Pathfinder Bancorp, Inc. (PBHC) Bundle
Understanding Pathfinder Bancorp, Inc. (PBHC) Revenue Streams
Understanding Pathfinder Bancorp, Inc.’s Revenue Streams
Pathfinder Bancorp, Inc. generates revenue primarily through two sources: net interest income and noninterest income. The following sections provide a detailed breakdown of these revenue streams, including historical trends and their contributions to overall revenue.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the third quarter of 2024, net interest income was $11.7 million, an increase of 16.6% from the same quarter in 2023. This increase was driven by higher interest and dividend income, primarily from loans and investment securities.
- Noninterest Income: Total noninterest income reached $1.7 million in Q3 2024, reflecting a 43.1% year-over-year increase. This growth was attributed to increases in service charges on deposit accounts, debit card interchange fees, and gains on bank-owned life insurance.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown consistent improvement. The total revenue (non-GAAP) for the third quarter of 2024 was $13.6 million, compared to $11.3 million in Q3 2023, marking a growth rate of 20.5%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | Q3 2024 ($ million) | Q3 2023 ($ million) | Percentage Change (%) |
|---|---|---|---|
| Net Interest Income | 11.7 | 10.0 | 16.6 |
| Noninterest Income | 1.7 | 1.2 | 43.1 |
| Total Revenue | 13.6 | 11.3 | 20.5 |
Analysis of Significant Changes in Revenue Streams
In Q3 2024, net interest income increased due to a combination of higher loan volumes and improved interest rates. The average yield on loans rose to 6.31%, contributing to an increase in loan interest income. Conversely, the total interest expense also increased to $9.5 million for the same period, reflecting higher rates paid on deposits.
Noninterest income saw a significant boost from operational changes, including an increase in debit card usage and service charges. The net death benefit from bank-owned life insurance added a notable $175,000 to noninterest income, showcasing the financial benefits of existing insurance products.
Overall, Pathfinder Bancorp’s diversified revenue streams and strategic focus on enhancing interest margins and noninterest income sources position the company for sustained growth.
A Deep Dive into Pathfinder Bancorp, Inc. (PBHC) Profitability
A Deep Dive into Pathfinder Bancorp, Inc. (PBHC) Profitability
Gross Profit Margin: The gross profit margin for the third quarter of 2024 was reported at 51.81%, an increase from 50.88% in the second quarter of 2024 and 50.05% in the third quarter of 2023.
Operating Profit Margin: The operating profit margin was 14.51% in Q3 2024, compared to 11.52% in Q2 2024 and 13.68% in Q3 2023.
Net Profit Margin: The net profit margin was -5.81% for Q3 2024, a decrease from 6.57% in Q2 2024 and 7.18% in Q3 2023.
Trends in Profitability Over Time
Over the past year, profitability has seen fluctuations, particularly influenced by the net loss reported in Q3 2024. The following table summarizes the key profitability metrics over the last four quarters:
| Quarter | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 51.81 | 14.51 | -5.81 |
| Q2 2024 | 50.88 | 11.52 | 6.57 |
| Q1 2024 | 50.45 | 12.39 | 6.74 |
| Q4 2023 | 50.05 | 13.68 | 7.18 |
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin in the banking industry is approximately 50%. Pathfinder Bancorp’s gross margin of 51.81% indicates a competitive position. The operating profit margin in the industry averages around 15%, placing Pathfinder slightly below at 14.51%. The net profit margin industry average stands at 10%, with Pathfinder’s -5.81% indicating challenges in maintaining profitability amidst operational costs.
Analysis of Operational Efficiency
Pathfinder Bancorp has implemented several operational efficiency measures. The efficiency ratio, which measures noninterest expenses as a percentage of revenue, was 72.70% in Q3 2024, compared to 66.58% in Q2 2024. The increase reflects higher transaction-related expenses due to the East Syracuse branch acquisition.
The net interest margin (NIM) improved to 3.34% in Q3 2024 from 2.78% in Q2 2024, driven by a 23.8% increase in net interest income to $11.7 million for the quarter, up from $9.5 million in the previous quarter.
The following table summarizes the operational efficiency metrics:
| Metric | Q3 2024 | Q2 2024 | Q1 2024 |
|---|---|---|---|
| Efficiency Ratio (%) | 72.70 | 66.58 | 75.28 |
| Net Interest Margin (%) | 3.34 | 2.78 | 2.97 |
| Net Interest Income ($ million) | 11.7 | 9.5 | 9.4 |
Debt vs. Equity: How Pathfinder Bancorp, Inc. (PBHC) Finances Its Growth
Debt vs. Equity Structure
Pathfinder Bancorp, Inc. (PBHC) maintains a structured approach to its financing, balancing both debt and equity to support its growth and operational needs. As of September 30, 2024, the company's total liabilities stood at $1.36 billion, while total assets were reported at $1.48 billion.
Overview of Debt Levels
As of the end of the third quarter of 2024, Pathfinder Bancorp reported:
- Total short-term borrowings of $60.3 million
- Total long-term borrowings of $597,000
- Subordinated debt totaling $1.48 million
The overall debt structure indicates a significant reliance on short-term borrowing, with total debt amounting to approximately $62.4 million.
Debt-to-Equity Ratio
The debt-to-equity ratio is a crucial indicator of financial health. As of September 30, 2024, the company reported shareholders' equity of $121.1 million, resulting in a debt-to-equity ratio of approximately 0.52. This ratio is below the industry average of around 0.75, suggesting a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings
In the third quarter of 2024, Pathfinder Bancorp undertook a strategic refinancing initiative, reducing its short-term borrowings by $67.3 million through the acquisition of lower-cost deposits from the East Syracuse branch. The company has not recently issued new debt but has maintained a stable credit outlook, reflecting adequate liquidity and capital ratios.
Balancing Debt Financing and Equity Funding
To finance its growth, Pathfinder Bancorp has effectively balanced debt and equity. The company has increased its core deposits to 77.45% of total deposits as of September 30, 2024, which enhances its funding stability. The equity base has been bolstered by retained earnings, though recent losses have slightly impacted overall equity levels.
| Debt Type | Amount (in millions) |
|---|---|
| Short-term Borrowings | $60.3 |
| Long-term Borrowings | $0.6 |
| Subordinated Debt | $1.5 |
| Total Debt | $62.4 |
| Shareholders' Equity | $121.1 |
| Debt-to-Equity Ratio | 0.52 |
The table above summarizes the current debt levels and their relationship with equity, providing a clear view of the company's financial structure as it navigates growth opportunities.
Assessing Pathfinder Bancorp, Inc. (PBHC) Liquidity
Assessing Pathfinder Bancorp, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated at 1.09 based on total current assets of $290.5 million and current liabilities of $266.6 million.
Quick Ratio: The quick ratio stands at 0.98, reflecting a quick assets amount of $245.7 million against the same current liabilities of $266.6 million.
Working Capital Trends
Working capital as of September 30, 2024, is $23.9 million, which represents a 15.8% increase from $20.7 million on June 30, 2024. This upward trend indicates improving liquidity.
Cash Flow Statements Overview
The cash flow statement for the third quarter of 2024 shows:
- Operating Cash Flow: $8.5 million
- Investing Cash Flow: $(4.2 million)
- Financing Cash Flow: $(3.1 million)
Overall, the net cash flow for the quarter was $1.2 million, indicating a positive trend in operational cash generation.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total deposits increased to $1.20 billion, up from $1.10 billion in June 2024. Core deposits now represent 77.45% of total deposits, up from 67.98% in the previous quarter.
Available additional funding capacity with the Federal Home Loan Bank of New York stands at $105.2 million, complemented by unused credit lines totaling $27.3 million.
| Liquidity Metric | Value |
|---|---|
| Current Ratio | 1.09 |
| Quick Ratio | 0.98 |
| Working Capital | $23.9 million |
| Operating Cash Flow | $8.5 million |
| Investing Cash Flow | $(4.2 million) |
| Financing Cash Flow | $(3.1 million) |
| Net Cash Flow | $1.2 million |
| Total Deposits | $1.20 billion |
| Core Deposits Percentage | 77.45% |
| Funding Capacity | $105.2 million |
| Unused Credit Lines | $27.3 million |
Is Pathfinder Bancorp, Inc. (PBHC) Overvalued or Undervalued?
Valuation Analysis
Pathfinder Bancorp, Inc. (PBHC) valuation metrics provide crucial insights regarding its market standing. Below are the key ratios relevant to valuation:
| Valuation Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 18.75 |
| Price-to-Book (P/B) Ratio | 1.25 |
| Enterprise Value-to-EBITDA (EV/EBITDA) Ratio | 12.50 |
Over the last 12 months, the stock price of Pathfinder Bancorp has shown the following trends:
| Date | Stock Price |
|---|---|
| September 2023 | $18.00 |
| December 2023 | $17.50 |
| March 2024 | $15.00 |
| June 2024 | $14.00 |
| September 2024 | $12.00 |
The dividend metrics for Pathfinder Bancorp are as follows:
| Dividend Metric | Value |
|---|---|
| Dividend per Share | $0.10 |
| Dividend Yield | 0.83% |
| Payout Ratio | 30% |
Analyst consensus on the stock valuation is as follows:
| Analyst Rating | Consensus |
|---|---|
| Buy | 5 |
| Hold | 2 |
| Sell | 1 |
Key Risks Facing Pathfinder Bancorp, Inc. (PBHC)
Key Risks Facing Pathfinder Bancorp, Inc.
The financial health of Pathfinder Bancorp, Inc. (PBHC) is influenced by various internal and external risk factors. These risks can significantly impact its performance and stability as a financial institution.
Industry Competition
Pathfinder operates in a highly competitive banking environment. The increasing competition from both traditional banks and fintech companies poses a risk to its market share and profitability. As of September 30, 2024, the total loans amounted to $921.7 million, reflecting a 3.8% increase during the third quarter of 2024. This growth may be challenged by competitors offering more attractive rates or innovative services.
Regulatory Changes
Changes in regulations can adversely affect Pathfinder's operations. The bank must comply with various banking regulations, which can lead to increased compliance costs. As of September 30, 2024, the Tier 1 capital ratio was 9.13%, down from 10.30% a year earlier. This decline indicates a potential weakening of the bank's capital position in response to regulatory pressures.
Market Conditions
The prevailing economic conditions, including interest rates and inflation, directly impact Pathfinder’s financial performance. For instance, net interest income increased to $11.7 million in the third quarter of 2024, up 23.8% from the previous quarter. However, rising interest rates can lead to higher borrowing costs, affecting loan demand and profitability.
Operational Risks
Operational risks arise from inadequate or failed internal processes, systems, or external events. The recent acquisition of the East Syracuse branch, which assumed $186.0 million in deposits, introduces integration risks and operational challenges. Additionally, transaction-related expenses reached $1.6 million in the third quarter of 2024, reflecting the costs associated with this expansion.
Financial Risks
Pathfinder faces financial risks, including credit risk associated with its loan portfolio. The gross loan charge-offs totaled $8.8 million in the third quarter of 2024, primarily due to nonperforming commercial loans. The allowance for credit losses on September 30, 2024, was $17.3 million, representing 1.87% of total loans. This indicates the bank's efforts to manage potential loan defaults, but elevated charge-offs could strain its financial health.
Strategic Risks
The strategic direction taken by Pathfinder, including expansion plans and product offerings, carries inherent risks. The bank’s noninterest income rose to $1.7 million in the third quarter of 2024, a 41.0% increase from the previous quarter. However, reliance on noninterest income can expose the bank to fluctuations in service fees and other income sources.
Mitigation Strategies
Pathfinder has implemented several strategies to mitigate its risks. The bank maintains a robust liquidity profile, with total deposits increasing to $1.20 billion as of September 30, 2024. Additionally, the bank's management emphasizes strong credit risk management practices to enhance its loan portfolio quality. The efficiency ratio for the third quarter of 2024 was 75.28%, reflecting ongoing efforts to control operational costs.
| Risk Factor | Description | Current Metric |
|---|---|---|
| Industry Competition | Increased competition from banks and fintechs | $921.7 million in total loans |
| Regulatory Changes | Compliance costs and capital requirements | Tier 1 capital ratio: 9.13% |
| Market Conditions | Impact of interest rates and inflation | Net interest income: $11.7 million |
| Operational Risks | Integration and operational challenges from acquisitions | Transaction-related expenses: $1.6 million |
| Financial Risks | Credit risk from loan defaults | Gross loan charge-offs: $8.8 million |
| Strategic Risks | Risks from expansion and product offerings | Noninterest income: $1.7 million |
Future Growth Prospects for Pathfinder Bancorp, Inc. (PBHC)
Future Growth Prospects for Pathfinder Bancorp, Inc. (PBHC)
Pathfinder Bancorp, Inc. is positioned for significant growth opportunities driven by various strategic initiatives and market dynamics.
Key Growth Drivers
- Product Innovations: The bank is focusing on enhancing its digital banking services, which is expected to attract a younger customer demographic and increase engagement.
- Market Expansions: The acquisition of the East Syracuse branch, completed on July 19, 2024, added $186.0 million in deposits and $30.6 million in assets, expanding the customer base by approximately 25%.
- Acquisitions: Continued exploration of strategic acquisitions to enhance market share and operational capabilities is a priority.
Future Revenue Growth Projections
For the third quarter of 2024, net interest income was reported at $11.7 million, a 16.6% increase from the same quarter in 2023, driven by improved loan yields. Revenue for the nine months ended September 30, 2024, was $35.6 million, reflecting a 6.0% increase year-over-year.
Earnings Estimates
Despite a net loss of $4.6 million in Q3 2024, primarily due to a $9.0 million provision for credit losses, the company anticipates a return to profitability as it reduces nonperforming loans by 34.0%.
Strategic Initiatives and Partnerships
- The bank's cash dividend was declared at $0.10 per share for Q3 2024, signaling confidence in future earnings.
- Partnerships with local businesses to enhance community engagement and cross-selling opportunities are being prioritized.
Competitive Advantages
Pathfinder Bancorp's competitive advantages include:
- Strong Liquidity Position: The bank reported total deposits of $1.20 billion as of September 30, 2024, a growth of 8.6% from Q2 2024.
- Robust Asset Quality: The allowance for credit losses was 1.87% of total loans, providing a solid buffer against potential defaults.
- Net Interest Margin Improvement: The net interest margin improved to 3.34% in Q3 2024, up from 2.78% in Q2 2024.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Interest Income | $11.7 million | $9.5 million | $10.1 million |
| Noninterest Income | $1.7 million | $1.2 million | $1.2 million |
| Total Deposits | $1.20 billion | $1.10 billion | $1.13 billion |
| Loans | $921.7 million | $888.3 million | $896.1 million |
| Net Loss | $4.6 million | $2.0 million | $2.2 million |
| Net Interest Margin | 3.34% | 2.78% | 3.07% |
With a focus on strategic growth initiatives and an improving financial performance, the outlook remains positive for Pathfinder Bancorp as it navigates the evolving banking landscape.
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Article updated on 8 Nov 2024
Resources:
- Pathfinder Bancorp, Inc. (PBHC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Pathfinder Bancorp, Inc. (PBHC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Pathfinder Bancorp, Inc. (PBHC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.