Investor/Media Contacts

James A. Dowd, President, CEO

Justin K. Bigham, Executive Vice President, CFO

Telephone: (315) 343-0057

Pathfinder Bancorp, Inc. Announces Financial Results for the
Second Quarter of 2026

Pathfinder grew earnings to $0.42 per share in the second quarter of 2026 with stable credit performance, disciplined loan and deposit pricing, and incremental net interest income generated by
deploying underutilized liquidity into the bank’s AFS securities portfolio

OSWEGO, N.Y., July 30, 2026 (GLOBE NEWSWIRE) -- Pathfinder Bancorp, Inc. (“Pathfinder” or the “Company”) (NASDAQ: PBHC) announced its financial results for the second quarter ended June 30, 2026.

The holding company for Pathfinder Bank (“the Bank”) reported net income attributable to common shareholders of $2.7 million, or $0.42 per diluted share, in the second quarter of 2026, compared to $2.4 million, or $0.38 per diluted share, in the first quarter of 2026, and $31,000, or less than $0.01 per share, in the second quarter of 2025.

Second Quarter 2026 Highlights and Key Developments

“Pathfinder’s financial results reflect continued progression toward more consistent, durable profitability, with meaningful improvement in second quarter earnings and returns on assets and equity,” President and Chief Executive Officer James Dowd said. “Sequential growth in net interest income reflected an opportunistic reallocation of underutilized liquidity into the AFS securities portfolio, and third quarter results are expected to benefit more fully from these securities purchases undertaken in late May, utilizing borrowings at rates below those of wholesale funding alternatives. This approach enabled us to generate incremental earnings while preserving the flexibility to leverage Pathfinder’s low-cost core deposit franchise to fund future lending to our community bank’s businesses and consumers.”

Dowd added, “Performance was also supported by a modest net credit to provision, underscoring the benefits of the proactive, risk-based reserve build we completed last year and the ongoing stabilization of credit costs. The resolution of previously reserved commercial loans with unique risk characteristics improved overall portfolio quality without the need for incremental provision expense. Our second quarter 2026 asset quality metrics further reflects the comprehensive commercial portfolio review and reserve build completed at the end of last year, as well as the broad-based credit discipline initiatives implemented since mid-2024.”

(1) Non-GAAP financial metric. See “Notes on Non-GAAP Financial Measures” and non-GAAP reconciliation included herein for the most directly comparable financial measures.

Net Interest Income and Net Interest Margin

Second quarter 2026 net interest income was $10.5 million, an increase of $196,000, or 1.9%, from the first quarter of 2026. An increase in total interest and dividend income of $566,000 in the second quarter of 2026, from the linked quarter, was primarily attributed to a $34.9 million increase in average earning assets, as well as an average yield increase of 3 basis points on all interest-earning assets. An 11 basis points increase in average loan yields in the second quarter of 2026, from the linked quarter, was primarily attributable to the transfer of three commercial relationships to nonperforming status in the first quarter of 2026, in addition to originations of commercial real estate loans, which offset the impact of portfolio runoff from maturities and payoffs. A 16 basis points decrease in taxable securities average yield in the second quarter of 2026, from the linked quarter, reflected a $43.0 million increase in average taxable investment securities balances resulting from AFS securities purchases undertaken in the second quarter of 2026. In addition, average balances of loans, tax-exempt securities, and federal funds sold and interest-earning deposits declined in the second quarter of 2026, from the linked quarter, by $2.2 million, $384,000, and $5.5 million, respectively. Compared to the linked quarter, second quarter 2026 income

from loan interest, taxable securities, tax-exempt securities and dividends increased by $213,000, $321,000, $33,000, and $38,000, respectively, while income from federal funds sold and interest earning deposits declined by $39,000. An increase in total interest expense in the second quarter of 2026, from the linked quarter, of $370,000 was attributed to a 5 basis points increase in the average cost of total interest-bearing liabilities, including an increase of 3 basis points in the average cost of interest-bearing deposits that was partially offset by decreases of 6 basis points in the average cost of borrowings and 3 basis points in the average cost of subordinated debt.

Second quarter 2026 NIM was 3.08%, compared to 3.10% in the linked quarter. The 2 basis points decrease from the linked quarter resulted from an increase in the cost of interest-bearing deposits, which more than offset higher earning asset yields.

Second quarter 2026 net interest income was $10.5 million, a decrease of $278,000, or 2.6%, from the year-ago period. A decrease in total interest and dividend income of $1.1 million in the second quarter of 2026, from the year-ago period, was primarily attributed to a $21.9 million decline in average earning asset balances and an average yield decrease of 24 basis points on all interest-earning assets. Average loan yields decreased 16 basis points from the year-ago period, driven by maturities and payoffs of higher-yielding loans, and elevated nonperforming loans for which specific reserves were established as appropriate prior to the second quarter of 2026. A 33 basis points decrease in taxable securities average yield in the second quarter of 2026, from the year-ago period, reflected a decline in average taxable investment securities balances and a declining rate environment. In addition, average balances of loans, taxable securities and tax-exempt securities declined in the second quarter of 2026, from the year-ago period, by $11.4 million, $14.8 million, and $1.2 million, respectively. Compared to the year-ago period, second quarter 2026 decreases in income from loan interest, taxable securities, and tax-exempt securities of $536,000, $602,000, and $97,000, respectively, were partially offset by increases in income from dividends of $66,000 and federal funds sold and interest earning deposits of $55,000. A decrease in total interest expense in the second quarter of 2026, from the year-ago period, of $836,000 was attributed to a 22 basis points decline in the average cost of total interest-bearing liabilities, including a reduction of 33 basis points in the average cost of interest-bearing deposits that was partially offset by an increase of 7 basis points in the average cost of borrowings, as well as an increase of 218 basis points in the average cost of subordinated debt that reset from bearing fixed to floating-rate interest after October 15, 2025.

Second quarter 2026 NIM was 3.08%, compared to 3.11% in the year-ago period. The decrease of 3 basis points primarily reflected lower earning asset yields that more than offset the reduction in the cost of interest-bearing deposits and other liabilities.

Noninterest Income

Second quarter 2026 noninterest income totaled $1.2 million. First quarter 2026 noninterest income totaled $1.1 million, which was reduced by $203,000 for fair value adjustments made in that period to $6.3 million in substandard loans that were transferred to held-for-sale status in the fourth quarter of 2025. Second quarter 2025 noninterest income totaled negative $1.5 million, including $3.1 million in fair value adjustments made in the year-ago period in connection with the sale of certain nonperforming and classified loans.

Compared to the linked quarter, second quarter 2026 noninterest income reflected increases of $74,000 in earnings and gain on bank owned life insurance (“BOLI”) and $49,000 in debit card interchange fees. In addition, compared to the linked quarter, second quarter 2026 noninterest income also reflected a decrease of $5,000 in net

realized losses on sales and redemptions of investment securities, as well as decreases of $91,000 in gains on sales of loans and foreclosed real estate and $21,000 in loan servicing fees. Net unrealized gains on marketable equity securities, which include three limited partnership equity method investments, remains a variable contributor to noninterest income, decreasing $129,000 in the second quarter of 2026 from the linked quarter.

Compared to the year-ago period, second quarter 2026 noninterest income reflected increases of $174,000 in earnings and gains on BOLI, $8,000 in debit card interchange fees, and $1,000 in service charges on deposit accounts. In addition, compared to the year-ago period, second quarter 2026 noninterest income included an increase of $12,000 in gains on sales of loans and foreclosed real estate, as well as a decrease of $29,000 in loan servicing fees. Net unrealized gains on marketable equity securities, which include three limited partnership equity method investments, remains a variable contributor to noninterest income, decreasing $473,000 in the second quarter of 2026 from the year-ago period.

Noninterest Expense

Noninterest expense totaled $8.7 million in the second quarter of 2026, compared to $8.7 million in the first quarter of 2026 and $8.1 million in the second quarter of 2025.

Salaries and benefits expense was $4.7 million in the second quarter of 2026, decreasing $204,000 from the linked quarter and increasing $128,000 from the year-ago quarter. The Company recorded moderate increases in salaries, stock-based compensation, and payroll taxes compared to both periods, with the year-over-year increase also reflecting higher staffing levels. These increases were offset by the favorable impact of several non-operating items, including recoveries from medical claim refunds under the Company's self-insured health plan in the second quarter of 2026.

Building and occupancy expense was $1.4 million in the second quarter of 2026, increasing $53,000 from the linked quarter and $150,000 from the year-ago quarter. The increases from the linked and year-ago quarters reflected higher facility-related maintenance and repair expenses, including ATM servicing, branch maintenance and various property improvement activities.

Data processing expense was $774,000 in the second quarter of 2026, increasing $41,000 from the linked quarter and $107,000 from the year-ago period. The increases from the linked and year-ago quarters reflected higher costs primarily associated with data, ATM, and other technology maintenance costs.

Other expenses were $614,000 in the second quarter of 2026, increasing $139,000 from the linked quarter and $104,000 from the year-ago quarter. The increases from both the linked and year-ago quarters were primarily attributable to higher employee travel, training, and professional development expenses, as well as higher mortgage recording tax, liability insurance, and business development-related expenses. The year-over-year increase was also influenced by certain favorable accrual and expense reclassification adjustments recognized in the year-ago period.

Total noninterest expense comparisons also reflect FDIC assessments, which were zero in the second quarter of 2025, due to modest over-accruals in prior periods. Normalized FDIC assessment accruals have been recorded since June 30, 2025, including $204,000 and $232,000 in first and second quarters of 2026, respectively.

As a percentage of average assets, annualized noninterest expense represented 2.39% in the second quarter of 2026, compared to 2.48% and 2.18% in the linked and year-ago periods. The efficiency ratio was 74.26% in the second quarter of 2026, compared to 75.65% and 65.66% in the linked and year-ago periods, respectively(2). As the Company continues to maintain well controlled noninterest expenses, the efficiency ratio was elevated in the second quarter of 2026 by a reduction in revenues in the period, which the Company views as temporary. In addition, the absence of FDIC assessment expense in the second quarter of 2025, due to modest over-accruals in prior periods, lowered the efficiency ratio for the three months ended June 30, 2025.

(2) Non-GAAP financial metric. See “Notes on Non-GAAP Financial Measures” and non-GAAP reconciliation included herein for the most directly comparable financial measures.

Net Income

Net income attributable to common shareholders was $2.7 million, or $0.42 per basic and diluted share, in the second quarter of 2026, compared to $2.4 million, or $0.38 per basic and diluted share, in the first quarter of 2026, and $31,000, or less than $0.01 per basic and diluted share, in the second quarter of 2025.

Statement of Financial Condition

As of June 30, 2026, the Company’s statement of financial condition reflects total assets of $1.49 billion, compared to $1.42 billion on March 31, 2026, and $1.51 billion on June 30, 2025.

Loans totaled $889.0 million on June 30, 2026, decreasing $6.2 million or 0.7% during the second quarter of 2026 and $20.7 million or 2.3% from one year prior. Consumer and residential loans totaled $345.2 million on June 30, 2026, decreasing $1.8 million or 0.5% during the second quarter of 2026 and $16.9 or 4.7% from one year prior. Commercial loans totaled $544.6 million on June 30, 2026, decreasing $4.9 million or 0.9% during the second quarter of 2026 and $4.5 million or 0.8% from one year prior.

Investment securities totaled $483.7 million on June 30, 2026, increasing $82.1 million or 20.4% during the second quarter of 2026 and $20.0 million or 4.3% from one year prior. The increase from March 31, 2026 was primarily due to the purchase of AFS securities during the second quarter of 2026, enabling the Company to generate incremental earnings while preserving the flexibility to use core deposits to fund future loan growth, even as the held-to maturity (“HTM”) portfolio experienced runoff from maturities, calls, and paydowns.

With respect to liabilities, deposits totaled $1.17 billion on June 30, 2026, decreasing $37.5 million or 3.1% during the second quarter of 2026 and $47.6 million or 3.9% from one year prior, as the Bank utilizes deliberate pricing and account management to facilitate intentional runoff of higher-cost brokered deposits and non-relationship time deposits. The decrease from March 31, 2026 reflected a shift in deposit mix toward noninterest-bearing demand deposits, while other deposit categories declined, including higher-cost time deposits with balances of less than $250,000. The decrease from June 30, 2025 reflects growth in MMDA deposits and both interest- and noninterest-bearing demand deposits, offset by runoff of higher-cost time deposits.

Core deposits totaled $961.6 million, or 81.9% of total deposits, on June 30, 2026, decreasing $32.1 million or 3.2% during the second quarter of 2026 and increasing $2.8 million or 0.3% from one year prior.

Borrowings were utilized in the second quarter of 2026 to fund purchases of AFS securities at rates below those of wholesale funding alternatives, including brokered deposits. As a result, borrowings grew to $133.4 million on June 30, 2026, increasing $106.0 million during the second quarter of 2026 and $36.9 million from one year prior.

Shareholders’ equity totaled $125.7 million on June 30, 2026, increasing $2.2 million or 1.7% during the second quarter of 2026 and $1.3 million or 1.1% from one year prior. The increase from March 31, 2026 primarily reflected a $2.0 million increase in retained earnings and a $529,000 increase in additional paid in capital, which more than offset a $408,000 increase in accumulated other comprehensive loss (“AOCL”).

Asset Quality

The Company’s asset quality metrics reflect ongoing efforts the Bank is undertaking as part of its commitment to continuously improve its credit risk management approach.

The Company believes it is sufficiently collateralized and reserved, with an ACL of $26.9 million on June 30, 2026, compared to $29.0 million on March 31, 2026, and $16.0 million on June 30, 2025. During the second quarter of 2026, the Company charged off a $1.6 million commercial loan with unique risk characteristics ("LURC") that had been identified through last year's comprehensive commercial portfolio review. The charge-off was fully covered by previously established ACL reserves. As a percentage of total loans, ACL represented 3.03% on June 30, 2026, 3.24% on March 31, 2026, and 1.76% on June 30, 2025.

The ACL continues to reflect a $11.4 million risk-based reserve build at the end of 2025, following a forward-looking assessment of LURCs identified through a comprehensive review of approximately 90% of the Bank’s commercial portfolio. Specific reserves, including those established in conjunction with 2025’s comprehensive commercial portfolio review, represented 62.0% of the Company’s ACL at the end of the second quarter of 2026.

Individually analyzed loans (“IALs”) including LURCs totaled $78.6 million on June 30, 2026, improving from $84.7 million on March 31, 2026. At the end of the second quarter of 2026, LURCs consisted of 67% commercial real estate (“CRE”) loans, which had a weighted average loan-to-value (“LTV”) ratio of 66%(3).

Nonperforming loan (“NPL”) levels may fluctuate near term as IALs progress through resolution activities. NPLs were $35.7 million, or 4.02% of total loans on June 30, 2026, compared to $38.2 million, or 4.26% of total loans on March 31, 2026, and $11.7 million or 1.28% of total loans on June 30, 2025. NPLs decreased in the second quarter of 2026, largely as the result of the $1.6 million charge-off of the aforementioned LURC associated with a single commercial relationship.

The Company’s ACL fully absorbed second quarter 2026 net charge-offs (“NCOs”) of $1.9 million, or an annualized 0.83% of average loans, with gross charge-offs partially offset by $298,000 in recoveries.

A credit loss provision benefit of $155,000 was recorded in the second quarter of 2026, attributed to the level of average loans outstanding in the period and the risk-based reserve build undertaken in the second half of 2025 to absorb future loss resolution activity related to commercial IALs. A credit loss provision benefit of $168,000 was recorded in the first quarter of 2026 and the provision for credit loss expense was $1.2 million in the year-ago period.

(3) Weighted average LTV is the loan principal balance as a percentage of book balance for commercial real estate (CRE) individually analyzed loans, excluding two loans with LTVs >100% based on collateral that is expected to be sold to new owners or sponsors intending to reposition these transitional or value-add properties. Collateral values are determined using most-recent appraisals, purchase offers, auction bids, broker opinions, and business financials.

Liquidity

The Company has diligently ensured a strong liquidity profile as of June 30, 2026 to meet its ongoing financial obligations. The Bank’s liquidity management, as evaluated by its cash reserves and operational cash flows from loan repayments and investment securities, remains robust and is effectively managed by the institution’s leadership.

The Bank’s analysis indicates that expected cash inflows from loans and investment securities are more than sufficient to meet all projected financial obligations. Total deposits were $1.17 billion on June 30, 2026, compared to $1.21 billion on March 31, 2026, and $1.22 billion on June 30, 2025. Core deposits, as a percentage of total deposits, represented 81.89% on June 30, 2026, compared to 82.01% on March 31, 2026, and 78.47% on June 30, 2025. The Bank continues to implement strategic initiatives to enhance its core deposit franchise, including targeted marketing campaigns and customer engagement programs aimed at deepening banking relationships and enhancing deposit stability.

On June 30, 2026, the Bank had an available additional funding capacity of $81.7 million with the Federal Home Loan Bank of New York and $54.3 million with the Federal Reserve Bank, which complements its liquidity reserves. Moreover, the Bank maintains additional unused credit lines totaling $15.0 million, which provide a buffer for additional funding needs. These facilities, including access to the Federal Reserve’s Discount Window, are part of a comprehensive liquidity strategy that ensures flexibility and readiness to respond to any funding requirements.

Cash Dividend Declared

On June 29, 2026, Pathfinder’s Board of Directors declared a cash dividend of $0.10 per share for holders of both voting common and non-voting common stock.

Shareholders registered by July 17, 2026 will be eligible for the dividend, which is scheduled for disbursement on August 7, 2026. This distribution aligns with Pathfinder Bancorp’s philosophy of consistent and reliable delivery of shareholder value.

Evaluating the Company’s market performance, the closing stock price as of June 30, 2026 stood at $15.88 per share. This positions the annualized dividend yield at 2.52%.

About Pathfinder Bancorp, Inc.

Pathfinder Bancorp, Inc. (NASDAQ: PBHC) is the bank holding company for Pathfinder Bank, which serves Central New York customers throughout Oswego, Syracuse, and their neighboring communities. Strategically located branches, as well as diversified consumer, mortgage, and commercial loan portfolios, reflect the state-chartered Bank’s commitment to in-market relationships and local customer service. The Company also offers investment services to individuals and businesses. More information is available at pathfinderbank.com and ir.pathfinderbank.com.

Forward-Looking Statements

Certain statements contained herein are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, but are not limited to, statements regarding expected earnings normalization, future credit costs, the adequacy of the allowance for credit losses, reduced incremental reserve pressure, potential expansion of regulatory capital ratios, dividend sustainability, liquidity capacity, funding availability, and the Company’s business strategy and outlook for 2026 and beyond.

Forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” or “may.” These forward-looking statements are based on current beliefs and expectations of the Company’s and the Bank’s management and are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the Company’s and the Bank’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

Actual results may differ materially from those expressed or implied by the forward-looking statements as a result of numerous factors. Although it is not possible to identify all factors that may cause actual results to differ, such include, but are not limited to: risks related to the real estate and economic environment, particularly in the market areas in which the Company and the Bank operate; fiscal and monetary policies of the U.S. Government; inflation; changes in prevailing interested rates; changes in government regulations affecting financial institutions, including regulatory compliance costs and capital requirements; the risk that actual credit losses, borrower performance, collateral values, or loan migration patterns differ from management’s forward-looking estimates or assumptions; fluctuations in the adequacy of the allowance for credit losses; decreases in deposit levels or changes in deposit mix that may necessitate increased borrowing to fund loans and investments; access to wholesale or other funding sources; operational risks including, cybersecurity, fraud, model risk and natural disasters; credit risk management; and the risk that the Company may not be successful in the implementation of its business strategy.

Additional factors that could cause actual results to differ materially are described in the Company’s Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission (“SEC”), which are available at the SEC’s website, www.sec.gov. While the Company believes it has identified and discussed the material risks affecting its business, there may be additional risks and uncertainties not currently known or considered immaterial that could affect the forward-looking statements made herein.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictions of future results. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Notes on Non-GAAP Financial Measures

This release contains certain non-GAAP financial measures, including, but not limited to the efficiency ratio, pre-tax, pre-provision net income, tangible common equity, tangible book value per share, and return on average tangible common equity. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a registrant’s historical or future financial performance, financial position, or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable GAAP measure.

The Company believes these non-GAAP financial measures provide useful information to investors by assisting in the evaluation of the Company’s operating performance, operating efficiency, financial condition, and trends, and by facilitating comparisons with prior periods and with peer institutions. In particular, management uses these measures to assess expense control relative to revenue generation, underlying profitability excluding certain non-recurring or non-operational items, and capital strength on a basis that it believes is meaningful for internal planning and external analysis.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP and should be considered only in conjunction with the Company’s GAAP financial results.

Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures within this release.

The above information is unaudited and preliminary, based on the Company's data available at the time of presentation.