PCSB Financial Corporation Announces Fourth Fiscal Quarter and Year End Financial Results and Declares Quarterly Cash Dividend

Thursday, 05. August 2021 14:00

YORKTOWN HEIGHTS, N.Y., Aug. 05, 2021 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $3.4 million, or $0.23 per diluted share, for the three months ended June 30, 2021, compared to $3.6 million, or $0.25 per diluted share, for the three months ended March 31, 2021 and $3.0 million, or $0.19 per diluted share, for the three months ended June 30, 2020. Net income was $12.4 million, or $0.84 per diluted share, for the year ended June 30, 2021, compared to $9.4 million, or $0.60 per diluted share, for the year ended June 30, 2020.

Results for the year ended June 30, 2021 include a benefit for loan losses of $673,000, or $0.04 per diluted share, net of tax, which includes the release of the qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic. The prior year results include a provision for loan losses of $3.1 million, or $0.15 per diluted share, net of tax, for the year ended June 30, 2020, of which $1.9 million, or $0.10 per diluted share, net of tax, related to the establishment of these qualitative reserves. Substantially all of these qualitative reserves have been released as of June 30, 2021.

On July 28, 2021, the Board of Directors declared a regular quarterly cash dividend of $0.06 per share. The dividend is payable on or about September 3, 2021 to shareholders of record as of the close of business on August 20, 2021.

Fourth Quarter and Year End Highlights

  • Earnings before income tax expense and provision for loan losses of $4.3 million for the current quarter increased 17.1% from the linked quarter and 4.4% from the same quarter last year. Earnings before income tax expense and provision for loan losses of $15.1 million for the current year was unchanged from the prior year.
  • Net interest income of $12.6 million for the current quarter increased 8.1% from the linked quarter and 9.8% from the same quarter last year. Net interest income of $47.3 million for the current year increased 1.4% from the prior year.
  • Tax equivalent net interest margin was 2.81% for the current quarter, an increase from 2.69% in the linked quarter and 2.73% for the same quarter last year. Tax equivalent net interest margin was 2.73% for the current year, a decrease from 2.89% in the prior year.
  • The average cost of interest-bearing deposits was 0.48% for the current quarter, a decrease from 0.59% in the linked quarter and 0.97% for the same quarter last year. The average cost of interest-bearing deposit was 0.64% for the current year, a decrease from 1.14% in the prior year.
  • The efficiency ratio was 67.43% for the current quarter compared to 70.10% for the linked quarter and 67.53% for the prior year quarter. The efficiency ratio was 69.73% for the current year compared to 69.62% in the prior year.
  • Average loans receivable, excluding SBA Paycheck Protection Program (“PPP”) loans, of $1.20 billion for the current quarter, a decrease from $1.23 billion in the same quarter last year.
  • Average deposits of $1.48 billion for the current quarter, increases of 5.8% and 10.1% compared to the linked quarter and same quarter last year, respectively.
  • Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.66% as of June 30, 2021, a decrease from 0.71% as of June 30, 2020.
  • Non-performing loans of $5.8 million, or 0.48% of total net loans receivable (excluding PPP loans), as of June 30, 2021, compared to 0.17% as of March 31, 2021 and 0.15% as of June 30, 2020. The increase in the current quarter was the result of one commercial mortgage with an LTV of 53.9% upon origination being placed on nonaccrual status.
  • Loans on a COVID-19 related payment deferral totaled $27.3 million, or 2.21% of gross loans, compared to $34.4 million, or 2.71% of gross loans as of March 31, 2021. Loans on deferral totaling $12.5 million, $1.3 million and $13.5 million are scheduled to resume payments in the next three consecutive quarters, respectively.

President’s Comments

Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation, commented, “We are pleased with the Company’s solid operating and financial results for the fourth quarter and year ended June 30, 2021. I am proud of what our team achieved over the past 12 months during a time of disruption and uncertainty presented by the pandemic, especially during the first half of our fiscal year. Our employees came together and provided vital support to our communities during this difficult period. That support included participation in the PPP program, loan payment deferrals, loan modifications and fee waivers. All of this was accomplished while adjusting to a new work environment and all the challenges that it presented operationally. As the economy continues to improve, PCSB with strong liquidity and capital is well positioned to build on these results in fiscal 2022 and continue to create value for our shareholders.”

Income Statement Summary

Net income for the three months ended June 30, 2021 was $3.4 million, a $182,000 decrease from the linked quarter and a $450,000 increase from the prior year period. The change from the linked quarter is primarily due to an $899,000 increase in the provision for loan losses, a $295,000 increase in noninterest expense and a $24,000 decrease in noninterest income, partially offset by a $944,000 increase in net interest income and a $92,000 decrease in income tax expense. The change from the prior year period is primarily due to a $1.1 million increase in net interest income and a $304,000 decrease in provision for loan losses, partially offset by a $609,000 decrease in noninterest income, a $334,000 increase in noninterest expense, and a $33,000 increase in income tax expense.

Net interest income was $12.6 million for the quarter ended June 30, 2021, increases of $944,000 and $1.1 million, or 8.1% and 9.8%, compared to the linked quarter and prior year quarter, respectively. The increase compared to the linked quarter is primarily the result of a $65.4 million, or 3.8%, increase in average interest-earning assets and a 12 basis point increase in the tax equivalent net interest margin. The increase in net interest income compared to the prior year period is primarily the result of a $115.7 million, or 6.9%, increase in average interest-earning assets and an 8 basis point increase in the tax equivalent net interest margin.

The tax equivalent net interest margin was 2.81% for the current quarter, reflecting increases of 12 basis points compared to 2.69% in the linked quarter and 8 basis points compared to 2.73% in the prior year quarter. Adjusted net interest margin, which excludes the effect of PPP loans, was 2.68% for the current quarter compared to 2.62% in the linked quarter and 2.68% in the prior year quarter. Adjusted net interest margin was 2.65% for the current year compared to 2.88% in the prior year. Adjusted margin for the current quarter is unchanged compared to the prior year quarter as pressures on asset yields, driven by lower market interest rates and significant increases in cash liquidity, were offset by a reduction in the cost of funds. The increase in adjusted margin compared to the linked quarter is the result of a stable yield on assets and the continued decrease in the average cost of funds.

The Company recognized PPP loan interest and origination fee income (net of costs) of $516,000 in the current quarter, compared to $279,000 in the linked quarter and $172,000 in the prior year quarter. PPP loan interest and origination fee income (net of costs) totaled $1.2 million for the current year compared to $172,000 in the prior year. Unearned origination fees (net of costs) on PPP loans totaled $1.0 million as of June 30, 2021 and will be recognized in income over the remaining lives of the loans and the timing of such income is largely dependent on the timing of forgiveness.

Tax equivalent yield on interest-earning assets for the current quarter was 3.26%, a 3 basis point increase from the prior quarter and a 27 basis point decrease from the prior year quarter. The increase in asset yield compared to the linked quarter was a result of $610,000 in loan prepayment fees as well as the deployment of excess cash liquidity into investment securities. The decrease in yield compared to the prior year quarter is a result of decreases in market interest rates, lower average loan balances due to muted origination activity, the origination of lower yielding PPP loans, and significant increases in liquidity over the last twelve months. The rate of asset yield decrease (excluding the effects of PPP income) has slowed in recent quarters due to a more stable yield curve and earning asset composition.

The cost of interest-bearing deposits was 0.48% for the current quarter, decreases of 11 basis points and 49 basis points from 0.59% and 0.97% in the prior quarter and prior year quarter, respectively. In response to the significant decrease in market interest rates in March 2020, deposit rate reductions have been implemented throughout the last year, the effects of which continue to be realized. As of quarter end, the weighted average cost of interest-bearing deposits was 0.42%. The cost of interest-bearing liabilities was 0.59% for the current quarter, decreases of 11 basis points from 0.70% in the prior quarter and 46 basis points from 1.05% in the prior year quarter. During fiscal year 2022, the Company has $27.5 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.43%.

The provision for loan losses was $5,000 for the three months ended June 30, 2021 compared to a benefit for loan losses of $894,000 for the linked quarter and a provision for loan losses of $309,000 for the prior year quarter. Included in the linked quarter was a benefit for loan losses associated with the release of qualitative reserves established in the prior fiscal year in response to the COVID-19 pandemic. Loans on a COVID-19 related payment deferral totaled $27.3 million, or 2.21% of gross loans, as of June 30, 2021, compared to $34.4 million, or 2.71% of the gross loans, as of March 31, 2021. Recoveries, net of charge-offs, were $11,000 for the three months ended June 30, 2021 compared to $82,000 for the linked quarter and charge-offs, net of recoveries, of $17,000 for the prior year quarter.   Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.48% as of June 30, 2021, an increase from 0.17% as of March 31, 2021 and 0.15% as of June 30, 2020. The increase in non-performing loans for the current quarter relates to one non-owner-occupied commercial mortgage loan with an outstanding principal balance of $3.6 million at June 30, 2021. The loan has been granted a principal and interest payment deferral through January 2022 and has a loan-to-value ratio of 53.9% based on the collateral value upon origination.

The table below provides additional detail for those loans on deferral as of June 30, 2021 (dollar amounts in thousands):

Industry Sector:Number of
loans
 Recorded
Investment
(2) (3)
 % secured by
real estate
collateral
 Loan-to-
Value %
(4)
 Weighted
average term
of remaining
deferral (in
months)
Consumer (1)7 $3,147 100.0%57.5%0.3
Commercial:          
Retail3  11,591 100.0 48.7 4.8
Hotels and accommodation services2  7,648 100.0 55.6 0.6
Food service2  3,018 100.0 59.8 6.1
All other commercial5  1,903 89.2 70.0 2.2
Total commercial12  24,160 99.2 57.8 3.9
Total19 $27,307 99.2%57.7%3.5
           
(1) Includes first and second lien residential mortgages of $2.9 million and $294,000, respectively.
(2) Includes loans classified as special mention and substandard of $1.7 million and $14.2 million, respectively.
(3) Includes $3.6 million of nonaccrual loans. All loans are considered current.
(4) Generally based on collateral values upon origination.
 

Noninterest income of $568,000 for the three months ended June 30, 2021 decreased $24,000 compared to the linked quarter and $609,000 compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to a decrease of $113,000 in gains on sale of securities, partially offset by increases of $48,000 in bank-owned life insurance income and $37,000 in fees and service charges. The decrease compared to the prior year quarter was primarily due to a decrease of $814,000 in swap income, partially offset by increases of $163,000 in fees and service charges and $39,000 in bank-owned life insurance income. The increase in fees and service charges compared to the prior year quarter was the result of our waiver in the prior year of certain overdraft fees, ATM usage fees, wire and CD early withdrawal fees in response to COVID-19.

Noninterest expense of $8.9 million for the three months ended June 30, 2021 increased $295,000 compared to the linked quarter and $334,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $200,000 in salaries and benefits and $186,000 in New York State franchise taxes associated with tax legislation enacted during the quarter, partially offset by a $91,000 net decrease in all other expenses. The increase compared to the prior year quarter was primarily due to increases of $296,000 in salaries and benefits, $173,000 in New York State franchise taxes and $98,000 in occupancy and equipment costs, partially offset by a $158,000 decrease in professional fees and a $75,000 net decrease in all other expenses.

The effective income tax rate was 20.3% for the three months ended June 30, 2021, as compared to 22.0% for the prior year quarter. The effective income tax rate was 21.2% for the current year compared to 22.3% for the prior year.

Balance Sheet Summary

Total assets increased $83.0 million to $1.87 billion at June 30, 2021 as compared to $1.79 billion as of June 30, 2020, primarily due to increases of $81.8 million in total investment securities, $23.0 million in cash and cash equivalents and $10.5 million in bank-owned life insurance, partially offset by a $31.5 million decrease in net loans receivable. The increase in investment securities was primarily driven by increases of $55.5 million in state and municipal securities and $20.8 million in mortgage-backed securities as the Company deployed excess liquidity. The increase in cash and cash equivalents is a result of an increase in deposits and reduced loan originations experienced during the year due to reduced economic activity resulting from the COVID-19 pandemic. Net loans receivable decreased $31.5 million, primarily the result of decreases in residential mortgages, commercial loans and home equity lines of credit of $31.1 million, $13.6 million and $4.4 million, respectively, partially offset by an increase in commercial mortgages of $19.5 million. The decrease in commercial loans includes a decrease in PPP loans of $12.6 million, driven by the origination of $23.8 million in PPP loans being more than offset by paydowns and forgiveness of $36.4 million. During the current quarter, the Company experienced the paydown of a $26.2 million commercial mortgage loan, resulting in the receipt of a prepayment penalty of $524,000.

Total liabilities increased $82.2 million to $1.60 billion at June 30, 2021 compared to June 30, 2020 as increases of $118.4 million, or 8.6%, in deposits and $3.9 million in all other liabilities was partially offset by a $40.1 million decrease in FHLB advances.

Total shareholders’ equity increased $847,000 to $274.6 million at June 30, 2021 as compared to $273.7 million as of June 30, 2020. This increase was primarily due to net income of $12.4 million, $4.8 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period and $3.3 million of other comprehensive income, partially offset by the repurchase of $16.9 million (1,121,774 shares) of common stock and $2.7 million of cash dividends declared and paid. As of June 30, 2021, there were 544,089 shares available to be repurchased under the current stock repurchase plan.

At June 30, 2021, the Company’s book value per share and tangible book value per share were $17.41 and $17.01, respectively, compared to $16.20 and $15.82, respectively, at June 30, 2020. Reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) appear at the end of this release. At June 30, 2021, the Bank was considered “well capitalized” under applicable regulatory guidelines.

About PCSB Financial Corporation and PCSB Bank

PCSB Financial Corporation is the bank holding company for PCSB Bank. PCSB Bank is a New York-chartered commercial bank that has served the banking needs of its customers in the Lower Hudson Valley of New York State since 1871. It operates from its executive offices/headquarters and 15 branch offices located in Dutchess, Putnam, Rockland and Westchester Counties in New York.

This News Release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the duration, extent and severity of the COVID-19 pandemic, including its impact on our business and operations, the impact of lost fee revenue and increased operating expenses, as well as its effect on our customers and issuers of securities, including their ability to make timely payments on obligations, service providers and on economies and markets more generally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the Company's business; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

Contact: Joseph D. Roberto
Chairman, President and Chief Executive Officer
(914) 248-7272

PCSB Financial Corporation and Subsidiaries
Consolidated Balance Sheets (unaudited)
(amounts in thousands, except share and per share data)

        
 June 30,  June 30, 
 2021  2020 
ASSETS       
Cash and due from banks$152,070  $135,045 
Federal funds sold 7,235   1,257 
Cash and cash equivalents 159,305   136,302 
Held to maturity debt securities, at amortized cost (fair value of $342,137 and $281,497, respectively) 337,584   275,772 
Available for sale debt securities, at fair value 57,387   37,426 
Total investment securities 394,971   313,198 
Loans receivable, net of allowance for loan losses of $7,881 and $8,639, respectively 1,229,451   1,260,947 
Accrued interest receivable 6,398   6,880 
FHLB stock 4,507   6,308 
Premises and equipment, net 21,099   20,853 
Deferred tax asset, net 2,552   3,129 
Bank-owned life insurance 35,568   25,019 
Goodwill 6,106   6,106 
Other intangible assets 151   229 
Other assets 14,827   12,958 
Total assets$1,874,935  $1,791,929 
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest-bearing deposits$1,272,610  $1,181,357 
Non interest-bearing deposits 219,072   191,898 
Total deposits 1,491,682   1,373,255 
Mortgage escrow funds 10,536   10,123 
Advances from Federal Home Loan Bank 65,957   106,089 
Other liabilities 32,200   28,749 
Total liabilities 1,600,375   1,518,216 
Commitments and contingencies -   - 
Shareholders' equity:       
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2021 and June 30, 2020) -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 and 18,712,295 shares issued as of June 30, 2021 and June 30, 2020, respectively, 15,770,645 and 16,898,137 shares outstanding as of June 30, 2021 and June 30, 2020, respectively) 187   187 
Additional paid in capital 189,926   186,200 
Retained earnings 150,987   141,288 
Unearned compensation - ESOP (10,176)  (11,145)
Accumulated other comprehensive loss, net of income taxes (3,099)  (6,403)
Treasury stock, at cost (2,932,932 and 1,814,158 shares as of June 30, 2021 and June 30, 2020, respectively) (53,265)  (36,414)
Total shareholders' equity 274,560   273,713 
Total liabilities and shareholders' equity$1,874,935  $1,791,929 
        


PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(amounts in thousands, except share and per share data)

 Three Months Ended  Year Ended 
 June 30,  June 30, 
 2021  2020  2021  2020 
Interest and dividend income               
Loans receivable$12,625  $12,808  $49,470  $52,107 
Investment securities 1,851   1,896   7,340   8,870 
Federal funds and other 110   117   454   933 
Total interest and dividend income 14,586   14,821   57,264   61,910 
Interest expense               
Deposits and escrow interest 1,519   2,848   7,891   12,775 
FHLB advances 486   514   2,031   2,456 
Total interest expense 2,005   3,362   9,922   15,231 
Net interest income 12,581   11,459   47,342   46,679 
Provision (benefit) for loan losses 5   309   (673)  3,064 
Net interest income after provision (benefit) for loan losses 12,576   11,150   48,015   43,615 
Noninterest income               
Fees and service charges 390   227   1,428   1,397 
Swap income -   814   367   984 
Bank-owned life insurance 168   129   549   528 
Gains on sale of securities, net -   -   113   38 
Other 10   7   40   122 
Total noninterest income 568   1,177   2,497   3,069 
Noninterest expense               
Salaries and employee benefits 5,795   5,499   22,517   22,934 
Occupancy and equipment 1,362   1,264   5,413   5,223 
Communications and data processing 525   502   2,064   2,061 
Professional fees 405   563   1,690   1,739 
Postage, printing, stationery and supplies 137   145   589   584 
Advertising 100   100   400   400 
FDIC assessment 113   87   463   87 
Amortization of intangible assets 17   21   78   94 
Other operating expenses 413   352   1,540   1,512 
Total noninterest expense 8,867   8,533   34,754   34,634 
Net income before income tax expense 4,277   3,794   15,758   12,050 
Income tax expense 867   834   3,334   2,691 
Net income$3,410  $2,960  $12,424  $9,359 
Earnings per common share:               
Basic$0.23  $0.19  $0.84  $0.60 
Diluted 0.23   0.19   0.84   0.60 
Weighted average common shares outstanding:               
Basic 14,553,783   15,334,098   14,846,786   15,648,627 
Diluted 14,586,928   15,334,098   14,847,579   15,674,169 
                

PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)

 Three Months Ended
 June 30, 2021 March 31, 2021  June 30, 2020
 Average
Balance
 Interest / Dividends Average
Rate
 Average
Balance
 Interest / Dividends Average
Rate
  Average
Balance
 Interest / Dividends Average
Rate
Assets:                                   
Loans receivable (1)$1,245,610  $12,625   4.06% $1,252,492  $12,116   3.88% $1,263,600  $12,808   4.06%
Investment securities (1) 363,175   1,851   2.11   319,239   1,700   2.18   304,383   1,896   2.50 
Other interest-earning assets 190,582   110   0.23   162,193   109   0.27   115,652   117   0.41 
Total interest-earning assets 1,799,367   14,586   3.26   1,733,924   13,925   3.23   1,683,635   14,821   3.53 
Non-interest-earning assets 79,015           68,748           70,120         
Total assets$1,878,382          $1,802,672          $1,753,755         
                                    
Liabilities and equity:                                   
NOW accounts$182,475   69   0.15  $161,049   59   0.15  $140,954   79   0.23 
Money market accounts 311,255   162   0.21   274,516   208   0.31   218,023   289   0.53 
Savings accounts and mortgage escrow funds 387,422   109   0.11   368,791   132   0.15   343,472   192   0.22 
Time deposits 395,240   1,179   1.20   411,500   1,383   1.36   470,279   2,288   1.95 
Total interest-bearing deposits 1,276,392   1,519   0.48   1,215,856   1,782   0.59   1,172,728   2,848   0.97 
FHLB advances 94,970   486   2.05   104,604   506   1.96   106,099   514   1.94 
Total interest-bearing liabilities 1,371,362   2,005   0.59   1,320,460   2,288   0.70   1,278,827   3,362   1.05 
Non-interest-bearing deposits 208,265           187,778           176,146         
Other non-interest-bearing liabilities 23,114           24,272           23,505         
Total liabilities 1,602,741           1,532,510           1,478,478         
Total shareholders' equity 275,641           270,162           275,277         
Total liabilities and shareholders' equity$1,878,382          $1,802,672          $1,753,755         
                                    
Net interest income    $12,581          $11,637          $11,459     
Interest rate spread - tax equivalent (2)         2.67           2.53           2.48 
Net interest margin - tax equivalent (3)         2.81           2.69           2.73 
Average interest-earning assets to interest-bearing liabilities 131.21%          131.31%          131.65%        
                                    
(1) Tax exempt yield is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all periods presented. See reconciliation of non-GAAP measures at the end of this release. 
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. 
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets. See reconciliation of non-GAAP measures at the end of this release. 
  

PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)

 Year Ended June 30,
 2021 2020
 Average
Balance
 Interest /
Dividends
 Average
Rate
 Average
Balance
 Interest /
Dividends
 Average
Rate
Assets:                       
Loans receivable (1)$1,245,818  $49,470   3.97% $1,198,449  $52,107   4.35%
Investment securities (1) 327,879   7,340   2.29   346,569   8,870   2.57 
Other interest-earning assets 169,855   454   0.27   69,371   933   1.34 
Total interest-earning assets 1,743,552   57,264   3.30   1,614,389   61,910   3.84 
Non-interest-earning assets 72,522           69,268         
Total assets$1,816,074          $1,683,657         
                        
Liabilities and equity:                       
NOW accounts$160,652   296   0.18  $127,091   270   0.21 
Money market accounts 273,007   819   0.30   177,052   1,647   0.93 
Savings accounts and mortgage escrow funds 369,681   611   0.17   350,897   866   0.25 
Time deposits 421,168   6,165   1.46   469,336   9,992   2.13 
Total interest-bearing deposits 1,224,508   7,891   0.64   1,124,376   12,775   1.14 
FHLB advances 102,919   2,031   1.97   111,008   2,456   2.21 
Total interest-bearing liabilities 1,327,427   9,922   0.75   1,235,384   15,231   1.23 
Non-interest-bearing deposits 189,667           148,262         
Other non-interest-bearing liabilities 25,707           21,563         
Total liabilities 1,542,801           1,405,209         
Total shareholders' equity 273,273           278,448         
Total liabilities and shareholders' equity$1,816,074          $1,683,657         
                        
Net interest income    $47,342          $46,679     
Interest rate spread - tax equivalent (2)         2.55           2.61 
Net interest margin - tax equivalent (3)         2.73           2.89 
Average interest-earning assets to interest-bearing liabilities 131.35%          130.68%        
                        
(1) Tax exempt yield is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all periods presented. See reconciliation of non-GAAP measures at the end of this release. 
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. 
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets. See reconciliation of non-GAAP measures at the end of this release. 
  

PCSB Financial Corporation and Subsidiaries
Condensed Financial Information (unaudited)
(amounts in thousands, except per share data)

 As of
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
Condensed Balance Sheets            
Cash and cash equivalents$159,305 $169,314 $162,541 $162,739 $136,302
Total investment securities 394,971  347,302  310,231  318,509  313,198
Loans receivable, net 1,229,451  1,261,155  1,237,550  1,227,913  1,260,947
Other assets 91,208  76,903  79,517  81,914  81,482
Total assets$1,874,935 $1,854,674 $1,789,839 $1,791,075 $1,791,929
               
Total deposits and mortgage escrow funds$1,502,218 $1,463,542 $1,387,897 $1,383,432 $1,383,378
Advances from Federal Home Loan Bank 65,957  95,991  106,023  106,056  106,089
Other liabilities 32,200  23,844  26,595  27,908  28,749
Total liabilities 1,600,375  1,583,377  1,520,515  1,517,396  1,518,216
Total shareholders' equity 274,560  271,297  269,324  273,679  273,713
Total liabilities and shareholders' equity$1,874,935 $1,854,674 $1,789,839 $1,791,075 $1,791,929
               


 Quarter Ended Year Ended
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 June 30,
2021
 June 30,
2020
Condensed Income Statements                  
Interest income$14,586 $13,925 $14,225 $14,528 $14,821 $57,264 $61,910
Interest expense 2,005  2,288  2,678  2,951  3,362  9,922  15,231
Net interest income 12,581  11,637  11,547  11,577  11,459  47,342  46,679
Provision (benefit) for loan losses 5  (894) 107  109  309  (673) 3,064
Noninterest income 568  592  743  594  1,177  2,497  3,069
Noninterest expense 8,867  8,572  8,691  8,624  8,533  34,754  34,634
Income before income tax expense 4,277  4,551  3,492  3,438  3,794  15,758  12,050
Income tax expense 867  959  798  710  834  3,334  2,691
Net income$3,410 $3,592 $2,694 $2,728 $2,960 $12,424 $9,359
                     
Earnings per share:                    
Basic$0.23 $0.25 $0.18 $0.18 $0.19 $0.84 $0.60
Diluted 0.23  0.25  0.18  0.18  0.19  0.84  0.60
                     

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

 Quarter Ended Year Ended 
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 June 30,
2021
 June 30,
2020
 
Performance Ratios (1):              
Return on average assets0.73%0.80%0.60%0.61%0.68%0.68%0.56%
Return on average equity4.95%5.32%3.96%3.96%4.30%4.55%3.36%
Interest rate spread2.67%2.53%2.52%2.47%2.48%2.55%2.61%
Net interest margin2.81%2.69%2.71%2.69%2.73%2.73%2.89%
Efficiency ratio67.43%70.10%70.72%70.86%67.53%69.73%69.62%
               
Noninterest income to average assets0.12%0.13%0.17%0.13%0.27%0.14%0.18%
Noninterest expense to average assets1.89%1.90%1.95%1.92%1.95%1.91%2.06%
               
Average interest-earning assets to average interest-bearing liabilities131.21%131.31%131.07%131.81%131.65%131.35%130.68%
Average equity to average assets14.67%14.99%15.23%15.32%15.70%15.05%16.54%
Dividend payout ratio (2)26.07%16.65%22.57%23.09%21.25%21.93%27.47%
               

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)

 As of and for the quarter ended 
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 
Loans to deposits 82.42% 86.72% 89.85% 89.17% 91.82%
                
Share Data:               
Shares outstanding 15,770,645  15,966,216  16,097,867  16,634,237  16,898,137 
Book value per common share$17.41 $16.99 $16.73 $16.45 $16.20 
Tangible book value per common share (3)$17.01 $16.60 $16.34 $16.07 $15.82 
                
Asset Quality Ratios:               
Non-performing loans receivable$5,764 $2,054 $1,668 $2,083 $1,795 
Non-performing assets$5,764 $2,054 $1,668 $2,083 $1,795 
Allowance for loan losses as a percent of total loans receivable (4) 0.66% 0.65% 0.72% 0.72% 0.71%
Allowance for loan losses as a percent of non-performing loans receivable 136.73% 382.91% 520.20% 416.32% 481.28%
Non-performing loans as a percent of total loans receivable, net (4) 0.48% 0.17% 0.14% 0.17% 0.15%
Non-performing assets as a percent of total assets 0.31% 0.11% 0.09% 0.12% 0.10%
Net (recoveries) charge-offs$(11)$(82)$102 $76 $17 
Net (recoveries) charge-offs to average outstanding loans during the period (1) 0.00% (0.03%) 0.03% 0.02% 0.01%
                
Capital Ratios (5):               
Tier 1 capital (to adjusted total assets) 12.48% 12.76% 12.66% 12.41% 12.51%
Common equity Tier 1 capital (to risk-weighted assets) 17.93% 17.72% 17.74% 17.56% 16.98%
Tier 1 capital (to risk-weighted assets) 17.93% 17.72% 17.74% 17.56% 16.98%
Total capital (to risk-weighted assets) 18.53% 18.33% 18.42% 18.24% 17.65%
                
(1) Performance ratios for quarter ended periods are annualized. 
(2) Dividends declared per share divided by net income per share. 
(3) Tangible book value per share is a non-GAAP measure and equals total shareholders’ equity, less goodwill and other intangible assets, divided by shares outstanding. We believe this disclosure may be meaningful to those investors who seek to evaluate our equity without giving effect to goodwill and other intangible assets. Reconciliations of GAAP to non-GAAP measures appear at the end of this release. 
(4) Total loans receivable excludes PPP loans. 
(5) Represents Bank ratios. 
  

PCSB Financial Corporation and Subsidiaries
Loan and Deposit Portfolios (unaudited)
(amounts in thousands)

 As of 
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 
Mortgage loans:               
Residential mortgages$224,305 $229,008 $237,987 $245,008 $255,382 
Commercial mortgages 826,624  831,162  801,348  794,248  807,106 
Construction 10,151  10,047  17,551  11,512  11,053 
Net deferred loan origination costs 196  365  600  666  739 
Total mortgage loans 1,061,276  1,070,582  1,057,486  1,051,434  1,074,280 
Commercial and consumer loans:               
Commercial loans (1) 150,658  171,314  160,678  155,569  164,257 
Home equity credit lines 25,439  27,211  27,653  29,249  29,838 
Consumer and overdrafts 345  269  328  308  481 
Net deferred loan origination costs (386) (356) 82  25  730 
Total commercial and consumer loans 176,056  198,438  188,741  185,151  195,306 
Total loans receivable 1,237,332  1,269,020  1,246,227  1,236,585  1,269,586 
Allowance for loan losses (7,881) (7,865) (8,677) (8,672) (8,639)
Loans receivable, net$1,229,451 $1,261,155 $1,237,550 $1,227,913 $1,260,947 
                
(1) Includes PPP loans totaling:$37,050 $50,380 $35,687 $35,687 $49,603 
                


 As of 
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 
Demand deposits$219,072 $203,344 $189,968 $183,844 $191,898 
NOW accounts 177,223  169,077  159,919  148,176  151,797 
Money market accounts 332,843  301,892  256,132  253,176  239,942 
Savings 387,529  372,151  354,882  349,805  343,352 
Time deposits 375,015  407,826  416,386  442,011  446,266 
Total deposits$1,491,682 $1,454,290 $1,377,287 $1,377,012 $1,373,255 
                

PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(dollar amounts in thousands, except share and per share data)

 Quarter Ended  Year Ended 
 June 30,
2021
 March 31,
2021
 June 30,
2020
  June 30,
2021
 June 30,
2020
 
Computation of Tax Equivalent Net Interest Income        
Total interest income$14,586 $13,925 $14,821  $57,264 $61,910 
Total interest expense 2,005  2,288  3,362   9,922  15,231 
Net interest income (GAAP) 12,581  11,637  11,459   47,342  46,679 
Tax equivalent adjustment 68  51  18   198  56 
Net interest income - tax equivalent (Non-GAAP)$12,649 $11,688 $11,477  $47,540 $46,735 
                 

PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)

 As of 
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
 
Computation of Tangible Book Value per Common Share    
Total shareholders' equity (GAAP)$274,560 $271,297 $269,324 $273,679 $273,713 
Adjustments:               
Goodwill (6,106) (6,106) (6,106) (6,106) (6,106)
Other intangible assets (151) (168) (189) (209) (229)
Tangible common shareholders' equity (Non-GAAP)$268,303 $265,023 $263,029 $267,364 $267,378 
                
Common shares outstanding 15,770,645  15,966,216  16,097,867  16,634,237  16,898,137 
                
Book value per share (GAAP)$17.41 $16.99 $16.73 $16.45 $16.20 
Adjustments:               
Effects of intangible assets (0.40) (0.39) (0.39) (0.38) (0.38)
                
Tangible book value per common share (Non-GAAP)$17.01 $16.60 $16.34 $16.07 $15.82 
                

PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)

 Quarter Ended Year Ended 
 June 30,
2021
 March 31,
2021
 June 30,
2020
 June 30,
2021
 June 30,
2020
 
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin, Excluding PPP income       
Average interest-earning assets$1,799,485 $1,733,924 $1,683,635 $1,743,581 $1,614,389 
                
Interest and dividend income (GAAP)$14,586 $13,925 $14,821 $57,264 $61,910 
Less: PPP income (516) (279) (172) (1,171) (172)
Adjusted interest and dividend income (Non-GAAP)$14,070 $13,646 $14,649 $56,093 $61,738 
                
Yield on interest-earning assets (GAAP) 3.26% 3.23% 3.53% 3.30% 3.84%
Adjusted yield on interest-earning assets (Non-GAAP) 3.13% 3.15% 3.48% 3.22% 3.82%
                
Net interest income (GAAP)$12,581 $11,637 $11,459 $47,342 $46,679 
Less: PPP income (516) (279) (172) (1,171) (172)
Adjusted net interest income (Non-GAAP)$12,065 $11,358 $11,287 $46,171 $46,507 
                
Net interest margin (GAAP) 2.81% 2.69% 2.73% 2.73% 2.89%
Adjusted net interest margin (Non-GAAP) 2.68% 2.62% 2.68% 2.65% 2.88%

 


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