• Pathfinder Bancorp, Inc. Announces Fourth Quarter 2021 Net Income of $3.9 Million and Record Full Year Net Income of $12.5 Million

    Source: Nasdaq GlobeNewswire / 03 Feb 2022 15:05:01   America/Chicago

    Results Include Record Earnings, Continued Stable Asset Quality,
    Prudent Expense Management and Significant Fourth Quarter Provision Benefit

    OSWEGO, N.Y., Feb. 03, 2022 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. (“Company”) (NASDAQ: PBHC), the holding company for Pathfinder Bank (“Bank”), announced fourth quarter 2021 net income available to common shareholders of $3.9 million, or $0.64 per basic and diluted share, compared to $1.9 million, or $0.33 per basic and diluted share, for the fourth quarter of 2020. For the full year 2021, total net income attributable to Pathfinder Bancorp, Inc. was $12.4 million, or $2.07 per basic and diluted share, compared to $7.0 million, or $1.17 per basic and diluted share, for 2020.

    2021 Fourth Quarter and Full Year Performance Highlights

    • Fourth quarter 2021 total revenue (net interest income and total noninterest income) of $11.1 million increased $1.5 million, or 15.7%, compared to the fourth quarter of 2020. Full year total revenue of $44.5 million was up $6.4 million, or 16.8%, compared to 2020.
    • Total interest-earning assets on December 31, 2021 of $1.21 billion increased by $52.4 million, or 4.5%, from December 31, 2020 and included $832.5 million in total loans.
    • Total deposits on December 31, 2021 were $1.06 billion, an increase of $59.4 million, or 6.0%, compared to one year prior.
    • A more beneficial deposit mix contributed to a 44 basis point improvement in deposit funding costs to 0.56% for the year. Total funding costs decreased 40 basis points to 0.79% in 2021.
    • Total net interest income for fourth quarter 2021 of $9.7 million increased by $1.8 million, or 23.0%, from the prior year period, and increased $6.7 million, or 21.0%, to $38.3 million for full year 2021 compared to 2020.
    • Noninterest expense of $7.2 million for the fourth quarter of 2021 represents an increase of $344,000, or 5.0%, compared to the year-ago quarter. Noninterest expense was $27.5 million for 2021, an increase of $2.4 million, or 9.6%, compared to 2020.
    • These factors combined to reduce our Efficiency Ratio to 62.6% in 2021, a decline of 3.7%, when compared to 66.3% for the year ended December 2020.
    • Loan growth was impacted by significant reductions in the Paycheck Protection Program (“PPP”) for the past three quarters, however, the Bank’s loan pipeline remains strong.
    • In response to continuing improvements in the nonaccrual loans and general economic conditions, the Company recorded a benefit of $1.0 million in its provision for loan losses during the fourth quarter of 2021.

    “Since our private placement capital raise in May 2019, our earnings and tangible capital have grown significantly,” said Thomas W. Schneider, President and CEO. “Our record net income in 2021 of $12.5 million for the year represents a 77.5% and 190.0% increase over year-end results for 2020 and 2019, respectively. Similarly, the return on average assets has grown from 0.60% in 2019 to 0.98% in 2021. Tangible Book Value per common share has grown from $14.14 at June 30, 2019 to $17.65 at December 31, 2021.

    “Many exogenous factors have weighed into this significant increase in performance. Most notably were the governmental responses to Covid-19 and the accompanying fiscal programs and monetary policy.”

    “The board of directors and staff take great pride and credit for the improvement in performance, including execution of our Strategic Plan, announced in June of 2019, and the careful and prudent management of asset quality through this tumultuous period. I want to thank our shareholders for their patience and confidence, our board of directors for their steady governance, and the relentless and restless work of our staff.”

    “Our focus throughout 2021 on enhancing our operating leverage proved to be successful, as double-digit revenue growth outpaced noninterest expense growth by a significant margin. Total revenue in 2021 was up 16.8%, while we limited expense growth to under 10%, even compared to the lower-than-typical expenses we recorded in 2020 amid the pandemic-induced operating environment. Looking ahead, we remain focused on balancing effective expense management with appropriate investments to support the future growth of the Company, which includes attracting and retaining exceptional talent. To that end, we do expect increased salary and benefits costs in 2022 and beyond as we respond to inflationary and wage pressures within our markets.”

    “Our balance sheet continues to grow, with an improving funding mix and healthy loan portfolio. Period-end deposits grew by more than $59 million from one year prior and included growth of approximately $30 million of noninterest bearing deposits. We continued to reduce our reliance on time deposits, with both average balance and rate paid on time deposits decreasing significantly compared to the prior year. This supported continued improvement in our overall funding costs, with the average cost of total interest-bearing liabilities down 40 basis points to 0.79% in 2021.”

    “We continued to maintain strong credit quality on our $832.5 million loan portfolio, with a ratio of nonperforming loans to total loans of 1.00% at December 31, 2021, less than half of the 2.58% we reported one year prior. In addition, even as we released reserves during the fourth quarter, our ratio of allowance for loan losses to nonperforming loans stood at approximately156% at year end.”

    “While our local economies have improved significantly from the height of the pandemic and our pipelines remain solid, we continue to maintain a conservative approach to managing asset quality and modest loan growth expectations given fiscal policy changes and the evolving impacts of the latest COVID-19 variant. Improved metrics have borne out our patient approach with borrowers through the Pandemic. That said, we are optimistic about the opportunities in our vibrant Central New York markets and are taking strategic steps to maximize them. In the second quarter of 2022, we expect to open a new branch in the Southwest Corridor of the City of Syracuse, which will allow us to serve our growing customer base there and provide a range of community banking services to the City’s underserved neighborhoods. Overall, our strong financial performance, dedicated and highly capable team and healthy capital position, leaves us well-positioned for 2022 and beyond.”

    Income Statement for the Quarter Ended December 31, 2021

    Net Interest Income

    Unaudited For the three months ended  For the twelve months ended 
    (In thousands, except per share data) December
    31, 2021    		  December
    31, 2020    		  Change  December
    31, 2021    		  December
    31, 2020    		  Change 
    Interest and dividend income:                              
    Loans, including fees $8,930  $8,537  $393  4.6% $37,026  $35,421  $1,605  4.5%
    Debt securities:                              
    Taxable  2,135   1,763   372  21.1%  8,312   6,524   1,788  27.4%
    Tax-exempt  72   50   22  44.0%  171   159   12  7.5%
    Dividends  48   87   (39) -44.8%  309   324   (15) -4.6%
    Federal funds sold and interest earning deposits  2   26   (24) -92.3%  9   79   (70) -88.6%
    Total interest and dividend income  11,187   10,463   724  6.9%  45,827   42,507   3,320  7.8%
    Interest expense:                              
    Interest on deposits  889   1,736   (847) -48.8%  4,714   8,112   (3,398) -41.9%
    Interest on short-term borrowings  2   14   (12) -85.7%  10   148   (138) -93.2%
    Interest on long-term borrowings  153   288   (135) -46.9%  1,018   1,503   (485) -32.3%
    Interest on subordinated loans  414   512   (98) -19.1%  1,790   1,101   689  62.6%
    Total interest expense  1,458   2,550   (1,092) -42.8%  7,532   10,864   (3,332) -30.7%
    Net interest income  9,729   7,913   1,816  22.9%  38,295   31,643   6,652  21.0%
    Provision for loan losses  (1,039)  812   (1,851) -228.0%  1,022   4,707   (3,685) -78.3%
    Net interest income after provision for loan losses $10,768  $7,101  $3,667  51.6% $37,273  $26,936  $10,337  38.4%

    As noted in the table above, fourth quarter 2021 net interest income was $9.7 million, an increase of $1.8 million, or 23.0%, compared to $7.9 million for the same quarter in 2020. Interest and dividend income in the 2021 fourth quarter was $11.2 million, compared to $10.5 million in the fourth quarter of 2020. The increase in net interest income between comparable quarters was a result of a 45 basis point reduction in rates paid on interest-bearing liabilities, combined with a 24 basis point increase in the average loan yield, and a $32.8 million increase in average taxable investment securities combined with a 10 basis point increase in the average yield. Total interest expense for the fourth quarter of 2021 was $1.5 million, a decrease of $1.1 million, or 42.8%, from $2.6 million for the prior year quarter. The decrease in the quarterly interest expense was primarily a result of an improved funding mix, which included a $56.3 million reduction in average time deposit balances combined with a 76 basis point decrease in the average interest rate paid on time deposits. The net interest margin for the fourth quarter of 2021 was 3.28%, a 52 basis point increase compared to 2.75% for the fourth quarter of 2020. This improvement reflects both a 13 basis point increase in the average yield for interest-earning assets, and a 45 basis point decline in the average cost for interest-bearing liabilities.

    Net interest income for the full year of 2021 increased $6.7 million, or 21.0%, to $38.3 million compared to $31.6 million for the full year of 2020. Interest and dividend income for the full year ended December 31, 2021 was $45.8 million, an increase of $3.3 million, or 7.8%, compared to $42.5 million for 2020. The increase was due to a $56.8 million, or 22.1%, increase in average taxable investment securities and a $36.2 million, or 4.5%, increase in average loans compared to the prior year period. Interest expense of $7.5 million for the full year decreased by $3.3 million, or 30.7%, from the prior year period, primarily due to a reduction in time deposit balances along with a 44 basis point decrease in the interest rate paid on time deposits. Full year 2021 net interest margin of 3.21% was up 33 basis points from 2.88% for the twelve months ended December 31, 2020.

    Paycheck Protection Program Discussion

    From April 2020 to May 2021, the Company participated in all phases of the Paycheck Protection Program (“PPP”) as administered by the U.S. Small Business Administration (the “SBA”). PPP loans are substantially guaranteed as to timely repayment by the SBA and have unique forgiveness features whereby loan principal amounts may be discharged, for the benefit of the borrowers, by direct payments from the SBA to the lending institution holding the indebtedness. The Company has received both interest (calculated at a stated rate of 1%) and various levels of fee income related to the origination of PPP loans. Information related to the Company’s PPP loans are included in the following tables:

    Unaudited For the three months ended For the twelve months ended,
    (In thousands, except number of loans) December 31,
    2021    		 December 31,
    2020    		 December 31,
    2021    		 December 31,
    2020
    Number of PPP loans originated in the period  -  25  478  699
    Funded balance of PPP loans originated in the period $- $313 $36,369 $75,352
    Number of PPP loans forgiven in the period 160  136 796  136
    Average balance of PPP loans in the period $23,315 $67,960 $75,538 $91,328
    Balance of PPP loans forgiven in the period $7,611 $15,279 $77,054 $15,279
    Deferred PPP fee income recognized in the period $407 $495 $2,150 $938


    (In thousands, except number of loans) December 31, 2021 December 31, 2020
    Unearned PPP deferred fee income at end of period $716 $1,216


    (In thousands, except number of loans)  Number Balance
    Total PPP loans originated since inception  1,177 $111,721
    Total PPP loans forgiven since inception  932 $92,333
    Total PPP loans remaining at December 31, 2021  256 $19,338

    Provision for Loan Losses

    The Bank reported a credit to provision for loan losses of $1.0 million for the fourth quarter of 2021, reflecting improvements in its strong asset quality metrics. This compares to a provision for loan losses of $812,000 for the fourth quarter of 2020. The credit sensitive portfolios continue to be carefully monitored, and the Bank will consistently apply its proven conservative loan classification and reserve building methodologies to the analysis of these portfolios. The provision for loan losses for the full year of 2021 was $1.0 million, compared to $4.7 million in 2020.

    Noninterest Income

    Fourth quarter 2021 noninterest income was $1.4 million, a decrease of $309,000, or 18.0%, compared to $1.7 million for the same three-month period in 2020. Noninterest income was $6.2 million for the full year ended 2021, compared to $6.5 million for 2020.

    The following table details the components of noninterest income for the three and twelve months ended December 31, 2021 and 2020:

    Unaudited For the three months ended  For the twelve months ended 
    (Dollars in thousands) December 31, 2021  December 31, 2020 Change  December 31, 2021  December 31, 2020 Change 
    Service charges on deposit accounts $382  $397 $(15)  -3.8% $1,464  $1,395 $69   4.9%
    Earnings and gain on bank owned life insurance  141   105  36   34.3%  559   460  99   21.5%
    Loan servicing fees  91   143  (52)  -36.4%  246   361  (115)  -31.9%
    Debit card interchange fees  225   194  31   16.0%  923   771  152   19.7%
    Insurance agency revenue  231   216  15   6.9%  1,048   955  93   9.7%
    Other charges, commissions and fees  258   215  43   20.0%  1,058   917  141   15.4%
    Noninterest income before gains (losses)  1,328   1,270  58   4.6%  5,298   4,859  439   9.0%
    Net gains on sales and redemptions of
    investment securities    		  (19)  -  (19) >100%  37   1,076  (1,039)  -96.6%
    Gains/(losses) on marketable equity securities  10   169  (159)  -94.1%  382   (629) 1,011   160.7%
    Net gains on sales of loans and foreclosed
    real estate    		  87   276  (189)  -68.5%  313   1,179  (866)  -73.5%
    Gains on sale of premises and equipment  -   -  -   -   201   -  201  >100%
    Total noninterest income $1,406  $1,715 $(309)  -18.0% $6,231  $6,485 $(254)  -3.9%

    Noninterest Expense

    Total noninterest expense for the fourth quarter of 2021 was $7.2 million, an increase of $344,000, or 5.0%, compared to $6.8 million for the same three-month period in 2020. The increase was primarily a result of increases in advertising and other expenses, offset in part by lower data processing expenses. Total noninterest expense for the full year period of 2021 was $27.5 million, an increase of $2.4 million, or 9.6%, compared with $25.1 million for the prior year period, and primarily driven by increases in salaries and employee benefits expense, professional and other services, and advertising costs.

    The following table details the components of noninterest expense for the three and twelve months ended December 31, 2021 and 2020:

    Unaudited For the three months ended    For the twelve months ended 
    (Dollars in thousands) December
    31, 2021    		  December
    31, 2020    		  Change  December
    31, 2021    		  December
    31, 2020    		  Change 
    Salaries and employee benefits $3,918  $3,853  $65  1.7% $14,384  $13,468  $916  6.8%
    Building and occupancy  734   764   (30) -3.9%  3,121   3,013   108  3.6%
    Data processing  539   675   (136) -20.1%  2,555   2,396   159  6.6%
    Professional and other services  374   311   63  20.3%  1,627   1,210   417  34.5%
    Advertising  502   268   234  87.3%  1,198   941   257  27.3%
    FDIC assessments  222   190   32  16.8%  874   699   175  25.0%
    Audits and exams  153   131   22  16.8%  725   507   218  43.0%
    Insurance agency expense  198   226   (28) -12.4%  825   743   82  11.0%
    Community service activities  39   36   3  8.3%  220   199   21  10.6%
    Foreclosed real estate expenses  16   8   8  100.0%  46   50   (4) -8.0%
    Other expenses  496   385   111  28.8%  1,920   1,854   66  3.6%
    Total noninterest expenses $7,191  $6,847  $344  5.0% $27,495  $25,080  $2,415  9.6%

    During the most restrictive periods following the inception of the COVID-19 pandemic, which began in March 2020, the Company experienced material declines in substantially all forms of noninterest expenses. These reductions in noninterest expenses were the result of the curtailment or elimination of a significant portion of non-critically essential business and business development activities during that time. These activities were reduced or eliminated for the duration of the substantial restrictions imposed by governmental officials and as a consequence of the internal safety and social distancing protocols initiated by the Company and/or its customers. These effects were most pronounced in the third and fourth quarters of 2020 and extended, to lessening degrees, at least through the end of the first quarter of 2021. Accordingly, as the Company progressively returned to less restricted operations, noninterest expenses progressively returned to the levels considered by its management to be prudent for the effective long-term management of the Company.

    Unaudited For the three months ended  For the twelve months ended, 
    (Dollars in thousands) December
    31, 2021    		 December
    31, 2019    		 Change  December
    31, 2021    		 December
    31, 2019    		 Change 
    Salaries and employee benefits $3,918 $3,281 $637  19.4% $14,384  13,660 $724  5.3%
    Building and occupancy  734  688  46  6.7%  3,121  2,674  447  16.7%
    Data processing  539  590  (51) -8.6%  2,555  2,339  216  9.2%
    Professional and other services  374  257  117  45.5%  1,627  1,325  302  22.8%
    Advertising  502  243  259  106.6%  1,198  962  236  24.5%
    FDIC assessments  222  50  172  344.0%  874  421  453  107.6%
    Audits and exams  153  123  30  24.4%  725  427  298  69.8%
    Insurance agency expense  198  198  -  0.0%  825  816  9  1.1%
    Community service activities  39  228  (189) -82.9%  220  620  (400) -64.5%
    Foreclosed real estate expenses  16  13  3  23.1%  46  337  (291) -86.4%
    Other expenses  496  527  (31) -5.9%  1,920  2,149  (229) -10.7%
    Total noninterest expenses $7,191 $6,198 $993  16.0% $27,495 $25,730 $1,765  6.9%

    Balance Sheet on December 31, 2021

    The Company’s total assets on December 31, 2021 were $1.28 billion, an increase of $57.7 million, or 4.7%, from $1.23 billion on December 31, 2020. This increase was primarily driven by available-for-sale securities and loans. Total loans of $832.5 million increased by $7.0 million, or 0.8%, compared with $825.5 million on December 31, 2020. Investment securities totaled $352.2 million, an increase of $50.9 million compared to $301.3 million on December 31, 2020.

    Total deposits on December 31, 2021 were $1.06 billion, an increase of $59.4 million, or 6.0%, from $995.9 million at December 31, 2020. Interest-bearing deposits of $863.5 million at 2021 year end were up by $29.6 million, or 3.6%, largely due to increases in retail and commercial deposits.   Noninterest-bearing deposits totaled $191.9 million at December 31, 2021, an increase of $29.8 million, or 18.4%, from the 2020 year end. The increases in noninterest-bearing deposits were the result of continued growth in business banking relationships and the effects of the Bank’s participation in the PPP.

    Shareholders’ equity was $110.3 million at December 31, 2021, reflecting an increase of $12.8 million, or 13.2%, compared with $97.5 million at December 31, 2020. The increase was primarily a result of a $10.7 million increase in retained earnings.

    Asset Quality

    The Bank’s asset quality metrics, as measured by net loan charge-offs to average loans, remained strong and relatively stable for fourth quarter 2021. Annualized net loan charge-offs to average loans were 0.12% for the fourth quarter 2021, compared with 0.08% for the fourth quarter of 2020 and 0.12% for the quarter ended September 30, 2021. Nonperforming loans as a percentage of total loans continued to improve, totaling 1.00% at December 31, 2021, or a decrease of 158 basis points compared to 2.58% at December 31, 2020.

    The decrease in the nonperforming loan portfolio at December 31, 2021, as compared to December 31, 2020, was primarily the result of loans held in portfolio that resumed regular payment status following the improvement in general business conditions in the second half of 2021. Management is monitoring all nonaccrual loans closely and has incorporated our current estimate of the ultimate collectability of these loans into the reported allowance for loan losses at December 31, 2021. No loans were classified as being on COVID-19 related payment deferral at December 31, 2021.

    The following table summarizes nonaccrual loans by category and status at December 31, 2021:

    Loan TypeCollateral TypeNumber
    of
    Loans    		 Loan Balance Average Loan Balance Weighted
    LTV at
    Origination/
    Modification    		  Status
    Secured residential mortgage:             
     Real Estate 10 $892 $89 81% Under active resolution management by the Bank.
                   
    Secured commercial real estate:             
     Private Museum 1  1,384  1,384 79% The modification is still in progress and the customer is making monthly payments to the bank under an informal agreement currently. DRI grant proceeds are anticipated to be received in both Q1 2022 and Q2 2022 further reducing our exposure.
     Recreational 1  1,233  1,233 49% The loan is currently classified as a Troubled Debt Restructuring (TDR). Next payment was due September 1, 2021.
     All other 12  1,790  149 74% Under active resolution management by the Bank.
                   
    Commercial lines of credit 5  629  126 N/A  Under active resolution management by the Bank.
                   
    Commercial and industrial: 7  1,261  180 N/A  Under active resolution management by the Bank.
                   
    Consumer loans 71  1,103  16 N/A  Under active resolution management by the Bank.
       107 $8,292 $77     

    The allowance for loan losses to non-performing loans at December 31, 2021 was 155.99%, compared with 59.89% at December 31, 2020. The change in the allowance for loans losses to non-performing loans is reflective of the changes in nonaccrual loans discussed above and appropriate reserve releases during the fourth quarter of 2021.

    COVID-19 Additional Discussion

    Pathfinder Bank has participated in all rounds of the PPP to date. The Program was initially established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, and is a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the SBA. The PPP was renewed under the Consolidated Appropriations Act, 2021 and the American Rescue Plan Act of 2021. While these legislative actions, and the programs that resulted therefrom, appear to have significantly reduced the negative near-term economic impact of the pandemic, the future trajectory of the economy and the economy’s effect on the financial condition and results of the Company’s operations cannot be predicted with certainty.

    Cash Dividend Declared     

    On December 20, 2021, the Company announced that its Board of Directors declared a cash dividend of $0.07 per share on the Company's voting common and non-voting common stock, and a cash dividend of $0.07 per notional share for the issued warrant relating to the fiscal quarter ended December 31, 2021. The dividend will be payable to all shareholders of record on January 14, 2022 and will be paid on February 4, 2022. Based on the closing price of the Company’s common stock of $17.17 on December 31, 2021, the implied dividend yield is 1.6%. The quarterly cash dividend of $0.07 equates to a dividend payout ratio of 10.9%.

    About Pathfinder Bancorp, Inc.

    Pathfinder Bank is a New York State chartered commercial bank headquartered in Oswego, whose deposits are insured by the Federal Deposit Insurance Corporation. The Bank is a wholly owned subsidiary of Pathfinder Bancorp, Inc., (NASDAQ SmallCap Market; symbol: PBHC). The Bank has ten full-service offices located in its market areas consisting of Oswego and Onondaga County and one limited purpose office in Oneida County. Through its subsidiary, Pathfinder Risk Management Company, Inc., the Bank owns a 51% interest in the FitzGibbons Agency, LLC. At December 31, 2021, there were 4,603,184 shares of common stock issued and outstanding, as well as 1,380,283 shares of non-voting common stock issued and outstanding. The Company's common stock trades on the NASDAQ market under the symbol "PBHC."  At December 31, 2021, the Company and subsidiaries had total consolidated assets of $1.28 billion, total deposits of $1.06 billion and shareholders' equity of $110.6 million.

    Forward-Looking Statement

    Certain statements contained herein are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may.”   This release may contain certain forward-looking statements, which are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Company's earnings in future periods. Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and economic, competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products, and services.

    As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following additional risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

    • demand for our products and services may decline, making it difficult to grow assets and income;
    • if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
    • collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
    • our allowance for loan losses may have to be increased if borrowers experience financial difficulties beyond forbearance periods, which will adversely affect our net income;
    • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
    • as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income;
    • a material decrease in net income or a net loss over several quarters could result in a decrease in the rate of our quarterly cash dividend;
    • our cyber security risks are increased as the result of an increase in the number of employees working remotely;
    • we rely on fourth party vendors for certain services and the unavailability of a critical service due to the COVID-19 outbreak could have an adverse effect on us; and
    • Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

    The Company disclaims any obligation to revise or update any forward-looking statements contained in this press release to reflect future events or developments.

     
    PATHFINDER BANCORP, INC.
    FINANCIAL HIGHLIGHTS
    (Dollars and shares in thousands except per share amounts)
     
      For the three months  For the twelve months 
      ended December 31,  ended December 31, 
      (Unaudited)  (Unaudited) 
      2021  2020  2021  2020 
    Condensed Income Statement                
    Interest and dividend income $11,187  $10,463  $45,827  $42,507 
    Interest expense  1,458   2,550   7,532   10,864 
    Net interest income  9,729   7,913   38,295   31,643 
    Provision for loan losses  (1,039)  812   1,022   4,707 
       10,768   7,101   37,273   26,936 
    Noninterest income excluding net gains on sales of
    securities, fixed assets, loans and foreclosed real estate    		  1,328   1,270   5,298   4,859 
    Net gains on sales of securities, fixed assets, loans and foreclosed
    real estate    		  68   276   551   2,255 
    Gains (losses) on marketable equity securities  10   169   382   (629)
    Noninterest expense  7,191   6,847   27,495   25,080 
    Income before income taxes  4,983   1,969   16,009   8,341 
    Provision for income taxes  1,094   29   3,499   1,295 
                     
    Net income attributable to noncontrolling interest and
    Pathfinder Bancorp, Inc.    		 $3,889  $1,940  $12,510  $7,046 
    Net income attributable to noncontrolling interest  10   (5)  103   96 
    Net income attributable to Pathfinder Bancorp Inc. $3,879  $1,945  $12,407  $6,950 
                     


     For the Periods Ended 
     (Unaudited) 
     December 31,  December 31,  December 31, 
     2021  2020  2019 
    Selected Balance Sheet Data           
    Assets$1,285,177  $1,227,443  $1,093,807 
    Earning assets 1,212,139   1,159,778   1,032,817 
    Total loans 832,459   825,495   781,451 
    Deposits 1,055,346   995,907   881,893 
    Borrowed funds 77,098   82,050   93,125 
    Allowance for loan losses 12,935   12,777   8,669 
    Subordinated loans 29,563   39,400   15,128 
    Pathfinder Bancorp, Inc. Shareholders' equity 110,287   97,456   90,434 
                
    Asset Quality Ratios           
    Net loan charge-offs (annualized) to average loans 0.12%  0.08%  0.09%
    Allowance for loan losses to period end loans 1.55%  1.55%  1.11%
    Allowance for loan losses to nonperforming loans 155.99%  59.89%  162.25%
    Nonperforming loans to period end loans 1.00%  2.58%  0.67%
    Nonperforming assets to total assets 0.65%  1.74%  0.49%
                


    PATHFINDER BANCORP, INC.
    FINANCIAL HIGHLIGHTS
    (Dollars and shares in thousands except per share amounts)
            
      For the three months  For the twelve months
    		 
      ended December 31,  ended December 31,
    		 
      (Unaudited)  (Unaudited)
    		 
      2021  2020  2021  2020 
    Key Earnings Ratios                
    Return on average assets  1.24%  0.63%  0.98%  0.60%
    Return on average common equity  14.38%  9.83%  11.91%  8.92%
    Return on average equity  14.38%  8.11%  11.91%  7.43%
    Net interest margin  3.27%  2.75%  3.21%  2.88%
                     
    Share, Per Share and Ratio Data                
    Basic weighted average shares outstanding- Voting  4,518   4,537   4,478   4,608 
    Basic earnings per share- Voting $0.64  $0.33  $2.07  $1.17 
    Basic weighted average shares outstanding- Series A Non-Voting  1,380   -   745   - 
    Basic earnings per share- Series A Non-Voting $0.64   -  $2.07   - 
    Diluted weighted average shares outstanding- Voting  4,518   4,537   4,478   4,608 
    Diluted earnings per share- Voting $0.64  $0.33  $2.07  $1.17 
    Diluted weighted average shares outstanding- Series A Non-Voting  1,380   -   745   - 
    Diluted earnings per share- Series A Non-Voting $0.64   -  $2.07   - 
    Cash dividends per share $0.07  $0.06  $0.28  $0.24 
    Book value per common share at December 31, 2021 and 2020         $18.43  $17.56 
    Tangible book value per common share at December 31, 2021 and 2020         $17.66  $16.53 
    Tangible common equity to tangible assets at December 31, 2021 and 2020          8.25%  6.12%
    Tangible common equity to tangible assets at December 31, 2021 and 2020, adjusted          8.38%  6.44%


    Non-GAAP Reconciliation        
    Tangible book value per common share        
    Total equity $110,287  $97,456 
    Intangible assets  (4,653)  (4,669)
    Convertible preferred equity  -   (17,901)
    Common tangible equity $105,634  $74,886 
    Common shares outstanding  5,983   4,531 
    Tangible book value per common share $17.66  $16.53 
             
    Tangible common equity to tangible assets        
    Tangible common equity $105,634  $74,886 
    Tangible assets  1,280,524   1,222,914 
    Tangible common equity to tangible assets ratio  8.25%  6.12%
             
    Tangible common equity to tangible assets, adjusted        
    Tangible common equity $105,634  $74,886 
    Tangible assets  1,280,524   1,222,914 
    Less: Paycheck Protection Program (PPP) loans  (19,338)  (60,643)
    Total assets excluding PPP loans $1,261,186  $1,162,271 
    Tangible common equity to tangible assets ratio, excluding PPP loans  8.38%  6.44%

    * Basic and diluted earnings per share are calculated based upon the two-class method for the three and six months ended September 30, 2021 and 2020.
                    
    Weighted average shares outstanding do not include unallocated ESOP shares.

                    

    PATHFINDER BANCORP, INC.
    FINANCIAL HIGHLIGHTS
    (Dollars and shares in thousands except per share amounts)

    The following table sets forth information concerning average interest-earning assets and interest-bearing liabilities and the yields and rates thereon. Interest income and resultant yield information in the table has not been adjusted for tax equivalency. Averages are computed on the daily average balance for each month in the period divided by the number of days in the period. Yields and amounts earned include loan fees. Nonaccrual loans have been included in interest-earning assets for purposes of these calculations.

     Unaudited  
     For the three months ended December 31,  
     2021  2020 
            Average         Average 
     Average     Yield /  Average     Yield / 
    (Dollars in thousands)Balance  Interest Cost  Balance  Interest Cost 
    Interest-earning assets:                   
    Loans$805,421  $8,930 4.43% $814,990  $8,537 4.19%
    Taxable investment securities 323,166   2,138 2.65%  290,398   1,850 2.55%
    Tax-exempt investment securities 26,759   117 1.75%  12,333   50 1.62%
    Fed funds sold and interest-earning deposits 29,750   2 0.03%  34,714   26 0.30%
    Total interest-earning assets 1,185,096   11,187 3.78%  1,152,435   10,463 3.63%
    Noninterest-earning assets:                   
    Other assets 84,608         85,463       
    Allowance for loan losses (14,083)        (12,541)      
    Net unrealized gains on available-for-sale securities 535         103       
    Total assets$1,256,156        $1,225,460       
    Interest-bearing liabilities:                   
    NOW accounts$94,178  $74 0.31% $80,335  $50 0.25%
    Money management accounts 15,489   4 0.10%  15,563   4 0.10%
    MMDA accounts 265,570   253 0.38%  242,793   310 0.51%
    Savings and club accounts 129,441   44 0.14%  103,607   26 0.10%
    Time deposits 337,054   514 0.61%  393,350   1,346 1.37%
    Subordinated loans 29,537   415 5.62%  36,098   512 5.67%
    Borrowings 65,596   154 0.94%  77,776   302 1.55%
    Total interest-bearing liabilities 936,865   1,458 0.62%  949,522   2,550 1.07%
    Noninterest-bearing liabilities:                   
    Demand deposits 199,254         167,279       
    Other liabilities 12,146         12,765       
    Total liabilities 1,148,265         1,129,566       
    Shareholders' equity 107,891         95,894       
    Total liabilities & shareholders' equity$1,256,156        $1,225,460       
    Net interest income    $9,729        $7,913   
    Net interest rate spread       3.16%        2.56%
    Net interest margin       3.28%        2.75%
    Ratio of average interest-earning assets
    to average interest-bearing liabilities    		       126.50%        121.37%


    PATHFINDER BANCORP, INC.
    FINANCIAL HIGHLIGHTS
    (Dollars and shares in thousands except per share amounts)
     
      Unaudited
    For the years ended December 31,
      2021  2020 
            Average         Average 
      Average    Yield /  Average     Yield / 
    (Dollars in thousands) Balance Interest Cost  Balance  Interest Cost 
    Interest-earning assets:                   
    Loans $833,308 $37,026 4.44% $797,099  $35,421 4.44%
    Taxable investment securities  313,392  8,576 2.74%  256,590   6,848 2.67%
    Tax-exempt investment securities  16,191  216 1.33%  8,992   159 1.77%
    Fed funds sold and                   
    interest-earning deposits  28,765  9 0.03%  36,366   79 0.22%
    Total interest-earning assets  1,191,656  45,827 3.85%  1,099,047   42,507 3.87%
    Noninterest-earning assets:                   
    Other assets  82,130        79,024       
    Allowance for loan losses  (13,992)       (10,584)      
    Net unrealized losses
    on available-for-sale securities    		  1,482        (447)      
    Total assets $1,261,276       $1,167,040       
    Interest-bearing liabilities:                   
    NOW accounts $93,950 $286 0.30% $79,338  $159 0.20%
    Money management accounts  15,916  17 0.11%  15,482   18 0.12%
    MMDA accounts  245,329  990 0.40%  211,191   1,381 0.65%
    Savings and club accounts  122,275  159 0.13%  96,381   97 0.10%
    Time deposits  366,724  3,262 0.89%  407,910   6,457 1.58%
    Subordinated loans  32,736  1,790 5.47%  20,421   1,101 5.39%
    Borrowings  79,362  1,028 1.30%  81,434   1,651 2.03%
    Total interest-bearing liabilities  956,292  7,532 0.79%  912,157   10,864 1.19%
    Noninterest-bearing liabilities:                   
    Demand deposits  189,434        148,739       
    Other liabilities  11,419        12,558       
    Total liabilities  1,157,145        1,073,454       
    Shareholders' equity  104,131        93,586       
    Total liabilities & shareholders' equity $1,261,276       $1,167,040       
    Net interest income    $38,295        $31,643   
    Net interest rate spread       3.06%        2.68%
    Net interest margin       3.21%        2.88%
    Ratio of average interest-earning assets                   
    to average interest-bearing liabilities       124.61%        120.49%
                        

    PATHFINDER BANCORP, INC.
    FINANCIAL HIGHLIGHTS
    (Dollars and shares in thousands except per share amounts)

    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 represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the years indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volume (change in volume multiplied by prior rate); (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) total increase or decrease. Changes attributable to both rate and volume have been allocated ratably. Tax-exempt securities have not been adjusted for tax equivalency.

     Unaudited  Unaudited 
     Three months ended December 31,  Twelve months ended December 31, 
     2021 vs. 2020  2021 vs. 2020 
     Increase/(Decrease) Due to  Increase/(Decrease) Due to 
            Total          Total 
            Increase          Increase 
    (In thousands)Volume  Rate (Decrease)  Volume  Rate  (Decrease) 
    Interest Income:                      
    Loans$(602) $995 $393  $1,609  $(4) $1,605 
    Taxable investment securities 215   73  288   1,550   178   1,728 
    Tax-exempt investment securities 63   4  67   103   (46)  57 
    Interest-earning deposits (3)  (21) (24)  (14)  (56)  (70)
    Total interest income (327)  1,051  724   3,248   72   3,320 
    Interest Expense:                      
    NOW accounts 10   14  24   33   94   127 
    Money management accounts (0)  0  -   -   (1)  (1)
    MMDA accounts 154   (211) (57)  198   (589)  (391)
    Savings and club accounts 7   11  18   30   32   62 
    Time deposits (171)  (661) (832)  (598)  (2,597)  (3,195)
    Subordinated loans (92)  (5) (97)  673   16   689 
    Borrowings (42)  (106) (148)  (41)  (582)  (623)
    Total interest expense (134)  (958) (1,092)  295   (3,627)  (3,332)
    Net change in net interest income$(193) $2,009 $1,816  $2,953  $3,699  $6,652 

    The above information is preliminary and based on the Company's data available at the time of presentation.

    Investor/Media Contacts

    Thomas W. Schneider, President, CEO
    Walter F. Rusnak, Senior Vice President, CFO
    Telephone: (315) 343-0057


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