Pathfinder Bancorp, Inc. Earnings Per Share Disclosure
NOTE 3: EARNINGS PER SHARE
Following shareholder approval received on June 4, 2021, the Company converted 1,380,283 shares of its Series B Convertible Perpetual Preferred Stock to an equal number of shares of its newly-created Series A Non-Voting Common Stock. The conversion, which was effective on June 28, 2021, represented 100% of the Company's Convertible Perpetual Preferred Stock outstanding at the time of the conversion and retired the Convertible Perpetual Preferred Stock in perpetuity.
The Company has voting common stock, non-voting common stock and a warrant that are all eligible to participate in dividends equal to the voting common stock dividends on a per share basis. Securities that participate in dividends, such as the Company’s non-voting common stock and warrant, are considered “participating securities”. The Company calculates net income available to voting common shareholders using the two-class method required for capital structures that include participating securities.
In applying the two-class method, basic net income per share was calculated by dividing net income (less any dividends on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period. Diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying either the two-class method or the Treasury Stock method to the assumed exercise or vesting of potentially dilutive common shares. The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options and restricted stock units. Unallocated common shares held by the ESOP are not included in the weighted average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.
Anti-dilutive shares are common stock equivalents with average exercise prices in excess of the weighted average market price for the period presented. Anti-dilutive stock options, not included in the computation below, were $-0- for the years ended 2024 and 2023, respectively.
The following table sets forth the calculation of basic and diluted earnings per share for the years ended December 31:
(In thousands, except share and per share data) |
2024 |
|
|
2023 |
|
||
Net income attributable to Pathfinder Bancorp, Inc. |
$ |
3,383 |
|
|
$ |
9,293 |
|
Series A Non-Voting Common Stock dividends |
|
552 |
|
|
|
497 |
|
Warrant dividends |
|
50 |
|
|
|
45 |
|
Undistributed earnings allocated to participating securities |
|
216 |
|
|
|
1,729 |
|
Net income available to common shareholders-Voting |
$ |
2,565 |
|
|
$ |
7,022 |
|
|
|
|
|
|
|
||
Net income attributable to Pathfinder Bancorp, Inc. |
$ |
3,383 |
|
|
$ |
9,293 |
|
Voting Common Stock dividends |
|
1,888 |
|
|
|
1,680 |
|
Warrant dividends |
|
50 |
|
|
|
45 |
|
Undistributed earnings allocated to participating securities |
|
695 |
|
|
|
5,487 |
|
Net income available to common shareholders-Voting |
$ |
750 |
|
|
$ |
2,081 |
|
|
|
|
|
|
|
||
Basic and diluted weighted average common shares outstanding-Voting |
|
4,714 |
|
|
|
4,653 |
|
Basic and diluted weighted average common shares outstanding-Series A Non-Voting |
|
1,380 |
|
|
|
1,380 |
|
|
|
|
|
|
|
||
Basic and diluted earnings per common share-Voting |
$ |
0.54 |
|
|
$ |
1.51 |
|
Basic and diluted earnings per common share-Series A Non-Voting |
$ |
0.54 |
|
|
$ |
1.51 |
|
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.