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PB

Pathfinder Bancorp, Inc. (PBHC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a return to positive earnings with net income of $0.626M and diluted EPS of $0.10, up from <$0.01 in Q2 and a loss in Q3 2024, driven by NIM expansion (+23 bps q/q) and disciplined liability pricing, partially offset by higher provision expense tied to two large CRE relationships .
  • Net interest income rose 7.3% q/q to $11.6M as average deposit costs declined and prepayment penalties added ~7 bps to NIM; noninterest income normalized to $1.5M vs a Q2 LOCOM loss, while efficiency ratio rose to 68.77% (non-GAAP) on higher operating costs .
  • Asset quality volatility re-emerged: NPLs increased to $23.3M (2.59% of loans) and provision rose to $3.5M; ACL strengthened to $18.7M (2.08% of loans), positioning reserves ahead of portfolio review completion by year-end .
  • Liquidity and funding remained solid: deposits grew to $1.23B with core deposits at 78.37%; FHLB capacity increased to $138.3M, and a $0.10 dividend was maintained .
  • Catalyst setup: resolution of legacy credit exposures and completion of the portfolio review, sustained NIM resilience with core funding growth, and clarity on FDIC assessment run-rate could drive sentiment in the near term .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin expanded to 3.34% (+23 bps q/q) on lower deposit costs and prepayment fees; net interest income increased to $11.6M (+7.3% q/q) .
    • Noninterest income recovered to $1.5M from a Q2 loss tied to the LOCOM HFS adjustment; debit card fees and service charges improved sequentially .
    • Management emphasized a disciplined funding strategy and core deposit growth; “Third quarter results also underscore the benefits of our disciplined approach to balance sheet management…stable, relationship-driven source of funding” – CEO James Dowd .

  • What Went Wrong

    • Asset quality weakened as two local CRE relationships moved to nonperforming status; NPLs rose to $23.3M (2.59% of loans) and ACL/NPL coverage fell to 80.04% .
    • Provision for credit losses spiked to $3.5M (vs $1.2M in Q2), pressuring bottom-line despite PTPP stability .
    • Efficiency ratio deteriorated to 68.77% on higher salaries/benefits and occupancy, including timing effects and reduced loan origination deferrals .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net Income ($USD Millions)$2.974 $0.031 $0.626
Diluted EPS ($)$0.47 (updated) <$0.01 $0.10
Net Interest Income ($USD Millions)$11.411 $10.814 $11.600
Noninterest (Loss)/Income ($USD Millions)$1.197 $(1.518) $1.503
Provision for Credit Losses ($USD Millions)$0.457 $1.197 $3.495
Net Interest Margin (%)3.31 3.11 3.34
Efficiency Ratio (%) (non-GAAP)66.84 65.66 68.77
PTPP Net Income ($USD Millions) (non-GAAP)$4.118 $4.216 $4.058
Revenue ($USD Millions) (non-GAAP)$12.551 $12.277 $12.994

KPIs and Balance Sheet

MetricQ1 2025Q2 2025Q3 2025
Total Assets ($USD Billions)$1.495 $1.505 $1.472
Loans ($USD Millions)$912.150 $909.723 $898.520
Deposits ($USD Billions)$1.264 $1.222 $1.225
Core Deposits / Deposits (%)78.31 78.47 78.37
Loans / Deposits (%)72.14 74.45 73.34
ACL ($USD Millions)$17.407 $15.983 $18.654
ACL / Loans (%)1.91 1.76 2.08

Asset Quality Detail

MetricQ1 2025Q2 2025Q3 2025
Nonperforming Loans ($USD Millions)$13.232 $11.689 $23.305
NPL / Loans (%)1.45 1.28 2.59
Net Charge-offs ($USD Millions)$0.340 $2.597 $0.670
ACL / NPL Coverage (%)131.55 136.74 80.04

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ3 2025$0.10 (Q2 2025 declaration) $0.10 (payable Nov 7, 2025) Maintained
FDIC assessment expense (run-rate)H2 2025~$220k–$230k per quarter expected $171k recorded in Q3; normalization anticipated Below guided run-rate in Q3; trajectory maintained
Loan portfolio review2025—Comprehensive review of loans ≥$0.5M expected complete by year-end 2025 New initiative timeline

Note: Non-GAAP metrics are defined and reconciled in the release (efficiency ratio, PTPP, revenue) .

Earnings Call Themes & Trends

No public earnings call transcript was available; themes reflect press releases across the last three quarters.

TopicQ-2 (Q2 2025)Q-1 (Q1 2025)Current (Q3 2025)Trend
Credit risk mitigationSold $9.3M NPLs at LOCOM, provision $1.2M; NPLs improved to 1.28% NPLs improved to 1.45%; provision $0.457M NPLs rose to 2.59%; provision $3.5M; portfolio review launched Rising volatility in Q3; proactive actions ongoing
Core deposits and pricingCore deposits 78.47%; deliberate pricing lowered cost Core deposits 78.31%; funding mix improved Core deposits 78.37%; continued growth and favorable pricing Stable, supportive to NIM
NIM and balance sheetNIM 3.11%; q/q down on lower loan yields NIM 3.31%; expanded on lower funding costs NIM 3.34%; +23 bps q/q on cost declines and prepayment income Re-acceleration in Q3
Operating expense disciplineEfficiency 65.66%; no FDIC in Q2 Efficiency 66.84%; improved Efficiency 68.77%; salaries/occupancy up; FDIC $171k Mixed; Q3 uptick
Technology modernizationHigher recurring data processing costs from upgrades ATM processing timing effects Lower check/ATM processing; upgrades continued Ongoing investments
Liquidity & funding capacityFHLB capacity $124.5M; unused lines $46.5M FHLB capacity $133.3M; unused lines $46.6M FHLB capacity $138.3M; unused lines $53.3M Strengthening

Management Commentary

  • “Recent asset quality related to certain legacy loans has resulted in unacceptable levels of credit volatility…we believe [the portfolio review] will…reduce the volatility of credit costs in 2026 and beyond, clearing a path for consistent and sustainable improvement in earnings” – James A. Dowd, President & CEO .
  • “Third quarter results also underscore the benefits of our disciplined approach to balance sheet management…stable, relationship-driven source of funding” – James A. Dowd .
  • “Proactive credit risk mitigation…sale of nonperforming and classified commercial loans…as part of our ongoing efforts to enhance…asset quality and resilience” – James A. Dowd (Q2 release) .
  • “Focus on disciplined loan and deposit pricing…expand net interest margin…optimiz[ing] non-interest expenses” – James A. Dowd (Q1 release) .

Q&A Highlights

  • No public earnings call transcript or Q&A was available for Q3 2025; management’s disclosures are reflected in the 8-K and press releases .

Estimates Context

  • S&P Global consensus estimates for Q3 2025 EPS and revenue were unavailable for PBHC; coverage appears limited for this microcap bank. Where comparisons to consensus are not shown, interpret results versus prior periods and management commentary instead.
  • Revenue actuals reported by SPGI for Q3 2025 were $9.61M*, but Company’s non-GAAP “total revenue” was $12.99M (see reconciliation); definitions differ for banks, so consensus comparisons are not meaningful without standardized “net revenue” series .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • NIM resilience and core deposit momentum underpin earnings power; disciplined pricing reduced funding costs, lifting NIM to 3.34% and net interest income to $11.6M .
  • Credit cost volatility is the swing factor: provision climbed to $3.5M and NPLs rose to 2.59%; management’s portfolio review and tightened underwriting are key to normalizing credit in 2026+ .
  • Noninterest income normalized after the Q2 LOCOM loss, removing a major drag; watch for stability in interchange/service fees and BOLI trends .
  • Efficiency ticked higher on salaries/occupancy; further operating discipline and loan production recovery could improve the ratio (non-GAAP) over time .
  • Liquidity/FHLB capacity expanded ($138.3M) with a stable $0.10 dividend; the funding stack supports risk management and opportunistic repositioning .
  • Near-term trading: headline credit metrics (NPLs/provision updates) and NIM trajectory are likely to drive reaction; completion of the loan review is a potential de-risking catalyst .
  • Medium-term thesis: community banking model with strengthening core deposits and capital ratios; execution on credit containment and operating efficiency could re-rate earnings quality .