Pathfinder Bancorp, Inc.

Previous wording

The Bank owns 100% of Pathfinder Risk Management Company, Inc., ("PRMC") which was established to record the 51% controlling interest upon the December 2013 purchase of FitzGibbons Agency, LLC (the “Agency”), an Oswego County property, casualty and life insurance brokerage business. The Company completed the sale of its majority membership interest in the FitzGibbons Agency to Marshall & Sterling Enterprises, Inc. in October 2024.

Current wording

The Bank owns 100% of Pathfinder Risk Management Company, Inc., ("PRMC") which was established to record the 51% controlling interest upon the December 2013 purchase of FitzGibbons Agency, LLC (the “Agency”), an Oswego County property, casualty and life insurance brokerage business. The Company completed the sale of its majority membership interest in the Agency to Marshall & Sterling Enterprises, Inc. in October 2024.

Previous 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.

Current wording

At September 30, 2025, the Company and subsidiaries had total consolidated assets of $1.47 billion, total consolidated liabilities of $1.35 billion and shareholders' equity of $126.3 million.

Previous 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.

Current wording

The following discussion reviews the Company's financial condition at September 30, 2025 and the results of operations for the three and nine month periods ended September 30, 2025 and 2024. Operating results for the three and nine months ended September 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 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

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 such as the U.S. Government shutdown, 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;

Previous wording

-49 - businesses that we may acquire, including our recently completed 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 and liquidity could be significant; (12) our ability to prevent or mitigate fraudulent activity and cybersecurity threats; and (13) the outcome of any future regulatory and legal investigations and proceedings may not be anticipated.

Current wording

(10) difficulties in integrating any businesses that we may acquire, including our recently completed 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 below in Recent Events on such matters as business generation and retention, funding and liquidity could be significant; (12) our ability to prevent or mitigate fraudulent activity and cybersecurity threats; and (13) the outcome of any future regulatory and legal investigations and proceedings may not be anticipated.

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 June 30, 2025, the Bank’s position in individually evaluated loans consisted of 30 loans totaling $12.1

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 September 30, 2025, the Bank’s position in individually evaluated loans consisted of 49 loans totaling $32.1

Previous wording

-50 - million. Of these loans, 13 loans, totaling $818,000, were valued using the present value of future cash flows method; and 17 loans, totaling $11.3 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

-48 - million. Of these loans, 13 loans, totaling $847,000, were valued using the present value of future cash flows method; and 36 loans, totaling $31.2 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.

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 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.

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 September 30, 2025, the Bank held $543.7 million in commercial real estate and commercial & industrial loans (collectively, commercial loans) representing 60.5% of the Bank’s entire loan portfolio. The Bank allocated $12.5 million to the ACL for these loans, including $1.6 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 $400,000, 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 September 30, 2025 in the final recorded estimation of the ACL on loans recognized on the Statements of Financial Condition.

Previous wording

We maintain a noncontributory defined benefit pension plan covering most employees. The plan provides defined benefits based on years of service and final average salary. On May 14, 2012, we informed our employees of our decision to freeze participation and benefit accruals under the plan, primarily to reduce some of the volatility in earnings that can accompany the maintenance of a defined benefit plan. Pension and post-retirement benefit plan liabilities and expenses are based upon actuarial assumptions of future events; including fair value of plan assets, interest rates, and the length of time the Company will have to provide those benefits. The assumptions used by management are discussed in Note 14 to the consolidated annual financial statements.

Current wording

We maintain a noncontributory defined benefit pension plan covering a portion of employees. The plan provides defined benefits based on years of service and final average salary. On May 14, 2012, we informed our employees of our decision to freeze participation and benefit accruals under the plan, primarily to reduce some of the volatility in earnings that can accompany the maintenance of a defined benefit plan. Pension and post-retirement benefit plan liabilities and expenses are based upon actuarial assumptions of future events; including fair value of plan assets, interest rates, and the length of time the Company will have to provide those benefits. The assumptions used by management are discussed in Note 14 to the consolidated annual financial statements.

Previous wording

-51 - 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

-49 - 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.

Previous wording

Net interest income before the provision for credit losses increased $1.3 million, or 14.1%, to $10.8 million for the three months ended June 30, 2025, as compared to $9.5 million for the same three month period in 2024. This increase was predominately the result of a decrease in interest expense of $1.2 million and an increase in interest and dividend income of $160,000. The decrease in interest expense of $1.2 million for the second quarter of 2025, compared to the prior year quarter, was predominantly the result of average cost decreases of 40 basis points for interest-bearing deposits, 13 basis points for subordinated debt, and 38 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in deposits and borrowings expense from the year-ago period were $308,000 and $860,000 respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core

Current wording

The decrease in interest expense of $1.3 million to $8.1 million for the third quarter of 2025, compared to the prior year quarter, was primarily attributed to average cost decreases of 40 basis points for interest-bearing deposits, 18 basis points for subordinated debt, and 61 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in interest-bearing deposits and borrowings expense for the current quarter as compared to the year-ago period were $676,000 and $645,000 respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core deposits, as well as deliberate deposit pricing adjustments and significant reductions in borrowings.

Previous wording

The provision for credit losses was $1.2 million in the second quarter of 2025 compared to $290,000 in the second quarter of 2024. The provision for credit losses for the second quarter of 2025 was primarily driven by net charge offs of $2.6 million that are reflected in the second quarter of 2025 provision expense. These net charge offs during the recent quarter represent 1.14% of average loans on an annualized basis, compared to $66,000 in charge offs, or 0.03% of average loans on an annualized basis in the second quarter of 2024. See the “Provision for Credit Losses” and “Loan and Asset Quality and Allowance for Credit Losses” sections of this Management’s Discussion and Analysis for further discussion.

Current wording

The provision for credit losses was $3.5 million in the third quarter of 2025 compared to $9.0 million in the third quarter of 2024. The provision for credit losses for the third quarter of 2025 was due to an increase in credit loss reserves primarily associated with two local commercial relationships that moved to nonperforming status, in addition to $670,000 of net charge offs during the period. Net charge offs during the recent quarter represent 0.30% of average loans on an annualized basis, compared to $8.7 million in charge offs, or 3.82% of average loans on an annualized basis in the third quarter of 2024. See the “Provision for Credit Losses” and “Loan and Asset Quality and Allowance for Credit Losses” sections of this Management’s Discussion and Analysis for further discussion.

Previous 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.

Current wording

Noninterest income totaled $1.5 million in the third quarter of 2025, compared to $1.7 million during the same period in 2024. Third quarter 2024 noninterest income included $367,000 in insurance revenue from the insurance agency business sold in October 2024.

Previous wording

Compared to the year-ago period, second quarter 2025 noninterest income included increases of $50,000 in service charges on deposit accounts and $43,000 in gains on sales of loans and foreclosed real estate, as well as a decrease of $15,000 in loan servicing fees, a decrease of $11,000 in earnings and gain on bank owned life insurance, and a decrease of $11,000 in debit card interchange fees. Second quarter 2025 noninterest income compared to the year-ago period also reflected an increase of $559,000 in net unrealized gains on marketable equity securities, as well as a decrease of $16,000 in net realized gains on sales and redemptions of investment securities.

Current wording

Compared to the third quarter of 2024, noninterest income decreased by $204,000 in the third quarter of 2025. The decline reflects the impact of new BOLI policy purchases made during the current year and differences in net death benefits recorded in the third quarter of 2025 and the year-ago period of $32,000 and $175,000, respectively. In addition, third quarter 2025 noninterest income, compared to the year-ago period, included a $12,000 increase in service charges on deposit accounts and a decrease of $83,000 in debit card interchange fees. Compared to the year-ago period, third quarter 2025 noninterest income also reflected increases of $83,000 in net unrealized gains on marketable equity securities, $34,000 in loan servicing fees, and $31,000 in gains on sales of loans and foreclosed real estate, as well as a decrease of $176,000 in net realized losses on sales and redemptions of investment securities.

Previous 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.

Current wording

For the third quarter of 2025, annualized noninterest expense represented 2.40% of average assets in the third quarter of 2025, compared to 2.75% in the year-ago period. The efficiency ratio was 68.78%, for the third quarter of 2025, compared to 75.78% in the year-ago period. For the nine months ended September 30, 2025, annualized noninterest expense represented 2.30% of average assets in the first nine months of 2025, compared to 2.39% in the year-ago period. The efficiency ratio was 67.24%, for the nine months ended September 30, 2025, compared to 73.01% 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

Second quarter 2025 net interest income was $10.8 million, an increase of $1.3 million, or 14.1%, from the second quarter of 2024. This increase was mostly the result of a decrease in interest expense of $1.2 million, slightly enhanced by an increase in interest and dividend income of $160,000.

Current wording

Third quarter 2025 net interest income was $11.6 million, a decrease of 1.1% from the third quarter of 2024. This decrease was the result of a $1.5 million, or 6.9% decrease in interest and dividend income, partially offset by a decrease of $1.3 million, or 14.1%, in total interest expense.

Previous wording

The decrease in interest expense of $1.2 million for the second quarter of 2025, compared to the prior year quarter, was primarily attributed to average cost decreases of 40 basis points for interest-bearing deposits, 13 basis points for subordinated debt, and 38 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in deposits and borrowings expense for the current quarter as compared to the year-ago period were $308,000 and $860,000 respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core deposits, as well as deliberate deposit pricing adjustments and significant reductions in borrowings.

Current wording

The decrease in interest expense of $1.3 million for the third quarter of 2025, compared to the prior year quarter, was primarily attributed to average cost decreases of 40 basis points for interest-bearing deposits, 18 basis points for subordinated debt, and 61 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in interest-bearing deposits and borrowings expense for the current quarter as compared to the year-ago period were $676,000 and $645,000 respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core deposits, as well as deliberate deposit pricing adjustments and significant reductions in borrowings.

Previous wording

For the six months ended June 30, 2025, net interest income increased $3.3 million, or 17.7%, to $22.2 million compared to the same six month period in 2024. The increase was due to a decrease in interest expense of $2.4 million, in addition to an increase in interest and dividend income of $991,000.

Current wording

For the nine months ended September 30, 2025, net interest income increased $3.2 million, or 10.5%, to $33.8 million compared to the same nine month period in 2024. The change from the prior nine month period was due to a decrease in interest expense of $3.7 million, partially offset by a decrease in interest and dividend income of $472,000.

Previous wording

The decrease in interest expense of $2.4 million for the six months ended June 30, 2025, compared to the same six month prior year period, was primarily attributed to average cost decreases of 36 basis points for interest-bearing deposits, 18 basis points for subordinated debt, and 53 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in deposits and borrowings expense for the current period as compared to the year-ago period were $774,000 and $1.6 million respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core deposits, as well as deliberate deposit pricing adjustments and significant reductions in borrowings.

Current wording

The decrease in interest expense of $3.7 million for the nine months ended September 30, 2025, compared to the same nine month prior year period, was primarily attributed to average cost decreases of 36 basis points for interest-bearing deposits, 18 basis points for subordinated debt, and 55 basis points for borrowings coupled with average balance decreases for time deposits and borrowings. The corresponding decreases in interest-bearing deposits and borrowings expense for the current period as compared to the year-ago period were $1.5 million and $2.2 million respectively. These reductions reflect continued changes in the Bank’s funding mix, including growing core deposits, as well as deliberate deposit pricing adjustments and significant reductions in borrowings.

Previous wording

The increase in interest and dividend income of $991,000 for the first six months of 2025, compared to the prior year period, was primarily due to a 30 basis points increase in the average yield on loans and a $23.7 million increase in the average balance of loans, resulting in a $2.0 million increase in interest income. This increase was partially offset by decreases in income from taxable investment securities, tax-exempt investment securities, and fed funds sold and interest-earning deposits of $829,000, $139,000, and $62,000, respectively, primarily as a result of the decrease in the average yield of such assets.

Current wording

The decrease in interest and dividend income of $472,000 for the first nine months of 2025, compared to the prior year period, was primarily due to decreases in income from taxable investment securities, tax-exempt investment securities, and fed funds sold and interest-earning deposits of $1.3 million, $153,000, and $423,000, respectively, primarily as a result of the decrease in the average yield of such assets. These decreases were partially offset by a 12 basis points increase in the average yield on loans and a $13.1 million increase in the average balance of loans, resulting in a $1.4 million increase in interest income on loans. In addition, interest and dividend income included benefits of $607,000 in the first nine months of 2025 from 2024 interest recovered from loans removed from nonaccrual status and loan and investment prepayment penalty income and $887,000 in the first nine months of 2024 from the third quarter catch-up interest payment associated with purchased loan pool positions.

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 $17.4 million, or 1.4% from December 31, 2024. The increase in deposits during the six months ended June 30, 2025, reflected the Bank’s increased market penetration among both non-business and business customers. During the second quarter of 2025, total balances declined on reductions in higher-cost time and money market accounts, as well as regular municipal deposit seasonality.

Current 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 $20.6 million, or 1.7% from December 31, 2024. The increase in deposits during the nine months ended September 30, 2025, reflected the Bank’s increased market penetration among both non-business and business customers.

Previous 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.

Current wording

At September 30, 2025, 78.4% of the Company's deposit base of $1.23 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

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 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.

Previous 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.

Current wording

The Company recorded $3.5 million in provision for credit losses for the three month period ended September 30, 2025, as compared to $9.0 million for the three month period ended September 30, 2024. The provisioning in the third 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 $5.5 million decrease in provision for credit losses in the third quarter of 2025, as compared to the same period in 2024. This decrease can be primarily attributed to lower net charge offs of $670,000 in the quarter, compared to $8.7 million from a year ago period. 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. In addition, the Company continued to undertake proactive measures in the third quarter of 2025 to mitigate credit risk and enhance asset quality metrics for the long term, including the initiation of a comprehensive loan portfolio review in September 2025, encompassing performing and nonperforming loans of $500,000 or more, representing approximately 90% of all outstanding loans. This review is expected to be completed by the end of 2025. 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 (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.

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 4.1% and 3.8% at September 30, 2025, and December 31, 2024, respectively. Delinquent loans (numerator) increased $1.8 million from December 31, 2024 to September 30, 2025. Total loan balances (denominator) decreased $20.7 million from December 31, 2024 to September 30, 2025. The increase in delinquent loans from December 31, 2024 to September 30, 2025 was driven by loans delinquent 30-59 days and loans delinquent 90 days and over, which increased by $761,000 and $1.2 million, respectively, partially offset by a decrease of $189,000 in loans delinquent 60-89 days.

Previous 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.

Current wording

Income tax expense increased $1.2 million to $46,000, with an effective tax rate of 6.8%, for the quarter ended September 30, 2025, as compared to an income tax benefit of $1.2 million with an effective tax rate of 20.3% for the same three month period in 2024. The increase in income tax expense for the quarter ended September 30, 2025, as compared to the same quarter in 2024, was primarily driven by an increase of $6.5 million in income before taxes. The effective income tax rate decreased 13.5% to 6.8% for the three months ended September 30, 2025 as compared to 20.3% for the same three month period in 2024. The decrease in the tax rate in the third quarter of 2025, as compared to the same quarter in 2024, was primarily related to a decrease in income and fluctuations in permanent tax differences.

Previous wording

Income tax expense decreased $262,000 to $751,000, with an effective tax rate of 20.0%, for the six months ended June 30, 2025, as compared to $1.0 million with an effective tax rate of 19.5%, for the same six month period in 2024. The decrease in income tax expense for the six months ended June 30, 2025, as compared to the same six month period in 2024, was primarily driven by a decrease in income before taxes and fluctuations in permanent tax differences. The effective income tax rate increased 0.50% to 20.0% for the six months ended June 30, 2024 as compared to 19.5% for the same six month period in 2024. The increase in the tax rate in the six months ended June 30, 2025, as compared to the same period in 2024, was primarily related to fluctuations in permanent tax differences.

Current wording

Income tax expense increased $957,000 to $797,000, with an effective tax rate of 18.0%, for the nine months ended September 30, 2025, as compared to an income tax benefit of $160,000 with an effective tax rate of 27.1%, for the same nine month period in 2024. The increase in income tax expense for the nine months ended September 30, 2025, as compared to the same nine month period in 2024, was primarily driven by a $5.0 million increase in income before taxes and fluctuations in permanent tax differences. The effective income tax rate decreased 9.1% to 18.0% for the nine months ended September 30, 2025 as compared to 27.1% for the same nine month period in 2024. The increase in the tax rate in the nine months ended September 30, 2025, as compared to the same period in 2024, was primarily related to an income in income and fluctuations in permanent tax differences.

Previous wording

Basic and diluted earnings per Voting and Series A Non-Voting share were less than $0.01 per share for the second quarter of 2025, as compared to $0.32 for the same prior year period. The decrease in earnings per share between the second quarter of 2025 and 2024 was due to the decrease of net income between the two periods that resulted from the $0.40 per share effect of the loss on sale of nonperforming and classified loans associated with one local commercial relationship, which was recorded as a second quarter 2025 LOCOM HFS adjustment.

Current wording

Basic and diluted earnings per Voting and Series A Non-Voting share were $0.10 per share for the third quarter of 2025, as compared to $(0.75) for the same prior year period. The increase in earnings per share between the third quarter of 2025 and 2024 was due to the increase of net income between the two periods. Third quarter 2024 results included a $9.0 million provision for credit losses due to $8.7 million of net charge offs resulting from a comprehensive loan portfolio review and $1.6 million in one-time transaction-related expenses for the previously announced July 2024 East Syracuse branch acquisition.

Previous wording

Basic and diluted earnings per share were $0.48 and $0.47, respectively, for both Voting and Series A Non-Voting shares for the six month period ended June 30, 2025. Basic and diluted earnings per Voting and Series A Non-Voting share were $0.66 per share for the six month period ended June 30, 2024. The decrease in earnings per share between the first six months of 2025 and 2024 was due to the decrease in net income between these two time periods that resulted from the $0.40 per share effect of the loss on sale of nonperforming and classified loans associated with one local commercial relationship, which was recorded as a second quarter 2025 LOCOM HFS adjustment.

Current wording

Basic and diluted earnings per share were $0.58 and $0.57, respectively, for both Voting and Series A Non-Voting shares for the nine month period ended September 30, 2025. Basic and diluted earnings per Voting and Series A Non-Voting share were $(0.09) per share for the nine month period ended September 30, 2024. The increase in earnings per share between the first nine months of 2025 and 2024 was due to the increase in net income between these two time periods. The results for the nine months ended September 30, 2024 included the effects from the aforementioned net charge offs and the East Syracuse one-time branch acquisition transaction-related expenses.

Previous 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.

Current wording

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

Loans, net of deferred fees, totaled $909.7 million on June 30, 2025, after $3.2 million in balances were moved to held-for-sale status for the July 2025 sale of nonperforming and classified loans, resulting in a decrease of $9.3 million or 1.0% from December 31, 2024. Consumer and residential loans totaled $362.1 million on June 30, 2025, decreasing $18.8 million or 4.9% from December 31, 2024. Commercial loans totaled $549.1 million on June 30, 2025, increasing $9.4 million, or 1.7% during the first half of 2025, despite the recent loan sale.

Current wording

Loans, net of deferred fees, totaled $898.5 million on September 30, 2025, resulting in a decrease of $20.5 million or 2.2% from December 31, 2024. Consumer and residential loans totaled $356.2 million on September 30, 2025, decreasing $24.7

Previous 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.

Current wording

Total investment securities, including investment in FHLB-NY stock, totaled $445.8 million at September 30, 2025, an increase of $9.2 million, or 2.1%, compared to $436.7 million at December 31, 2024. This increase was due to an increase of $25.1 million in available-for-sale securities, and a $1.3 million increase in marketable equity securities. This increase was partially offset by a $16.1 million decrease in held-to-maturity securities due to calls and maturities, and a $1.1 million decrease in FHLB-NY stock.

Previous wording

Bank owned life insurance increased $6.3 million, or 25.6%, to $31.0 million at June 30, 2025 as compared to December 31, 2024. This increase was primarily due to a $6.0 million purchase of new life insurance policies during the second quarter of 2025.

Current wording

Bank owned life insurance increased $6.4 million, or 26.0%, to $31.1 million at September 30, 2025 as compared to December 31, 2024. This increase was primarily due to a $6.0 million purchase of new life insurance policies during the second quarter of 2025.

Previous 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.

Current wording

Total liabilities decreased $7.5 million, or 0.6%, to $1.35 billion at September 30, 2025 as compared to December 31, 2024. This decrease was due primarily to decreases in total borrowings, offset partially by increases in total deposits.

Previous wording

The increase in liabilities was also due to a $8.4 million, or 9.5% increase in total borrowings to $96.5 million at June 30, 2025, as compared to $88.1 million at December 31, 2024. This increase was due to a $14.5 million increase in short-term borrowed funds from FHLB-NY, offset partially by a $6.1 million decrease in long-term borrowed funds from FHLB-NY.

Current wording

Total borrowings decreased $31.4 million, or 35.6%, from $88.1 million at December 31, 2024 to $56.7 million at September 30, 2025. This decrease was due to a $23.0 million decrease in short-term borrowed funds from FHLB-NY, and an $8.4 million decrease in long-term borrowed funds from FHLB-NY.

Previous 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.

Current wording

Shareholders' equity increased by $4.8 million, or 4.0%, from $121.5 million at December 31, 2024, to $126.3 million at September 30, 2025. This increase was primarily due to the Company’s recorded net income of $3.6 million, an increase in additional paid in capital of $1.2 million, and a decrease in accumulated other comprehensive loss of $1.9 million, partially reduced by declared dividends to shareholders of $1.9 million during the nine months ended September 30, 2025.

Previous wording

2 Revenue equals net interest income plus total noninterest income less net realized gains or losses on sales and redemptions of investment securities, sales of loans and foreclosed real estate, and gain on the October 2024 sale of the Company's insurance agency asset.

Current wording

1 Revenue equals net interest income plus total noninterest income less net realized gains or losses on sales and redemptions of investment securities, and sales of loans and foreclosed real estate.

Previous wording

3 Pre-tax, pre-provision net income equals revenue less total non-interest expense.

Current wording

2 Pre-tax, pre-provision net income equals revenue less total noninterest expense.

Previous wording

4 Efficiency ratio equals noninterest expense divided by revenue.

Current wording

3 Efficiency ratio equals noninterest expense divided by revenue.

Previous 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.

Current wording

As indicated in the table above, nonperforming assets at September 30, 2025 were $23.4 million, and were $1.3 million greater than the $22.1 million reported at December 31, 2024 and $7.2 million greater than the $16.2 million reported at September 30, 2024. The increase in the nonperforming loans on September 30, 2025, as compared to December 31, 2024, was the result of loans associated with two local commercial relationships that moved to nonperforming status.