PCSB Financial Corporation Announces Second Fiscal Quarter Financial Results and Declares Quarterly Cash Dividend

1/27, 2:00 PM (Source: GlobeNewswire)

YORKTOWN HEIGHTS, N.Y., Jan. 27, 2022 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $4.3 million, or $0.30 per diluted share, for the three months ended December 31, 2021, compared to $3.6 million, or $0.25 per diluted share, for the three months ended September 30, 2021 and $2.7 million, or $0.18 per diluted share, for the three months ended December 31, 2020.

On January 26, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.06 per share. The dividend is payable on or about February 25, 2022 to shareholders of record as of the close of business on February 11, 2022.

Second Quarter Highlights

  • Net income of $4.3 million or $0.30 per diluted share for the current quarter, increases of 18.6% and 59.2% compared to the linked quarter and same quarter last year, respectively. Excluding certain non-recurring items, current quarter adjusted net income (non-GAAP) was $3.1 million or $0.22 per diluted share, a decrease of 4.3% compared to the linked quarter and an increase of 29.2% compared to the same quarter last year, respectively. The decrease in adjusted net income from the linked quarter is largely due to higher provision for loan losses tied to loan portfolio growth. Reconciliations of GAAP to non-GAAP financial measures are included at the end of this release.
  • Net interest income of $13.3 million for the current quarter, increases of 5.8% and 14.8% from the linked quarter and the same quarter last year, respectively. Adjusted net interest income (non-GAAP) of $12.4 million for the current quarter, increases of 2.0% and 9.2% from the linked quarter and the same quarter last year, respectively.
  • Tax equivalent net interest margin of 2.97% for the current quarter, an increase from 2.82% in the linked quarter and 2.70% for the same quarter last year. Adjusted tax equivalent net interest margin (non-GAAP) of 2.75% for the current quarter, an increase from 2.71% in the linked quarter and 2.64% for the same quarter last year.
  • Average cost of interest-bearing deposits of 0.39% for the current quarter, a decrease from 0.41% in the linked quarter and 0.71% for the same quarter last year.
  • Efficiency ratio of 60.92% for the current quarter, improved from 65.59% for the linked quarter and 70.72% for the same quarter last year. Adjusted efficiency ratio (non-GAAP) of 67.64% for the current quarter, unchanged from the linked quarter and improved from 72.70% for the same quarter last year.
  • Average loans receivable, excluding SBA Paycheck Protection Program (“PPP”) loans, of $1.23 billion for the current quarter, increased from $1.20 billion in both the linked quarter and the same quarter last year.
  • Average deposits of $1.52 billion for the current quarter, increases of 0.8% and 10.0% compared to the linked quarter and same quarter last year, respectively.
  • Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.68% as of December 31, 2021, an increase from 0.66% as of June 30, 2021.
  • Non-performing loans of $7.9 million, or 0.64% of total net loans receivable (excluding PPP loans), as of December 31, 2021, increased from 0.48% as of June 30, 2021.
  • Loans on COVID-19-related payment deferral totaled $13.7 million, or 1.10% of gross loans, as of December 31, 2021, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Loans on deferral totaling $10.1 million have resumed payments in January 2022, with the remaining $3.6 million (1 loan) scheduled to resume payments in June 2022.

President’s Comments

“We are extremely pleased with the Company’s solid quarter and six-month financial performance which resulted in solid earnings”, said Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation. “Despite a difficult operating environment, our strong financial results year over year reflect continued net interest margin expansion along with continued control over operating expenses. We are encouraged by our ability to grow net loans over 10.0% annualized during the quarter despite some significant paydowns. With respect to credit quality, although we have seen recent increases in non-performing loans, our conservative underwriting has provided us strong LTVs and we believe these are isolated issues and not indicative of systemic risks in the loan portfolio. I am proud of our PCSB team who remain a source of strength to our customers and look forward to continuing to invest in the communities we serve which we believe will create sustainable value for our shareholders.”

Income Statement Summary

Net income for the current quarter was $4.3 million, which increased $674,000 from the linked quarter and $1.6 million from the prior year quarter. The change from the linked quarter is primarily due to a $723,000 increase in net interest income and a $582,000 increase in noninterest income, partially offset by increases of $251,000 in provision for loan losses, $199,000 in income tax expense, and $181,000 in noninterest expense. The change from the prior year quarter is primarily due to a $1.7 million increase in net interest income and a $452,000 increase in noninterest income, partially offset by increases of $298,000 in income tax expense, $157,000 in provision for loan losses and $114,000 in noninterest expense.

Net interest income was $13.3 million for the current quarter, increases of $723,000, or 5.8%, compared to the linked quarter and $1.7 million, or 14.8%, compared to the prior year quarter. The increase compared to the linked quarter is primarily the result of a 15 basis point increase in the tax equivalent net interest margin and a $7.9 million, or 0.4%, increase in average interest-earning assets. The increase in net interest income compared to the prior year period is primarily the result of a 27 basis point increase in the tax equivalent net interest margin and an $81.6 million, or 4.8%, increase in average interest-earning assets.

The Company recognized PPP loan interest and origination fee income (net of costs) of $332,000 in the current quarter, compared to $373,000 in the linked quarter and $159,000 in the prior year quarter. Unearned origination fees (net of costs) on PPP loans totaled $366,000 as of December 31, 2021 and will be recognized in income over the remaining lives of the loans. The timing of such recognition is largely dependent on the timing of forgiveness, which the Company expects to be substantially complete by June 30, 2022.

The tax equivalent net interest margin was 2.97% for the current quarter, reflecting increases of 15 basis points compared to 2.82% in the linked quarter and 27 basis points compared to 2.70% in the prior year quarter. During the current quarter, the Company recognized $555,000 of loan prepayment income. Adjusted net interest margin, which excludes the effects of loan prepayment income and PPP loan interest and fees, was 2.75% for the current quarter compared to 2.71% in the linked quarter and 2.64% in the prior year quarter. Reductions in the cost of funds were partially offset by a decrease in adjusted asset yield compared to the prior year quarter, driven by lower market interest rates. Reconciliations of GAAP to non-GAAP financial measures are included at the end of this release.

Tax equivalent yield on interest-earning assets for the current quarter was 3.33%, increases of 13 basis points from the linked quarter and 1 basis point from the prior year quarter. Excluding the effects of non-recurring PPP loan income and loan prepayment income, the tax equivalent yield on interest-earning assets for the current quarter was 3.11%, an increase of 2 basis points from the linked quarter and a decrease of 16 basis points from the same quarter last year. The decrease in yield compared to the prior year quarter is a result of the loan and investment portfolios continuing to re-price downward due to lower market interest rates, however the decline in asset yields (excluding the effects of PPP income) has slowed and reversed in recent quarters due to a more favorable yield curve and earning asset composition.

The cost of interest-bearing deposits was 0.39% for the current quarter, decreases of 2 basis points and 32 basis points from 0.41% and 0.71% in the linked quarter and prior year quarter, respectively. In response to lower market interest rates and increased liquidity levels, deposit rate reductions have been implemented throughout the last 2 years, the effects of which continue to be realized. As of quarter end, the weighted average cost of interest-bearing deposits was 0.32%. The cost of interest-bearing liabilities was 0.47% for the current quarter, decreases of 2 basis points from 0.49% in the linked quarter and 34 basis points from 0.81% in the prior year quarter. Over the next 12 months, the Company has $40.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.07%.

The provision for loan losses was $264,000 for current quarter, compared to $13,000 for the linked quarter and $107,000 for the prior year quarter. Loans on COVID-19 related payment deferral totaled $13.7 million, or 1.10% of gross loans, as of December 31, 2021, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Recoveries, net of charge-offs, were $6,000 for the current quarter compared to $265,000 for the linked quarter and charge-offs, net of recoveries, of $102,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.64% as of December 31, 2021, an increase from 0.48% as of June 30, 2021. The increase in non-performing loans over the last 12 months primarily includes three commercial relationships totaling $6.3 million, including $2.7 million of loans secured by multi-family commercial real estate (including 1 relationship consisting of 2 construction loans totaling $1.5 million) with a weighted average loan-to-value ratio of 68.8% and one loan for $3.6 million secured by non-owner-occupied retail commercial real estate with a loan-to-value ratio of 53.9%.

Noninterest income of $1.2 million for the current quarter increased $582,000 compared to the linked quarter and $452,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $548,000 in gains on the sale of premises and $35,000 in gains on the sale of loans. The increase compared to the prior year quarter was primarily due to increases of $548,000 in gains on the sale of premises, $62,000 in bank-owned life insurance income, $44,000 in fees and service charges and $41,000 in gains on the sale of loans, partially offset by a $238,000 decrease in swap income. During the current quarter, the Company sold a parcel of unused land, resulting in the gain discussed above.

Noninterest expense of $8.8 million for the current quarter increased $181,000 compared to the linked quarter and $114,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to higher salaries and benefits, postage and printing, as well as professional costs. Noninterest expenses increased compared to the prior year quarter primarily due to increases in salaries and benefits, including ESOP costs, and New York State capital-based taxes, which were largely offset by lower pension costs.

The effective income tax rate was 20.4% for the current quarter, as compared to 19.9% for the linked quarter and 22.9% for the prior year quarter. The decrease in the effective tax rate for the current quarter compared to the prior year quarter is the result of increases in tax-exempt municipal bond income and bank-owned life insurance income.

Balance Sheet Summary

Total assets increased $13.2 million to $1.89 billion at December 31, 2021 as compared to June 30, 2021, as increases of $39.0 million in total investment securities and $14.2 million in net loans receivable were partially offset by a decrease of $39.0 million in cash and cash equivalents. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $29.8 million in state and municipal securities, $8.5 million in corporate securities and $5.8 million in mortgage-backed securities, partially offset by a $5.1 million decrease in U.S. government and agency bonds. Net loans receivable increased $14.2 million, primarily the result of increases in commercial mortgage loans and construction loans of $41.0 million and $1.7 million, respectively, partially offset by decreases in commercial loans and residential mortgage loans of $15.6 million and $11.5 million, respectively. The decrease in commercial loans includes a decrease in PPP loans of $24.3 million, driven by forgiveness and paydowns.

Total liabilities increased $12.9 million to $1.61 billion at December 31, 2021 compared to June 30, 2021 as an increase of $31.4 million in deposits was partially offset by decreases of $11.3 million in other liabilities and $7.6 million in FHLB advances. The $31.4 million increase in deposits includes increases in money market, NOW and savings accounts of $28.5 million, $21.4 million and $5.5 million, respectively, partially offset by decreases in time deposits and demand accounts of $20.7 million and $3.3 million, respectively.

Total shareholders’ equity increased $274,000 to $274.8 million at December 31, 2021 as compared to $274.6 million as of June 30, 2021. The increase for the six months ended December 31, 2021 was primarily due to net income of $7.9 million and $2.5 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, partially offset by the repurchase of $8.2 million (440,666 shares) of common stock and $1.7 of cash dividends declared and paid. As of December 31, 2021, there were 122,417 shares available to be repurchased under the current stock repurchase plan.

At December 31, 2021, the Company’s book value per share and tangible book value per share were $17.92 and $17.51, respectively, compared to $17.41 and $17.01, respectively, at June 30, 2021. 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 December 31, 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 14 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 and on our customers, 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)

         
  December 31,  June 30, 
  2021  2021 
ASSETS        
Cash and due from banks $113,499  $152,070 
Federal funds sold  6,840   7,235 
Cash and cash equivalents  120,339   159,305 
Held to maturity debt securities, at amortized cost
  (fair value of $389,814 and $342,137, respectively)
  390,312   337,584 
Available for sale debt securities, at fair value  43,687   57,387 
Total investment securities  433,999   394,971 
Loans receivable, net of allowance for loan losses of $8,429 and $7,881, respectively  1,243,646   1,229,451 
Loans held for sale  1,452   - 
Accrued interest receivable  6,509   6,398 
FHLB stock  4,167   4,507 
Premises and equipment, net  19,550   21,099 
Deferred tax asset, net  2,327   2,552 
Bank-owned life insurance  35,951   35,568 
Goodwill  6,106   6,106 
Other intangible assets  119   151 
Other assets  13,956   14,827 
Total assets $1,888,121  $1,874,935 
LIABILITIES AND SHAREHOLDERS' EQUITY        
Interest-bearing deposits $1,307,359  $1,272,610 
Non interest-bearing deposits  215,708   219,072 
Total deposits  1,523,067   1,491,682 
Mortgage escrow funds  10,880   10,536 
Advances from Federal Home Loan Bank  58,390   65,957 
Other liabilities  20,950   32,200 
Total liabilities  1,613,287   1,600,375 
Commitments and contingencies  -   - 
Shareholders' equity:        
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of December 31, 2021 and June 30, 2021)  -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both December 31, 2021 and June 30, 2021, 15,337,979 and 15,770,645 shares outstanding as of December 31, 2021 and June 30, 2021, respectively)  187   187 
Additional paid in capital  191,826   189,926 
Retained earnings  157,146   150,987 
Unearned compensation - ESOP  (9,688)  (10,176)
Accumulated other comprehensive loss, net of income taxes  (3,353)  (3,099)
Treasury stock, at cost, 3,365,598 and 2,932,932 shares as of December 31, 2021 and June 30, 2021, respectively)  (61,284)  (53,265)
Total shareholders' equity  274,834   274,560 
Total liabilities and shareholders' equity $1,888,121  $1,874,935 
         


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

  Three Months Ended  Six Months Ended 
  December 31,  December 31, 
  2021  2020  2021  2020 
Interest and dividend income                
Loans receivable $12,651  $12,182  $24,758  $24,729 
Investment securities  2,131   1,933   4,142   3,789 
Federal funds and other  88   110   197   235 
Total interest and dividend income  14,870   14,225   29,097   28,753 
Interest expense                
Deposits and escrow interest  1,292   2,158   2,646   4,590 
FHLB advances  320   520   658   1,039 
Total interest expense  1,612   2,678   3,304   5,629 
Net interest income  13,258   11,547   25,793   23,124 
Provision for loan losses  264   107   277   216 
Net interest income after provision for loan losses  12,994   11,440   25,516   22,908 
Noninterest income                
Fees and service charges  407   363   808   685 
Gains on sales of premises  548   -   548   - 
Swap income  -   238   -   367 
Bank-owned life insurance  191   129   383   261 
Net gains on sales of loans  41   -   47   - 
Other  8   13   22   24 
Total noninterest income  1,195   743   1,808   1,337 
Noninterest expense                
Salaries and employee benefits  5,843   5,520   11,616   11,127 
Occupancy and equipment  1,348   1,374   2,701   2,692 
Communications and data processing  526   446   1,053   1,022 
Professional fees  420   503   813   903 
Postage, printing, stationery and supplies  182   167   325   306 
FDIC assessment  121   122   246   235 
Advertising  100   100   200   200 
Amortization of intangible assets  16   20   32   40 
Other operating expenses  249   439   443   790 
Total noninterest expense  8,805   8,691   17,429   17,315 
Net income before income tax expense  5,384   3,492   9,895   6,930 
Income tax expense  1,096   798   1,993   1,508 
Net income $4,288  $2,694  $7,902  $5,422 
Earnings per common share:                
Basic $0.30  $0.18  $0.55  $0.36 
Diluted  0.30   0.18   0.55   0.36 
Weighted average common shares outstanding:                
Basic  14,236,473   14,888,528   14,287,009   15,094,982 
Diluted  14,281,232   14,899,020   14,349,272   15,094,982 


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

 Three Months Ended 
 December 31, 2021  September 30, 2021  December 31, 2020 
 Average
Balance
    Interest /
Dividends
  Average
Rate
  Average
Balance
    Interest /
Dividends
  Average
Rate
  Average
Balance
  Interest /
Dividends
  Average
Rate
 
Assets:                                       
Loans receivable (1)$1,242,109    $12,651   4.07% $1,223,532    $12,107   3.96% $1,232,555  $12,182   3.95%
Investment securities (1) 427,918     2,131   2.08   404,565     2,011   2.07   313,812   1,933   2.51 
Other interest-earning assets 126,586     88   0.28   160,659     109   0.27   168,608   110   0.26 
Total interest-earning assets 1,796,613     14,870   3.33   1,788,756     14,227   3.20   1,714,975   14,225   3.32 
Non-interest-earning assets 77,506             76,375             70,417         
Total assets$1,874,119            $1,865,131            $1,785,392         
                                        
Liabilities and equity:                                       
NOW accounts$192,856     90   0.18  $182,531     70   0.15  $149,620   79   0.21 
Money market accounts 355,708     168   0.19   350,575     186   0.21   255,961   211   0.33 
Savings accounts and mortgage escrow funds 398,076     108   0.11   397,292     113   0.11   362,422   168   0.18 
Time deposits 357,242     926   1.03   367,641     985   1.06   434,446   1,700   1.55 
Total interest-bearing deposits 1,303,882     1,292   0.39   1,298,039     1,354   0.41   1,202,449   2,158   0.71 
FHLB advances 63,805     320   1.99   65,935     338   2.03   106,034   520   1.94 
Total interest-bearing liabilities 1,367,687     1,612   0.47   1,363,974     1,692   0.49   1,308,483   2,678   0.81 
Non-interest-bearing deposits 214,558             207,806             178,538         
Other non-interest-bearing liabilities 16,250             19,943             26,482         
Total liabilities 1,598,495             1,591,723             1,513,503         
Total shareholders' equity 275,624             273,408             271,889         
Total liabilities and shareholders' equity$1,874,119            $1,865,131            $1,785,392         
                                        
Net interest income      $13,258            $12,535          $11,547     
Interest rate spread - tax equivalent (2)           2.86             2.71           2.51 
Net interest margin - tax equivalent (3)           2.97             2.82           2.70 
Average interest-earning assets to interest-bearing liabilities 131.36%            131.14%            131.07%        
                                        
(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 GAAP to 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 GAAP to non-GAAP measures at the end of this release. 


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

 Six Months Ended December 31, 
 2021  2020 
 Average
Balance
  Interest /
Dividends
  Average
Rate
  Average
Balance
  Interest /
Dividends
  Average
Rate
 
Assets:                       
Loans receivable (1)$1,232,821  $24,758   4.01% $1,242,575  $24,729   3.98%
Investment securities (1) 416,241   4,142   2.08   314,552   3,789   2.44 
Other interest-earning assets 143,622   197   0.27   163,323   235   0.29 
Total interest-earning assets 1,792,684   29,097   3.26   1,720,450   28,753   3.35 
Non-interest-earning assets 76,940           71,172         
Total assets$1,869,624          $1,791,622         
                        
Liabilities and equity:                       
NOW accounts$187,693   159   0.17  $149,543   168   0.22 
Money market accounts 353,141   355   0.20   253,129   449   0.35 
Savings accounts and mortgage escrow funds 397,684   221   0.11   361,256   370   0.20 
Time deposits 362,442   1,911   1.05   438,966   3,603   1.63 
Total interest-bearing deposits 1,300,960   2,646   0.40   1,202,894   4,590   0.76 
FHLB advances 64,870   658   2.01   106,051   1,039   1.94 
Total interest-bearing liabilities 1,365,830   3,304   0.48   1,308,945   5,629   0.86 
Non-interest-bearing deposits 211,182           181,312         
Other non-interest-bearing liabilities 18,096           27,720         
Total liabilities 1,595,108           1,517,977         
Total shareholders' equity 274,516           273,645         
Total liabilities and shareholders' equity$1,869,624          $1,791,622         
                        
Net interest income    $25,793          $23,124     
Interest rate spread - tax equivalent (2)         2.78           2.49 
Net interest margin - tax equivalent (3)         2.90           2.70 
Average interest-earning assets to interest-bearing liabilities 131.25%          131.44%        
                        
(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 GAAP to 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 GAAP to 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 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 
Condensed Balance Sheets             
Cash and cash equivalents$120,339 $148,012 $159,305 $169,314 $162,541 
Total investment securities 433,999  423,525  394,971  347,302  310,231 
Loans receivable, net 1,243,646  1,210,674  1,229,451  1,261,155  1,237,550 
Other assets 90,137  90,968  91,208  76,903  79,517 
Total assets$1,888,121 $1,873,179 $1,874,935 $1,854,674 $1,789,839 
                
Total deposits and mortgage escrow funds$1,533,947 $1,511,465 $1,502,218 $1,463,542 $1,387,897 
Advances from Federal Home Loan Bank 58,390  65,924  65,957  95,991  106,023 
Other liabilities 20,950  21,062  32,200  23,844  26,595 
Total liabilities 1,613,287  1,598,451  1,600,375  1,583,377  1,520,515 
Total shareholders' equity 274,834  274,728  274,560  271,297  269,324 
Total liabilities and shareholders' equity$1,888,121 $1,873,179 $1,874,935 $1,854,674 $1,789,839 
                


 Quarter Ended Six Months Ended 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
 
Condensed Income Statements                   
Interest income$14,870 $14,227 $14,586 $13,925 $14,225 $29,097 $28,753 
Interest expense 1,612  1,692  2,005  2,288  2,678  3,304  5,629 
Net interest income 13,258  12,535  12,581  11,637  11,547  25,793  23,124 
Provision (benefit) for loan losses 264  13  5  (894) 107  277  216 
Noninterest income 1,195  613  568  592  743  1,808  1,337 
Noninterest expense 8,805  8,624  8,867  8,572  8,691  17,429  17,315 
Income before income tax expense 5,384  4,511  4,277  4,551  3,492  9,895  6,930 
Income tax expense 1,096  897  867  959  798  1,993  1,508 
Net income$4,288 $3,614 $3,410 $3,592 $2,694 $7,902 $5,422 
                      
Earnings per share:                     
Basic$0.30 $0.25 $0.23 $0.25 $0.18 $0.55 $0.36 
Diluted 0.30  0.25  0.23  0.25  0.18  0.55  0.36 


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

 Quarter Ended Six Months Ended 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
 
Performance Ratios (1):                   
Return on average assets 0.92% 0.78% 0.73% 0.80% 0.60% 0.85% 0.61%
Return on average equity 6.22% 5.29% 4.95% 5.32% 3.96% 5.76% 3.96%
Interest rate spread 2.86% 2.71% 2.67% 2.53% 2.51% 2.78% 2.49%
Net interest margin 2.97% 2.82% 2.81% 2.69% 2.70% 2.90% 2.70%
Efficiency ratio 60.92% 65.59% 67.43% 70.10% 70.72% 63.15% 70.79%
                      
Noninterest income to average assets 0.26% 0.13% 0.12% 0.13% 0.17% 0.19% 0.15%
Noninterest expense to average assets 1.88% 1.85% 1.89% 1.90% 1.95% 1.86% 1.93%
                      
Average interest-earning assets to average interest-bearing liabilities 131.36% 131.14% 131.21% 131.31% 131.07% 131.25% 131.44%
Average equity to average assets 14.71% 14.66% 14.67% 14.99% 15.23% 14.68% 15.27%
Dividend payout ratio (2) 20.22% 24.24% 26.07% 16.65% 22.57% 22.06% 22.83%
                      
                      
  


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 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 
Loans to deposits 81.65% 80.46% 82.42% 86.72% 89.85%
                
Share Data:               
Shares outstanding 15,337,979  15,574,310  15,770,645  15,966,216  16,097,867 
Book value per common share$17.92 $17.64 $17.41 $16.99 $16.73 
Tangible book value per common share (3)$17.51 $17.24 $17.01 $16.60 $16.34 
                
Asset Quality Ratios:               
Non-performing loans receivable$7,890 $5,732 $5,764 $2,054 $1,668 
Non-performing assets$7,890 $5,732 $5,764 $2,054 $1,668 
Allowance for loan losses as a percent of total loans receivable (4) 0.68% 0.68% 0.66% 0.65% 0.72%
Allowance for loan losses as a percent of non-performing loans receivable 106.83% 142.34% 136.73% 382.91% 520.20%
Non-performing loans as a percent of total loans receivable, net (4) 0.64% 0.48% 0.48% 0.17% 0.14%
Non-performing assets as a percent of total assets 0.42% 0.31% 0.31% 0.11% 0.09%
Net (recoveries) charge-offs$(6)$(265)$(11)$(82)$102 
Net (recoveries) charge-offs to average outstanding loans during the period (1) 0.00% (0.09%) 0.00% (0.03%) 0.03%
                
Capital Ratios (5):               
Tier 1 capital (to adjusted total assets) 12.91% 12.72% 12.48% 12.76% 12.66%
Common equity Tier 1 capital (to risk-weighted assets) 17.67% 17.84% 17.93% 17.72% 17.74%
Tier 1 capital (to risk-weighted assets) 17.67% 17.84% 17.93% 17.72% 17.74%
Total capital (to risk-weighted assets) 18.28% 18.46% 18.53% 18.33% 18.42%
                
(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 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 
Mortgage loans:               
Residential mortgages$212,817 $221,735 $224,305 $229,008 $237,987 
Commercial mortgages 867,581  838,021  826,624  831,162  801,348 
Construction 11,857  11,639  10,151  10,047  17,551 
Net deferred loan origination (fees) costs (18) 97  196  365  600 
Total mortgage loans 1,092,237  1,071,492  1,061,276  1,070,582  1,057,486 
Commercial and consumer loans:               
Commercial loans (1) 135,055  122,031  150,658  171,314  160,678 
Home equity credit lines 24,142  24,936  25,439  27,211  27,653 
Consumer and overdrafts 356  394  345  269  328 
Net deferred loan origination costs (fees) 285  (20) (386) (356) 82 
Total commercial and consumer loans 159,838  147,341  176,056  198,438  188,741 
Total loans receivable 1,252,075  1,218,833  1,237,332  1,269,020  1,246,227 
Allowance for loan losses (8,429) (8,159) (7,881) (7,865) (8,677)
Loans receivable, net$1,243,646 $1,210,674 $1,229,451 $1,261,155 $1,237,550 
                
(1) Includes PPP loans totaling:$12,769 $19,763 $37,050 $50,380 $35,687 


 As of 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 
Demand deposits$215,708 $216,470 $219,072 $203,344 $189,968 
NOW accounts 198,610  181,572  177,223  169,077  159,919 
Money market accounts 361,352  363,090  332,843  301,892  256,132 
Savings 393,041  381,836  387,529  372,151  354,882 
Time deposits 354,356  361,669  375,015  407,826  416,386 
Total deposits$1,523,067 $1,504,637 $1,491,682 $1,454,290 $1,377,287 
                


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 Six Months Ended 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
 
Computation of Adjusted Net Income and Adjusted Earnings Per Share       
Net income applicable to common stock (GAAP)$4,288 $3,614 $3,410 $3,592 $2,694 $7,902 $5,422 
                      
Adjustments (1):                     
Prepayment income on loans receivable and investment securities (442) (26) (532) (43) (136) (468) (194)
Gains on sales of premises (436) -  -  -  -  (436) - 
PPP interest and fee income (264) (299) (411) (220) (123) (563) (295)
Gains on sale of investment securities -  -  -  (89) -  -  - 
Adjusted net income (Non-GAAP)$3,146 $3,289 $2,467 $3,240 $2,435 $6,435 $4,933 
                      
Average number of common shares outstanding:             
Basic 14,236,473  14,337,543  14,553,783  14,631,122  14,888,528  14,287,009  15,094,982 
Diluted 14,281,232  14,405,816  14,586,928  14,632,342  14,899,020  14,349,272  15,094,982 
Earnings per share (GAAP):                     
Basic$0.30 $0.25 $0.23 $0.25 $0.18 $0.55 $0.36 
Diluted 0.30  0.25  0.23  0.25  0.18  0.55  0.36 
Adjusted earnings per common share (Non-GAAP):             
Basic$0.22 $0.23 $0.17 $0.22 $0.16 $0.45 $0.33 
Diluted 0.22  0.23  0.17  0.22  0.16  0.45  0.33 
                      
(1) Amounts included in income before income tax expense are presented net of tax.       


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  Six Months Ended 
 December 31,
2021
 September 30,
2021
 December 31,
2020
  December 31,
2021
 December 31,
2020
 
Computation of Tax Equivalent Net Interest Income        
Total interest income$14,870 $14,227 $14,225  $29,097 $28,753 
Total interest expense 1,612  1,692  2,678   3,304  5,629 
Net interest income (GAAP) 13,258  12,535  11,547   25,793  23,124 
Tax equivalent adjustment 99  89  45   188  78 
Net interest income - tax equivalent (Non-GAAP)$13,357 $12,624 $11,592  $25,981 $23,202 
                 


 Quarter Ended Six Months Ended 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 December 31,
2021
 December 31,
2020
 
Computation of Efficiency Ratio          
Noninterest expense (GAAP)$8,805 $8,624 $8,867 $8,572 $8,691 $17,429 $17,315 
                      
Net interest income (GAAP)$13,258 $12,535 $12,581 $11,637 $11,547 $25,793 $23,124 
Noninterest income (GAAP) 1,195  613  568  592  743  1,808  1,337 
Total (GAAP) 14,453  13,148  13,149  12,229  12,290  27,601  24,461 
Adjustments:                     
Prepayment income on loans receivable and investment securities (555) (32) (667) (55) (176) (587) (249)
Gains on sales of premises (548) -  -  -  -  (548) - 
PPP interest and fee income (332) (373) (516) (279) (159) (705) (376)
Gains on sales of investment securities -  -  -  (113) -  -  - 
Adjusted total (Non-GAAP)$13,018 $12,743 $11,966 $11,782 $11,955 $25,761 $23,836 
                      
Efficiency ratio (GAAP) 60.92% 65.59% 67.43% 70.10% 70.72% 63.15% 70.79%
Adjusted efficiency ratio (Non-GAAP) 67.64% 67.68% 74.10% 72.76% 72.70% 67.66% 72.64%


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 
 December 31,
2021
 September 30,
2021
 June 30,
2021
 March 31,
2021
 December 31,
2020
 
Computation of Tangible Book Value per Common Share    
Total shareholders' equity (GAAP)$274,834 $274,728 $274,560 $271,297 $269,324 
Adjustments:               
Goodwill (6,106) (6,106) (6,106) (6,106) (6,106)
Other intangible assets (119) (135) (151) (168) (189)
Tangible common shareholders' equity (Non-GAAP)$268,609 $268,487 $268,303 $265,023 $263,029 
                
Common shares outstanding 15,337,979  15,574,310  15,770,645  15,966,216  16,097,867 
                
Book value per share (GAAP)$17.92 $17.64 $17.41 $16.99 $16.73 
Adjustments:               
Effects of intangible assets (0.41) (0.40) (0.40) (0.39) (0.39)
                
Tangible book value per common share (Non-GAAP)$17.51 $17.24 $17.01 $16.60 $16.34 


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  Six Months Ended 
 December 31,
2021
 September 30,
2021
 December 31,
2020
  December 31,
2021
 December 31,
2020
 
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin        
Average interest-earning assets$1,796,613 $1,788,756 $1,714,975  $1,792,684 $1,720,450 
                 
Interest and dividend income (GAAP)$14,870 $14,227 $14,225  $29,097 $28,753 
Less: PPP interest and fee income (332) (373) (159)  (705) (376)
Less: Prepayment income on loans receivable (555) (32) (59)  (587) (132)
Adjusted interest and dividend income (Non-GAAP)$13,983 $13,822 $14,007  $27,805 $28,245 
                 
Yield on interest-earning assets (GAAP) 3.33% 3.20% 3.32%  3.26% 3.35%
Adjusted yield on interest-earning assets (Non-GAAP) 3.11% 3.09% 3.27%  3.10% 3.28%
                 
Net interest income (GAAP)$13,258 $12,535 $11,547  $25,793 $23,124 
Less: PPP interest and fee income (332) (373) (159)  (705) (376)
Less: Prepayment income on loans receivable (555) (32) (59)  (587) (132)
Adjusted net interest income (Non-GAAP)$12,371 $12,130 $11,329  $24,501 $22,616 
                 
Net interest margin (GAAP) 2.97% 2.82% 2.70%  2.90% 2.70%
Adjusted net interest margin (Non-GAAP) 2.75% 2.71% 2.64%  2.73% 2.63%


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