Item 9.01 Financial Statements and Exhibits
Exhibit 99 – Pathfinder Bancorp, Inc's Presentation to Shareholders
Solidly Positioned to Continue Our Operating Momentum 2016 Annual Meeting of Shareholders 10 a.m., May 4, 2016 Alexandria’s at the Lake Ontario Conference and Events Center Oswego, New York
* Solidly Positioned to Continue Our Operating Momentum Welcoming Remarks Chris R. BurrittChairman of the Board
* Solidly Positioned to Continue Our Operating Momentum Agenda – 2016 Annual Meeting of Shareholders Introduction of Directors, Management and Guests Present Meeting Notice and Proxy Review Rules of Conduct Report of Inspector of Elections Establish That a Quorum Exists Review Annual Meeting Proposals Voting Management Presentation and Q&A to Follow Results of Shareholder Vote Meeting Adjourned
* Solidly Positioned to Continue Our Operating Momentum Pathfinder Board of Directors Director Since David A. Ayoub 2012 William A. Barclay 2011 John P. Funiciello 2011 Adam C. Gagas 2014 George P. Joyce 2000 Melanie Littlejohn * 2016 Thomas W. Schneider, President & CEO 2001 John F. Sharkey, III 2014 Lloyd “Buddy” Stemple 2005 Chris R. Burritt, ChairmanCurrently a Director of Pathfinder Bank. On ballot for election to Pathfinder Bancorp, Inc. 1986
* Solidly Positioned to Continue Our Operating Momentum Pathfinder Executive Officers Current Position Since Thomas W. Schneider President & CEO 2000 James A. Dowd, CPA Executive Vice President & Chief Financial Officer 2000 Ronald Tascarella Executive Vice President & Chief Credit Officer 2006 Melissa A. Miller Senior Vice President & Chief Operating Officer 2005 Edward A. Mervine, ESQ Senior Vice President, General Counsel & Corporate Secretary 2002 Daniel R. Phillips Senior Vice President & Chief Information Officer 2014
* Solidly Positioned to Continue Our Operating Momentum Independent Registered Public Accounting Firm Jamie L. KeiserBonadio & Company, LLP
* Solidly Positioned to Continue Our Operating Momentum Please comply with distributed rules of conductPlease refrain from using electronic devicesOnly proposals and nominations submitted in accordance with the Company’s Bylaws will be considered Only shareholders of record or their proxy may address the meetingPlease hold all comments and questions until question and answer periodPlease limit remarks and questions to matters which are relevant to the Company 2016 Annual Meeting Rules of Conduct
* Solidly Positioned to Continue Our Operating Momentum Business of 2016 Annual Meeting of Shareholders The Election of Four Directors David A. AyoubAdam C. GagasJohn F. Sharkey, IIIMelanie Littlejohn Approval of the 2016 Pathfinder Bancorp, Inc. Equity Incentive PlanRatification of the appointment of Bonadio & Co., LLP as independent registered public accounting firm for the year ending 12/31/16
* Solidly Positioned to Continue Our Operating Momentum Executive Management Presentation Thomas W. SchneiderPresident & Chief Executive Officer
* Solidly Positioned to Continue Our Operating Momentum Executive Management Presentation This discussion may contain the words or phrases “will likely result”, “are expected to”, “will continue”, “is anticipated”, “estimate”, ”project” or similar expression are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties. By identifying these forward-looking statements for you in this manner, the Company is alerting you to the possibility that its actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Important factors that could cause the Company’s actual results and financial condition to differ from those indicated in the forward-looking statements include, among others: Credit quality and the effect of credit quality on the adequacy of our allowance for loan losses;Deterioration in financial markets that may result in impairment charges relating to our securities portfolio; Competition in our primary market areas; significant government regulations, legislation and potential changes thereto;A reduction in our ability to generate or originate revenue-producing assets as a result of compliance with heightened capital standards; Increased cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, and higher deposit insurance premiums; The limitation on our ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations: and other risks described herein and in the other reports and statements we file with the SEC.These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
* Solidly Positioned to Continue Our Operating Momentum Positioned to Continue Our Momentum Sustainable, Consistent Growth Commitment to Business Model Receptive Market
* Solidly Positioned to Continue Our Operating Momentum Continued Strong Performance in 2015 Record Net Income of $2.8 million Total Revenue Growth of 10%, to $22.9 Million Significant Growth of Syracuse Business Banking Presence FitzGibbons Agency Revenue Increased 25% Total Loans at year end $430.4 Million, 11% Growth Deposits Increased by $74.7 Million, an Increase of 18%
* Solidly Positioned to Continue Our Operating Momentum Top line revenue increase driven by loan growthSmall business lendingResidential real estateLimited Margin Compression Despite Continued Headwinds Continued Strong Performance in 2015 Record Net Income of $2.8 Million Net Interest Income Growth of $1.7 Million 9.8% Noninterest income Growth of $301,000* 8.8% *Excluding net gains on sales of securities, loans and foreclosed real estate
* Solidly Positioned to Continue Our Operating Momentum Yield Curve Changes
* Solidly Positioned to Continue Our Operating Momentum Enhanced liquidityAllowed for redemption of SBLF preferred stock Provided additional Tier 2 capital for continued growth Continued Strong Performance in 2015 Subordinated Debt Offering of $10 Million
* Solidly Positioned to Continue Our Operating Momentum Affiliated with the FitzGibbons Agency, LLC in 2013 to Diversify RevenueAcquired Huntington Agency in 2015 – Expanded Presence in Onondaga County Revenue has Increased by $231,896, or by 49% since 2013 Continued Strong Performance in 2015 FitzGibbons Agency Growth Continued in 2015
* Solidly Positioned to Continue Our Operating Momentum Continued Strong Performance in 2015 FitzGibbons Agency Revenue Increased 25.4%
* Solidly Positioned to Continue Our Operating Momentum Favorable commercial real estate and development trendsContinued strong commercial loan demand8% increase in residential real estate portfolioElevated Awareness of Pathfinder in Onondaga County Continued Strong Performance in 2015 Total Loans at 2015 Year End $430.4 Million, 11.1% Growth
* Solidly Positioned to Continue Our Operating Momentum Abundant CapitalLoan Portfolio DiversificationRevenue DiversificationStrong Competitive Market PositionIncreased brand awareness – SyracuseFocus on retail and business core deposit generation Positioned for Continued Growth
* Solidly Positioned to Continue Our Operating Momentum Positioned for Growth Abundant Capital 12/31/15 Well-Capitalized (Regulatory Definition) Total Capital /Risk-weighted Assets 16.22% >10.00% Tier 1 Capital /Total Assets 10.0% >5.00% Goal: Support growth and expansion activities, while maintaining a strong capital position and exceeding regulatory standards
* Solidly Positioned to Continue Our Operating Momentum Positioned for Continued Growth Loan Portfolio Diversification Loan Composition December 31, 2005 December 31, 2015 Residential Real Estate Commercial Real Estate Commercial Loans Municipal Loans Consumer Loans
* Solidly Positioned to Continue Our Operating Momentum Positioned for Continued Growth Core Revenue Growth (In Thousands) 5-Year CAGR 6.8%
* Solidly Positioned to Continue Our Operating Momentum Positioned for Continued Growth Strong Competitive Market Position Plaza OfficeState Route 104 East, Oswego Downtown Drive-Thru34 East Bridge Street, Oswego Mexico OfficeNorman & Main Streets, Mexico Fulton Office5 West First Street South, Fulton Lacona Office1897 Harwood Drive, Lacona Central Square Office3025 East Avenue, Central Square Cicero Office6194 State Route 31, Cicero Pike Block Building Office109 West Fayette, Syracuse Main Office214 West First Street, Oswego
* Solidly Positioned to Continue Our Operating Momentum Positioned for Continued Growth Strong Competitive Market Position – in Onondaga and Oswego Counties Source: FDIC Deposit Market Share Report at 6-30-15 2015 Rank Institution (ST) Total Deposits ($000) Market Share (%) 1 Manufacturers and Traders Trust Company 2,813,353 26.05% 2 Bank of America, National Association 1,687,223 15.63% 3 KeyBank National Association 1,312,769 12.16% 4 JPMorgan Chase Bank, National Association 875,259 8.11% 5 First Niagara Bank, National Association 763,827 7.07% 6 Solvay Bank 697,320 6.46% 7 NBT Bank, National Association 520,044 4.82% 8 Pathfinder Bank 470,914 4.36% 9 Geddes Federal Savings and Loan Association 416,893 3.86% 10 Community Bank, National Association 308,649 2.86% 11 Berkshire Bank 284,758 2.64% 12 Citizens Bank, National Association 262,055 2.43% 13 Fulton Savings Bank 241,148 2.23% 14 Seneca Federal Savings and Loan Association 103,612 0.96% 15 The Lyons National Bank 31,546 0.29% 16 Adirondack Bank 8,119 0.08% Number of Institutions in the Market: 16 10,797,489 100%
* Solidly Positioned to Continue Our Operating Momentum Executive Management Presentation James A. Dowd, CPAExecutive Vice President & Chief Financial Officer
* Solidly Positioned to Continue Our Operating Momentum 5-Year Loan Growth (In Millions) 5-Year CAGR 8.6%
* Solidly Positioned to Continue Our Operating Momentum 5-Year Deposit Growth Includes Brokered Deposits(In Millions) CAGR 8.5%
* Solidly Positioned to Continue Our Operating Momentum Deposit Composition December 31, 2005$236.7 Million December 31, 2015$490.3 Million Retail Commercial Municipal Includes Brokered Deposits
* Solidly Positioned to Continue Our Operating Momentum Rate / Volume Analysis for Year Ended December 31, 2015 Volume Rate Total Incr / (Decr) Interest Income: Loans $ 1,951 $ (429) $ 1,522 Investments 205 (9) 196 Interest-earning Deposits 10 (4) 7 Total Interest Income 2,166 (442) 1,725 Interest Expense: Deposits 116 (110) (6) Borrowings 100 (63) 37 Total Interest Expense 216 (173) 43 Net Change in Net Interest Income $ 1,950 $ (269) $ 1,682
* Solidly Positioned to Continue Our Operating Momentum Net Interest Margin
* Solidly Positioned to Continue Our Operating Momentum Revenue and Operating Expense Trends (In Thousands)
* Solidly Positioned to Continue Our Operating Momentum Stable Asset Quality Metrics Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Non-performing Loans to Total Loans 1.55% 1.66% 1.57% 1.61% 1.24% Non-performing Assets to Total Assets 1.19% 1.25% 1.18% 1.16% .94% Allowance for Loan Losses to Total Loans 1.31% 1.35% 1.48% 1.38% 1.33% Allowance for Loan Losses to Non-performing Loans 84.18% 81.13% 94.22% 85.50% 107.30%
* Solidly Positioned to Continue Our Operating Momentum Net Income and EPS (Diluted) Growth (In Thousands) Net Income CAGR 10.2%
* Solidly Positioned to Continue Our Operating Momentum Return on Average Assets
* Solidly Positioned to Continue Our Operating Momentum Return on Average Common Equity
* Solidly Positioned to Continue Our Operating Momentum Total Return Performance Index Value
* Solidly Positioned to Continue Our Operating Momentum 2016 1st Quarter Performance Summary Financial Performance *as compared to 1st Quarter 2015 results (In Thousands) (In thousands) 2016 *Change Total Interest Income $5,712 12.3% Total Interest Expense 872 49.6% Net Interest Income 4,840 7.5% Provision for Loan Losses 210 (45.2%) Total Noninterest Income 1,001 15.7% Total Revenue 5,481 8.8% Total Noninterest Expense 4,703 11.4% Net Income 661 25.0% Net Income Available to Common Shareholders 645 29.8% Earnings Per Share – Diluted $0.15 25.0%
* Solidly Positioned to Continue Our Operating Momentum 2016 1st Quarter Condition Summary Financial Condition (In Thousands) March 2016 December 2015 Incr.(Decr.) Total Loans $434,179 $430,438 $3,741 Total Investment Securities 169,752 143,239 26,513 Total Assets 665,326 623,254 42,072 Total Deposits 539,358 490,315 49,043 Shareholders’ Equity 58,774 70,805 (12,031) Tier 1 Capital (to Total Assets) 9.76% 10.0% (.24)% Nonperforming Loans / Total Loans 1.15% 1.24% (.09)%
* Solidly Positioned to Continue Our Operating Momentum Significant ownership stake by management and directorsESOP provides additional performance incentive to employeesInstitutional holdings expected to growLarge majority of shares still held by customers and retail investors Pathfinder Stock Ownership Summary
* Solidly Positioned to Continue Our Operating Momentum Executive Management Presentation Thomas W. SchneiderPresident & Chief Executive Officer
* Solidly Positioned to Continue Our Operating Momentum Strategic capital managementMarket expansionOrganic and balanced growth in loans and depositsInvestment in staffingContinued revenue diversificationPositioned as true local alternative to M&A market disruption Strategic Growth & Profitability Initiatives
* Solidly Positioned to Continue Our Operating Momentum Abundant capital provides flexibility to pursue growth opportunitiesDominant deposit share in primary market – Oswego CountySignificant opportunity for growth in metropolitan Syracuse Stable asset quality metrics reflective of approach to underwritingFocus on noninterest income growth / diversificationMore diverse stock ownership and increased liquidity Investment Rationale
* Solidly Positioned to Continue Our Operating Momentum Questions and Discussion
* Solidly Positioned to Continue Our Operating Momentum Voting ResultsChris R. Burritt – ChairmanInspector of Elections Report – Edward Mervine
Solidly Positioned to Continue Our Operating Momentum 2015 Annual Meeting of Shareholders 10 a.m., May 4, 2016 Meeting AdjournedThank You for Attending