2024 2023 2022 2021 2020 Per Share Book value per common share Total Pathfinder Bancorp, Inc. shareholders' equity (book value) (GAAP) $ 121,483 $ 119,495 $ 110,997 $ 110,287 $ 97,456 Preferred stock - - - - 17,901 Total shares outstanding 6,126 6,100 6,032 5,983 4,531 Book value per common share $ 19.83 $ 19.59 $ 18.40 $ 18.43 $ 17.56 Total common equity Total equity (GAAP) $ 121,483 $ 119,495 $ 110,997 $ 110,287 $ 79,555 Goodwill 5,056 4,536 4,536 4,536 4,536 Intangible assets 5,989 85 101 117 133 Tangible common equity $ 110,438 $ 114,874 $ 106,360 $ 105,634 $ 74,886 Tangible book value per common share Tangible common equity $ 110,438 $ 114,874 $ 106,360 $ 105,634 $ 74,886 Total shares outstanding 6,126 6,100 6,032 5,983 4,531 Tangible book value per common share $ 18.03 $ 18.83 $ 17.63 $ 17.66 $ 16.53 Performance Ratios Efficiency ratio Operating expenses (numerator) $ 34,417 $ 29,395 $ 28,874 $ 27,495 $ 25,080 Net interest income 40,989 38,919 41,403 38,295 31,643 Noninterest income 9,561 5,190 5,914 6,231 6,485 Less: (Losses) gains on the sales and redemptions of investment securities (71 ) 62 (169 ) 37 1,076 Less: Gain on asset sale 3,169 - - - - Denominator $ 47,452 $ 44,047 $ 47,486 $ 44,489 $ 37,052 Efficiency ratio 72.53 % 66.74 % 60.81 % 61.80 % 67.69 % Dividend payout ratio Dividends declared (numerator) $ 2,440 $ 2,177 $ 2,143 $ 1,548 $ 1,102 Net income available to common shareholders (denominator) 3,117 7,519 10,221 9,576 5,405 Dividend payout ratio 78.28 % 28.95 % 20.97 % 16.17 % 20.39 % Return on average common equity Net income attributable to Pathfinder Bancorp Inc.
The Company provides, as supplemental information, such non-GAAP measures included in this document as described immediately below. - 30 - At or for the year ended December 31, (In thousands, except per share amounts) 2025 2024 2023 2022 2021 Per Share Book value per common share Total Pathfinder Bancorp, Inc. shareholders' equity (book value) (GAAP) $ 122,451 $ 121,483 $ 119,495 $ 110,997 $ 110,287 Total shares outstanding 6,186 6,126 6,100 6,032 5,983 Book value per common share $ 19.80 $ 19.83 $ 19.59 $ 18.40 $ 18.43 Total common equity Total equity (GAAP) $ 122,451 $ 121,483 $ 119,495 $ 110,997 $ 110,287 Goodwill 5,056 5,056 4,536 4,536 4,536 Intangible assets 5,362 5,989 85 101 117 Tangible common equity $ 112,033 $ 110,438 $ 114,874 $ 106,360 $ 105,634 Tangible book value per common share Tangible common equity $ 112,033 $ 110,438 $ 114,874 $ 106,360 $ 105,634 Total shares outstanding 6,186 6,126 6,100 6,032 5,983 Tangible book value per common share $ 18.11 $ 18.03 $ 18.83 $ 17.63 $ 17.66 Performance Ratios Efficiency ratio Total noninterest expense (numerator) $ 34,581 $ 34,417 $ 29,395 $ 28,874 $ 27,495 Net interest income 44,335 40,989 38,919 41,403 38,295 Noninterest income 2,495 9,561 5,190 5,914 6,231 Less: (Losses) gains on the sales and redemptions of investment securities (23 ) (71 ) 62 (169 ) 37 Less: Gains on sales of loans and foreclosed real estate 402 187 181 137 313 Less: Fair value adjustment to loans held-for-sale (3,462 ) - - - - Less: Loss (gain) on asset sale (115 ) 3,169 - - - Revenue (denominator) $ 50,028 $ 47,265 $ 43,866 $ 47,349 $ 44,176 Efficiency ratio 69.12 % 72.82 % 67.01 % 60.98 % 62.24 % Dividend payout ratio Dividends declared (numerator) $ 2,467 $ 2,440 $ 2,177 $ 2,143 $ 1,548 Net (loss) income available to common shareholders (denominator) (917 ) 3,117 7,519 10,221 9,576 Dividend payout ratio (269.03 ) % 78.28 % 28.95 % 20.97 % 16.17 % Return on average common equity Net (loss) income attributable to Pathfinder Bancorp Inc.
The Company maintains strict loan underwriting standards and carefully monitors the performance of the loan portfolio. See Note 1: Summary of Significant Accounting Policies contained in the financial statements herein. FRE balances decreased to zero at December 31, 2024, compared to $151,000 at the prior year end.
The Company maintains strict loan underwriting standards and carefully monitors the performance of the loan portfolio. See Note 1: Summary of Significant Accounting Policies contained in the financial statements herein. FRE balances totaled $137,000 at December 31, 2025. There were no FRE balances reported at December 31, 2024.
LIQUIDITY Liquidity management involves the Company’s ability to generate cash or otherwise obtain funds at reasonable rates to support asset growth, meet deposit withdrawals, maintain reserve requirements, and otherwise operate the Company on an ongoing basis.
At December 31, 2025, the Bank exceeded all current regulatory required minimum capital ratios, including the capital buffer requirements. - 51 - LIQUIDITY Liquidity management involves the Company’s ability to generate cash or otherwise obtain funds at reasonable rates to support asset growth, meet deposit withdrawals, maintain reserve requirements, and otherwise operate the Company on an ongoing basis.
The following table represents information regarding short-term borrowings for the years ended December 31: (Dollars in thousands) 2024 2023 2022 Maximum outstanding at any month end $ 127,577 $ 125,680 $ 60,333 Average amount outstanding during the year 76,668 49,601 12,492 Balance at the end of the period 61,000 125,680 60,333 Average interest rate during the year 5.45 % 5.42 % 2.48 % Average interest rate at the end of the period 6.14 % 4.50 % 3.86 % The following table represents information regarding long-term borrowings for the years ended December 31: (Dollars in thousands) 2024 2023 2022 Maximum outstanding at any month end $ 49,919 $ 58,369 $ 67,371 Average amount outstanding during the year 43,162 55,091 58,593 Balance at the end of the period 27,068 49,919 55,664 Average interest rate during the year 1.70 % 1.54 % 0.96 % Average interest rate at the end of the period 1.26 % 1.84 % 1.39 % Trust Preferred Securities and Subordinated Debt The Company has a non-consolidated subsidiary trust, Pathfinder Statutory Trust II, of which the Company owns 100% of the common equity.
The following table represents information regarding short-term borrowings for the years ended December 31: (Dollars in thousands) 2025 2024 Maximum outstanding at any month end $ 75,500 $ 127,577 Average amount outstanding during the year 43,865 76,668 Balance at the end of the period 44,000 61,000 Average interest rate during the year 4.49 % 5.45 % Average interest rate at the end of the period 4.33 % 6.14 % The following table represents information regarding long-term borrowings for the years ended December 31: (Dollars in thousands) 2025 2024 Maximum outstanding at any month end $ 23,802 $ 49,919 Average amount outstanding during the year 20,612 43,162 Balance at the end of the period 14,074 27,068 Average interest rate during the year 1.88 % 1.70 % Average interest rate at the end of the period 2.84 % 1.26 % Trust Preferred Securities and Subordinated Debt The Company has a non-consolidated subsidiary trust, Pathfinder Statutory Trust II, of which the Company owns 100% of the common equity.
At December 31, 2023, these deposits totaled $95.3 million, or 20.1% of time deposits and 8.5% of total deposits.
At December 31, 2024, these deposits totaled $142.5 million, or 28.3% of time deposits and 11.8% of total deposits.
The Company will continue to emphasize retail and business core deposits in the future by providing depositors with a full range of deposit product offerings and will maintain its recent focus on deposit gathering within the Syracuse market. - 48 - Brokered deposits totaled $136.3 million and represented 11.3% of all deposits at December 31, 2024 and totaled $242.7 million and represented 21.7% at December 31, 2023.
The Company will continue to emphasize retail and business - 47 - core deposits in the future by providing depositors with a full range of deposit product offerings and will maintain its recent focus on deposit gathering within the Syracuse market.
Total nonperforming assets increased $4.7 million, or 27.1%, between December 31, 2023 and December 31, 2024, driven by an increase of $5.9 million in nonperforming commercial and commercial real estate loans, and an increase of $1.4 million in nonperforming residential real estate loans.
Total nonperforming assets increased $5.6 million, or 25.4%, between December 31, 2024 and December 31, 2025, driven by an increase of $6.4 million in nonperforming commercial and commercial real estate loans, and an increase of $258,000 in nonperforming consumer loans offset by a decrease of $1.2 million in nonperforming residential real estate loans.
The dividend was paid on February 7, 2025 to shareholders of record on January 17, 2025. EXECUTIVE SUMMARY AND RESULTS OF OPERATIONS The Company reported net income of $3.4 million for 2024, a decrease of $5.9 million as compared to net income of $9.3 million in 2023.
The dividend was paid on February 6, 2026 to shareholders of record on January 16, 2026. EXECUTIVE SUMMARY AND RESULTS OF OPERATIONS The Company reported a net loss of $1.9 million or $0.31 per diluted share for the full year 2025, a decrease of $5.3 million compared to net income of $3.4 million or $0.54 per diluted share in 2024.
For the year ended December 31, 2024 2023 Average Average Unaudited Average Yield / Average Yield / (In thousands) Balance Interest Cost Balance Interest Cost Interest-earning assets: Loans $ 903,941 $ 52,705 5.83 % $ 899,605 $ 47,348 5.26 % Taxable investment securities 423,475 22,939 5.42 % 379,600 18,073 4.76 % Tax-exempt investment securities 30,861 1,920 6.22 % 30,318 1,947 6.42 % Fed funds sold and interest-earning deposits 16,379 793 4.84 % 11,730 295 2.51 % Total interest-earning assets 1,374,656 78,357 5.70 % 1,321,253 67,663 5.12 % Noninterest-earning assets: Other assets 102,582 100,319 Allowance for credit losses (16,670 ) (17,870 ) Net unrealized losses on available-for-sale securities (9,769 ) (13,600 ) Total assets $ 1,450,799 $ 1,390,102 Interest-bearing liabilities: NOW accounts $ 101,336 $ 1,111 1.10 % $ 92,223 $ 538 0.58 % Money management accounts 11,679 13 0.11 % 14,116 15 0.11 % MMDA accounts 227,597 8,020 3.52 % 239,182 6,695 2.80 % Savings and club accounts 118,965 307 0.26 % 124,617 274 0.22 % Time deposits 517,352 21,042 4.07 % 480,867 15,743 3.27 % Subordinated debt 30,002 1,966 6.55 % 29,815 1,941 6.51 % Borrowings 114,471 4,909 4.29 % 105,471 3,538 3.35 % Total interest-bearing liabilities 1,121,402 37,368 3.33 % 1,086,291 28,744 2.65 % Noninterest-bearing liabilities: Demand deposits 184,572 172,950 Other liabilities 21,924 16,037 Total liabilities 1,327,898 1,275,278 Shareholders' equity 122,901 114,824 Total liabilities & shareholders' equity $ 1,450,799 $ 1,390,102 Net interest income $ 40,989 $ 38,919 Net interest rate spread 2.37 % 2.47 % Net interest margin 2.98 % 2.95 % Ratio of average interest-earning assets to average interest-bearing liabilities 122.58 % 121.63 % - 38 - Rate/Volume Analysis Net interest income can also be analyzed in terms of the impact of changing interest rates on interest-earning assets and interest-bearing liabilities, and changes in the volume or amount of these assets and liabilities.
For the year ended December 31, 2025 2024 Average Yield / Average Yield / (In thousands) Balance Interest Cost Balance Interest Cost Interest-earning assets: Loans $ 909,683 $ 53,560 5.89 % $ 903,941 $ 52,705 5.83 % Taxable investment securities 420,838 20,936 4.97 % 423,475 22,939 5.42 % Tax-exempt investment securities 34,136 1,707 5.00 % 30,861 1,920 6.22 % Fed funds sold and interest-earning deposits 14,984 450 3.00 % 16,379 793 4.84 % Total interest-earning assets 1,379,641 76,653 5.56 % 1,374,656 78,357 5.70 % Noninterest-earning assets: Other assets 115,350 102,582 Allowance for credit losses (17,277 ) (16,670 ) Net unrealized losses on available-for-sale securities (9,357 ) (9,769 ) Total assets $ 1,468,357 $ 1,450,799 Interest-bearing liabilities: NOW accounts $ 115,555 $ 1,275 1.10 % $ 101,336 $ 1,111 1.10 % Money management accounts 10,233 12 0.12 % 11,679 13 0.11 % MMDA accounts 282,650 8,823 3.12 % 227,597 8,020 3.52 % Savings and club accounts 127,414 318 0.25 % 118,965 307 0.26 % Time deposits 485,975 17,560 3.61 % 517,352 21,042 4.07 % Subordinated debt 30,179 1,972 6.53 % 30,002 1,966 6.55 % Borrowings 64,489 2,358 3.66 % 114,471 4,909 4.29 % Total interest-bearing liabilities 1,116,495 32,318 2.89 % 1,121,402 37,368 3.33 % Noninterest-bearing liabilities: Demand deposits 196,353 184,572 Other liabilities 29,589 21,924 Total liabilities 1,342,437 1,327,898 Shareholders' equity 125,920 122,901 Total liabilities & shareholders' equity $ 1,468,357 $ 1,450,799 Net interest income $ 44,335 $ 40,989 Net interest rate spread 2.67 % 2.37 % Net interest margin 3.21 % 2.98 % Ratio of average interest-earning assets to average interest-bearing liabilities 123.57 % 122.58 % - 37 - Rate/Volume Analysis Net interest income can also be analyzed in terms of the impact of changing interest rates on interest-earning assets and interest-bearing liabilities, and changes in the volume or amount of these assets and liabilities.
The following table sets forth our certificate of deposit balances and rates at December 31, 2024: (Dollars in thousands) Balance Average Rate Maturity Year: 2025 $ 341,036 3.75 % 2026 23,023 4.03 % 2027 1,556 1.63 % 2028 2,299 2.78 % 2029 722 1.34 % After 2030 282 1.36 % $ 368,918 3.74 % Deposit Concentrations The Bank utilizes a variety of funding sources to support the interest-earning asset base in addition to achieving targeted growth objectives.
The following table sets forth our certificate of deposit balances and rates at December 31, 2025: (Dollars in thousands) Balance Average Rate Maturity Year: 2026 $ 334,189 3.75 % 2027 15,430 3.04 % 2028 4,337 2.68 % 2029 719 1.18 % 2030 72 1.08 % After 2030 320 1.26 % $ 355,067 3.70 % - 49 - Deposit Concentrations The Bank utilizes a variety of funding sources to support the interest-earning asset base in addition to achieving targeted growth objectives.

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