Pathfinder Bancorp, Inc.

Previous wording

At March 31, 2025, the Company and subsidiaries had total consolidated assets of $1.50 billion, total consolidated liabilities of $1.37 billion and shareholders' equity of $124.9 million.

Current wording

At June 30, 2025, the Company and subsidiaries had total consolidated assets of $1.51 billion, total consolidated liabilities of $1.38 billion and shareholders' equity of $124.4 million.

Previous wording

The following discussion reviews the Company's financial condition at March 31, 2025 and the results of operations for the three month periods ended March 31, 2025 and 2024. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any other period.

Current wording

The following discussion reviews the Company's financial condition at June 30, 2025 and the results of operations for the three and six month periods ended June 30, 2025 and 2024. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any other period.

Previous wording

This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. These forward-looking statements concern the financial condition, results of operations, plans, objectives, future performance and business of Pathfinder Bancorp, Inc. and its subsidiary, including statements preceded by, followed by or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions may be less favorable than expected; (2) competitive pressures among depository institutions may increase significantly; (3) changes in the interest rate environment may reduce interest margins; (4) loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (5) the impact of a pandemic or other health crises and the government's response to such pandemic or crises on our operations as well as those of our customers and on the economy generally and in our market area specifically; (6) political developments, tariffs, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (7) legislative or regulatory changes or actions may adversely affect the businesses in which Pathfinder Bancorp, Inc. is engaged; (8) changes and trends in the securities markets may adversely impact Pathfinder Bancorp, Inc.; (9) a delayed or incomplete resolution of regulatory issues could adversely impact our planning; (10) difficulties in integrating any businesses that we may acquire, including our acquisition of the East Syracuse branch of Berkshire Bank, which may increase our expenses and delay the achievement of any benefits that we may expect from such acquisitions; (11) the impact of reputation risk created by the developments discussed above on such matters as business generation and retention, funding

Current wording

This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. These forward-looking statements concern the financial condition, results of operations, plans, objectives, future performance and business of Pathfinder Bancorp, Inc. and its subsidiaries, including statements preceded by, followed by or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) general economic conditions may be less favorable than expected; (2) competitive pressures among depository institutions may increase significantly; (3) changes in the interest rate environment may reduce interest margins; (4) loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (5) the impact of a pandemic or other health crises and the government's response to such pandemic or crises on our operations as well as those of our customers and on the economy generally and in our market area specifically; (6) political developments, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (7) legislative or regulatory changes or actions may adversely affect the businesses in which Pathfinder Bancorp, Inc. is engaged; (8) changes and trends in the securities markets may adversely impact Pathfinder Bancorp, Inc.; (9) a delayed or incomplete resolution of regulatory issues could adversely impact our planning; (10) difficulties in integrating any

Previous wording

The Company's consolidated quarterly financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated quarterly financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different from originally reported. Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by unaffiliated third-party sources, when available. When third party information is not available, valuation adjustments are estimated in good faith by management.

Current wording

The Company's consolidated quarterly financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated quarterly financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by unaffiliated third-party sources, when available. When third party information is not available, valuation adjustments are estimated in good faith by management.

Previous wording

The measurement of individually evaluated loans is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses as compared to the loan carrying value. For all other loans and leases, the Company uses the general allocation methodology that establishes an allowance to estimate the lifetime incurred loss for each risk-rating category. The measurement of individually evaluated loans is generally based upon the present value of future cash flows discounted at the historical effective interest rate, except that all collateral-dependent loans are measured based on the fair value of the collateral, less costs to sell. At March 31, 2025, the Bank’s position in individually evaluated loans consisted of 44 loans totaling $15.8 million. Of these loans, 14 loans, totaling $923,000, were valued using the present value of future cash flows method; and 30 loans, totaling $14.9 million, were valued based on a collateral analysis. For all other loans, the Company uses the general allocation methodology that establishes an allowance to estimate the lifetime incurred loss for each risk-rating category.

Current wording

The measurement of individually evaluated loans is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses as compared to the loan carrying value. For all other loans and leases, the Company uses the general allocation methodology that establishes an allowance to estimate the lifetime incurred loss for each risk-rating category. The measurement of individually evaluated loans is generally based upon the present value of future cash flows discounted at the historical effective interest rate, except that all collateral-dependent loans are measured based on the fair value of the collateral, less costs to sell. At June 30, 2025, the Bank’s position in individually evaluated loans consisted of 30 loans totaling $12.1

Previous wording

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 March 31, 2025, the Bank held $542.7 million in commercial real estate and commercial & industrial loans (collectively, commercial loans) representing 59.0% of the Bank’s entire loan portfolio. The Bank allocated $10.8 million to the ACL for these loans, including $4.4 million derived from the use of qualitative factors in the calculation. Given the concentration of ACL allocation to the total commercial loan portfolio and the significant judgments made by management in deriving the qualitative loss factors, management considers the impact that changes in judgments could have on the ACL. 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 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 March 31, 2025 in the final recorded estimation of the ACL on loans recognized on the Statements of Financial Condition.

Current wording

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 June 30, 2025, the Bank held $549.1 million in commercial real estate and commercial & industrial loans (collectively, commercial loans) representing 60.4% of the Bank’s entire loan portfolio. The Bank allocated $9.8 million to the ACL for these loans, including $3.7 million derived from the use of qualitative factors in the calculation. Given the concentration of ACL allocation to the total commercial loan portfolio and the significant judgments made by management in deriving the qualitative loss factors, management considers the impact that changes in judgments could have on the ACL. The ACL could increase (or decrease) by approximately $925,000, assuming a 25% negative (or positive) change within the group of qualitative factors used to determine the ACL for commercial loans. 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 June 30, 2025 in the final recorded estimation of the ACL on loans recognized on the Statements of Financial Condition.

Previous wording

The Company carries all of its AFS investments at fair value with any unrealized gains or losses reported, net of tax, as an adjustment to shareholders' equity and included in accumulated other comprehensive income (loss), except for the credit-related portion of debt securities’ credit losses securities which are charged to earnings. The Company's ability to fully realize the value of its investments in various securities, including corporate debt securities, is dependent on the underlying creditworthiness of the issuing organization. In evaluating the debt securities portfolio, for both AFS and HTM securities for credit losses, management considers (1) if we intend to sell the security; (2) if it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) if the present value of expected cash flows is insufficient to recover the entire amortized cost basis.

Current wording

The Company carries all of its AFS investments at fair value with any unrealized gains or losses reported, net of tax, as an adjustment to shareholders' equity and included in accumulated other comprehensive income (loss), except for the credit-related portion of debt securities’ credit losses securities which are charged to earnings. The Company's ability to fully realize the value of its investments in various securities, including corporate debt securities, is dependent on the underlying

Previous wording

Management performs an annual evaluation of our goodwill for possible impairment at each of our reporting units. Based on the December 31, 2024 evaluation, management has determined that the carrying value of goodwill was not impaired as of that date. Management will continuously evaluate all relevant economic and operational factors potentially affecting the Bank or the fair value of its assets, including goodwill. Should future economic consequences require a significant and sustained change in the operations of the Bank, re-evaluations of the Bank’s goodwill valuation will be conducted on a more frequent basis.

Current wording

Management performs an annual evaluation of our goodwill for possible impairment at each of our reporting units. Management has determined that the carrying value of goodwill was not impaired as of June 30, 2025. Management will continuously evaluate all relevant economic and operational factors potentially affecting the Bank or the fair value of its assets, including goodwill. Should future economic consequences require a significant and sustained change in the operations of the Bank, re-evaluations of the Bank’s goodwill valuation will be conducted on a more frequent basis.

Previous wording

On March 31, 2025, the Company announced that its Board of Directors 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 March 31, 2025. The dividends are payable to all shareholders of record on April 18, 2025 and will be paid on May 9, 2025.

Current wording

On June 30, 2025, the Company announced that its Board of Directors 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 June 30, 2025. The dividends were payable to all shareholders of record on July 18, 2025 and were paid on August 8, 2025.

Previous wording

First quarter 2025 noninterest income totaled $1.2 million and no longer includes contributions from the insurance agency business sold in October 2024. First quarter 2024 noninterest income totaled $1.7 million, including $397,000 in insurance revenue.

Current wording

Noninterest income totaled negative $1.5 million in the second quarter of 2025, reflecting the aforementioned $3.1 million LOCOM HFS adjustment, and no longer includes contributions from the insurance agency business sold in October 2024. Noninterest income was $1.2 million, including $260,000 in insurance revenue, during the second quarter of 2024.

Previous wording

Total noninterest expense for the first quarter of 2025 was $8.4 million, an increase of $727,000, or 9.4%, compared to the same three month period in 2024. Salaries and benefits were $4.5 million in the first quarter of 2025, increasing $121,000 from the year-ago same period. The increase from the first quarter of 2024 was primarily attributed to a $95,000 increase in stock-based compensation and $123,000 in other salary and benefits expenses associated with personnel in the East Syracuse branch acquired in July 2024.

Current wording

Salaries and benefits were $4.5 million in the second quarter of 2025, an increase of $126,000 from the year-ago period. The increase from the second quarter of 2024 was primarily attributed to the July 2024 East Syracuse branch acquisition, which had $116,000 of total salary and benefit expenses in the second quarter of 2025. Excluding the East Syracuse branch, total salaries and benefits increased $10,000 from the year-ago period. This increase from the second quarter of 2024 was primarily attributed to a $183,000 increase in stock-based compensation, partially offset by a $106,000 decrease in employee benefits, a $51,000 decrease in salaries and benefits expenses, and a $16,000 decrease in director compensation.

Previous wording

Building and occupancy was $1.3 million in the first quarter of 2025, increasing $531,000 from the year-ago quarter. The increase from the first quarter of last year was primarily due to ongoing facilities-related costs associated with operating the East Syracuse branch acquired in July 2024.

Current wording

Building and occupancy was $1.2 million in the second quarter of 2025, increasing $316,000 from the year-ago quarter. Data processing expense was $667,000 in the second quarter of 2025, increasing $117,000 from the year-ago quarter. Both of these noninterest expense increases were primarily attributed to ongoing facilities-related costs and operations associated with operating the East Syracuse branch acquired in July 2024.

Previous wording

Annualized noninterest expense represented 2.33% of average assets in the first quarter of 2025, compared to 2.16% in the year-ago period, including costs associated with transactions of the divested insurance agency business. The efficiency ratio improved to 66.84% in the first quarter of 2025 as revenue growth outpaced increases in noninterest expense, compared to 68.29% in the year-ago period. The efficiency ratio, which is not a financial metric under GAAP, is a measure that the Company believes is helpful to understanding its level of non-interest expense as a percentage of total revenue.

Current wording

For the second quarter of 2025, annualized noninterest expense represented 2.18% of average assets in the second quarter of 2025, compared to 2.19% in the year-ago period. The efficiency ratio was 65.66%, for the second quarter of 2025, compared to 74.36% in the year-ago period. The efficiency ratio, which is not a financial metric under GAAP, is a measure that the Company believes is helpful to understanding its level of non-interest expense as a percentage of total revenue.

Previous wording

The following table sets forth information concerning average interest-earning assets and interest-bearing liabilities and the average yields and rates thereon for the periods indicated. 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. Nonaccrual loans have been included in interest-earning assets for purposes of these calculations.

Current wording

The following tables set forth information concerning average interest-earning assets and interest-bearing liabilities and the average yields and rates thereon for the periods indicated. Interest income and resultant yield information in the tables have 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. Nonaccrual loans have been included in interest-earning assets for purposes of these calculations.

Previous wording

The Company’s deposit base is drawn from eleven full-service branches and one motor bank in its market area. The deposit base consists of demand deposits, money management and money market deposit accounts, savings, and time deposits. Total deposits increased by $60.0 million, or 5.0% from December 31, 2024. The increase in consumer and business deposits during the quarter ended March 31, 2025, reflected the Bank’s increased market penetration among both non-business and business customers. For the quarter ended March 31, 2025, 78.3% of the Company's deposit base of $1.1 billion consisted of core deposits. Core deposits, which exclude brokered deposits and certificates of deposit of $250,000 or more, are considered to be more stable and generally provide the Company with a lower cost of funds than brokered and time 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.

Current wording

At June 30, 2025, 78.5% of the Company's deposit base of $1.22 billion consisted of core deposits. Core deposits, which exclude brokered deposits and certificates of deposit of $250,000 or more, are considered to be more stable and generally provide the Company with a lower cost of funds than time deposits of $250,000 or more. 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.

Previous wording

We establish a provision for credit losses, which is charged to operations, at a level management believes is appropriate to absorb lifetime credit losses in the loan portfolio. In evaluating the level of the allowance for credit losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. The provision for credit losses represents management’s estimate of the amount necessary to maintain the allowance for credit losses at an adequate level.

Current wording

We establish a provision for credit losses, which is charged to operations, at a level management believes is appropriate to absorb lifetime credit losses in the loan portfolio. In evaluating the level of the allowance for credit losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more

Previous wording

The Company recorded $457,000 in provision for credit losses for the three month period ended March 31, 2025, as compared to $726,000 for the three month period ended March 31, 2024. The provisioning in the first quarter of 2025 and 2024 reflects management’s determination of the appropriate level of additions to reserves, the composition of the loan portfolio, changes in quantifiable econometric data statistically correlated to historical charge-off rates, subjective qualitative assessments of changes in a broad array of factors including changes to underwriting criteria, loan staffing and local market conditions and changes in the levels of delinquent and nonaccrual loans. This represents a $269,000 decrease in provision for credit losses in the first quarter of 2025, as compared to the same period in 2024. The first quarter PCL reflects an addition to reserves considering loan growth and asset quality metrics. The Bank's credit sensitive portfolios continue to be carefully monitored, and the Bank will consistently apply its loan classification and reserve building methodologies to the analysis of these portfolios. Please refer to the asset quality section below for a further discussion of asset quality as it relates to the allowance for credit losses.

Current wording

The Company recorded $1.2 million in provision for credit losses for the three month period ended June 30, 2025, as compared to $290,000 for the three month period ended June 30, 2024. The provisioning in the second quarter of 2025 and 2024 reflects management’s determination of the appropriate level of additions to reserves, the composition of the loan portfolio, changes in quantifiable econometric data statistically correlated to historical charge-off rates, subjective qualitative assessments of changes in a broad array of factors including changes to underwriting criteria, loan staffing and local market conditions, and changes in the levels of delinquent and nonaccrual loans. This represents a $907,000 increase in provision for credit losses in the second quarter of 2025, as compared to the same period in 2024. This increase can be primarily attributed to charge offs of $2.6 million in the quarter, partially offset by reductions related to quantitative and qualitative factors in the Company's reserve model. The Bank's credit sensitive portfolios continue to be carefully monitored, and the Bank will consistently apply its loan classification and reserve building methodologies to the analysis of these portfolios. Please refer to the asset quality section below for a further discussion of asset quality as it relates to the allowance for credit losses.

Previous wording

The Company measures delinquency based on the amount of past due loans as a percentage of total loans. The ratio of delinquent loans to total loans decreased to 3.1% at March 31, 2025 as compared to 3.8% at December 31, 2024. Delinquent loans (numerator) decreased $7.1 million while total loan balances (denominator) decreased $6.8 million at March 31, 2025, as compared to December 31, 2024. The decrease in past due loans between these two periods was driven by an $8.9 million decrease in loans delinquent 90 days and over, and a decrease of $297,000 in loans delinquent 60-89 days, partially offset by an increase of $2.1 million in loans delinquent 30-59 days.

Current wording

The Company measures delinquency based on the amount of past due loans (defined as loans equal to or greater than 30 days past due) as a percentage of total loans. The ratio of delinquent loans to total loans was 4.9%, 3.1% and 3.8% at June 30, 2025, March 31, 2025 and December 31, 2024, respectively. Delinquent loans (numerator) decreased $7.1 million from December 31, 2024 to March 31, 2025, but subsequently increased by $16.4 million at June 30, 2025. Total loan balances (denominator) decreased $6.8 million and $2.5 million at March 31, 2025 and June 30 2025, respectively. The increase in delinquent loans from March 31, 2025 to June 30, 2025 was driven by loans delinquent 30-59 days and loans delinquent 60-89 days, which increased by $13.3 million and $4.6 million, respectively, partially offset by a decrease of $1.5 million in loans delinquent 90 days and over.

Previous wording

The Company's noninterest income is primarily comprised of fees on deposit account balances and transactions, loan servicing, commissions, including insurance agency commissions, and net gains on sales of securities, loans, and foreclosed real estate.

Current wording

The Company's noninterest income is primarily comprised of fees on deposit account balances and transactions, loan servicing, commissions, and net gains on sales of securities, loans, and foreclosed real estate.

Previous wording

Income tax expense increased $212,000 to $744,000, with an effective tax rate of 20.0%, for the quarter ended March 31, 2025, as compared to $532,000 with an effective tax rate of 19.7% for the same three month period in 2024. The increase in income tax expense for the quarter ended March 31, 2025, as compared to the same quarter in 2024, was primarily driven by an increase of $1.0 million in income before taxes. The effective income tax rate increased 30 basis points to 20.0% for the three months ended March 31, 2025 as compared to 19.7% for the same three month period in 2024. The increase in the tax rate in the first quarter of 2025, as compared to the same quarter in 2024, was primarily related to fluctuations in permanent tax differences.

Current wording

Income tax expense decreased $474,000 to $7,000, with an effective tax rate of 18.4%, for the quarter ended June 30, 2025, as compared to $481,000 with an effective tax rate of 19.3% for the same three month period in 2024. The decrease in income tax expense for the quarter ended June 30, 2025, as compared to the same quarter in 2024, was primarily driven by a decrease of $2.5 million in income before taxes. The effective income tax rate decreased 0.9% to 18.4% for the three months ended June 30, 2025 as compared to 19.3% for the same three month period in 2024. The decrease in the tax rate in the second quarter of 2025, as compared to the same quarter in 2024, was primarily related to fluctuations in permanent tax differences.

Previous wording

The Company’s tax liability is a function of the 21% statutory federal tax rate, the level of pretax income, the varying effects of New York State income taxes, and is partially reduced by tax-exempt income from specific types of investment securities and loans, bank owned life insurance, and, to a much lesser degree, the utilization of low income housing tax credits. In addition, the tax effects of certain incentive stock option activity may reduce the Company’s effective tax rate on a sporadic basis.

Current wording

The Company’s tax liability is a function of the 21% statutory federal tax rate, the level of pretax income, the varying effects of New York State income taxes, and is partially reduced by tax-exempt income from specific types of investment securities and loans, bank owned life insurance, and, to a much lesser degree, the utilization of historic and low income housing tax credits. In addition, the tax effects of certain incentive stock option activity may reduce the Company’s effective tax rate on a sporadic basis.

Previous wording

For the first quarter of 2024, both basic and diluted earnings per Voting and Series A Non-Voting share were $0.34 per share. The increase in earnings per share between these two periods was due to the increase in net income between these two time periods. Further information on earnings per share can be found in Note 3 of the unaudited consolidated financial statements of this Form 10-Q.

Current wording

Diluted earnings per share for the first quarter of 2025 has been revised to $0.47, from the $0.41 reported previously. Further information on earnings per share can be found in Note 3 of the unaudited consolidated financial statements of this Form 10-Q.

Previous wording

Total increases in assets were also due to an increase in investment securities, including investment in FHLB-NY stock, of $10.4 million, or 2.4%, to $447.1 million at March 31, 2025, as compared to December 31, 2024. This was due to increases of $14.7 million in available-for-sale securities and $325,000 in marketable equity securities, partially offset by decreases of $3.0 million in held-to-maturity securities and $1.7 million in FHLB-NY stock.

Current wording

Total investment securities, including investment in FHLB-NY stock, totaled $469.0 million at June 30, 2025, an increase of $32.3 million, or 7.4%, compared to $436.7 million at December 31, 2024. This increase was due to an increase of $31.6 million in available-for-sale securities, an $805,000 increase in marketable equity securities, and a $688,000 increase in FHLB-NY stock. This increase was partially offset by a $791,000 decrease in held-to-maturity securities.

Previous wording

Total assets increased $20.5 million, or 1.39%, to $1.50 billion at March 31, 2025 as compared to December 31, 2024. This increase was due primarily to increases in total cash and cash equivalents.

Current wording

Total liabilities increased $27.3 million, or 2.0%, to $1.38 billion at June 30, 2025 as compared to $1.35 billion at December 31, 2024. This increase was due primarily to increases in total deposits and total borrowings.

Previous wording

Shareholders' equity increased by $3.4 million, or 2.8%, from $121.5 million at December 31, 2024, to $124.9 million on March 31, 2025. This increase was primarily due to the Company’s $2.3 million increase in retained earnings and a decrease in accumulated other comprehensive loss of $712,000, partially reduced by declared dividends to shareholders of $627,000.

Current wording

Shareholders' equity increased by $2.9 million, or 2.4%, from $121.5 million at December 31, 2024, to $124.4 million at June 30, 2025. This increase was primarily due to the Company’s recorded net income of $3.0 million, an increase in additional paid in capital of $895,000, a decrease in accumulated other comprehensive loss of $286,000, partially reduced by declared dividends to shareholders of $1.3 million during the six months ended June 30, 2025.

Previous wording

-55 - accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary bank are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures, including period-end regulatory capital ratios for its subsidiary bank, in its periodic reports filed with the SEC. The Company provides, below, an explanation of the calculations, as supplemental information, for non-GAAP measures included in the consolidated annual financial statements. In addition, the Company provides a reconciliation of its subsidiary bank’s disclosed regulatory capital measures, below.

Current wording

Regulation G, a rule adopted by the Securities and Exchange Commission (SEC), applies to certain SEC filings, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” GAAP is generally accepted accounting principles in the United States of America. Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary bank are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures, including period-end regulatory capital ratios for its subsidiary bank, in its periodic reports filed with the SEC. The Company provides, below, an explanation of the calculations, as supplemental information, for non-GAAP measures included in the consolidated annual financial statements. In addition, the Company provides a reconciliation of its subsidiary bank’s disclosed regulatory capital measures, below.

Previous wording

As indicated in the table above, nonperforming assets at March 31, 2025 were $13.2 million, and were $8.9 million lower than the $22.1 million reported at December 31, 2024 and $6.5 million lower than the $19.7 million reported at March 31, 2024. The decrease in the nonperforming loans on March 31, 2025, as compared to December 31, 2024, was primarily the result of certain commercial loans returning to accrual status.

Current wording

As indicated in the table above, nonperforming assets at June 30, 2025 were $11.8 million, and were $10.3 million lower than the $22.1 million reported at December 31, 2024 and $12.8 million lower than the $24.6 million reported at June 30, 2024. The decrease in the nonperforming loans on June 30, 2025, as compared to December 31, 2024, was driven by the aforementioned sale of loans associated with one local commercial relationship dating back to 2013.

Previous wording

The allowance for credit losses on loans represents management’s estimate of the lifetime losses inherent in the loan portfolio as of the date of the statement of condition. The allowance for credit losses was $17.4 million and $17.2 million at March 31, 2025 and December 31, 2024, respectively. The ratio of the allowance for credit losses to total loans was 1.91% as of March 31, 2025, as compared to 1.88% at December 31, 2024 and 1.87% at March 31, 2024. Management performs a quarterly evaluation of the allowance for credit losses based on quantitative and qualitative factors and has determined that the current level of the allowance for credit losses is adequate to absorb the losses in the loan portfolio as of March 31, 2025.

Current wording

The allowance for credit losses on loans represents management’s estimate of the lifetime losses inherent in the loan portfolio as of the date of the statement of condition. The allowance for credit losses was $16.0 million and $17.2 million at June 30, 2025 and December 31, 2024, respectively. The ratio of the allowance for credit losses to total loans was 1.76% as of June 30, 2025, as compared to 1.88% at December 31, 2024 and 1.90% at June 30, 2024. Management performs a quarterly evaluation of the allowance for credit losses based on quantitative and qualitative factors and has determined that the current level of the allowance for credit losses is adequate to absorb the losses in the loan portfolio as of June 30, 2025.

Previous wording

Loans purchased outside the Bank’s general market area are subject to substantial pre-purchase due diligence. Homogenous pools of purchased loans are subject to pre-purchase analyses led by a team of the Bank’s senior executives and credit analysts. In each case, the Bank’s analytical processes consider the types of loans being evaluated, the underwriting criteria employed by the originating entity, the historical performance of such loans, the offered collateral enhancements and other credit loss mitigation factors offered by the seller and the capabilities and financial stability of the servicing entities involved. From a credit risk perspective, these loan pools also benefit from broad diversification, including wide geographic dispersion, the readily-verifiable historical performance of similar loans issued by the originators, as well as the overall experience and skill of the underwriters and servicing entities involved as counterparties to the Bank in these transactions. 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.

Current wording

Loans purchased outside of the Bank’s general market area are subject to substantial pre-purchase due diligence. Homogenous pools of purchased loans are subject to pre-purchase analyses led by a team of the Bank’s senior executives and credit analysts. In each case, the Bank’s analytical processes consider the types of loans being evaluated, the underwriting criteria employed by the originating entity, the historical performance of such loans, especially in the most recent deeply recessionary period, the offered collateral enhancements and other credit loss mitigation factors offered by the seller and the capabilities and financial stability of the servicing entities involved. From a credit risk perspective, these loan pools also benefit from broad diversification, including wide geographic dispersion, the readily-verifiable historical performance of similar loans issued by the originators, as well as the overall experience and skill of the underwriters and servicing entities involved as counterparties to the Bank in these transactions. 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.

Previous wording

At March 31, 2025 and December 31, 2024, the Company had $15.8 million and $20.0 million in loans, respectively, which were individually analyzed, having established specific reserves of $2.5 million, respectively, on these loans.

Current wording

At June 30, 2025 and December 31, 2024, the Company had $12.1 million and $20.0 million in loans, respectively, which were individually analyzed, having established specific reserves of $2.3 million and $2.5 million, respectively, on these loans. The $7.9 million decrease in specifically identified loans between these two dates reflects 2025 net charge offs of $2.9 million as well as $3.2 million in balances moved to held-for-sale status for the July 2025 sale of nonperforming and classified loans associated with one local commercial relationship dating back to 2013.

Previous wording

Management has identified certain loans with potential credit profiles that may result in the borrowers not being able to comply with the current loan repayment terms and which may result in possible future identified loan reporting. Potential problem loans totaled $58.5 million at March 31, 2025, a decrease of $2.1 million, as compared to $56.4 million at December 31, 2024. These loans have been internally classified as special mention, substandard, or doubtful, yet are not currently considered individually evaluated.

Current wording

Management has identified certain loans with potential credit profiles that may result in the borrowers not being able to comply with the current loan repayment terms and which may result in possible future identified loan reporting. Potential problem loans totaled $64.2 million at June 30, 2025, an increase of $7.8 million, as compared to $56.4 million at December 31, 2024. These loans have been internally classified as special mention, substandard, or doubtful, yet are not currently considered specifically-identified.

Previous wording

Through the first three months of 2025, as indicated in the Consolidated Statement of Cash Flows, the Company reported net cash inflows from financing activities of $16.1 million and $5.7 million from operating activities. The net cash inflows from financing activities was primarily due to increases of $60.0 million in net deposit balances, partially offset by a $43.4 million decrease in net borrowings, and a $445,000 decrease in net cash from all other financing sources, including dividends paid to common voting and non-voting shareholders and warrants of $625,000. The Company reported net cash outflows of $1.9 million related to investing activities, generated primarily by decreases of $7.9 million and $637,000 in net

Current wording

Through the first six months of 2025, as indicated in the consolidated statement of cash flows, the Company reported net cash flow from operating activities of $2.0 million and net cash outflow of $27.0 million related to investing activities. The net cash inflows from investing activities was generated principally by an increase of $3.1 million in net loan activity, offset by a $29.3 million decrease in net investment activity, and an $861,000 decrease in premises and equipment. The Company

Previous wording

The Bank’s management monitors liquidity on a continuous basis through a broad range of internal programs and considers effective liquidity management to be one of its primary objectives. At March 31, 2025 the Bank had deposits of $1.26 billion, of which a portion were nominally uninsured, as they were above the insurance limits established by the Federal Deposit Insurance Corporation (“FDIC”) on that date. Of the nominally uninsured deposits at March 31, 2025, $107.0 million were insured through a long-standing reciprocal deposit program managed by a third-party entity. In addition, $138.0 million in municipal deposits are fully protected against principal loss by a collateral program whereby the Bank places high-quality securities with an independent custodian as collateral. The Bank had $150.0 million in deposits, representing 13.2% of all deposits, that were considered to be uninsured at March 31, 2025.

Current wording

The Bank’s management monitors liquidity on a continuous basis through a broad range of internal programs and considers effective liquidity management to be one of its primary objectives. At June 30, 2025 the Bank had deposits of $1.22 billion, of which a portion were nominally uninsured, as they were above the insurance limits established by the Federal Deposit Insurance Corporation (“FDIC”) on that date. Of the nominally uninsured deposits at June 30, 2025, $95.2 million were insured through a long-standing reciprocal deposit program managed by a third-party entity. In addition, $101.6 million in municipal deposits are fully protected against principal loss by a collateral program whereby the Bank places high-quality securities with an independent custodian as collateral. The Bank had $154.7 million in deposits, representing 14.0% of all deposits that were considered to be uninsured at June 30, 2025. At December 31, 2024, the Bank had $149.0 million in deposits, representing 14.0% of all deposits that were considered to be uninsured.

Previous wording

The Company has a number of existing credit facilities available to it. At March 31, 2025, total credit available under the existing lines of credit was approximately $224.5 million at FHLBNY, the Federal Reserve Bank, and two other correspondent banks. At March 31, 2025, the Company had $44.6 million of the available lines of credit utilized on its existing lines of credit with the remainder of $179.8 million available.

Current wording

The Company has a number of existing credit facilities available to it. At June 30, 2025, total credit available under the existing lines of credit was approximately $244.9 million at FHLBNY, the Federal Reserve Bank, and two other correspondent banks. At June 30, 2025, the Company had $74.0 million of the available lines of credit utilized on its existing lines of credit with the remainder of $170.9 million available.

Previous wording

The Company 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. These financial instruments include commitments to extend credit and standby letters of credit. At March 31, 2025, the Company had $211.2 million in outstanding commitments to extend credit and standby letters of credit.

Current wording

The Company 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. These financial instruments include commitments to extend credit and standby letters of credit. At June 30, 2025, the Company had $229.9 million in outstanding commitments to extend credit and standby letters of credit.

Previous wording

The Company's exposure to credit loss in the event of nonperformance related to off-balance sheet arrangements is proportional to the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless such commitments are unconditionally cancelable, through the provision for credit losses expense. The allowance for credit losses on off-balance sheet credit exposures as of March 31, 2025 was $513,000 and is included in other liabilities on the Company's consolidated Statements of Condition.

Current wording

The Company's exposure to credit loss in the event of nonperformance related to off-balance sheet arrangements is proportional to the contractual amount of those instruments. Such financial instruments are recorded when they are funded. The Company records an allowance for credit losses on off-balance sheet credit exposures, unless such commitments are unconditionally cancelable, through the provision for credit losses expense. The allowance for credit losses on off-balance sheet credit exposures as of June 30, 2025 was $532,000 and is included in other liabilities on the Company's consolidated Statements of Condition.