DEF 14A

DEF 14A 1 pbhc2023_def_14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement

☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

☐ Definitive Additional Materials

☐ Soliciting Material Pursuant to §240.14a-12

PATHFINDER BANCORP, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

☒ No fee required

☐ Fee paid previously with preliminary materials

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

April 27, 2023

Dear Shareholder:

We cordially invite you to attend the Annual Meeting of Shareholders of Pathfinder Bancorp, Inc. The Annual Meeting will be held at the Lake Ontario Conference and Events Center, 24 East First Street, Oswego, NY 13126 at 10:00 a.m., Eastern Time, on June 1, 2023.

The enclosed Notice of Annual Meeting and Proxy Statement describe the formal business to be transacted. During the Annual Meeting, we will also report on our operations. Directors and officers, as well as a representative of our independent registered public accounting firm, will be present to respond to questions that shareholders may properly present.

The Annual Meeting is being held so that shareholders may consider the election of five directors and the appointment of Bonadio & Co., LLP, as our independent registered public accounting firm for the year ending December 31, 2023.

For the reasons set forth in the Proxy Statement, the Board of Directors unanimously recommends a vote “FOR” the election of the nominated directors and “FOR” the ratification of the appointment of Bonadio & Co., LLP as our independent registered public accounting firm for the year ending December 31, 2023.

On behalf of the Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, or vote by telephone or internet as directed on our Proxy Card enclosed, even if you currently plan to attend the Annual Meeting. This will not prevent you from voting at the Annual Meeting, but will assure that your vote is counted if you are unable to attend the meeting. Your vote is important, regardless of the number of shares that you own.

Sincerely,

James A. Dowd

President and Chief Executive Officer

Pathfinder Bancorp, Inc.
214 West First Street
Oswego, New York 13126
(315) 343-0057

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS – June 1, 2023

Notice is hereby given that the Annual Meeting of Pathfinder Bancorp, Inc. will be held at The Lake Ontario Conference and Events Center, 24 East First Street, Oswego, NY 13126 at 10:00 a.m., Eastern Time, on June 1, 2023.

A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.

The Annual Meeting is for the purpose of considering and acting upon:

The election of five directors; and

The ratification of the appointment of Bonadio & Co., LLP as our independent registered public accounting firm for the year ending December 31, 2023; and

such other matters as may properly come before the Annual Meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to come before the Annual Meeting.

Any action may be taken on the foregoing proposals at the Annual Meeting on the date specified above, or on any date or dates to which the Annual Meeting may be adjourned. Shareholders of record at the close of business on April 12, 2023 are the shareholders entitled to vote at the Annual Meeting, and any adjournments thereof.

EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR INTERNET AS DIRECTED ON OUR PROXY CARD ENCLOSED. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH OUR CORPORATE SECRETARY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting

THE NOTICE AND PROXY STATEMENT, ANNUAL REPORT TO SHAREHOLDERS, FORM 10-K AND PROXY CARD ARE AVAILABLE ON THE INTERNET AT WWW.PATHFINDERBANK.COM/ANNUALMEETING. IF YOU NEED DIRECTIONS TO ATTEND THE ANNUAL MEETING AND VOTE IN PERSON, PLEASE CALL US AT 315-207-8017.


		By Order of the Board of Directors

April 27, 2023		William O’Brien, Secretary

IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.

TABLE OF CONTENTS


			PAGE #
I.	Information about this Proxy Statement and the Annual Meeting			4
	A.	Date, Time and Place		4
	B.	Voting Securities and Principal Holders Thereof		4
	C.	Proxy Solicitation Costs		5
	D.	Revocation of Proxies		5
	E.	Conduct of Meeting		5
	F.	Attendance of Directors at the Annual Meeting		5
	G.	Other Matters		5
	H.	Smaller Reporting Company		5
II.	Our Governance and Beneficial Ownership			6
	A.	Leadership Structure and Risk Oversight Rule of the Board of Directors		6
	B.	Independence and Diversity of Directors		6
	C.	Security Ownership of Certain Beneficial Owners and Management		6
	D.	Delinquent Section 16(a) Reports		9
	E.	Transactions with Certain Related Persons		9
	F.	Anti-Hedging Policy		10
	G.	Code of Ethics		10
	H.	Shareholder Communications		10
III.	Meetings and Committees of the Board of Directors			11
	A.	Nominating/Governance Committee		11
	B.	Compensation Committee		13
	C.	Audit Committee		13
	D.	Asset/Liability Committee (ALCO)		13
	E.	Executive/Loan Committee		13
	F.	Other Committees		14
IV	Compensation Disclosure			14
	A.	Executive Compensation		14
	B.	Compensation of our Named Executive Officers		15
	C.	Directors’ Compensation		22
V.	Proposal 1 – Election of Directors			23
	A.	Composition of our Board		23
	B.	Nominees		24
	C.	Continuing Directors		25
	D.	Executive Officers who are not Directors		27
VI.	Proposal 2– Ratification of Appointment of Auditors			27
	A.	Audit and Related Fees for 2022		28
	B.	Audit Committee Report		29
VII.	Next Year			29

Pathfinder Bancorp, Inc.
214 West First Street
Oswego, New York 13126
(315) 343-0057

INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING

DATE, TIME AND PLACE

This proxy statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Pathfinder Bancorp, Inc. (the “Company”) to be used at our Annual Meeting of Shareholders (the “Annual Meeting”), which will be held at the Lake Ontario Conference and Events Center, 24 East First Street, Oswego, NY 13126 on June 1, 2023 at 10:00 a.m. Eastern Time, and all adjournments of the Annual Meeting. The accompanying notice of Annual Meeting and this proxy statement are first being mailed to shareholders on or about April 27, 2023.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Holders of record of our voting common stock, par value $0.01 per share, as of the close of business on April 12, 2023 (the "Record Date"), are entitled to one vote for each share they own. As of the Record Date, we had 4,651,829 shares of voting common stock outstanding. The presence at the Annual Meeting or by proxy of a majority of the outstanding shares of voting common stock entitled to vote is necessary to constitute a quorum at the Annual Meeting. If a shareholder holds shares in street name (i.e., the shares are held in a stock brokerage account or by a bank, trust, or other institution) and does not provide voting instructions to the holder of the account for non-discretionary voting items such as the election of directors, such shares will be considered “Broker non-votes.” Broker non-votes and proxies marked “abstain” will be counted for purposes of determining that a quorum is present, but will not be considered as votes cast as to the matters to be considered.

As to the election of directors, shareholders may cast their votes “For” or “Withhold.” As to the ratification of our independent registered public-accounting firm, shareholders may cast their votes “For,” “Against” or “Abstain".

Directors are elected by a plurality of votes cast, without regard to either broker non-votes, or proxies as to which the authority to vote for the nominees being proposed is withheld. The affirmative vote of holders of a majority of the total votes cast at the Annual Meeting or by proxy, without regard to broker non-votes or proxies as to which shareholders abstain, is required for the ratification of Bonadio & Co., LLP as our independent registered public accounting firm (the “Auditors”) for the year ending December 31, 2023.

In accordance with the provisions of our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10% of the outstanding shares of our voting common stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the Limit unless approved by our Board of Directors. Our Articles of Incorporation authorize the Board of Directors (i) to make all determinations necessary to implement and apply the Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the Limit supply information to us to enable the Board of Directors to implement and apply the Limit. However, pursuant to our Articles of Incorporation, our employee stock ownership plan will not be deemed to beneficially own any “over the limit Company stock” held under such plan. Castle Creek Capital Partners VII, L.P. has been approved by the Board of Directors to vote shares held in excess of the Limit.

If you participate in the Pathfinder Bank (“Pathfinder Bank” or the “Bank”) Employee Stock Ownership Plan (the “ESOP”), you will receive a voting instruction card so that you may direct the trustee to vote on your behalf under the plan. Under the terms of the ESOP, the ESOP trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the shares of voting common stock allocated to his or her account. The ESOP trustee, subject to the exercise of its fiduciary responsibilities, will vote all unallocated shares of Pathfinder Bancorp, Inc. common stock held by the ESOP and allocated shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. The deadline for returning your ESOP voting instructions is May 22, 2023.

PROXY SOLICITATION COSTS

The Company will pay all costs relating to the solicitation of proxies. Proxies may be solicited by officers, directors, and staff members of the Company personally, by mail, by telephone, or by other electronic means. The Company will also reimburse brokers, custodians, nominees, and fiduciaries for reasonable expenses in forwarding proxy materials to beneficial owners of the Company’s stock.

REVOCATION OF PROXIES

Shareholders who sign the proxies we are soliciting will retain the right to revoke them in the manner described below. Unless so revoked, the shares represented by such proxies will be voted at the Annual Meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors will be voted in accordance with the directions given thereon. Where no instructions are indicated, validly executed proxies will be voted in favor of all proposals. If any other matters are properly brought before the Annual Meeting, the persons named in the accompanying proxy will vote the shares as directed by a majority of the Board of Directors in attendance at the Annual Meeting. We know of no additional matters that will be presented for consideration at the Annual Meeting.

Proxies may be revoked by sending written notice of revocation to our Secretary, at the address shown above, by delivering to us a duly executed proxy bearing a later date or by attending the Annual Meeting and voting. The presence at the Annual Meeting of any shareholder who had returned a proxy will not revoke the proxy unless the shareholder delivers his or her ballot in person at the Annual Meeting or delivers a written revocation to our Secretary prior to the voting of the proxy. If you are a shareholder whose shares are not registered in your name, you will need appropriate documentation from your record holder to vote in person at the Annual Meeting.

CONDUCT OF MEETING

In accordance with our bylaws, and by action of the Board of Directors, the Chair of the Board will preside over the Annual Meeting. The Chair of the Board has broad authority to ensure the orderly conduct of the meeting. This includes discretion to recognize shareholders who have questions, and the right to determine the extent of discussion on each item of business. Rules governing the conduct of the meeting have been established and will be available at the meeting along with the agenda of the matters to be considered at the Annual Meeting.

ATTENDANCE OF DIRECTORS AT THE ANNUAL MEETING

The Company does not have a policy regarding the attendance of Board members at the Annual Meeting, although all are encouraged to attend. Five directors attended the 2022 Annual Meeting.

OTHER MATTERS

The Board of Directors is not aware of any business to come before the Annual Meeting other than the matters described in this Proxy Statement. However, if any matters should properly come before the Annual Meeting, it is intended that holders of the proxies will act as directed by a majority of the Board of Directors, except for matters related to the conduct of the Annual Meeting, as to which they shall act in accordance with their best judgment. The Board of Directors intends to exercise its discretionary authority to the fullest extent permitted under Maryland Law and the Securities Exchange Act of 1934.

SMALLER REPORTING COMPANY

The Company has elected to prepare this Proxy Statement and other annual and periodic reports as a “Smaller Reporting Company” consistent with rules of the Securities and Exchange Commission.

II.

OUR GOVERNANCE AND BENEFICIAL OWNERSHIP

LEADERSHIP STRUCTURE AND RISK OVERSIGHT ROLE OF THE BOARD OF DIRECTORS

Our Board has a separate person serve as Chief Executive Officer (“CEO”) and Chair of the Board and has functioned in that manner since the year 2000. Mr. Burritt, our Chair, is an independent director as defined by NASDAQ’s listing requirements. The Company has spent significant time evaluating its leadership structure and has determined that, under the present circumstances, separating the Chair and CEO positions is appropriate. We believe this separation allows our Board to concentrate on policy and strategy and our CEO the time to concentrate on executing such strategy. Additionally, we believe this structure is most appropriate given the Board’s role in monitoring the Company’s execution of its business plan and the risk elements associated with such execution.

The primary risks facing the Bank, as the operating subsidiary of the Company, are interest rate risk, liquidity risk, investment risk, credit risk, risks associated with inadequate allowance for loan losses, cyber security risks, competitive risks and regulatory risks. While the full Board is actively engaged in monitoring all of the noted risks, we have further assigned specific responsibilities to Board Committees for detailed review. The Asset/Liability Committee, with the assistance of professional consultants, monitors interest rate risk, investment risk and liquidity risk. The Directors' Loan Committee, with the assistance of a professional loan review consultant, monitors the credit risks and risks associated with allowance for loan losses. The Technology Steering Committee, with the assistance of professional experts, monitors and responds to cyber risks. In addition, we purchase internet liability and other insurance to protect us against cyber security risks. The Audit/Compliance Committee monitors regulatory risks. Every member of our Board engages in continuing education in an effort to monitor Enterprise Risk Management issues so that they can effectively engage in their oversight role.

INDEPENDENCE AND DIVERSITY OF DIRECTORS

Our common stock is listed on the NASDAQ Capital Market. The Board of Directors has determined that all of its directors, with the exception Mr. Funiciello, are “independent” pursuant to NASDAQ’s listing requirements. Director nominee James A. Dowd would not be an independent director because he is President and Chief Executive Officer of the Company. In evaluating the independence of our independent directors, we considered the following transactions between us and our independent directors during 2022 that are not required to be disclosed under “Transactions with Certain Related Persons:”

•

A law firm, of which our Director William A. Barclay is a partner, was paid for real estate loan closings by borrowers and other legal matters in the amount of $77,273.

Our Board of Directors has determined that this transaction did not impair the independence of the named director. Our independent directors hold executive sessions no less than twice a year.

Although the Nominating Committee does not have a formal policy with regard to the consideration of diversity in identifying a director nominee, diversity is considered in our review of candidates. The Nominating Committee hopes to continue to diversify our Board membership. As considered by our Board, diversity includes not only gender and ethnicity, but the various perspectives that come from having differing viewpoints, geographic and cultural backgrounds, and life experiences. Our current Diversity Matrix Chart can be found on our website at https://ir.pathfinderbank.com.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Persons and groups who beneficially own in excess of 5% of the Company's voting common stock are required to file Schedule 13G or Schedule 13D reports with the Securities and Exchange Commission (the “SEC”) regarding such ownership. The following table sets forth, as of the date of the most recent reports, the shares of voting common stock beneficially owned by each person or entity that was the beneficial owner of more than 5% of our outstanding shares of voting common stock. None of the shares beneficially owned by directors, executive officers or nominees to the board of directors have been pledged as security or collateral for any loans.

The following table represents the ownership of our Schedule 13D and 13G filers as of the Record Date:


Name and Address of Beneficial Owners	Amount Beneficially Owned		Percentage of Shares of Voting Common Stock Outstanding
Castle Creek Capital Partners VII, LP (1)		409,908	8.8%
Castle Creek Capital VII LLC
6051 El Tordo
PO Box 1329
Rancho Santa Fe, CA 92067

Pathfinder Bank Employee Stock Ownership Plan Trust (2)		386,935	8.3%
c/o Pentegra Services, Inc.
2 Enterprise Drive, Suite 408
Shelton, CT 06484

Minerva Advisors, LLC (3)		251,649	5.4%
Minerva Group, LP
Minerva GP, LP
Minerva GP, Inc.
David P. Cohen
50 Monument Road, Suite 201
Bala Cynwyd, PA 19004

(1)

Based on information reported on a Schedule 13D/A filed with the Securities and Exchange Commission on November 17, 2020, Castle Creek Capital Partners VII, LP and Castle Creek Capital VII, LLC reported shared voting power for 409,908 shares of our voting common stock and shared dispositive power over 409,908 shares of our voting common stock.

(2)

Based on information reported on a Schedule 13G/A filed with the Securities and Exchange Commission on February 13, 2023, Pentegra Trust Company, the trustee for the Pathfinder Bank Employee Stock Ownership Plan, reported sole voting power for 47,924 shares of our voting common stock, shared voting power for 339,011 shares of our voting common stock, sole dispositive power over 356,513 shares of our voting common stock and shared dispositive power over 30,422 shares of our voting common stock.

(3)

Based on information reported on a Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2023, Minerva Advisors, LLC, Minerva Group, LP, Minerva GP, LP, Minerva GP, Inc., and David P. Cohen reported sole dispositive and voting power with respect to 204,250 shares of our voting common stock and Minerva Advisors, LLC and David P. Cohen reported shared dispositive and voting power with respect to 47,399 shares of our voting common stock.

The following table sets forth as of the Record Date, the shares of common stock beneficially owned by director nominees, directors, executive officers and other management for whom we file Section 16 reports.


Name and Address of Beneficial Owners	Number of Shares Owned and Nature of Beneficial Ownership (1)		Number of Unexercised Stock Options which are included in Beneficial Ownership (2)		Percentage of Shares of Voting Common Stock Outstanding
Director Nominees, Directors, Named Executive Officers and Executive Officers (3)	#		#		%
Eric Allyn (4)		50,394	─			1.1
David A. Ayoub (5)		39,948		17,023		0.9
William A. Barclay (6)		90,750		8,787		2.0
Meghan Crawford-Hamlin	─		─			0.0
Chris R. Burritt (7)		56,691		8,787		1.2
John P. Funiciello (8)		45,537		8,787		1.0
Adam C. Gagas (9)		201,052		17,023		4.3
Melanie Littlejohn (10)		12,302		8,787		0.3
John F. Sharkey, III (11)		51,538	─			1.1
Lloyd "Buddy" Stemple (12)		71,570	─			1.5
James A. Dowd (13)		72,327		16,870		1.6
Ronald Tascarella (14)		103,416		16,870		2.2
Daniel R. Phillips (15)		63,459		29,106		1.4
Calvin L. Corriders (16)		51,441		17,555		1.1
Walter F. Rusnak (17)		97,707		24,851		2.1
William O'Brien (18)		34,322		17,555		0.7
Thomas W. Schneider (19)		74,868	─			1.6
All Directors and Executive Officers as a Group (16 persons)		1,117,322		192,001		24.0
Section 16 Filers
Robert G. Butkowski		28,503		3,636		0.6
Ronald G. Tascarella		25,640		5,109		0.6

(1)

A person is deemed to be the beneficial owner, for purposes of this table, of any shares of voting common stock if he or she has shared voting or investment power with respect to such security, or has a right to acquire beneficial ownership at any time within 60 days from the Record Date. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment power” is the power to dispose or direct the disposition of shares. This table includes all shares held directly, as well as by spouses and minor children, in trust and other indirect ownership, over which shares the named individuals effectively exercise sole or shared voting and investment power. Unless otherwise indicated, the named individual has sole voting and investment power. ESOP shares allocated to the officers are also included within their respective totals.

(2)

These options are exercisable within 60 days of the Record Date. They cannot be voted until exercised.

(3)

The mailing address for each person listed is 214 West First Street, Oswego, New York 13126.

(4)

Mr. Allyn's shares include 50,394 shares held by Foundation and LLC.

(5)

Mr. Ayoub’s shares include 17,763 shares in a 401(k) plan and 1,647 shares in an IRA.

(6)

Mr. Barclay has sole voting and investment power over 19,987 shares and shared investment and voting power over 61,976 shares.

(7)

Mr. Burritt’s shares include 25,000 shares in an IRA.

(8)

Mr. Funiciello’s shares include 5,000 shares in an IRA.

(9)

Mr. Gagas’s shares include 15,800 shares in an IRA. He has sole voting and investment power over 34,365 shares and shared investment and voting power over 149,664 shares.

(10)

Ms. Littlejohn has sole voting and investment power over 3,515 shares.

(11)

Mr. Sharkey’s shares include 20,000 shares in an IRA.

(12)

Mr. Stemple has sole voting and investment power over 69,070 shares and shared investment and voting power over 2,500 shares.

(13)

Mr. Dowd’s shares include 16,607 shares in Pathfinder Bank’s 401(k) plan and 19,202 shares in Pathfinder Bank’s ESOP. He also has 1,054 restricted stock units that will vest within 60 days of the Record Date.

(14)

Mr. Tascarella’s shares include 20,292 shares in Pathfinder Bank’s 401(k) plan and 8,701 shares in Pathfinder Bank’s ESOP. He has sole voting and investment power over 81,545 shares and shared investment and voting power over 5,000 shares. He also has 1,054 restricted stock units that will vest within 60 days of the Record Date.

(15)

Mr. Phillip’s shares include 6,021 shares in Pathfinder Bank’s 401(k) plan and 12,387 shares in Pathfinder Bank’s ESOP. He has sole voting and investment power over 33,623 shares and shared investment and voting power over 730 shares. He also has 1,054 restricted stock units that will vest within 60 days of the Record Date.

(16)

Mr. Corrider’s shares include 15,974 shares in Pathfinder Bank’s 401(k) plan and 6,492 shares in Pathfinder Bank’s ESOP.

(17)

Mr. Rusnak’s shares include 29,000 shares in an IRA and 3,856 shares in Pathfinder Bank’s ESOP.

(18)

Mr. O’Brien’s shares include 3,255 shares in Pathfinder Bank’s 401(k) plan and 7,958 shares in Pathfinder Bank’s ESOP.

(19)

Mr. Schneider's shares include 23,262 shares in Pathfinder Bank's 401(k) plan and 19,233 shares in Pathfinder Bank's ESOP. Mr. Schneider resigned from the Company on September 7, 2022.

DELINQUENT SECTION 16(a) REPORTS

Our common stock is registered with the SEC pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”). Our executive officers and directors and beneficial owners of greater than 10% of our common stock (“10% beneficial owners”) are required to file reports on Forms 3, 4 and 5 with the SEC disclosing beneficial ownership and changes in beneficial ownership of the common stock. SEC rules require disclosure in our Proxy Statement and Annual Report on Form 10-K of the failure of an executive officer, director or 10% beneficial owner of our common stock to file a Form 3, 4, or 5 on a timely basis. A Form 4 for Walter F. Rusnak reporting one transaction was filed one day late.

TRANSACTIONS WITH CERTAIN RELATED PERSONS

The Sarbanes-Oxley Act of 2002 generally prohibits an issuer from (i) extending or maintaining credit; (ii) arranging for the extension of credit; or (iii) renewing an extension of credit in the form of a personal loan for an officer or director. There are several exceptions to this general prohibition, however, one of which is applicable to us. This prohibition does not apply to loans made by a depository institution that is insured by the FDIC and is subject to the insider lending restrictions of the Federal Reserve Act. Regulations permit executive officers and directors to receive the same loan terms through programs that are widely available to other employees, as long as the executive officer or director is not given preferential treatment compared to the other participating employees. The Bank currently has loans to each of the following officers and/or directors or their immediate families: David Ayoub, Chris Burritt, Robert Butkowski, Calvin Corriders, James Dowd, John Funiciello, William O’Brien, John Sharkey III, Ronald G. Tascarella and Ronald Tascarella.

After one year of service at the Bank, full-time employees and directors are entitled to receive a primary residence mortgage loan at an interest rate of 0.25% below market, consistent with applicable laws and regulations. Until 2021, the rate was at 0.50% below market.

The chart below lists the executive officers and directors who participated in the employee mortgage loan program during the years ended December 31, 2022 and 2021 and certain information with respect to their loans. No other directors or executive officers participated in the employee mortgage loan program during the years ended December 31, 2022 and 2021.


	Largest Aggregate				Non-		Principal		Principal Paid		Interest Paid
	Balance 01/01/21		Interest		Employee		Balance		01/01/2021 to		01/01/21 to
	to 12/31/22		Rate		Interest Rate		12/31/2022		12/31/2022		12/31/2022
Name	$		%		%		$		$		$
James Dowd		140,596		2.250		2.500	─			140,596		2,647
James Dowd		208,000		2.125		2.375		188,934		19,066		4,512
Lloyd Stemple		129,585		2.750		3.250	─			129,585		5,455
William O'Brien		110,440		2.500		3.000		79,695		30,746		4,593

Other than the loans noted in the above table, all other loans made to directors or executive officers:

•

were made in the ordinary course of business;

•

were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company; and

•

did not involve more than normal risk of collectability or present other unfavorable features.

All transactions between us and our executive officers, directors, holders of 10% or more of the shares of the Company’s common stock and affiliates thereof, must be approved by a majority of our independent outside directors not having any interest in the transaction, pursuant to our Code of Ethics.

On December 28, 2020, the Bank sold a parcel of property and an existing dwelling that was in the process of being developed into a new branch location, to 506 West Onondaga Associates, LLC (the "LLC"). Director John P. Funiciello is a member of 506 West Onondaga Associates, LLC. The purchase price of the property was $612,000.

In January of 2021, the Bank entered into a lease agreement with the LLC to lease the entire building located at the site in Syracuse, New York and an adjacent property. In November 2022, this site's development was completed and the Bank opened the building as a full-service branch banking facility. The term of this lease shall be for a period of thirty-two years and sixty days commencing on February 1, 2021. The Bank will pay the landlord, as total rent for the first twelve months of the lease, the annual sum of $201,000. After the first anniversary of the lease, and for every 12 month period following until the end of the lease term, the Bank will pay the landlord, as total rent, the annual sum of $262,000.

The property was developed and completed by the LLC up to a total project cost of $2.8 million. All development costs over $2.8 million, were the responsibility of the Bank and treated as leasehold improvements. The property was completed in 2022. Federal and state tax credits in 2022 assisted in offsetting the development costs attributed to the Bank.

Anti-Hedging Policy

The Company’s anti-hedging and anti-pledging provisions are covered in the Company’s Insider Trading Policy. Under the policy, directors and named executive officers are prohibited from engaging in short sales of Company stock and from engaging in transactions in publicly-traded options, such as puts, calls and other derivative securities based on Company stock including any hedging, monetization or similar transactions designed to decrease the risks associated with holding Company stock. In addition, directors and named executive officers are prohibited from pledging Company stock as collateral for any loan or holding Company stock in a margin account.

SEC Form DEF 14A filed by Pathfinder Bancorp Inc.