2 0 1 6
A N N UA L
R E P O RT
Main Office
214 West First Street, Oswego
(315) 343-0057
Plaza Office
State Route 104 East, Oswego
(315) 343-4483
DOwntOwn Drive-thru
34 East Bridge Street, Oswego
(315) 343-2577
MexicO Office
Norman & Main Streets, Mexico
(315) 963-7248
fultOn Office
5 West First Street South, Fulton
(315) 592-9545
lacOna Office
1897 Harwood Drive, Lacona
(315) 387-3437
central Square Office
3025 East Avenue, Central Square
(315) 676-2265
cicerO Office
6194 State Route 31, Cicero
(315) 752-0033
Pike BlOck Office
109 West Fayette, Syracuse
(315) 207-8020
www.PathfinDerBank.cOM
LOcAL. cOmmUNiTy. TRUsT.
OUR VISION
At Pathfinder Bank, we strive to be the local bank our community trusts.
Local… We have proudly served central New york for over 150 years. Like our
customers, we live, work and play here. That fact not only allows us to know our
customers better, but gives our customers access to decision makers right here
in central New york.
Community… Our success is intertwined with the success of the communities
we serve. For that reason, and because it is the right thing to do, we invest our
resources, time, and talents in those communities.
Trust… Because we want to serve our local communities for another 150 years,
we must earn the trust of our customers every day. We do that by being ethical,
capable, honest, reliable and responsive. We do not sell products and services to
our customers. We listen, and inquire, to determine our customers’ needs. Then,
with the help of a team of trusted advisors, we develop a program of services
and products to uniquely satisfy those needs.
CORPORATE INFORMATION
PATHFINDER BANCORP, INC.
BOARD OF DIRECTORS (1)
chris R. Burritt, chairman
David A. Ayoub
William A. Barclay
John P. Funiciello
Adam Gagas
George P. Joyce
melanie Littlejohn
Thomas W. schneider
John F. sharkey, iii
Lloyd “Buddy” stemple
PATHFINDER EXECUTIVE OFFICERS
Thomas W. schneider
President, chief Executive Officer
James A. Dowd, cPA
Executive Vice President,
chief Operating Officer, chief Financial Officer
Ronald Tascarella
Executive Vice President, chief credit Officer
Edward A. mervine, Esq.
senior Vice President, General counsel,
corporate secretary
melissa A. miller
senior Vice President,
customer Experience Officer
Daniel R. Phillips
senior Vice President,
chief information Officer
PATHFINDER OFFICERS
calvin corriders
First Vice President, sales manager
Will O’Brien
First Vice President,
credit Administration
Beth K. Alfieri
Vice President, Business sales Officer
Heather Bush
Vice President, Human Resources
Robert Butkowski
Vice President, Branch Administration
Roberta J. Davis
Vice President, Financial Analyst
Rhonda Hutchins
Vice President, compliance
Lisa A. Kimball
Vice President, controller
mary mcconkey
Assistant Vice President,
Electronic commerce manager
michael Quenville
Vice President, sales Officer
Walter F. Rusnak
Vice President, Finance
John Andrews
Assistant Vice President, Branch manager
Randall Barnard
Assistant Vice President, Branch manager
susan cahill
Assistant Vice President, Branch manager
Jodi DeAugustine
Assistant Vice President, Branch manager
Jeremy Fadden
Assistant Vice President,
Business Account manager
Jessica DeGrenier
Assistant Vice President,
commercial Loan mitigation
Theresa L. Dullen
Assistant Vice President, internal Audit
Amy E. Favata
Assistant Vice President,
Financial Reporting specialist
shari Gordon
Assistant Vice President,
information security Officer
Lorna Hall
Bank secrecy and security Officer
April Jordal
Assistant Vice President,
sales support manager
Laurie L. Lockwood
Assistant Vice President, Assistant controller
Denise Lyga
Assistant Vice President, Branch manager
Joseph P. mcmanus
Assistant Vice President,
computer Operations manager
Deana michaels
Assistant Vice President, Branch manager
craig Nessel
Assistant Vice President, Branch manager
April Phillips
Assistant Vice President,
sales support manager
Reyne Pierce
Assistant Vice President,
Retail Lending manager
crystal Rafte
Assistant Vice President, Operations manager
Robert Rickert
Assistant Vice President, Retail Loss mitigation
Paloma sarkar
Assistance Vice President, credit Team Leader
Amy shaw
Assistant Vice President, Branch manager
Jennifer Wright, Assistant Vice President
municipal and Business Deposit sales manager
CORPORATE HEADQUARTERS
214 West First street
Oswego, Ny 13126
(315) 343-0057
ANNUAL MEETING
Friday, may 5, 2017, 10:00 Am
The American Foundry
246 West seneca street, Oswego, Ny 13126
STOCK LISTING
The NAsDAQ capital market
symbol: PBHc Listing: PathBcp
SPECIAL COUNSEL
Luse Gorman, Pc
5335 Wisconsin Avenue N.W.
suite 400
Washington, D.c. 20015
INDEPENDENT AUDITORS
Bonadio & co., LLP
432 North Franklin street, suite 60
syracuse, Ny 13204
TRANSFER AGENT
computershare
480 Washington Blvd, 29th Floor
Jersey city, NJ 07310
INVESTOR RELATIONS
Thomas W. schneider
President, chief Executive Officer
James A. Dowd, cPA
Executive Vice President,
chief Operating Officer, chief Financial Officer
214 West First street
Oswego, Ny 13126
(315) 343-0057
GENERAL INQUIRIES AND REPORTS
A copy of the Bank’s 2016 Annual
Report to the securities and Exchange
commission, Form 10-K, may be
obtained without charge by written
request of shareholders to:
Edward A. mervine, Esq.
senior Vice President, General counsel
corporate secretary
Pathfinder Bank
214 West First street
Oswego, Ny 13126
A copy of this Annual Report on Form 10K
and our 2017 Annual Proxy statement is also
available free of charge on our website at:
www.pathfinderbank.com/annualmeeting
The public may read and copy any materials
the company files with the sEc at the sEc’s
Public Reference Room at 450 Fifth street,
N.W., Washington, D.c. 20549. The public
may obtain information on the operation of
the Public Reference Room by calling the sEc
at 1-800-sEc-0330. The company’s filings
are also available electronically free of charge
at the sEc website: http://www.sec.gov
and at the company’s website:
http://www.pathfinderbank.com
FDIC DISCLAIMER
This Annual Report has not been
reviewed or confirmed for accuracy
or relevance by the FDic.
(1) information concerning the principal
occupation of the Directors is available
in the company’s Proxy statement
S
T
H
G
I
L
H
G
I
H
L
A
I
C
N
A
N
I
F
2016
2015
2014
2013
2012
Year end (In thousands except per share amounts)
Total assets
Investment securities (AFS)
Investment securities (HTM)
Loans receivable, net
Deposits
Borrowings and subordinated debt
Shareholders’ equity
$749,034
141,955
54,645
485,900
610,983
73,972
58,361
$623,254
98, 942
44,297
424,732
490,315
56,291
71,229
$561,024
88,073
40,875
382,189
415,568
71,255
69,204
$503,793
80,959
34,412
336,592
410,140
46,008
43,070
$477,796
108,339
0
329,247
391,805
40,119
40,747
For the Year (In thousands)
Net interest income
Core noninterest income (a)
Net gains on sales, redemptions and
impairment of investment securities
Net (losses) gains on sales of loans and
foreclosed real estate
Noninterest expense (b)
Regulatory assessments
Interest income
Interest expense
Provision for loan losses
Net income attributable to the Company
per share
Net income (basic) (c)
Net income (diluted) (c)
Book value per common share
Tangible book value per common share (d)
Cash dividends declared
$20,289
3,629
$18,767
3,716
$17,085
3,415
$15,619
2,581
$14,857
2,627
594
422
310
365
375
(40)
18,765
345
24,093
3,804
953
3,272
$0.79
$0.78
13.67
12.55
0.20
34
17,179
408
21,424
2,657
1,349
2,889
$0.67
$0.66
13.28
12.19
0.16
34
15,287
398
19,699
2,614
1,205
2,745
$0.64
$0.63
12.82
11.78
0.12
470
14,336
415
18,883
3,264
1,032
2,406
$0.58
$0.58
11.33
10.16
0.12
61
13,207
311
18,765
3,908
825
2,648
$0.53
$0.53
10.60
9.13
0.12
perFormance ratIos
Return on average assets 0.48% 0.48% 0.51% 0.48% 0.57%
Return on average equity
Return on average tangible equity (d)
Return on average common equity
Average equity to average assets
Equity to total assets at end of period
Dividend payout ratio (e)
Net interest rate spread
Net interest margin
Average interest-earning assets to average
interest-bearing liabilities
Noninterest income to average assets
Noninterest expense to average assets
Efficiency ratio (f)
4.08
4.46
5.00
11.76
11.36
25.22
3.21
3.31
5.50
6.11
7.45
9.27
12.26
13.89
3.31
3.40
5.86
6.47
8.58
8.24
8.55
12.47
3.23
3.34
6.68
7.40
8.26
8.48
8.53
11.37
3.28
3.41
5.35
5.80
5.35
8.97
7.73
25.18
3.03
3.14
117.88
0.70
2.92
76.51
115.85
0.69
2.96
79.14
121.73
0.69
2.92
78.22
113.89
0.66
2.89
75.53
118.35
0.61
2.81
79.90
asset QualIt Y ratIos
Nonperforming loans as a percent of total loans 0.98% 1.24% 1.61% 1.57% 1.66%
1.25
Nonperforming assets as a percent of total assets
Allowance for loan losses to loans receivable
1.35
Allowance for loan losses as a percent of
nonperforming loans
0.94
1.33
1.16
1.38
1.18
1.48
0.72
1.27
107.30
129.85
81.13
94.22
85.50
regulatorY capItal ratIos (Bank onlY)
Total Core Capital (to Risk-Weighted Assets) 14.79% 16.22% 16.60% 14.13% 14.20%
Tier 1 Capital (to Risk-Weighted Assets)
Tier 1 Common Equity (to Risk-Weighted Assets)
Tier 1 Capital (to Assets)
14.95
14.95
10.00
15.31
15.31
10.55
12.82
12.82
8.72
12.90
12.90
8.80
13.54
13.54
9.06
numBer oF:
Banking offices
Full-time equivalent employees
9
133
9
124
9
122
8
112
8
110
(a) Exclusive of net gains (losses) on sales and impairment of investment securities and net gains (losses) on sales of loans and foreclosed real estate.
(b) Exclusive of regulatory assessments.
(c) Adjusted to reflect the 1.6472 exchange ratio used in the conversion for 2014 and prior years.
(d) Tangible equity excludes intangible assets.
(e) The dividend payout ratio is calculated using dividends declared and not waived by Pathfinder Bancorp, MHC for periods prior to the Conversion and Offering that occurred on October 16, 2014, divided by net income.
(f) The efficiency ratio is calculated as noninterest expense divided by the sum of net interest income and noninterest income, excluding net gains on sales, redemptions and impairment of investment securities
and net gains (losses) on sales of loans and foreclosed real estate.
1
Chris R. Burritt
Chairman of the Board
thomas W. schneider
President and CEO
LETTER TO SHAREHOLDERS
On behalf of the Board of Directors of Pathfinder Bancorp, Inc. we are
pleased and proud to provide our report to shareholders for the fiscal
year ended December 31, 2016. Pathfinder Bank has been serving our
communities for over 157 years. Pathfinder Bancorp, Inc. has been
operating as a publically held company for 21 years.
In past reports, we have spoken about our growth within our market.
Our trends, in chart format or through reading of the comprehensive
Annual Report, will demonstrate a consistent trend of organic growth;
principally through deploying your capital contributions to gather
deposits and originate loans; in a balanced manner; consistent with
the needs of our market; our responsibility and ability to manage
intermediation risk; and under the guidance of State and Federal
regulatory oversight.
While we could continue to dialogue our story of growth, which was the
strongest in our 157 year history during 2016, we would like to pivot to
a discussion of build. We strongly believe we are building our franchise,
building our business model, building our market and communities and
providing the build capabilities of our customers. We believe that this
franchise build will generate on-going value for our shareholders, our
customers and the communities we serve.
We are confident in our capabilities, our capacity to deliver value to our
investors, customers and markets, and the long-term sustainability of
the banking model we continue to build.
We are confident in the strength of our management team, led by a
strong and sound governance structure, a team who consistently seeks
transparency within the organization, clarity of direction, alignment of
strategy and realistic projections of outcome. The board of directors is
focused on executive development as part of the succession planning
process to bring forward and develop the next tier of management as
our future leaders; focused on providing opportunities and development
within our employee population and, most importantly, creating an
atmosphere and working environment of internal trust. Employees
operating in a trusted environment, where they are empowered and
accountable, while being owners of the organization through both their
individual holdings and the Employee Stock Ownership Plan, will deliver
to our customers in a manner that builds their trust. It is that trust-bond
that we feel is one of our competitive differentiations and consistent
with our value proposition. We know our purpose; we strive to achieve
our vision, we conduct ourselves under the tenants of our values. We are
2
principled and disciplined, but also agile. We are committed to building
value in a sustainable and perpetual model. We want to take this
opportunity to reaffirm our commitment to building value through the
long-term, perpetual earnings stream of our banking model. We hold
as a core principal, the concept that we are stewards of a community
asset that provides value to its customers, its communities and its
employees for over 157 years and we fully understand our fiduciary
responsibility to build value for all of our constituents, particularly you,
our shareholders, through our services.
Results 2016
The performance of Pathfinder Bank during 2016 can only be
described as very strong and occurring at record levels. We attained
asset growth of 20%, driven by deposit growth of 25%, and loan
growth of 14%. This growth occurs organically within our marketplace.
The growth in our balance sheet is displayed below.
Asset Growth Over 10 years
($ in millions)
%
3
R = 9 . 5
G
A
C
$750.0
$650.0
$550.0
$450.0
$350.0
$250.0
06 07 08 09 10 11 12 13 14 15 16
$500.0
$450.0
$400.0
$350.0
$300.0
$250.0
$200.0
$600.0
$500.0
$400.0
$300.0
$200.0
Loan Growth Over 10 years
($ in millions)
5 %
R = 9 . 2
G
A
C
06 07 08 09 10 11 12 13 14 15 16
Deposit Growth Over 10 years
($ in millions)
4 %
R = 9 . 5
G
A
C
Our other component of revenue, non-interest income, has grown at
an annual rate of 8.2% over the last six years. Our combined annual
growth in revenue over the past six years is 7.4%. The message we
seek to convey through these numbers is that the trend line in revenue
growth is consistent, and we strongly believe, sustainable going
forward. Varying economic and interest rate cycles, as well as the
health of the regional economy, of course, can impact the slope of
any future trend line.
A significant portion of the growth in revenue over this same period
has been reinvested in building the franchise. Building, for us, is a
more significant word than growing because it is a franchise we are
looking to build; providing valuable services into its marketplace in
a risk managed and disciplined environment, and building franchise
value for our constituents within a sustainable business model. Much
of the revenue growth has been reinvested in the enhancement of our
capabilities, in an effort to ensure an infrastructure of people, systems,
practice and process, and risk discipline that readies us for the Bank’s
trajection in growth to one billion dollars. However, the revenue growth,
net of these expenses, has still been consistently accretive to earnings
per share and book value per share.
06 07 08 09 10 11 12 13 14
15 16
A risk-managed, diversified balance sheet, built organically in our local
market with balanced growth in loans and deposits, is the primary
engine to drive net interest income, and thereby, revenue – current
and future. Our objective is to continue to build this revenue engine in
the same disciplined, controlled and sustainable manner by serving
our customers, our community and our markets through earning a
trust that we will not violate. We say clearly to the market who we are,
what we do and why we do it. Then we go out into the market and do
what we say in fulfillment of our purpose. We build franchise, we build
value, and we do not compromise our values.
Net interest income for 2016 increased by 8.1%, consistent with
the annual growth of the last six years of 7.3%. This continued
enhancement of income comes through our loan and deposit portfolio
build, against the constraints of a prolonged period of low interest
rates and downward pressure on yield curve slope.
Revenue and
Operating Expense Trends
($000’s)
$24,000
$22,000
$20,000
$18,000
$16,000
$14,000
$12,000
$10,000
11
12
13
14
15
16
Total Revenue
$16,714 $17,484 $18,200 $20,500 $22,483 $23,918
Total Expenses
$13,148 $13,518 $14,751 $15,685 $17,587 $19,110
Earnings Per Share
C A G R = 1 9 . 8 1 %
11
12
13
14
15
16
Book Value Per Share
%
7
R = 7 . 5
G
A
C
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.0
$14.0
$13.5
$13.0
$12.5
$12.0
$11.5
$11.0
$10.5
$10.0
$9.5
$9.0
11
12
13
14
15
16
We are more focused on the long-term value build through earnings
per share growth than we are in the representational liquidation value
presented by book value metrics. This is testimony to our firm belief
that our long-term perpetuity value exceeds the valuation metrics of a
premium on our present net equity or economic value of equity.
3
Model
The positive trend results shown above support a strong working
business model and the strategic commitment to this model going
forward.
We are focused, committed and internally aligned to our purpose, who
we serve, and the value proposition we offer. This is a community bank
model we focus on, placing great emphasis on being active community
members and community leaders. Through our local knowledge of the
market and our participation in our communities, we have demonstrated
our value proposition to our local leaders, decision makers, civic
organizers, centers of influence, concerned community members, active
community members and government entities. All comprise our retail,
business and municipal customer base. We put forward a message of
this commitment, local. Community. trust., and then we go out and
live that message. We make differentiated local decisions in markets
in which we have deep intimate knowledge. We support the growth and
health of our communities and our community members. This focus on
our purpose, and how we strategically execute this focus, helps us to
build our franchise value because it resonates; it builds trust; it works.
MaRket
Pathfinder Bank serves the Central New York market whose major city,
Syracuse, lies in Onondaga County. This market, while measured as
slow relative to economic growth nationally, growing somewhere in the
1% level, is stable and is emerging from a long downturn caused by the
loss of manufacturing, and reinventing its economy, and participating in
the re-urbanization taking place in the major cities of Upstate New York.
Within the stability of this marketplace, and its emerging growth, lies
great opportunity, particularly within the businesses and retail customer
base who seek the community bank model, who seek to work with a
banking organization that understands the market and understands
their needs, and a banking organization that can make decisions
that do not necessarily fit within the policy parameters of our larger
banking establishments. These large entities tend to construct models
they force their customers to adhere to, while we design solutions for
our customer’s needs. We always do this with risk management as one
of our foremost responsibilities. We cannot serve our customers by
providing them products or services they do not need, or by enabling
them to incur debt levels that stretch their ability to service, or inhibit
their ability to succeed. We think that the segment of this market that
seeks such financial and banking solutions is generally underserved by
those who share our banking model and the attributes of our vision and
our purpose. We also believe that this market segment grows as the
industry struggles to maintain trust with their customers.
deposit MaRket Rank
OswEgO and OnOndaga COunty COmBinEd
2016 total
deposits
2016 %
total MaRket
at June 30th
1. M & T Bank Corp. (NY)
2,974,149
2. Bank of America Corp. (NC)
1,814,957
2. KeyCorp (OH)
4. JP Morgan Chase & Co. (NY)
5. First Niagara Finl Group (NY)
1,388,330
951,699
764,605
6. Solvay Bank Corp. (NY)
749,321
7. NBT Bancorp Inc. (NY)
8. Pathfinder Bancorp Inc. (NY)
555,917
535,096
9. Geddes FS&LA (NY)
424,293
10. Community Bank System Inc. (NY)
321,067
11. Berkshire Hills Bancorp Inc. (MA)
280,664
12. Citizens Bank, NA
247,333
13. Fulton Savings Bank (NY)
243,158
14. Seneca FS&LA (NY)
115,502
15. Lyons Bancorp Inc (NY)
33,491
16. Woodforest Financial Group (TX)
710
26.09%
15.92%
12.18%
8.35%
6.71%
6.57%
4.88%
4.69%
3.72%
2.82%
2.46%
2.17%
2.13%
1.01%
0.29%
0.01%
total institution shaRe
11,400,292
1.000
ManageMent
We trust that you are confident in our ability to represent our
shareholders’ interests and provide return on contributed capital
commensurate with investment risk. We appreciate your support and
look forward to building our franchise in a valued and valuable manner
to the mutual benefit of all whom we serve. We are grateful for your
support and look forward to continuing to serve your interests.
Chris R. Burritt
Chairman of the Board
Thomas W. Schneider,
President and CEO
4
2 0 1 6
F I N A N C I A L
R E V I E W
LoCAL. CommuNIty. tRust.
April 5, 2017
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 American Foundry, 246 West Seneca Street, Oswego, NY 13126 at 10:00 a.m., Eastern Time, on May 5,
2017.
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 three directors and the appointment of
Bonadio & Co., LLP, as our independent registered public accounting firm for the year ending December 31, 2017.
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, 2017.
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 in person, 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,
Thomas W. Schneider
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
To Be Held On May 5, 2017
Notice is hereby given that the Annual Meeting of Pathfinder Bancorp, Inc. will be held at The American Foundry,
246 West Seneca Street, Oswego, NY 13126 at 10:00 a.m., Eastern Time, on May 5, 2017.
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:
1) The election of three directors; and
2) The ratification of the appointment of Bonadio & Co., LLP as our independent registered public
accounting firm for the year ending December 31, 2017; 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 March 16,
2017 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.
OUR PROXY STATEMENT, ANNUAL REPORT TO SHAREHOLDERS 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-
8036.
By Order of the Board of Directors
April 5, 2017
Edward A. Mervine
Secretary
IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
PROXY STATEMENT
Pathfinder Bancorp, Inc.
214 West First Street
Oswego, New York 13126
(315) 343-0057
ANNUAL MEETING OF SHAREHOLDERS
May 5, 2017
This proxy statement is 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 American Foundry, 246 West Seneca Street, Oswego, NY 13126 on
May 5, 2017 at 10:00 a.m., Eastern Time, and all adjournments of the Annual Meeting. The accompanying notice of
Annual Meeting of shareholders and this proxy statement are first being mailed to shareholders on or about April 5,
2017.
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 “For” the
proposals set forth in this proxy statement or hereafter. 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
in person. 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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of our common stock, par value $0.01 per share, as of the close of business on March 16,
2017, (the “Record Date”), are entitled to one vote for each share they own. As of the Record Date, we had
4,246,980 shares of common stock outstanding. The presence in person or by proxy of a majority of the outstanding
shares of 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
1
majority of the total votes cast at the Annual Meeting in person or by proxy, without regard to broker non-votes or
proxies as to which shareholders abstain, is required for ratification of Bonadio & Co., LLP as our independent
registered public accounting firm (the “Auditors”) for the year ending December 31, 2017.
At our 2015 Annual Meeting, shareholders adopted a resolution approving “Say-on-Pay” and a separate
resolution authorizing that future “Say-on-Pay” votes be conducted every three years. The Board of Directors, in its
discretion, has considered that advisory vote and will not be conducting a “Say-on-Pay” vote this year, and the next
“Say-on-Pay” vote will be held in 2018.
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 common stock (the “Limit”) are not entitled to
any vote with respect to the shares held in excess of the Limit. 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.
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 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 April 26, 2017.
2
Persons and groups who beneficially own in excess of 5% of the Company's common stock are required to
file certain reports with the Securities and Exchange Commission (the “SEC”) regarding such ownership. The
following table sets forth, as of the Record Date, the shares of common stock beneficially owned by directors or
nominees to the Board individually, by executive officers individually, by executive officers and directors as a group
and by each person who was the beneficial owner of more than 5% of our outstanding shares of 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.
Name and Address of Beneficial Owners
Pathfinder Bank Employee Stock Ownership Plan Trust (3)
c/o Pentegra Services, Inc.
2 Enterprise Drive, Suite 408
Shelton, CT 06484
Maltese Capital Holdings, LLC (4)
Maltese Capital Management, LLC
Terry Maltese
150 East 52nd Street, 30th Floor
New York, New York 10022
Directors and Executive Officers (5)
David A. Ayoub
William A. Barclay (6)
Chris R. Burritt
John P. Funiciello
Adam C. Gagas (7)
George P. Joyce (8)
John F. Sharkey, III
Melanie Littlejohn
Lloyd "Buddy" Stemple (9)
Thomas W. Schneider
James A. Dowd
Edward A. Mervine
Melissa A. Miller
Daniel R. Phillips
Ronald Tascarella (10)
Amount 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
Common Stock
Outstanding
436,846
N/A
10.31%
266,056
N/A
6.28%
24,360
6,698
66,175
9,993
39,661
9,993
28,079
6,698
178,833
3,404
107,310
9,993
26,919
3,404
5,272
1,757
57,540
9,993
85,150
23,357
63,191
24,496
58,608
21,496
39,748
22,614
27,735
6,707
83,611
9,260
0.57%
1.56%
0.94%
0.66%
4.22%
2.53%
0.64%
0.12%
1.36%
2.01%
1.49%
1.38%
0.94%
0.65%
1.97%
All Directors and Executive Officers as a Group (15 persons)
892,192
169,863
21.06%
3
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
A person is deemed to be the beneficial owner, for purposes of this table, of any shares of
common stock if he 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. This table also includes unvested restricted stock over
which the person has voting power, but no 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.
These options are exercisable within 60 days of the Record Date. They cannot be voted until
exercised.
On a Schedule 13G/A filed with the Securities and Exchange Commission on February 4,
2017, Pentegra Trust Company, the trustee for the Pathfinder Bank Employee Stock
Ownership Plan, reported sole voting power for 194,576 shares of our common stock, shared
voting power for 242,270 shares of our common stock, sole dispositive power over 422,484
shares of our common stock and shared dispositive power over 14,362 shares of our common
stock.
On a Schedule 13G/A filed with the Securities and Exchange Commission on February 7,
2017, Maltese Capital Management LLC reported shared dispositive and voting power with
respect to 266,056 shares of our common stock; Maltese Capital Holdings, LLC reported
shared dispositive and voting power with respect to 208,056 shares of our common stock; and
Terry Maltese reported shared dispositive and voting power with respect to 266,056 shares of
our common stock.
The mailing address for each person listed is 214 West First Street, Oswego, New York
13126.
Mr. Barclay has sole voting and investment power over 8,236 shares, shared voting power
over 40,137 shares and custodial voting power over 4,294 shares.
Mr. Gagas has sole voting and investment power over 22,250 shares and shared voting power
over 149,664 shares.
Mr. Joyce has sole voting and investment power over 14,152 shares and shared voting power
over 79,650 shares.
Mr. Stemple has sole voting and investment power over 41,532 shares and shared voting
power over 2,500 shares.
Mr. Tascarella has sole voting and investment power over 61,969 shares and shared voting
power over 5,000 shares.
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.
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 wish to speak, 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.
4
PROPOSAL 1 - ELECTION OF DIRECTORS
Our bylaws presently allow the Company to fix the number of directors. The number is currently fixed at
ten directors. Our bylaws provide that the number of directors be divided into three classes, as nearly equal in
number as reasonably possible, and for approximately one third to be elected each year. Directors are generally
elected to serve for a three-year period and until their respective successors shall have been elected and qualify. We
are nominating the following persons, each for a three year term: William A. Barclay, Chris R. Burritt and George
P. Joyce.
The table below sets forth certain information regarding the composition of the Board of Directors and
Director Nominees, including the terms of office of Board members. It is intended that the proxies solicited on
behalf of the Board of Directors (other than proxies in which the vote is withheld as to one or more nominees) will
be voted at the Annual Meeting for the election of the nominees identified below. If the nominee is unable to serve,
the shares represented by all such proxies will be voted for the election of such substitute as the Board of Directors
may recommend. At this time, the Board of Directors knows of no reason why any of the nominees would be unable
to serve if elected and each nominee has agreed to serve if elected. Except as indicated herein, there are no
arrangements or understandings between any nominee and any other person pursuant to which such nominee was
selected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMM ENDS A VOTE “FOR”
EACH NOMINEE.
Name (1)
Age (2)
Position Held
Director
Since (3)
Current Term
to Expire
Nominees
William A. Barclay
Chris R. Burritt
George P. Joyce
Directors Continuing in
Office
John P. Funiciello
Thomas W. Schneider
Lloyd "Buddy" Stemple
David A. Ayoub
Adam C. Gagas
John F. Sharkey, III
Melanie Littlejohn
48
63
66
Director
Chairman of the Board
Director
53
55
56
54
45
59
52
Director
Director, President and Chief Executive Officer
Director
Director
Director
Director
Director
2011
1986
2000
2011
2001
2005
2012
2014
2014
2016
2017
2017
2017
2018
2018
2018
2019
2019
2019
2019
(1) The mailing address for each person listed is 214 West First Street, Oswego, New York 13126.
(2) As of March 16, 2017.
(3) Dates prior to 1995 reflect initial appointment to the Board of Trustees of the mutual predecessor to
Pathfinder Bank, the Company’s operating subsidiary.
The principal occupation during the past five years of each director, nominee and executive officer, as well as
other relevant experience, is set forth below. All directors, nominees and executive officers have held their present
positions for five years unless otherwise stated. None of our directors, nominees or executive officers have been the
subject of securities litigation, regulatory enforcement or bankruptcy in the past ten years.
5
NOMINEES
William A. Barclay is a graduate of St. Lawrence University and Syracuse University College of Law. An
attorney and businessman, Mr. Barclay is a partner in the Syracuse law firm of Barclay Damon, LLP, where he
specializes in business law. Mr. Barclay has served on several community organizations throughout his career
including the SUNY Oswego College Council, the Rosamond Gifford Zoo at Burnet Park, the Everson Museum of
Art, and Northern Oswego County Health Services, Inc. Mr. Barclay currently serves on the Boards of Countryway
Insurance Company and QMP Enterprises. In 2004, he was recognized as one of Oswego County Business
Magazine’s Forty under 40, an honor given to Oswego County leaders under the age of 40. Mr. Barclay was also
awarded the 2007 Martin Rose Economic Developer Merit Award for his commitment to the economic development
process by helping to facilitate the attraction and retention of businesses in Oswego County. Mr. Barclay is
currently a New York State Assemblyman for the 120th District, which includes parts of Oswego, Onondaga and
Jefferson counties. Mr. Barclay’s in-depth knowledge of economic development and the law provide the Board with
a unique and valuable perspective into economic development and legal issues. The Board, therefore, supports his
re-election.
Chris R. Burritt is the former President and General Manager of R.M. Burritt Motors, Inc., an automobile
dealership located in Oswego, New York. Mr. Burritt was elected Chairman of the Board effective January 1, 2014.
In addition to his prior long term ownership and management of his well known local business, Mr. Burritt is active
in community affairs. He presently serves on the board of directors of Oswego Hospital and is a member of its
Finance/Operations Committee. Mr. Burritt also serves as Director of the NYS Automobile Dealers Association in
Albany, NY. Mr. Burritt’s experience operating a local business and substantial ties to the communities served by
the Bank provides the Board with valuable insight into managing and overseeing a business, and the Board supports
his re-election.
George P. Joyce is the owner and operator of Laser Transit, Ltd., Lacona, New York, a Central New York
logistics services provider. Mr. Joyce has a BA in Economics from SUNY Oswego. He has been a Controller for
transportation and warehousing firm, as well as a manager in an IT consulting firm. He is also presently President
of Intelliflex, LLC, a third party logistics firm performing freight forwarding and outsourced logistics services for its
customers. He has served as President and Chair of the Board of Trustees for Oswego Hospital, Chair of the Board
of Operation Oswego County, Vice President of Seneca Hill Manor, Director of the Oswego College Foundation
and numerous other community organizations. Mr. Joyce provides the Board with extensive financial and business
experience as well as valuable insight into technology issues, and the Board supports his re-election.
CONTINUING DIRECTORS
David A. Ayoub serves as Partner-in-Charge of the Tax Department at the Syracuse firm of Bowers &
Company, CPA’s. In that capacity, Mr. Ayoub consults on corporate mergers and acquisitions, and also assists
start-up businesses. In addition, he oversees the firm’s tax compliance, technical research, planning and consulting.
Mr. Ayoub has over 30 years of accounting and taxation experience. Mr. Ayoub is a graduate of Rochester Institute
of Technology with a BBA in Accounting and is a Certified Public Accountant in New York State. He is also a
Member of the American Institute of Certified Public Accountants, as well as the New York State Society of
Certified Public Accountants. Mr. Ayoub pursues an active role in the community, serving on boards including
Make-A-Wish Foundation of Central New York, where he is the immediate Post Chair. He has also worked
previously with the United Way and Score. Mr. Ayoub’s extensive experience with corporate transactions as well as
his experience in business and tax offers the board an invaluable perspective of the Bank’s business.
John P. Funiciello is a licensed real estate broker and developer who owns and operates JF Real Estate in
Syracuse, NY. Mr. Funiciello began his career in real estate in 1986 as a commercial real estate agent and founded
JF Real Estate in 1992. JF Real Estate represents both owners and users of real estate, providing a wide array of
skills and services that include brokerage, development, tenant and owner representation, site selection, space
planning, building management, and much more. Currently JF Real Estate represents approximately three million
square feet of commercial and residential real estate in the Central New York Region. Mr. Funiciello is a graduate
of the State University of New York at Cortland with a degree in Economics and a concentration in Business. He is
an active member in the Syracuse community and has served on the Boards of Children’s Consortium and the
6
Samaritan Center. He currently sits on the Board at the North West YMCA. Mr. Funiciello was recognized by the
Central New York Business Journal’s 40 Under 40, an honor given to Onondaga County business leaders under the
age of 40. Mr. Funiciello’s extensive real estate experience and knowledge of the local real estate market, as well as
his insight into managing and overseeing a business, brings valuable expertise to the Board.
Adam C. Gagas is a Principal in Disciplined Capital Management, LLC, an SEC registered investment
advisor firm and founder and CEO of Breakwall Asset Management, LLC, a New York State registered investment
advisor located in Oswego. Mr. Gagas was an analyst on teams managing multi-billion dollar portfolios at Skandia
Asset Management and Principal Global Investors in New York City. He was awarded an Alfa Fellowship and
completed a yearlong professional placement as an institutional investment analyst at Alfa Capital in Moscow,
Russia. He is also the owner/operator of Gagas Realty Corporation, a multi-property commercial real estate holding
company. In addition, he is an adjunct instructor of Corporate Finance in the SUNY Oswego School of Business.
Mr. Gagas earned a BA from Hobart College with majors in Economics and Russian Studies, and an MBA with a
concentration in Finance from the Leonard N. Stern School of Business at New York University. His extensive
community involvement includes having served as Secretary and Treasurer of Oswego Health, chair of that
organization’s Audit and Investment committees, and as a member of the Executive committee. He is currently
President of the Oswego Health Foundation and a board member of Oswego’s historic Riverside Cemetery. Mr.
Gagas’ expertise in finance, particularly of public companies, provides us with valuable insight.
Melanie Littlejohn serves as the Vice President, New York Jurisdiction of National Grid. (NYSE: NGG), a
natural gas and electricity provider, where she is responsible for establishing and maintaining strong local
relationships that drive superior customer satisfaction, and promoting safety and reliability of the network,
emergency management, economic development initiatives, gas and electric energy efficiency programs, renewable
energy solutions, and distributed resource projects in line with customer priorities within New York. Prior to 2011
when Ms. Littlejohn was named to her current position, she was the Executive Director of Energy Solutions
Delivery for National Grid’s Central New York division. Ms. Littlejohn joined the company (then Niagara
Mohawk) in April of 1994 as the Director of Inclusion & Diversity-US Operations. Before joining Niagara
Mohawk, Ms. Littlejohn was the Executive Director of Urban League Onondaga County. Before joining the Urban
League, she was the Manager of International Client Services for Banker’s Trust Company in the Wall Street
District. Ms. Littlejohn obtained a Bachelor of Arts degree in Liberal Arts from the State University of New York at
Stony Brook and a Master’s Degree in Business Administration from Syracuse University’s Whitman School of
Management. In addition, she was selected to participate in National Grid’s Developing Future Business Leader’s
program administered by the London Center for High Performance. She resides in Syracuse, New York. Ms.
Littlejohn pursues an active role in the community, currently serving as the Trustee/Officer of Onondaga County
Community College, Business Advisory Council for the Federal Reserve Bank of New York, Board of Directors and
Executive Committee of CenterState CEO, Board of Directors of Manufacturers of Central New York, Consensus
CNY (Commission Member), SUNY Morrisville Business School, Council of Advisor’s, St. Joseph’s Hospital, the
Downtown Committee, and Say Yes to Education (Scholarship Board). Ms. Littlejohns’ experience in working with
a large public company provides us with valuable market perspective.
John F. Sharkey, III is President of Universal Metal Works, a custom metal fabrication facility, in Fulton,
New York, and the Managing Partner of Universal Properties, LLC. Prior to his role with Universal Metal Works,
Mr. Sharkey was President of Universal Joint Sales, a heavy-duty truck parts distributor, headquartered in Syracuse,
New York. During his tenure at Universal Joint Sales, the company grew to 13 locations throughout the Northeast
and Florida. In 1998, Mr. Sharkey sold Universal Joint Sales to FleetPride. For three years following the sale of the
company, Mr. Sharkey acted as FleetPride’s Regional Vice President. Mr. Sharkey is an active member of the
Central New York community, serving on boards including Oswego State Economic Advisory Council and the St.
Anne Mother of Mary Parish. He is also a committee member of the Syracuse Chapter of Ducks Unlimited and
volunteers as a pilot/crew member for Angel Flight. Mr. Sharkey’s management experience and business knowledge
provides a valuable resource and perspective to the Board.
Lloyd “Buddy” Stemple is the Chief Executive Officer of Constellium Rolled Products in Ravenswood,
West Virginia, a global supplier of rolled aluminum to the Aerospace and Transportation materials industries
(NYSE: CSTM). Mr. Stemple, until recently, was the Chief Executive Officer of Oman Aluminum Rolling
Company. The Oman Aluminum Rolling Company is a new venture supported by the government of Oman which
started commercial production of rolled aluminum in late 2013. Prior to his work in Oman, he was the Vice-
7
President and General Manager of Novelis Specialty Products, Novelis Inc., which has manufacturing locations in
Oswego, New York, Kingston, Ontario Canada and sales offices in Cleveland, Ohio and Detroit, Michigan. Mr.
Stemple is on the Board of SECAT which is a metallurgical Research Laboratory specializing in aluminum product
and process technologies. He is also a member of the Compensation Committee of SECAT. Mr. Stemple also
served as a Board member of the Aluminum Association in Washington, DC. The Association promotes the use of
aluminum and all matters impacting the industry. Mr. Stemple has an Engineering Degree, an MBA and a Masters
Degree in International Management from McGill University and a Diploma from INSEAD in France. Mr.
Stemple’s varied experience in management of publicly traded companies is a valuable asset to our Board.
EXECUTIVE OFFICER OF THE COMPANY WHO IS A DIRECTOR
Thomas W. Schneider has been employed by the Bank since 1988. Mr. Schneider is the President and
Chief Executive Officer of Pathfinder Bancorp, Inc. and the Bank. Prior to his appointment as President in 2000, Mr.
Schneider was the Executive Vice President and Chief Financial Officer of Pathfinder Bancorp, Inc. and the Bank.
Mr. Schneider is a member of the boards of directors of Pathfinder Bancorp, Inc. and the Bank. Mr. Schneider
provides the Board with extensive knowledge of our customers and lending markets.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
James A. Dowd, CPA, age 49, has been employed by the Bank since 1994 and presently serves as the
Executive Vice President, Chief Operating Officer and Chief Financial Officer of Pathfinder Bancorp, Inc. and the
Bank. Mr. Dowd is responsible for the branch administration, accounting, finance, marketing and facilities
departments.
Ronald Tascarella, age 58, serves as Executive Vice President and Chief Credit Officer of Pathfinder
Bancorp, Inc. and the Bank. Prior to joining us in 2006, he was Senior Vice President of Oswego County National
Bank. Mr. Tascarella is responsible for the Bank’s lending operations.
Edward A. Mervine, ESQ, age 60, is Senior Vice President, General Counsel and Corporate Secretary for
Pathfinder Bancorp, Inc. and the Bank. Prior to joining us in 2002, Mr. Mervine was a partner in the law firm of
Bond Schoeneck & King, PLLC. Mr. Mervine is responsible for human resources, loss mitigation, security and
legal and regulatory compliance.
Melissa A. Miller, age 59, has been employed by the Bank since 1976. Ms. Miller is a Senior Vice
President and Chief Customer Experience Officer of Pathfinder Bancorp, Inc. and the Bank. Ms. Miller is
responsible for improving the banking experience of our customers.
Daniel R. Phillips, age 52, has been employed by the Bank since 1999 and presently serves as Senior Vice
President and Chief Information Officer of Pathfinder Bancorp, Inc. and the Bank. Prior to joining us in 1999, he
was Assistant Vice President of Community Bank. Mr. Phillips is responsible for electronic delivery channels,
information security and technology platforms.
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 of Mr. Schneider, are “independent” pursuant to NASDAQ’s listing
requirements. In evaluating the independence of our independent directors, we considered the following transactions
between us and our independent directors that are not required to be disclosed under “— Transactions with Certain
Related Persons:”
(1) We bought a vehicle and paid for maintenance through the dealership owned by Mr. Burritt, prior to
his sale of the dealership on September 17, 2016. The total cost of the vehicle and maintenance prior
to the sale was $47,474.
(2) We paid $6,765 for parking in a garage in downtown Syracuse for our Pike Block Branch owned by
Director, John Funiciello; and
8
(3) We paid the law firm which our Director William A. Barclay is a partner, for real estate loan
closings paid for by borrowers and paid the firm $7,620 for closing services not paid by borrowers.
Our Board of Directors determined that these transactions did not impair the independence of the named
directors. Our independent directors hold executive sessions no less than twice a year.
Pathfinder Bank conducts its business primarily in Oswego and Onondaga counties and the immediately
contiguous counties in Upstate New York. Our Board members are not, therefore, geographically diverse. Although
the Nominating Committee does not have a formal policy with regard to the consideration of diversity in identifying
a director nominee, the Nominating Committee is seeking to diversify and recently added Melanie Littlejohn
(elected in 2016), an African American woman, to the Board. We hope to continue to diversify our Board
membership.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
There were no transactions or series of transactions since the beginning of the Company’s fiscal year or any
currently proposed transaction where the Company was or is a participant and the amount involved exceeds
$120,000, and in which any related person had or will have a direct or indirect material interest.
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 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 has made loans to each of the following officers and/or directors or their immediate families: Chris Burritt,
James Dowd, John Funiciello, George Joyce, Edward Mervine, Melissa Miller, Daniel Phillips, Thomas Schneider,
John Sharkey, III, Lloyd Stemple and Ronald Tascarella.
Full-time employees and directors after one year of service at the Bank are entitled to receive a primary
residence mortgage loan at an interest rate of 0.50% below market, consistent with applicable laws and regulations.
The chart below lists the executive officers and directors who participated in the employee mortgage loan
program during the years ended December 31, 2016 and 2015 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, 2016 and 2015.
Largest Aggregate
Interest
Non-
Principal
Principal Paid
Interest Paid
Balance 01/01/15
to 12/31/16
Name
$
Thomas Schneider
182,798
Edward Mervine
76,419
James Dowd
Chris Burritt
116,116
45,383
Lloyd Stemple
233,208
Daniel Phillips
68,348
George Joyce
29,364
Rate
%
Employee
Interest Rate
Balance
12/31/2016
%
$
01/01/15 to
12/31/2016
$
01/01/15 to
12/31/2016
$
5.250
3.375
2.625
3.250
2.750
3.625
5.875
5.750
171,202
11,596
18,621
3.875
24,901
51,518
3,554
3.125
99,641
16,475
5,707
3.750
2,437
42,946
1,627
3.250
200,546
32,662
11,974
4.125
65,352
2,996
4,852
6.375
5,348
24,016
2,126
9
Other than the loans noted above in the 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our common stock is registered with the SEC pursuant to Section 12(b) of the Securities Exchange Act of
1934 (the “Exchange Act”). Our 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 officer, director or 10% beneficial owner of our
common stock to file a Form 3, 4, or 5 on a timely basis. All reporting persons of our Company satisfied these filing
requirements during 2016, except as described below:
• A required Form 3 report was not filed on a timely basis by Director Littlejohn upon her election to the
Company’s board;
• Required Form 4s for each of our directors was not filed on a timely basis by each director to report the
granting of stock options and restricted stock awards dated May 6, 2016;
• A required Form 4 report was not filed on a timely basis by Director Joyce to report a purchase of shares by
his father. Director Joyce has voting power over such shares;
• A required Form 4 report was not filed on a timely basis by Senior Vice President Daniel Phillips upon the
granting of stock options dated March 31, 2016; and
• A required Form 4 report was not filed on a timely basis by Director and Chief Executive Officer, Thomas
Schneider, upon a cashless exchange of stock options, dated August 15, 2016.
LEADERSHIP STRUCTURE AND RISK OVERSIGHT ROLE OF BOARD OF DIRECTORS
Our Board has a separate person serve as Chief Executive Officer (“CEO”) and Chair of the Board and has
functioned with that separation 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 same. 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 Pathfinder Bancorp, Inc., 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 Executive/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.
10
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Board of Directors is conducted through meetings and activities of the Board and its
committees. During the year ended December 31, 2016, the Board of Directors held nine regular meetings and one
special meeting. During the year ended December 31, 2016, no director attended fewer than 75 percent of the total
meetings of the Board of Directors and committees on which such director served.
COMPENSATION COMMITTEE
The Compensation Committee meets periodically to review the performance of officers and employees and
to determine compensation programs and adjustments. The entire Board of Directors ratifies the recommendations
of the Compensation Committee. In the year ended December 31, 2016, the members of the Compensation
Committee were Directors Joyce, Stemple, Ayoub, Gagas and Sharkey. All of these directors are “independent”
pursuant to NASDAQ listing requirements. The Compensation Committee met four times during the year ended
December 31, 2016. The Compensation Committee has a charter which is available at our website at
http://www.pathfinderbank.com/investor-relations.
Any shareholder who wishes to communicate directly with a member of the compensation committee
should do so by e-mail to compcommittee@pathfinderbank.com.
As a small reporting company, we are not required to include a Compensation Discussion and Analysis
(CD&A) under Item 402(b) of Regulation S-K. Nevertheless, we do want our shareholders to understand fully our
compensation policies and procedures so we incorporate many, but not all, of the required disclosures of a full
CD&A.
Our Compensation Philosophy. The Company’s ability to attract and retain talented employees and
executives with skills and experience is essential to providing value to its shareholders. The Company seeks to
provide fair and competitive compensation to its employees (including the Named Executive Officers described
below) by providing the type and amount of compensation consistent with our peers. We also seek to drive
performance through short term incentive compensation and to align our executives’ interest with shareholders with
appropriate equity awards.
Role of the Compensation Committee and Consultants. The Committee annually reviews the
performance of the CEO and other executive officers and recommends to the Board of Directors changes to base
compensation, as well as the amount of any bonus to be awarded. In determining whether the base salary of an
officer should be increased, the Committee and the Board of Directors take into account individual performance,
performance of the Company and information regarding compensation paid to executives of peer group institutions
performing similar duties in the Bank’s market area. The CEO recommends to the Compensation Committee,
compensation arrangements for the Executive and Senior Vice Presidents. He does not recommend compensation
arrangements for himself or Board members.
While the Compensation Committee and the Board of Directors do not use strict numerical formulas to
determine changes in compensation for the CEO, Executive and Senior Vice Presidents, and while they weigh a
variety of different factors in their deliberations, both company-wide and individually-based performance objectives
are used in setting the compensation of the CEO, Executive and Senior Vice Presidents. Company-wide
performance objectives emphasize earnings, profitability, earnings contribution to capital, capital strength, asset
quality, and return on equity which are customarily used by similarly-situated financial institutions in measuring
performance. Individually-based performance objectives include non-quantitative factors considered by the
Compensation Committee and the Board of Directors such as general management oversight of the Company, the
quality of communication with the Board of Directors, the productivity of employees and execution of the Bank’s
Strategic Plan. Finally, the Compensation Committee and the Board of Directors considers the standing of the
Company with customers and the community, as evidenced by customer and community complaints, compliments
and a customer survey completed in 2009 and again in 2013. Both of these surveys have been supplemented by
monthly surveys of new customers. While the Compensation Committee and the Board of Directors consider each
of the quantitative and non-quantitative factors described above, such factors are not assigned a specific
11
weight in evaluating the performance of the CEO, Executive and Senior Vice Presidents. Specific weights are
assigned to certain factors in the bonus system, however.
The Compensation Committee retains the services of Arthur Warren Associates (“Warren”) to assist the
Committee in analyzing executive and director compensation. Generally, Warren is retained triannually coincident
with our “Say-on-Pay” vote. He has also been retained for special projects like the freeze of our company pension,
the implementation of a defined contribution SERP and other projects.
Warren was hired in 2014 to complete our triennial study of compensation for Named Executive Officers
and independent board members. Warren billed the Company $15,600 for his services in 2014. Warren used a peer
group consisting of publicly traded banks. Some of these peers were selected because of their geographic proximity
and some were chosen because of their similar size and structure.
Warren also relied on other survey sources including FDIC data as of June 30, 2014, Pearl Meyer &
Partners 2013 New York Bankers Association Banking Compensation Survey, 2013 Northeast Bankers Survey, and
the ERI Economic Research Institute Survey.
While there was no study of compensation completed in 2016 by Warren, consistent with our triannual
practice described previously, the Compensation Committee was presented with a report prepared by management
that tracks executive compensation of the peer group which is listed below. This report shows that for 2016, Mr.
Schneider’s total compensation was near the median of his peers and is also relatively aligned with the performance
of the Company. Unvested options and unvested restricted stock were not considered in this analysis.
Name
Ticker
Name
Community Bancorp
Elmira Savings Bank
Enterprise Bancorp
Evans Bancorp
CMTV
Salisbury Bancorp
ESBK
EBTC
Union Bankshares
Wellesley Bancorp
EVBN
Citizens Community
Green County Bancorp
GCBC
Chicopee Bancorp
Ocean Shore Holding Co
OSHC
Atlantic Coast Financial
Provident Bancorp
PVBC
Wayne Savings
Ticker
SLA
UNB
WEBK
CZWI
CBNK
ACFC
WAYN
Compensation Best Practices. Our compensation program is designed to retain each named executive and
align their compensation with short-term and long-term performance. Toward that end, we use the following
compensation best practices:
• Our cash based bonus payments and our 2016 Pathfinder Bancorp, Inc. Equity Incentive Plan,
approved by the shareholders at last year’s Annual Meeting, are tied to both financial and non-
financial performance measures and are subject to a “clawback” policy, providing for the partial or
total return of the cash bonus in the event of a restatement of our financial statements which makes
the performance measures no longer valid;
12
• No tax “gross ups” are included in any employment related agreement;
• Our perquisites and personal benefits are limited to those that support a documented business
purpose;
• Our change in control provisions in the Company’s employment and other agreements with its
Named Executive Officers provide for payment only upon termination of employment or job
diminishment with a change in control (a so called “double trigger” event);
• We use appropriate peer groups when establishing compensation; and
• We balance short and long-term incentives.
Compensation Program Elements. The Compensation Committee, with the assistance of Warren, has
incorporated the following elements into the corporate program to meet the documented corporation philosophy:
• Cash based salary and employment benefits that are competitive within our peers;
• Cash based bonus, directly linking pay to both company and individual performance;
• An equity plan designed to align the executives’ interest with the company’s shareholders in
achieving long term performance.
• A qualified 401(k) plan allowing executives to defer “pre-tax” earnings toward retirement;
• Employee Stock Ownership Plan rewarding long term service to the Company;
• A defined contribution supplemental executive retirement plan (SERP) rewarding long term
service to the Company;
• Executive deferred compensation plan allowing executives to defer income for retirement
purposes;
•
Insurance programs designed to replace income in the event of sickness, accident or death; and
• Limited perquisites based on demonstrated business purpose.
13
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table shows the compensation of Thomas W. Schneider,
our principal executive officer, and the two other most highly compensated executive officers (“Named Executive
Officers”) that received total compensation of $100,000 or more during the past fiscal year for services to Pathfinder
Bancorp, Inc. or any of its subsidiaries during the years ended December 31, 2016 and 2015, respectively.
Summary Compensation Table
Stock
Options
($) (2)
Restricted
Stock
Awards
($) (3)
Non-Qualified
Deferred
Compensation
Earnings
($) (4)
All Other
Compensation
($) (5)
Total
($)
Salary
($)
Bonus
($) (1)
325,000
52,964
94,636
179,512
325,000
49,570
-
-
195,000
22,394
56,779
83,774
176,215
23,437
-
-
2,569
2,029
3,464
2,798
121,749
776,430
116,232
492,831
63,282
424,693
53,970
256,420
190,000
22,582
56,779
83,774
160,000
20,892
-
-
556
209
56,016
409,707
49,623
230,724
Name and
Principal Position
Thomas W. Schneider,
President and Chief
Executive Officer
James A. Dowd
Executive Vice President
Chief Operating Officer
and Chief Financial
Officer
Year
2016
2015
2016
2015
Ronald Tascarella
Executive Vice President
Chief Credit Officer
2016
2015
(1) Current year performance-based bonus awards were paid during March 2017.
(2) Represents the grant date fair value of the stock option awards granted to the Named Executives under the 2016 Equity Incentive Plan. The
grant date fair value of the stock option awards has been computed in accordance with the stock-based compensation accounting rules
(FASB ASC Topic 718). Assumptions used in the calculations of these amounts are included in Note 15 to our Financial Statements in
our Annual Report on Form 10-K filed with the SEC on March 31, 2017. While these options are included in this year’s compensation
table pursuant to SEC rules, they vest over a seven year period, commencing May 6, 2017.
(3) Represents the grant date fair value of $11.35 for the restricted stock awards granted to the Named Executives under the 2016 Equity
Incentive Plan. While these restricted stock awards are included in this year’s compensation table pursuant to SEC rules, they vest over a
seven year period, commencing May 6, 2017.
(4) The non-qualified deferred compensation earnings represents the above market or preferential earnings on compensation that was deferred
by each Named Executive Officer.
(5) All other compensation represents the following for each Named Executive Officer:
Named Executive
Year
Thomas W. Schneider
James A. Dowd
Ronald Tascarella
2016
2016
2016
Employee
Savings Plan
Company
Contribution
Automobile
Expense
Reimbursement
Club Dues
Life Insurance
Premium
($)
19,920
14,008
15,942
($)
16,347
-
-
($)
5,077
-
-
($)
407
407
407
Supplemental
Executive
Retirement
Plan
($)
55,568
27,040
27,040
*ESOP
($)
24,430
21,827
12,627
Total
($)
121,749
63,282
56,016
*The ESOP value is calculated based on the Company’s stock price of $13.49 per share as of December 31, 2016.
14
Employment Agreement. The Company and its operating subsidiary, Pathfinder Bank, entered into an
employment agreement with Thomas W. Schneider. The agreement has an initial term of three years. Unless notice
of non-renewal is provided, the agreement renews annually. The agreement provides for the payment of a base
salary, which will be reviewed at least annually, and which may be increased. Under the agreement, the 2017 base
salary for Mr. Schneider is $325,000. In addition to the base salary, the agreement provides for, among other
things, participation in employee and welfare benefit plans and incentive compensation and bonus plans applicable
to senior executive employees, and reimbursement of business expenses.
Mr. Schneider is entitled to severance payments and benefits in the event of termination of employment
under specified circumstances. In the event his employment is terminated for reasons other than for cause, disability
or retirement, or in the event he resigns during the term of the agreement following:
(1) the failure to elect or re-elect or to appoint or re-appoint the executive to his executive position or as a
Director;
(2) a material change in the executives’ functions, duties, or responsibilities, which change would cause the
executives’ position to become one of lesser responsibility, importance or scope;
(3) the liquidation or dissolution of Pathfinder Bancorp, Inc. or the Bank, other than liquidations or
dissolutions that are caused by reorganizations that do not affect the status of the executives;
(4) a relocation of the executives’ principal place of employment by more than 30 miles from its location as of
the date of the agreements;
(5) a material breach of the agreements by Pathfinder Bancorp, Inc. or the Bank; or
Mr. Schneider will be entitled to a severance payment equal to three times the sum of his base salary and the highest
rate of bonus awarded to him during the prior three years, payable as a single cash lump sum distribution within 30
days following his date of termination. In addition, Pathfinder Bancorp, Inc. or the Bank will continue to provide
him with continued life insurance and non-taxable medical and dental coverage for 36 months.
If he voluntarily resigns (without the occurrence of the specified circumstances listed above) from his
employment with Pathfinder Bancorp, Inc. and the Bank, the Board will have the discretion to provide severance
pay to him, provided, however, that such amount does not exceed three times the average of the executives’ three
preceding years’ base salary, including bonuses, any other cash compensation paid during such years, and the
amount of contributions made on behalf of him to any employee benefit plans maintained by Pathfinder Bancorp,
Inc. or the Bank during such years.
Upon the occurrence of a change in control of Pathfinder Bancorp, Inc. or the Bank followed by the Mr.
Schneider’s termination of employment for any reason, other than for cause, he will be entitled to receive a single
cash lump distribution equal to 2.99 times his average base salary over the previous five years, including bonuses,
any other cash compensation paid to him during such years, and the amount of contributions made on behalf of him
to any employee benefit plans maintained by Pathfinder Bancorp, Inc. or the Bank during such years. In addition,
Pathfinder Bancorp, Inc. or the Bank will continue to provide him with continued life insurance and non-taxable
medical and dental coverage for 36 months. In the event payments made to him include an “excess parachute
payment,” as defined in Section 280G of the Internal Revenue Code, the payment will be reduced by the minimum
dollar amount necessary to avoid this result. Should he become disabled, he would be entitled to receive his base
salary for one year, where the payment of base salary will commence within 30 days from the date he is determined
to be disabled, and will be payable in equal monthly installments.
Upon his voluntary resignation from employment (without the occurrence of the specified circumstances
listed above) he agrees not to compete with Pathfinder Bancorp, Inc. or the Bank for one year following his
resignation.
15
Change of Control Agreements. Pathfinder Bancorp, Inc. and Pathfinder Bank have entered into a
Change of Control Agreement with James A. Dowd and Ronald Tascarella which provides certain benefits to them
should they be “dismissed” from employment within a twelve month period following a change of control of the
Company or the Bank. Although “dismissal” does not include a termination for cause or voluntary termination, it
does include the executive’s resignation as a result of:
•
•
•
a material change in the executive’s functional duties or responsibilities which would cause the
executive’s position to become one of lesser responsibility, importance of scope.
a relocation of the executive’s principal place of employment by more than 30 miles from its location
as of the date of the agreement.
a material reduction in the benefits to the executive as of the date of the agreement.
In the event of such dismissal, the executive, or his beneficiary should he die subsequent to the dismissal, is
entitled to a lump sum payment equal to his most recent annual base salary plus bonuses and any other cash
compensation paid to the executive within the most recent twelve (12) month period. The executive is also entitled
to continued life, medical and dental coverage for a period of twelve months subsequent to the dismissal, and will
become fully vested in any stock option plans, deferred compensation plans, or restricted stock plans in which he
participates.
Defined Contribution Supplemental Retirement Income Agreements. The Bank adopted a Supplemental
Executive Retirement Plan (the “SERP”), effective January 1, 2014. The SERP benefits certain key senior
executives of the Bank who are selected by the Board to participate, including our Named Executive Officers,
Thomas W. Schneider, Ronald Tascarella and James A. Dowd. The SERP is intended to provide a benefit from the
Bank upon retirement, death, disability or voluntary or involuntary termination of service (other than “for cause”),
subject to the requirements of Section 409A of the Internal Revenue Code. Accordingly, the SERP obligates the
Bank to make a contribution to each executive’s account on the last business day of each calendar year. In addition,
the Bank, may, but is not required to, make additional discretionary contributions to the executive’s accounts from
time to time. All executives currently participating in the SERP, including the Named Executive Officers, are fully
vested in the Bank’s contribution to the plan. In the event the executive is terminated involuntarily or resigns for
good reason within 24 months following a change in control, the Bank is required to make additional annual
contributions the lesser of: (1) three years or (2) the number of years remaining until the executive’s benefit age,
subject to potential reduction to avoid an excess parachute payment under Code Section 280G. In the event of the
executive’s death, disability or termination within 24 months after a change in control, the executive’s account will
be paid in a lump sum to the executive or his beneficiary, as applicable. In the event executive is entitled to a
benefit from the SERP due to retirement or other termination of employment, the benefit will be paid either in a
lump sum or in 10 annual installments as detailed in the executive’s participant agreement.
Executive Deferred Compensation Plan. Pathfinder Bank maintains an Executive Deferred Compensation
Plan for a select group of management employees, including our Named Executive Officers. A participant in the
plan is eligible to defer, on a monthly basis, a percentage of compensation received from the Bank, up to $750. The
participant’s deferred compensation will be held by the Bank subject to the claims of the Bank’s creditors in the
event of the Bank’s insolvency.
Upon the earlier of the date on which the participant terminates employment with the Bank or attains his or
her benefit age (as designated by the participant upon joining the plan), the participant will be entitled to his or her
deferred compensation benefit, which will commence on the date the participant attains his or her elected benefit age
and will be payable in monthly installments for 10 years. In the event of a change in control of Pathfinder Bancorp,
Inc. or the Bank followed by the participant’s termination of employment within 36 months thereafter, the
participant will receive a deferred compensation benefit calculated as if the participant had made elective deferrals
through his or her benefit age. Such benefit will commence on the date the participant attains his or her benefit age
and will be payable in monthly installments for 10 years. If the participant dies after commencement of payment of
the deferred compensation benefit, the Bank will pay the participant’s beneficiary the remaining payments that were
due.
16
In the event the participant becomes disabled, the participant will be entitled to receive the deferred
compensation benefit as of the participant’s date of disability. Such benefit will commence within 30 days
following the date on which the participant is disabled and will be payable in monthly installments for 10 years. If
the participant dies prior to the commencement of payment of the deferred compensation benefit, the participant’s
beneficiary will be entitled to receive a survivor benefit.
2010 Stock Option Plan. The Pathfinder Bancorp, Inc. 2010 Stock Option Plan (the “2010 Stock Option
Plan”) was approved at our 2010 Annual Meeting. The 2010 Stock Option Plan authorized the issuance of up to
150,000 shares of common stock pursuant to grants of stock option awards to our senior executive officers and
outside directors. The options that were granted vest over 5 years (20% per year for each year of the participant’s
service), had an exercise price of $9.00, (the market price on the date of the grant) and have an exercise period of 10
years from the date of the grant, June 23, 2011. As a result of the second step conversion of Pathfinder Bancorp,
MHC into a fully-converted stock holding company as Pathfinder Bancorp, Inc., both the number of options and the
exercise price were adjusted by the exchange ratio of 1.6472.
2016 Equity Incentive Plan. The Pathfinder Bancorp, Inc. 2016 Equity Incentive Plan (the “2016 Equity
Incentive Plan”) was approved at our 2016 Annual Meeting. The 2016 Equity Incentive Plan authorized the issuance
of up to 263,605 shares of common stock pursuant to grants of stock option awards to our senior executive officers
and outside directors. The options that were granted vest over seven years (14.3% per year for each year of the
participant’s service), had an exercise price of $11.35, (the market price on the date of the grant) and have an
exercise period of 10 years from the date of the grant, May 6, 2016.
The 2016 Equity Incentive Plan also authorized the issuance of 105,442 shares of common stock pursuant
to grants of restricted stock awards to our senior executive officers and outside directors. The restricted stock awards
vest over seven years (14.3% per year for each year of the participant’s service). The following table sets forth
information with respect to our outstanding 2010 Stock Option Plan and the 2016 Equity Incentive Plan awards for
the Named Executive Officers.
Outstanding Equity Awards at Year-End. The following table sets forth information with respect to our
outstanding equity awards as of December 31, 2016 for the Named Executive Officers.
Number of
securities
underlying
unexercised
options
exercisable (1)
(#)
Number of
securities
underlying
unexercised
options
unexercisable
(#)
Name
Option
exercise
price
($)
Option
expiration
date
Market
value of
shares or
units of
restricted
stock that
have not
vested (3)
($)
Number of
shares or units
of restricted
stock that have
not vested
(#)
Thomas W. Schneider,
19,591 (2)
- 5.46
06/23/21
-
James A. Dowd
Ronald Tascarella
-
22,237 (2)
-
7,001 (2)
26,361
11.35
05/06/26
15,816
213,358
- 5.46
06/23/21
-
15,816
11.35
05/06/26
7,381
99,570
- 5.46
06/23/21
-
-
15,816
11.35
05/06/26
7,381
99,570
(1) At December 31, 2016, there are 48,829 stock options outstanding for the Named Executive Officers.
(2) All 2010 stock options were fully vested as of June 23, 2016.
(3)
Reflects the per share value of the restricted stock awards as of December 31, 2016 of $13.49.
Defined Benefit Plan. Pathfinder Bank maintains a tax-qualified noncontributory defined benefit plan
(“Retirement Plan”). The Company “froze” the Retirement Plan effective June 30, 2012 (“Plan Freeze Date”). After
the Plan Freeze Date, no employee is permitted to commence or recommence participation in the Plan and no further
benefits accrue to any plan participants. Employment service after the Plan Freeze Date does continue to be
17
recognized for vesting purposes, however. Prior to the Plan Freeze Date, all salaried employees age 21 or older who
worked for the Bank for at least one year and were credited with 1,000 or more hours of employment during the year
were eligible to accrue benefits under the Retirement Plan.
At the normal retirement age of 65, the Retirement Plan is designed to provide a life annuity. The
retirement benefit provided is equal to 1.5% of a participant’s average monthly compensation for periods after May
1, 2004, through the plan freeze date described below and 2.0% of the participant’s average monthly compensation
for credited service prior to May 1, 2004 based on the average of the three consecutive years during the last 10 years
of employment which provides the highest monthly average compensation multiplied by the participant’s years of
credited service (not to exceed 30 years) to the normal retirement date. Retirement benefits also are payable upon
retirement due to early and late retirement. Benefits also are paid from the Retirement Plan upon a Participant’s
disability or death. A reduced benefit is payable upon early retirement at or after age 60. Upon termination of
employment other than as specified above, a participant who was employed by the Bank for a minimum of five
years is eligible to receive his or her accrued benefit reduced for early retirement or a deferred retirement benefit
commencing on such participant’s normal retirement date. Benefits are payable in various annuity forms. On
December 31, 2016, the market value of the Retirement Plan trust fund was approximately $13.6 million. The
Company was not required to make a contribution to the Plan in 2016.
Employee Savings Plan. Pathfinder Bank maintains an Employee Savings Plan which is a profit sharing
plan with a “cash or deferred” feature that is tax-qualified under Section 401(k) of the Internal Revenue Code (the
“401(k) Plan”). All employees who have attained age 21 and have completed 90 days of employment during which
they worked at least 1,000 hours are eligible to participate.
Participants may elect to defer a percentage of their compensation each year instead of receiving that
amount in cash, in an amount up to 75% of their compensation to the 401(k) Plan, provided that the amount deferred
does not exceed $18,000 for 2016. In addition, for participants who are age 50 or older by the end of any taxable
year, the participant may elect to defer additional amounts (called “catch-up contributions”) to the 401(k) Plan. The
“catch-up contributions” may be made regardless of any other limitations on the amount that a participant may defer
to the 401(k) Plan. The maximum “catch-up contribution” that a participant can make in 2016 is $6,000. For these
purposes, “compensation” includes total compensation (including salary reduction contributions made under the
401(k) Plan or the flexible benefits plan sponsored by the Bank), but does not include compensation in excess of
$270,000 for 2016. The Bank generally provides a match of 100% of the first 3% of the participating employees
salary, plus 50% of the next 3% of the participating employees salary. All employee contributions and earnings
thereon are fully and immediately vested. Employer matching contributions vest at the rate of 20% per year
beginning at the end of a participant’s second year of service with the Bank until a participant is 100% vested after
six years of service. Participants also will vest in employer matching contributions when they reach the normal
retirement age of 65 or later, or upon death or disability regardless of years of service. To partially offset the impact
on employees due to the Retirement Plan freeze discussed above, the Company, on January 1, 2013, began making a
3% safe harbor contribution to all eligible participants in addition to the match contributions described above. The
employer safe harbor contribution is fully vested at all times.
For the plan year ended December 31, 2016, the Bank made a matching contribution in the amount of
$300,000 to the 401(k) Plan. In addition, the Company made a $219,000 safe harbor contribution to the plan in
2016.
Employee Stock Ownership Plan. Pathfinder Bank maintains an Employee Stock Ownership Plan
(“ESOP”). Employees who are at least 21 years old with at least one year of employment with the Bank are eligible
to participate. On April 6, 2011, the ESOP acquired 125,000 shares of common stock to replenish its ability to make
stock contributions to participants’ accounts. The shares were acquired pursuant to a loan obtained from a third
party lender. The Bank makes annual contributions to the ESOP which contributions are used by the ESOP to repay
the ESOP loan. In connection with the second step conversion and offering, the ESOP purchased an additional
105,442 shares, which equaled 4% of the shares issued in the offering. In connection with such purchase, the ESOP
borrowed sufficient funds from Pathfinder Bancorp, Inc. to both refinance the remaining outstanding balance on the
third party loan and purchase the additional shares.
18
Benefits under the ESOP become vested in an ESOP participant at the rate of 20% per year, starting upon
an employee’s completion of one year of credited service, and will be fully vested upon completion of five years of
credited service. Participants’ interest in their account under the ESOP will also fully vest in the event of termination
of service due to their normal retirement, death, disability, or upon a change in control (as defined in the plan).
Vested benefits will be payable generally upon the participants’ termination of employment with the Bank, and will
be paid in the form of common stock, or to the extent participants’ accounts contain cash, benefits will be paid in
cash. However, participants have the right to elect to receive their benefits entirely in the form of cash or common
stock, or a combination of both.
19
DIRECTORS’ COMPENSATION
Each non-employee director receives an annual retainer of $13,100, a meeting fee of $800 for each Board
meeting attended and $600 for each committee meeting attended, except for Executive Loan Committee fees which
are $300. The Board Chair receives an additional retainer of $12,000. The Audit Committee Chairman receives an
additional retainer of $6,000 and the chairman of all other committees receives an additional $100 for each
committee meeting in which they serve in the capacity of committee chairman. Employee directors do not receive
any fees. We paid a total of $299,500 in director fees during the year ended December 31, 2016.
Set forth below is director compensation for each of our non-employee directors for the year ended
December 31, 2016.
Director Compensation
Non-qualified
deferred
Stock
Options(1)
($)
Restricted
Stock (2)
($)
compensation
All other
earnings (3)
compensation (4)
($)
($)
Total
($)
Fees earned
or paid in
cash
($)
41,100
29,173
39,895
2,223
-
112,391
27,400
29,173
39,895
1,112
-
97,580
47,200
29,173
39,895
22,238
-
138,506
30,400
29,173
39,895
2,223
-
101,691
35,000
29,173
39,895
-
-
104,068
34,600
29,173
39,895
7,458
-
111,126
23,917
29,173
39,895
-
-
92,985
32,800
29,173
39,895
-
-
101,868
27,083
29,173
39,895
4,846
-
100,997
Name
David A. Ayoub
William A. Barclay
Chris R. Burritt
John P. Funiciello
Adam C. Gagas
George P. Joyce
Melanie Littlejohn
John F. Sharkey
Lloyd "Buddy" Stemple
Year
2016
2016
2016
2016
2016
2016
2016
2016
2016
(1) At December 31, 2016 each director had 8,787 stock options. The valuation for the year ended December 31, 2016 represents the
grant date fair value of the stock option awards granted to the directors under the 2016 Equity Incentive Plan. The grant date fair value
of the stock option awards has been computed in accordance with the stock-based compensation accounting rules (FASB ASC Topic
718). Assumptions used in the calculations of these amounts are included in Note 15 to our Financial Statements in our Annual
Report on Form 10-K filed with the SEC on March 31, 2017. While the stock options are included in this year’s compensation table
pursuant to SEC rules, they vest over a five year period, commencing May 6, 2017.
(2) At December 31, 2016, each director had 3,515 restricted stock awards. The valuation for the year ended December 31, 2016
represents the grant date fair value of the restricted stock awards granted to the directors under the 2016 Equity Incentive Plan. While
the restricted stock awards are included in this year’s compensation table pursuant to SEC rules, they vest over a five year period,
commencing May 6, 2017.
(3) The non-qualified deferred compensation earnings represents the above market or preferential earnings on compensation that was
deferred by each named director to the Trustee Deferred Fee Plan.
(4) No named director received perquisites and any other personal benefits that exceeded, in the aggregate, $10,000.
Director fees are reviewed annually by the Compensation Committee for recommendation to the Board of
Directors. The committee reviews relevant peer group data similar to that used in the executive compensation
review. The Committee believes that an appropriate compensation is critical to attracting, retaining and motivating
directors who have the qualities necessary to direct the Company. Mr. Warren, our compensation consultant,
concluded in his 2014 study that Director Compensation was comparable to peer banks, but suggested that
additional efforts be made to align directors with shareholder interests. The Board of Directors took Mr. Warren’s
suggestions into consideration in the design of the 2016 Equity Incentive Plan approved by the shareholders last
year.
20
Trustee (Director) Deferred Fee Plan. Pathfinder Bank maintains the Trustee Deferred Fee Plan for
members of the Boards of Directors of Pathfinder Bank and Pathfinder Bancorp, Inc. A participant in the plan is
eligible to defer, on a monthly basis, the lesser of (i) $2,000 or (ii) 100% of the monthly fees the participant would
be entitled to receive each month. The participant’s deferred fees will be held by the Bank subject to the claims of
the Bank’s creditors in the event of the Bank’s insolvency.
Upon the earlier of the date on which the participant’s services are terminated or the participant attains his
or her benefit age (as designated by the participant upon joining the plan), the participant will be entitled his or her
deferred compensation benefit, which will commence on the date the participant attains his or her elected benefit age
and will be payable in monthly installments for 10 years. In the event of a change in control of Pathfinder Bancorp,
Inc. or the Bank followed by the participant’s termination of services within 36 months thereafter, the participant
will receive a deferred compensation benefit calculated as if the participant had made elective deferrals through his
or her benefit age. Such benefit will commence on the date the participant attains his or her benefit age and will be
payable in monthly installments for 10 years. If the participant dies after commencement of payment of the deferred
compensation benefit, the Bank will pay the participant’s beneficiary the remaining payments that were due.
In the event the participant becomes disabled, the participant will be entitled to receive the deferred
compensation benefit as of the date of the participant’s disability. Such benefit will commence within 30 days
following the date on which the participant is determined to be disabled and will be payable in monthly installments
for 10 years. If the participant dies prior to the commencement of payment of the deferred compensation benefit, the
participant’s beneficiary will be entitled to receive a survivor benefit.
NOMINATING/GOVERNANCE COMMITTEE
The Nominating/Governance Committee met two times in the year ended December 31, 2016 to address
issues concerning corporate governance, succession planning, and to nominate directors to fulfill the terms of the
upcoming year. In the year ended December 31, 2016, the Nominating/Governance Committee was comprised of
Directors Barclay, Gagas, Joyce and Stemple, all of whom were “independent” pursuant to the NASDAQ listing
requirements. The Nominating/Governance Committee has a charter which is available at our website at
http://www.pathfinderbank.com/investor-relations.
Among other things, the functions of the Nominating/Governance Committee include the following:
•
•
•
to lead the search for individuals qualified to become members of the Board and to select director
nominees to be presented for shareholder approval;
to review and monitor compliance with the requirements for board independence; and
to review the committee structure and make recommendations to the Board regarding committee
membership.
The Nominating/Governance Committee identifies nominees by first evaluating the current members of the
Board of Directors willing to continue in service. Current members of the Board with skills and experience that are
relevant to our business and who are willing to continue in service are first considered for re-nomination, balancing
the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any
member of the Board does not wish to continue in service, or if the Nominating/Governance Committee or the
Board decides not to re-nominate a member for re-election, or if the size of the Board is increased, the
Nominating/Governance Committee would solicit suggestions for director candidates from all Board members. In
addition, the Nominating/Governance Committee is authorized by its charter to engage a third party to assist in the
identification of director nominees.
The Nominating/Governance Committee would seek to identify a candidate who, at a minimum, satisfies
the following criteria:
21
• has personal and professional ethics and integrity and whose values are compatible with ours;
• has had experiences and achievements that have given him or her the ability to exercise and develop
good business judgment;
•
•
•
is willing to devote the necessary time to the work of the Board and its committees, which includes
being available for Board and committee meetings;
is familiar with the communities in which we operate and/or is actively engaged in community
activities;
is involved in other activities or interests that do not create a conflict with his or her responsibilities to
us and our shareholders;
• has the capacity and desire to represent the balanced, best interest of our shareholders as a group, and
not primarily a special interest group or constituency; and
• Has had a principal residence for two years on a continuous basis within the following counties in New
York – Oswego, Jefferson, Lewis, Oneida, Onondaga or Cayuga. Our Bylaws provide that this
provision may be overridden by two-thirds vote of the Board of Directors.
The Nominating/Governance Committee will also take into account whether a candidate satisfies the
criteria for “independence” under the NASDAQ corporate governance listing standards and, if a nominee is sought
for service on the Audit Committee, the financial and accounting expertise of a candidate, including whether an
individual qualifies as an Audit Committee Financial Expert.
The Nominating/Governance Committee will consider candidates for the Board of Directors recommended
by shareholders. In order to make a recommendation to the Board of Directors, a shareholder must own no less than
500 shares of the Company. Shareholders who are so qualified may send their recommendations to our Corporate
Secretary for forwarding to the Nominating/Governance Committee. In light of the due diligence required to
evaluate recommendations, said recommendations for candidates for the 2018 annual meeting must be received by
the Nominating/Governance Committee by June 30, 2017.
Shareholders may submit the names of candidates to be considered in writing to our Corporate Secretary, at
214 West First Street, Oswego, New York 13126. The submission must include the following information:
•
•
•
•
•
•
the name and address of the shareholder as it appears on our books, and number of shares of our
common stock that are owned beneficially by such shareholder (if the shareholder is not a holder of
record, appropriate evidence of the shareholder’s ownership will be required);
the name, address and contact information for the candidate, and the number of shares of our common
stock that are owned by the candidate (if the candidate is not a holder of record, appropriate evidence
of the shareholder’s ownership should be provided);
a statement of the candidate’s business and educational experience;
such other information regarding the candidate as would be required to be included in the proxy
statement pursuant to SEC Regulation 14A;
a statement detailing any relationship between us and the candidate;
a statement detailing any relationship between the candidate and any of our customers, suppliers or
competitors;
22
• detailed information about any relationship or understanding between the proposing shareholder and
the candidate; and
•
a statement that the candidate is willing to be considered and willing to serve as a director if nominated
and elected.
The Nominating/Governance Committee will consider shareholder recommendations made in accordance
with the above similarly to any other nominee proposed by any other source. We have not paid a fee to any third
party to identify or evaluate any potential nominees. Moreover, the Nominating/Governance Committee has not
received within the last year a recommended nominee from any shareholder.
AUDIT COMMITTEE
In 2016, the Audit Committee consisted of Directors Ayoub, Gagas, Funiciello and Sharkey. The Audit
Committee meets on a periodic basis with the internal auditor to review audit programs and the results of audits of
specific areas, on regulatory compliance issues, as well as to review information to further their financial literacy
skills. The Audit Committee meets with the independent registered public accounting firm (“the Auditors”) to
review quarterly and annual filings, the results of the annual audit and other related matters. The Chairman of the
Audit Committee may meet with the Auditors on quarterly filing issues in lieu of the entire committee. The Audit
Committee met five times in 2016. Each member of the Audit Committee is “independent” as defined in the listing
standards of NASDAQ and SEC Rule 10A(m)-3. Our Board of Directors has adopted a written charter for the Audit
Committee which is available on our website at http://www.pathfinderbank.com/investor-relations.
The Audit Committee maintains an understanding of our key areas of risk and assesses the steps
management takes to minimize and manage such risks; selects and evaluates the qualifications and performance of
the Auditors; ensures that the internal and external auditors maintain no relationship with management and/or us that
would impede their ability to provide independent judgment; oversees the adequacy of the systems of internal
control; reviews the nature and extent of any significant changes in accounting principles; and oversees that
management has established and maintained processes reasonably calculated to ensure our compliance with all
applicable law, regulations, corporate policies and other matters contained in our Code of Ethics which is available
on our website at http://www.pathfinderbank.com/investor-relations. The Audit Committee has established
procedures for the confidential, anonymous submission by employees of concerns regarding accounting or auditing
matters.
The Board of Directors of Pathfinder Bancorp, Inc. has determined that Mr. Ayoub qualifies as an Audit
Committee financial expert serving on the committee. Mr. Ayoub meets the criteria established by the Securities and
Exchange Commission.
Our Auditors for 2016 were Bonadio & Co., LLP.
Audit Fees
Bonadio & Co., LLP billed us a total of $149,146 and $128,845 for 2016 and 2015, respectively, for the
audit of our 2016 and 2015 annual consolidated financial statements, review of our Annual Report on Form 10-K,
review of consolidated financial statements included in Forms 10-Q, and services normally provided in connection
with statutory and regulatory filings, including out-of-pocket expenses.
23
Audit-related fees
Bonadio & Co., LLP billed us a total of $40,426 and $50,270 for 2016 and 2015, respectively, for audit-
related fees, which included professional services rendered for the three annual audits of the Company’s employee
benefit plans.
Recurring and non-recurring tax services
Bonadio & Co., LLP billed us a total of $33,525 and $34,675 in 2016 and 2015, respectively, for tax fees
which included the preparation of state and federal tax returns, calculation of the quarterly tax estimates, and other
tax-related consulting. Recurring and non-recurring tax services included assistance in connection with the New
York State Franchise tax examination.
All Other Fees
Bonadio & Co., LLP billed us a total of $12,345 and $5,500 for 2016 and 2015, respectively, for other
fees which included cost segregation studies and tangible property write-offs and SEC comment letter review in
2016, and cost segregation studies in 2015.
Policy On Audit Committee Pre-Approval Of Audit And Non-Audit Services Of The Independent Registered
Public Accounting Firm
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the Auditors.
These services may include audit services, audit-related services, tax services and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to particular service or category of services
and is generally subject to a specific budget. The Audit Committee has delegated pre-approval authority to its
Chairman when expedition of services is necessary. The Auditors and management are required to periodically
report to the full Audit Committee regarding the extent of services provided by the Auditors in accordance with this
pre-approval, and the fees for the services performed to date. All of the non-audit fees incurred in 2016 and 2015
were preapproved pursuant to our policy.
The Audit Committee considered whether the provision of non-audit services was compatible with
maintaining the independence of its Auditors. The Audit Committee concluded that performing such services in
2016 did not affect the auditors’ independence in performing their function as independent registered public
accounting firm.
Audit Committee Report
In accordance with rules established by the SEC, the Audit Committee has prepared the following report
for inclusion in this proxy statement:
As part of its ongoing activities, the Audit Committee has:
• Reviewed and discussed with management our audited consolidated financial statements for the year
ended December 31, 2016;
• Discussed with the independent registered public accounting firm the matters required to be discussed
by Auditing Standards No. 16, Communication with Audit Committees;
• Received the written disclosures and the letter from the independent registered public accounting firm
required by Public Company Accounting Oversight Board Rule 3526, Communication with Audit
Committees Concerning Independence, and has discussed with the independent registered public
accounting firm their independence; and
• Considered the compatibility of non-audit services described above with maintaining auditor
independence.
24
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the
year ended December 31, 2016. The Audit Committee appointed Bonadio & Co., LLP as Auditors for 2017, which
appointment the shareholders will be asked to ratify at the 2017 Annual Meeting.
This report has been provided by the Audit Committee:
Messrs. Ayoub, Gagas, Funiciello and Sharkey
SHAREHOLDER COMMUNICATIONS
The Board of Directors has established a process for shareholders to send communications to a director by
either United States mail or electronic mail. Any shareholder who desires to communicate directly with our directors
should send their communication to Board of Directors, Pathfinder Bancorp, Inc., 214 West First Street, Oswego,
New York 13126 or by email to directors@pathfinderbank.com. The communication should indicate that the author
is a shareholder and if shares are not held of record, should include appropriate evidence of stock ownership.
Depending on the subject matter, management will:
• Forward the communication to the director or directors to whom it is addressed;
• Attempt to handle the inquiry directly, for example where it is a request for information about us or it
is a stock-related matter; or
• Not forward the communication if it is primarily commercial in nature, relates to an improper or
irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.
At each Board meeting, management shall present a summary of all communications received since the last
meeting that were not forwarded and make those communications available to the directors.
ATTENDANCE AT ANNUAL MEETINGS
The Company does not have a policy regarding the attendance of Board members at the Annual Meeting,
although all are encouraged to attend. Nine of our directors attended the 2016 Annual Meeting.
CODE OF ETHICS
We have adopted a Code of Ethics that is applicable to our officers, directors and employees, including our
principal executive officer, principal financial officer, principal accounting officer or controller, or persons
performing
at
http://www.pathfinderbank.com/investor-relations. Amendments to, and waivers from, the Code of Ethics will also
be disclosed on our website.
our website
The Code
functions.
available
similar
Ethics
on
of
is
PROPOSAL 2 -RATIFICATION OF APPOINTMENT OF AUDITORS
The Audit Committee has approved the engagement of Bonadio & Co., LLP to be our independent
registered public accounting firm for 2017. At the Annual Meeting, shareholders will consider and vote on the
ratification of the engagement of Bonadio & Co., LLP, for the year ending December 31, 2017. A representative of
Bonadio & Co., LLP is expected to attend the Annual Meeting to respond to appropriate questions and to make a
statement if he or she so desires. Information regarding our engagement of Bonadio & Co., LLP is set forth under
“Audit Committee.”
25
In order to ratify the selection of Bonadio & Co., LLP, as our independent registered public accounting
firm for 2017, the proposal must receive at least a majority of the votes cast, either in person or by proxy, in favor of
such ratification.
THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” THE RATIFICATION OF BONADIO & CO., LLP AS AUDITORS FOR 2017.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the proxy materials for next year’s Annual Meeting of Shareholders,
any shareholder proposal to take action at such meeting must be received at our executive office, 214 West First
Street, Oswego, New York 13126, no later than December 6, 2017. Any such proposals shall also be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
Our Bylaws provide an advance notice procedure for certain business, or nominations to the board of
directors, to be brought before an annual meeting of shareholders. In order for a shareholder to properly bring
business before an annual meeting, or to propose a nominee to the board of directors, Pathfinder Bancorp, Inc.’s
Secretary must receive written notice not less than 80 days nor more than 90 days prior to any such meeting;
provided, however, that if less than 90 days’ notice or prior public disclosure of the date of the meeting is given to
shareholders, such written notice shall be delivered or mailed to and received by the Secretary of Pathfinder
Bancorp, Inc. at its principal executive office not later than the tenth day following the day on which notice of the
meeting was mailed to shareholders or such public disclosure was made.
The notice with respect to shareholder proposals that are not nominations for director must set forth as to
each matter such shareholder proposes to bring before the annual meeting: (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;
(ii) the name and address of such shareholder as they appear on Pathfinder Bancorp, Inc.’s books and of the
beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of
capital stock of Pathfinder Bancorp, Inc. which are owned beneficially or of record by such shareholder and such
beneficial owner; (iv) a description of all arrangements or understandings between such shareholder and any other
person or persons (including their names) in connection with the proposal of such business by such shareholder and
any material interest of such shareholder in such business; and (v) a representation that such shareholder intends to
appear in person or by proxy at the annual meeting to bring such business before the meeting.
The notice with respect to director nominations must include (a) as to each person whom the shareholder
proposes to nominate for election as a director, (i) all information relating to such person that would indicate such
person’s qualification to serve on the board of directors of Pathfinder Bancorp, Inc.; (ii) an affidavit that such person
would not be disqualified under the provisions of Article II, Section 12 of the Bylaws; (iii) such information relating
to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or
is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation and (iv) a written consent of each proposed nominee to be named as a
nominee and to serve as a director if elected; and (b) as to the shareholder giving the notice: (i) the name and address
of such shareholder as they appear on Pathfinder Bancorp, Inc.’s books and of the beneficial owner, if any, on whose
behalf the nomination is made; (ii) the class or series and number of shares of capital stock of Pathfinder Bancorp,
Inc. which are owned beneficially or of record by such shareholder and such beneficial owner; (iii) a description of
all arrangements or understandings between such shareholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder; (iv) a
representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice; and (v) any other information relating to such shareholder that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of
directors pursuant to Regulation 14A under the Exchange Act of 1934 or any successor rule or regulation.
The 2018 annual meeting of shareholders is expected to be held May 2, 2018. Advance written notice for
certain business, or nominations to the board of directors, to be brought before the next annual meeting must be
26
given to us no earlier than February 1, 2018 and no later than February 11, 2018. If notice is received before
February 1, 2018 or after February 11, 2018, it will be considered untimely, and we will not be required to present
the matter at the shareholders meeting.
Nothing in this paragraph shall be deemed to require the Company to include in its proxy statement and
proxy relating to an annual meeting any shareholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is received.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the Annual Meeting other than the
matters described above in the 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
the Securities Exchange Act of 1934.
BY ORDER OF THE BOARD OF DIRECTORS
Oswego, New York
April 5, 2017
Edward A. Mervine
Secretary
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and
Proxy
at
and
http://www.pathfinderbank.com/annualmeeting.
Statement, Annual Report
Proxy Card
available
Form
10-K
and
are
27
OUR VISION
At Pathfinder Bank, we strive to be the local bank our community trusts.
Local… We have proudly served central New york for over 150 years. Like our
customers, we live, work and play here. That fact not only allows us to know our
customers better, but gives our customers access to decision makers right here
in central New york.
Community… Our success is intertwined with the success of the communities
we serve. For that reason, and because it is the right thing to do, we invest our
resources, time, and talents in those communities.
Trust… Because we want to serve our local communities for another 150 years,
we must earn the trust of our customers every day. We do that by being ethical,
capable, honest, reliable and responsive. We do not sell products and services to
our customers. We listen, and inquire, to determine our customers’ needs. Then,
with the help of a team of trusted advisors, we develop a program of services
and products to uniquely satisfy those needs.
CORPORATE INFORMATION
PATHFINDER BANCORP, INC.
BOARD OF DIRECTORS (1)
chris R. Burritt, chairman
David A. Ayoub
William A. Barclay
John P. Funiciello
Adam Gagas
George P. Joyce
melanie Littlejohn
Thomas W. schneider
John F. sharkey, iii
Lloyd “Buddy” stemple
PATHFINDER EXECUTIVE OFFICERS
Thomas W. schneider
President, chief Executive Officer
James A. Dowd, cPA
Executive Vice President,
chief Operating Officer, chief Financial Officer
Ronald Tascarella
Executive Vice President, chief credit Officer
Edward A. mervine, Esq.
senior Vice President, General counsel,
corporate secretary
melissa A. miller
senior Vice President,
customer Experience Officer
Daniel R. Phillips
senior Vice President,
chief information Officer
PATHFINDER OFFICERS
calvin corriders
First Vice President, sales manager
Will O’Brien
First Vice President,
credit Administration
Beth K. Alfieri
Vice President, Business sales Officer
Heather Bush
Vice President, Human Resources
Robert Butkowski
Vice President, Branch Administration
Roberta J. Davis
Vice President, Financial Analyst
Rhonda Hutchins
Vice President, compliance
Lisa A. Kimball
Vice President, controller
mary mcconkey
Assistant Vice President,
Electronic commerce manager
michael Quenville
Vice President, sales Officer
Walter F. Rusnak
Vice President, Finance
John Andrews
Assistant Vice President, Branch manager
Randall Barnard
Assistant Vice President, Branch manager
susan cahill
Assistant Vice President, Branch manager
Jodi DeAugustine
Assistant Vice President, Branch manager
Jeremy Fadden
Assistant Vice President,
Business Account manager
Jessica DeGrenier
Assistant Vice President,
commercial Loan mitigation
Theresa L. Dullen
Assistant Vice President, internal Audit
Amy E. Favata
Assistant Vice President,
Financial Reporting specialist
shari Gordon
Assistant Vice President,
information security Officer
Lorna Hall
Bank secrecy and security Officer
April Jordal
Assistant Vice President,
sales support manager
Laurie L. Lockwood
Assistant Vice President, Assistant controller
Denise Lyga
Assistant Vice President, Branch manager
Joseph P. mcmanus
Assistant Vice President,
computer Operations manager
Deana michaels
Assistant Vice President, Branch manager
craig Nessel
Assistant Vice President, Branch manager
April Phillips
Assistant Vice President,
sales support manager
Reyne Pierce
Assistant Vice President,
Retail Lending manager
crystal Rafte
Assistant Vice President, Operations manager
Robert Rickert
Assistant Vice President, Retail Loss mitigation
Paloma sarkar
Assistance Vice President, credit Team Leader
Amy shaw
Assistant Vice President, Branch manager
Jennifer Wright, Assistant Vice President
municipal and Business Deposit sales manager
CORPORATE HEADQUARTERS
214 West First street
Oswego, Ny 13126
(315) 343-0057
ANNUAL MEETING
Friday, may 5, 2017, 10:00 Am
The American Foundry
246 West seneca street, Oswego, Ny 13126
STOCK LISTING
The NAsDAQ capital market
symbol: PBHc Listing: PathBcp
SPECIAL COUNSEL
Luse Gorman, Pc
5335 Wisconsin Avenue N.W.
suite 400
Washington, D.c. 20015
INDEPENDENT AUDITORS
Bonadio & co., LLP
432 North Franklin street, suite 60
syracuse, Ny 13204
TRANSFER AGENT
computershare
480 Washington Blvd, 29th Floor
Jersey city, NJ 07310
INVESTOR RELATIONS
Thomas W. schneider
President, chief Executive Officer
James A. Dowd, cPA
Executive Vice President,
chief Operating Officer, chief Financial Officer
214 West First street
Oswego, Ny 13126
(315) 343-0057
GENERAL INQUIRIES AND REPORTS
A copy of the Bank’s 2016 Annual
Report to the securities and Exchange
commission, Form 10-K, may be
obtained without charge by written
request of shareholders to:
Edward A. mervine, Esq.
senior Vice President, General counsel
corporate secretary
Pathfinder Bank
214 West First street
Oswego, Ny 13126
A copy of this Annual Report on Form 10K
and our 2017 Annual Proxy statement is also
available free of charge on our website at:
www.pathfinderbank.com/annualmeeting
The public may read and copy any materials
the company files with the sEc at the sEc’s
Public Reference Room at 450 Fifth street,
N.W., Washington, D.c. 20549. The public
may obtain information on the operation of
the Public Reference Room by calling the sEc
at 1-800-sEc-0330. The company’s filings
are also available electronically free of charge
at the sEc website: http://www.sec.gov
and at the company’s website:
http://www.pathfinderbank.com
FDIC DISCLAIMER
This Annual Report has not been
reviewed or confirmed for accuracy
or relevance by the FDic.
(1) information concerning the principal
occupation of the Directors is available
in the company’s Proxy statement
2 0 1 6
A N N UA L
R E P O RT
Main Office
214 West First Street, Oswego
(315) 343-0057
Plaza Office
State Route 104 East, Oswego
(315) 343-4483
DOwntOwn Drive-thru
34 East Bridge Street, Oswego
(315) 343-2577
MexicO Office
Norman & Main Streets, Mexico
(315) 963-7248
fultOn Office
5 West First Street South, Fulton
(315) 592-9545
lacOna Office
1897 Harwood Drive, Lacona
(315) 387-3437
central Square Office
3025 East Avenue, Central Square
(315) 676-2265
cicerO Office
6194 State Route 31, Cicero
(315) 752-0033
Pike BlOck Office
109 West Fayette, Syracuse
(315) 207-8020
www.PathfinDerBank.cOM
LOcAL. cOmmUNiTy. TRUsT.