10-K: Pioneer Bancorp Reports Strong 2025 Growth, Diversifies Services

Pioneer Bancorp, Inc. reported a 32.9% increase in net income to $20.3 million for the year ended December 31, 2025, driven by loan growth and strategic diversification into wealth management and municipal bond trading.

Summary

• Net income increased by $5.0 million, or 32.9%, to $20.3 million for the year ended December 31, 2025, from $15.3 million for the fiscal year ended June 30, 2024.
• Total assets grew by $171.0 million, or 8.6%, to $2.15 billion at December 31, 2025, from $1.98 billion at December 31, 2024.
• Net loans receivable increased by $211.7 million, or 14.8%, to $1.65 billion at December 31, 2025, from $1.43 billion at December 31, 2024.
• Total deposits increased by $153.0 million, or 9.6%, to $1.74 billion at December 31, 2025, from $1.59 billion at December 31, 2024.
• Shareholders' equity increased by $19.3 million, or 6.3%, to $323.9 million at December 31, 2025, from $304.6 million at December 31, 2024.
• Net interest income increased $12.6 million, or 19.0%, to $79.1 million for the year ended December 31, 2025.
• Non-interest income increased $810,000, or 5.0%, to $17.1 million, primarily from insurance and wealth management services income.
• A $2.0 million goodwill impairment expense was recognized for the insurance subsidiary based on annual impairment testing.
• Non-performing assets increased to $11.3 million (0.52% of total assets) at December 31, 2025, from $5.2 million (0.27% of total assets) at December 31, 2024.
• The allowance for credit losses to non-performing loans decreased to 224.93% at December 31, 2025, from 414.60% at December 31, 2024, primarily due to the increase in non-accrual loans.
• The company adopted its second stock repurchase program, authorizing the repurchase of up to 1,254,027 shares.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral-to-slightly-negative report. While net income and overall asset/deposit growth are positive, the significant increase in non-performing assets, the decrease in allowance coverage, and the goodwill impairment, coupled with ongoing litigation risks, temper the positive financial performance.

Positives

• Net income increased by 32.9% to $20.3 million for the year ended December 31, 2025.
• Total assets grew by 8.6% to $2.15 billion at December 31, 2025.
• Net loans receivable increased by 14.8% to $1.65 billion, driven by growth in residential mortgage, commercial real estate, commercial construction, and commercial and industrial loans.
• Total deposits increased by 9.6% to $1.74 billion at December 31, 2025.
• Net interest income increased by 19.0% to $79.1 million, with net interest margin improving to 4.07% for the year ended December 31, 2025.
• Non-interest income increased by 5.0% to $17.1 million, primarily from insurance and wealth management services.
• Successfully acquired certain assets of Brown Financial Management Group, LLC, adding $73 million of assets under management.
• Formed Pioneer Capital Markets, Inc., a new broker-dealer subsidiary focused on municipal bond trading, enhancing financial services capabilities.
• The Bank was classified as a "well capitalized" institution under regulatory guidelines at December 31, 2025.
• Net charge-offs decreased to $95,000 for the year ended December 31, 2025, compared to $520,000 for the fiscal year ended June 30, 2024.
• Maintains a strong liquidity position with $327.0 million of available borrowing capacity from FHLBNY and a $20.0 million unsecured line of credit.

Negatives

• Non-performing assets increased significantly to $11.3 million (0.52% of total assets) at December 31, 2025, from $5.2 million (0.27% of total assets) at December 31, 2024.
• The allowance for credit losses to non-performing loans decreased to 224.93% at December 31, 2025, from 414.60% at December 31, 2024, primarily due to the increase in non-accrual loans.
• A $2.0 million goodwill impairment expense was recognized for the insurance subsidiary.
• Total substandard loans increased $1.5 million to $26.1 million at December 31, 2025.
• Total doubtful loans increased by $802,000 to $919,000 at December 31, 2025.
• Total special mention loans increased $2.5 million to $7.4 million at December 31, 2025.
• Litigation-related expense of $3.2 million was recognized for the year ended December 31, 2025.
• The company does not expect to pay any cash dividends on its common stock for the foreseeable future due to Federal Reserve Board regulations and policy.
• Uninsured deposits after exclusions increased to 16.6% of total deposits at December 31, 2025, from 12.9% at December 31, 2024.

Risks

• Business may be adversely affected by economic downturns in the market area and the national economy.
• Changes in interest rates may reduce profits, with a 100 basis point increase estimated to decrease net portfolio value by 7.6%.
• Inflation can have an adverse impact on the business and customers.
• Lawmakers' failure to address the federal debt ceiling, U.S. credit rating downgrades, potential government shutdowns, and uncertain credit/financial market conditions may affect securities valuation or liquidity and increase borrowing costs.
• Changes in market conditions, discount rates, mortality assumptions, or lower returns on assets may increase required contributions to the tax-qualified defined benefit plan.
• Changes in the valuation of the securities portfolio may reduce profits and capital levels.
• The loan portfolio consists of a high percentage of commercial real estate loans (27.9% of total loan portfolio), which carry greater credit risk than oneto four-family properties.
• A portion of the loan portfolio is comprised of commercial and industrial loans (7.5% of total loan portfolio) secured by accounts receivable, inventory, equipment, or other business assets, the deterioration in value of which could increase the potential for future losses.
• Commercial construction loans (10.2% of total loan portfolio) are considered to have greater credit risk than residential mortgage loans.
• The allowance for credit losses on loans may not be sufficient to absorb losses in the loan portfolio.
• An increase in non-performing assets would adversely affect earnings.
• A portion of the loan portfolio consists of loan participations secured by properties outside the market area, which may have a higher risk of loss due to limited control over credit monitoring.
• The company is subject to fraud and compliance risk, with past fraudulent activities adversely impacting financial performance and results.
• The company is a defendant in a variety of litigation and other actions, which may have a material adverse effect on financial condition and results of operations, with an estimated range of possible loss of $0 to $38.8 million in excess of accrued liability.
• Subject to sanctions and other negative actions if regulatory agencies determine failure to comply with applicable laws and regulations.
• Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations will subject the company to fines or sanctions.
• Changes in laws and regulations and the cost of compliance with new laws and regulations may adversely affect operations and income.
• Earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies.
• Subject to the Community Reinvestment Act (CRA) and fair lending laws, and failure to comply with these laws could lead to material penalties.
• The broker-dealer business subjects the company to regulatory risks, including net capital requirements.
• The level of the commercial real estate loan portfolio subjects the company to additional regulatory scrutiny, potentially requiring higher capital levels or curtailment of lending.
• Subject to environmental liability risk associated with lending activities.
• Environmental matters and related legislative and regulatory initiatives may materially affect business and results of operations.
• Changes in management's estimates and assumptions may have a material impact on consolidated financial statements.
• Changes in accounting standards could affect reported earnings.
• The cost of additional finance and accounting systems, procedures, and controls in order to satisfy public company reporting requirements has increased and will continue to increase expenses.
• A lack of liquidity could adversely affect financial condition and results of operations.
• Municipal deposits are price sensitive and could result in an increase in interest expense or funding fluctuations.
• Conditions in insurance markets could adversely affect earnings.
• Involvement in wealth management creates risks associated with the industry, including market value fluctuations of assets under management and competition.
• Strong competition within the market area may reduce profits and slow growth.
• Reliance on a third-party mortgage banking company to originate residential mortgage loans.
• Financial condition and results of operations may be adversely affected if the company fails to grow or fails to manage growth effectively.
• Failure to understand and adapt to continual technological changes could hurt the business.
• Subject to stringent capital requirements, which may adversely impact return on equity, require additional capital, or restrict dividends or share repurchases.
• Success depends on attracting and retaining certain key personnel.
• Systems failures or breaches of network security could subject the company to increased operating costs as well as litigation and other liabilities.
• The risk management framework may not be effective in mitigating risk and reducing the potential for significant losses.
• The ability to maintain reputation is critical to the success of the business and the failure to do so may materially adversely affect performance.
• Severe weather, acts of terrorism, geopolitical, and other external events could impact the ability to conduct business.
• Impairment of goodwill could adversely affect financial condition and results of operations.
• The risks presented by acquisitions could adversely affect financial condition and results of operations.
• New lines of business or new products and services may subject the company to additional risks.
• The development and use of artificial intelligence (AI) presents risks and challenges that may adversely impact the business.
• Pioneer Bancorp, MHC's majority control of common stock enables voting control over most matters put to a vote of stockholders and will prevent stockholders from forcing a sale or a second-step conversion transaction.
• Common stock is not heavily traded, and the stock price may fluctuate significantly.
• Federal Reserve Board regulations and policy effectively prohibit Pioneer Bancorp, MHC from waiving the receipt of dividends, which will likely preclude dividend payments on common stock.
• Various factors may make takeover attempts more difficult to achieve.

Future Outlook

The company plans to strategically grow through deepening customer relationships, emphasizing commercial customer acquisition while maintaining a balanced loan portfolio, and diversifying products and services to increase non-interest income, including through selective acquisitions. Pioneer Capital Markets, Inc. commenced operations in January 2026, marking entry into municipal bond trading.

Management Comments

• "At Pioneer, we are More Than a Bank which means that we are focused on growing our broad range of financial products and services for individual, business and municipal customers by continuing to expand our banking, insurance, consulting, and wealth management businesses."
• "We are fully grounded in the belief the future of financial services relies heavily on providing an unparalleled level of personal service and a comprehensive approach to our customers finances."
• "We believe that we have a competitive advantage in the markets we serve because of our over 130-year history in the community, our knowledge of the local marketplace and our long-standing reputation for providing superior, relationship-based customer service."
• "Management believes that we have good working relations with our employees."
• "Management believes that the Bank has substantial defenses to the claims that have been asserted [in legal proceedings]."

Industry Context

StockSavvy.ai notes that Pioneer Bancorp's strategy of diversifying into wealth management, insurance, and now municipal bond trading through Pioneer Capital Markets, Inc., aligns with a broader industry trend among regional banks seeking to enhance non-interest income streams and reduce reliance on traditional interest-based revenue, especially in a fluctuating interest rate environment. The focus on relationship-based community banking in the Capital Region of New York positions it against larger regional and money center banks, which often lack the localized approach. The increase in non-performing assets, while concerning, is a common challenge for banks navigating economic shifts and specific credit events.

Corporate Governance

Legal Proceedings

• Southwestern Payroll Services, Inc. and Granite Solutions Groupe, Inc. filed a complaint against Pioneer Parties for declaratory judgment, conversion, fraud, negligence/gross negligence, unjust enrichment/money had and received, RICO violations, aiding and abetting conversion, and aiding and abetting fraud, seeking at least $39.0 million. Trial date is August 17, 2026.
• National Payment Corp. (NatPay) intervened in Southwestern's lawsuit, asserting similar claims and seeking at least $11.4 million. Trial date is August 17, 2026.
• Cachet Financial Services filed an adversary proceeding complaint against Pioneer Parties for conversion, unjust enrichment, and money had and received, seeking approximately $8.5 million. This matter is currently in discovery.
• Berkshire Bank's action against the Bank was discontinued with prejudice on December 16, 2025, due to a confidential settlement.
• Chemung Canal Trust Company filed a complaint against the Bank for breach of participation agreement, fraudulent activities, constructive fraud, breach of contract, unjust enrichment, and breach of good faith and fair dealing, seeking approximately $4.6 million and additional damages. This matter is currently in discovery.
• AXH Air-Coolers, LLC filed a complaint against Pioneer Parties for wrongful conversion of tax funds, unjust enrichment, and gross negligence, seeking $336,000 plus penalties, interest, attorneys' fees, and punitive damages. The action is stayed pending the outcome of the Southwestern Payroll and NatPay matters.
• The Bank filed a verified petition to adjudicate the validity of its interest in approximately $14.9 million in cash and securities forfeited by Michael Mann.
• Two putative class action complaints were filed by Brandes & Yancy PLLC and Ricardos Restaurant, Inc., and by OMalleys Oven LLC and Legat Architects, Inc., asserting claims for conversion, gross negligence, unjust enrichment, money had and received, tortious interference with contract, aiding and abetting fraud, and declaratory judgment, seeking compensatory and punitive damages.
• The estimated range of possible loss from legal proceedings is $0 to $38.8 million in excess of any accrued liability as of December 31, 2025.

Related Party Transactions

• Deposits of related parties amounted to $1.4 million at December 31, 2025.
• Loans to executive officers, directors, or associates of such persons were immaterial as a percentage of total loans receivable.

Stakeholder Impact

• Shareholders: Potential for increased value from strategic growth and share repurchase program, but no dividends expected due to regulatory policy. Risk of dilution from stock-based compensation. Potential negative impact from increased non-performing assets, goodwill impairment, and significant legal expenses/potential judgments. Pioneer Bancorp, MHC's majority control limits minority shareholder influence.
• Employees: Defined benefit pension plan and 401(k) plan in place. Focus on employee engagement, career development, and competitive benefits. ESOP provides stock ownership opportunity.
• Customers: Expansion of banking, insurance, consulting, and wealth management services aims to meet diverse financial needs. Relationship-based service model emphasized. Potential impact from fraudulent activities and associated legal proceedings.
• Regulators: Increased scrutiny due to fraudulent activities and legal proceedings. Compliance with extensive banking regulations (OCC, FDIC, Federal Reserve Board) and broker-dealer regulations (SEC, FINRA, MSRB).
• Community: Long-standing reputation in the Capital Region of New York. Commitment to community impact through philanthropic efforts. CRA rating of "Outstanding".

Next Steps

• Pioneer Capital Markets, Inc. commenced operations in January 2026.
• The trial date for Southwestern Payroll and NatPay matters is set for August 17, 2026.
• The company will continue to evaluate the impact of ASU No. 2024-03 on its consolidated financial statements.
• The company is not required to make a cash contribution to its pension plan during the year ended December 31, 2026, but may elect to do so.
• The company intends to consider future acquisition opportunities to expand its insurance, wealth management, HR consulting, or other complementary financial services businesses.

Key Dates

Recommendation

While Pioneer Bancorp demonstrated solid growth in net income, assets, and deposits, along with strategic diversification efforts, the significant increase in non-performing assets, the substantial goodwill impairment, and the ongoing, high-value legal proceedings introduce considerable uncertainty and risk. The lack of expected dividends further limits immediate shareholder returns. A "hold" recommendation is appropriate given the mixed financial performance and the material, unresolved risks that could impact future profitability and share price. Investors should monitor the resolution of legal matters and trends in asset quality closely.

Keywords

Banking, Financial Services, Commercial Real Estate, Residential Mortgages, Wealth Management, Insurance, Municipal Bonds, Loan Growth, Deposit Growth, Net Interest Income, Non-Performing Assets, Goodwill Impairment, SEC Filing, 10-K, Pioneer Bancorp, PBFS, Capital Region New York, Community Bank, Risk Management, Cybersecurity, Litigation