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PB

Pathfinder Bancorp, Inc. (PBHC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 GAAP diluted EPS was less than $0.01 due to a $3.1M pre-tax lower-of-cost-or-market adjustment tied to the sale of $9.3M in nonperforming/classified loans; core operating metrics (NIM, efficiency) remained solid despite the clean-up .
  • Net interest income was $10.8M and NIM was 3.11%, down 20 bps sequentially (Q1 included ~$347k recovered interest/prepayment fees), but up 33 bps YoY versus 2.78% in Q2 2024 .
  • Asset quality improved materially: nonperforming loans fell to $11.7M (1.28% of loans) from $13.2M (1.45%) in Q1 and $24.5M (2.76%) a year ago, reflecting the targeted loan sale and elevated charge-offs taken this quarter .
  • Efficiency ratio improved to 65.66% (vs 67.19% in Q1 and 74.36% YoY), and pre-tax pre-provision income held at $4.2M, underscoring cost discipline and healthy core earnings power .
  • Near-term stock catalyst: continued credit risk mitigation progress (NPL ratio trajectory), core deposit growth/mix improvements, and normalization of FDIC assessments ($220–$230k per quarter expected in H2’25) could reset risk perception as one-time losses roll off .

What Went Well and What Went Wrong

What Went Well

  • Asset quality cleanup: sale of $9.3M of nonperforming/classified loans tied to one local commercial relationship, reducing NPLs to $11.7M (1.28% of loans) by quarter-end; CEO: “proactive credit risk mitigation continues to be implemented” .
  • Core deposit strength: total deposits were $1.22B with core deposits at 78.47% (up from 67.98% YoY), supporting lower-cost funding; management remains focused on deepening in-market relationships .
  • Operating efficiency: efficiency ratio improved to 65.66% and PTPP income sustained at $4.2M despite the noninterest income hit, highlighting cost control and underlying core profitability .

What Went Wrong

  • One-time noninterest income impact: $3.1M LOCOM adjustment (after-tax $2.5M; ~$0.40 per diluted share) drove negative noninterest income of $(1.5)M and near-zero EPS .
  • Elevated credit cost: net charge-offs were $2.6M (annualized 1.14% of average loans) and provision expense increased to $1.2M, reflecting the credit clean-up actions .
  • Sequential NIM compression: NIM fell 20 bps to 3.11% on lower average loan yields/higher interest-bearing deposit costs and the absence of Q1’s ~$347k recovered interest/prepayment fee benefit .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenue (non-GAAP, $USD Thousands)$10,635 $12,551 $12,277
Net Interest Income ($USD Thousands)$9,500 $11,411 $10,814
Net Income ($USD Thousands)$2,000 $2,974 $31
Diluted EPS ($)$0.32 $0.47 (updated) < $0.01
Net Interest Margin (%)2.78% 3.31% 3.11%
Efficiency Ratio (%)74.36% 67.19% 65.66%
Pre-tax, Pre-provision Income ($USD Thousands)$2,767 $4,183 $4,216

Segment and Balance Sheet Highlights

MetricQ2 2024Q1 2025Q2 2025
Total Loans ($USD Millions)$888.3 $912.2 $909.7
Commercial Loans ($USD Millions)$527.2 $542.7 $549.1
Consumer & Residential Loans ($USD Millions)–$371.0 $362.1
Total Deposits ($USD Billions)$1.10 $1.26 $1.22
Core Deposits (% of Total)67.98% 78.31% 78.47%

Asset Quality and Credit Costs

KPIQ2 2024Q1 2025Q2 2025
Nonperforming Loans ($USD Millions)$24.5 $13.2 $11.7
NPL Ratio (% of Loans)2.76% 1.45% 1.28%
Net Charge-offs ($USD Millions)$0.066 $0.340 $2.6
Provision for Credit Losses ($USD Thousands)$290 $457 $1,197
ACL ($USD Millions)$16.9 $17.4 $16.0
ACL / Loans (%)1.90% 1.91% 1.76%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FDIC Assessments ($USD Thousands per quarter)H2 2025Not specified$220–$230 per quarter Clarified/normalized range
Cash Dividend per Share ($)Q2 2025$0.10$0.10 payable Aug 8, 2025; record Jul 18, 2025 Maintained

No formal revenue, margin, OpEx, OI&E, tax rate, or segment-specific guidance was provided in the Q2 release .

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was available; themes below reflect press release narratives.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Credit risk mitigationQ4: Portfolio review, elevated provision to replenish reserves; Q1: continued NPL reduction Sale of $9.3M NPL/classified loans; LOCOM adjustment; further NPL ratio improvement Improving asset quality via proactive actions
Core deposit franchiseQ4/Q1: mix shift to core deposits, lower-cost funding Core deposits 78.47% of total; ongoing in-market growth focus Strengthening funding base
NIM trajectoryQ4: 3.15% (Q3 boosted by catch-up interest); Q1: 3.31% with recovered interest/prepayments 3.11% as transient Q1 benefits rolled off; modest deposit cost pressure Near-term compression, YoY improvement
Operating efficiencyQ4/Q1: efficiency ratio ~69–67%, cost discipline Efficiency ratio 65.66%; PTPP sustained at $4.2M Improving
FDIC assessmentsQ4/Q1: regular accruals No FDIC expense in Q2 due to over-accrual; normalized guidance for H2 Temporary benefit, normalization ahead
Syracuse branch integrationQ4/Q1: branch acquisition in July 2024 supporting deposits/operations Ongoing ops; incremental costs noted within noninterest expense Integrated contribution with steady costs

Management Commentary

  • “Proactive credit risk mitigation continues to be implemented… elevated charge offs and the sale of nonperforming and classified commercial loans associated with a single in-market commercial relationship” — James A. Dowd, President & CEO .
  • “Growing our Central New York core deposit franchise remains an ongoing area of focus… valuable source of low-cost funding for local, relationship-based lending” — James A. Dowd .
  • First-order rationale for NIM change: lower average loan yields, higher interest-bearing deposit costs, and absence of Q1 recovered interest/prepayment fee benefit .

Q&A Highlights

No Q2 2025 earnings call transcript was available; therefore, Q&A highlights and any guidance clarifications are not available for this quarter [List: earnings-call-transcript returned 0].

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2025 EPS and revenue appears unavailable; S&P data returned actuals without consensus estimates or estimate counts for EPS/revenue for Q1 and Q2 2025 (Revenue actuals only).*
  • Implication: Estimate-driven “beat/miss” framing is not possible; we expect sell-side models (if any) to adjust for the one-time LOCOM adjustment and elevated credit costs, emphasizing PTPP and core NIM trajectory going forward.
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core earnings intact: PTPP of $4.2M and an improved efficiency ratio (65.66%) indicate resilient underlying profitability despite one-time charges .
  • Credit clean-up is progressing: NPLs down to 1.28% of loans, with proactive actions (loan sale, charge-offs) reducing tail risk and potentially lowering required reserve levels over time .
  • Funding mix improving: Core deposits at 78.47% of total support NIM stability; watch deposit cost trends given modest sequential increases .
  • Near-term optics: Reported EPS < $0.01 due to noninterest income hit; as one-offs fade, underlying metrics (NIM, efficiency) should reassert valuation relevance .
  • Monitor credit costs: Provision and NCOs spiked with the clean-up; further normalization would be constructive for quarterly earnings cadence .
  • Operating discipline: Continued cost control and branch integration support efficiency; FDIC assessment normalization ($220–$230k per quarter) introduces a known expense headwind in H2 .
  • Catalysts: Continued decline in NPLs/NCOs, stability in NIM with core deposit growth, and confirmation that most credit clean-up is behind the company could re-rate risk perception.