Pathfinder Bancorp, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net income of $2.1 million ($0.32 per diluted share) for Q3 2026, compared to $2.7 million ($0.42 per diluted share) in Q2 2026 and $626,000 ($0.10 per diluted share) in Q3 2025.
• Net interest income was $10.7 million in Q3 2026, up 1.7% from $10.5 million in Q2 2026, but down 7.7% from $11.6 million in Q3 2025.
• Net interest margin (NIM) was 3.07% in Q3 2026, down 1 basis point from 3.08% in Q2 2026 and down 27 basis points from 3.34% in Q3 2025.
• Noninterest expense totaled $9.4 million in Q3 2026, up from $8.7 million in Q2 2026 and $8.9 million in Q3 2025.
• The efficiency ratio was 78.13% in Q3 2026, compared to 74.26% in Q2 2026 and 68.78% in Q3 2025.
• Pre-tax, pre-provision (PTPP) net income was $2.6 million in Q3 2026, down from $3.0 million in Q2 2026 and $4.1 million in Q3 2025.
• Provision for credit loss expense was $231,000 in Q3 2026, compared to a benefit of $155,000 in Q2 2026 and an expense of $3.5 million in Q3 2025.
• Net charge-offs (NCOs) were $4.3 million in Q3 2026, driven by commercial individually analyzed loans (IALs), compared to $1.9 million in Q2 2026 and $670,000 in Q3 2025.
• Total assets were $1.49 billion as of September 30, 2026, compared to $1.49 billion on June 30, 2026, and $1.47 billion on September 30, 2025.
• Total loans were $873.0 million at September 30, 2026, down from $889.0 million at June 30, 2026, and $898.5 million at September 30, 2025.
• Total deposits were $1.16 billion at September 30, 2026, down from $1.17 billion at June 30, 2026, and $1.23 billion at September 30, 2025.
• Core deposits were $957.1 million (82.6% of total deposits) at September 30, 2026, compared to $961.6 million at June 30, 2026, and $960.1 million at September 30, 2025.
• Allowance for credit losses (ACL) was $22.7 million (2.60% of total loans) at September 30, 2026, down from $26.9 million (3.03%) at June 30, 2026, and up from $18.7 million (2.08%) at September 30, 2025.
• Nonperforming loans (NPLs) were $30.3 million (3.47% of total loans) at September 30, 2026, compared to $35.7 million (4.02%) at June 30, 2026, and $23.3 million (2.59%) at September 30, 2025.
• Shareholders' equity was $118.8 million at September 30, 2026, down $7.0 million from June 30, 2026.
• Average cost of total deposits improved to 2.04% in Q3 2026, down 3 basis points from Q2 2026 and 24 basis points from Q3 2025.

Guidance and Future Outlook:

• Management expects new commercial real estate loan production from recently hired seasoned commercial banking talent to begin funding in the fourth quarter.
• The Company anticipates a rising rate environment and believes its market position and pricing discipline provide a solid foundation for building the core deposit base.
• Management views the elevated efficiency ratio in the first nine months of 2026 as temporary, attributing it to lower revenue compared to the prior-year period.

Business Segments and Product Lines:

• Commercial loans totaled $531.6 million (60.9% of total loans) at September 30, 2026, down from $544.6 million at June 30, 2026, and $543.7 million at September 30, 2025.
• Consumer and residential loans totaled $342.1 million at September 30, 2026, down $3.1 million from the prior quarter.
• Investment securities totaled $465.6 million at September 30, 2026, up from $453.7 million at June 30, 2026 (calculated from total assets and loan changes), and up from $437.0 million at September 30, 2025.
• Borrowings grew to $155.5 million at September 30, 2026, increasing $22.2 million during the quarter to fund AFS securities purchases.
• Noninterest income was $1.4 million in Q3 2026, up from $1.2 million in Q2 2026, driven by increases in debit card interchange fees, service charges, and net realized gains on investment securities.

Market and Competitive Landscape:

• Pathfinder maintained its leading deposit market share position among all local banks serving Oswego and Onondaga counties combined.
• The Company noted regional economic momentum, citing construction on the largest semiconductor manufacturing facility in the United States near two existing branches.
• New York State and Micron Technology announced a $500 million injection into Central New York housing, education, workforce development, and community investments through the Green CHIPS Community Investment Fund.

Risks and Challenges:

• Net charge-offs were driven by commercial individually analyzed loans (IALs), though fully covered by previously established specific reserves.
• Specific reserves represented 57.4% of the ACL at the end of Q3 2026.
• Accumulated other comprehensive loss (AOCL) increased by $8.7 million during the quarter due to the decline in fair value of AFS mortgage-backed securities in a rising interest rate environment.
• The Company faces upward pressure on deposit costs expected industry-wide.
• NPL levels may fluctuate near term as IALs progress through resolution activities.

Management Commentary and Tone:

• CEO James Dowd stated that results demonstrate continued execution of the strategy for strengthening the relationship-focused community bank.
• Management highlighted the orderly resolution of previously identified commercial credits and the introduction of a new pipeline of commercial real estate loan production.
• Dowd emphasized the focus on the core deposit franchise, noting six consecutive quarters of reductions in the average cost of total deposits and a core deposit ratio over 82%.
• Management expressed confidence that the Company's market position, customer relationships, and pricing discipline provide a solid foundation for future growth.

Other Key Points:

• The Board of Directors declared a cash dividend of $0.10 per share on September 28, 2026, payable on November 6, 2026, to shareholders registered by October 16, 2026.
• The closing stock price as of September 30, 2026, was $16.88 per share, resulting in an annualized dividend yield of 2.37%.
• The Company utilized borrowings to fund purchases of AFS securities at rates below wholesale funding alternatives, including brokered deposits.
• The Company intentionally ran off higher-cost time and brokered deposits, as well as experienced municipal deposit seasonality, to improve the cost of funds.
• The ACL reflects a $11.4 million risk-based reserve build recorded at the end of 2025 to absorb future loss resolution activity related to commercial IALs.