PCSB Financial Corporation Announces Third Fiscal Quarter Financial Results and Declares a 17% Increase In Quarterly Cash Dividend


YORKTOWN HEIGHTS, N.Y., April 28, 2022 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $3.5 million, or $0.24 per diluted share, for the three months ended March 31, 2022, compared to $4.3 million, or $0.30 per diluted share, for the three months ended December 31, 2021 and $3.6 million, or $0.25 per diluted share, for the three months ended March 31, 2021.

Results for the three months ended March 31, 2021 include a benefit for loan losses of $944,000, or $0.05 per diluted share, net of tax, related to the release of qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic.

On April 27, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.07 per share, representing a 17% increase compared to the linked quarter. The dividend is payable on or about May 27, 2022 to shareholders of record as of the close of business on May 13, 2022.

Third Quarter Highlights

  • Net income of $3.5 million or $0.24 per diluted share for the current quarter, decreases of 19.0% and 3.3% compared to the linked quarter and same quarter last year, respectively. Excluding certain non-recurring items, current quarter adjusted net income (non-GAAP) was $3.2 million or $0.23 per diluted share, an increase of 2.4% compared to the linked quarter and a decrease of 0.6% compared to the same quarter last year. The decrease in net income compared to the prior year quarter includes a $1.2 million increase in the provision for loan losses, as the prior year quarter included a $944,000 release of qualitative reserves associated with the COVID-19 pandemic. Reconciliations of GAAP to non-GAAP financial measures are included at the end of this release.

  • Net interest income of $12.7 million for the current quarter, a decrease of 4.1% from the linked quarter and an increase of 9.3% from the same quarter last year. Adjusted net interest income (non-GAAP) of $12.4 million for the current quarter, unchanged from the linked quarter and an increase of 9.7% from the same quarter last year.

  • Tax equivalent net interest margin of 2.80% for the current quarter, a decrease from 2.97% in the linked quarter and an increase from 2.69% for the same quarter last year. Adjusted tax equivalent net interest margin (non-GAAP) of 2.70% for the current quarter, a decrease from 2.75% for the linked quarter and an increase from 2.61% for the same quarter last year.

  • Average cost of interest-bearing deposits of 0.37% for the current quarter, a decrease from 0.39% in the linked quarter and 0.59% for the same quarter last year.

  • Efficiency ratio of 65.66% for the current quarter, compared to 60.92% for the linked quarter and 70.10% for the same quarter last year. Adjusted efficiency ratio (non-GAAP) of 67.24% for the current quarter, largely unchanged from the linked quarter and improved from 72.76% for the same quarter last year.

  • Average loans receivable, excluding SBA Paycheck Protection Program (“PPP”) loans, of $1.25 billion for the current quarter, increased from $1.23 billion and $1.21 billion in the linked quarter and the same quarter last year, respectively.

  • Average deposits of $1.56 billion for the current quarter, increases of 2.8% and 11.2% 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 March 31, 2022, an increase from 0.66% as of June 30, 2021.

  • Non-performing loans of $7.9 million, or 0.61% of total net loans receivable (excluding PPP loans), as of March 31, 2022, increased from 0.48% as of June 30, 2021.

  • Loans on COVID-19-related payment deferral totaled $3.6 million (1 loan), or 0.28% of gross loans, as of March 31, 2022, compared to $27.3 million (19 loans), or 2.21% of gross loans, as of June 30, 2021.

President’s Comments

“We are extremely pleased with our third quarter and nine-month financial results which exhibited solid core earnings combined with strong loan and deposit growth despite continued economic uncertainty,” said Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation. “Annualized loan growth excluding PPP loans was 10.0% for the nine months and 13.6% for the current quarter. I am encouraged by the increased opportunities to originate quality loans within our strong market footprint. We believe we are well positioned to take advantage of the increase in market rates because of our current elevated liquidity position, resulting from significant deposit growth, and expected loan and securities portfolio repricing opportunities. Of the $1.3 billion of loan balances, 15% are subject to daily or monthly repricing with another 4% scheduled to mature or re-price within the next 12 months; additionally, approximately 13% of our securities portfolio have adjustable rates, more than half of which are subject to re-pricing in the June quarter. I am proud of what our PCSB team has accomplished as we continue working to create sustainable value for our shareholders.”

Income Statement Summary

Net income for the current quarter was $3.5 million, which decreased $814,000 from the linked quarter and $118,000 from the prior year quarter. The change from the linked quarter is primarily due to a $541,000 decrease in net interest income, a $272,000 decrease in noninterest income and increases of $151,000 in noninterest expense and $22,000 in provision for loan losses, partially offset by a $172,000 decrease in income tax expense. The change from the prior year quarter is primarily due to increases of $1.2 million in provision for loan losses and $384,000 in noninterest expense, largely offset by increases of $1.1 million in net interest income and $331,000 in noninterest income, and a $35,000 decrease in income tax expense.

Net interest income was $12.7 million for the current quarter, a decrease of $541,000, or 4.1%, compared to the linked quarter and an increase of $1.1 million, or 9.3%, compared to the prior year quarter. The decrease compared to the linked quarter is primarily the result of a 17 basis point decrease in the tax equivalent net interest margin, partially offset by a $36.9 million, or 2.1%, increase in average interest-earning assets. The increase in net interest income compared to the prior year period is primarily the result of an 11 basis point increase in the tax equivalent net interest margin and a $99.6 million, or 5.7%, increase in average interest-earning assets.

The Company recognized PPP loan interest and origination fee income (net of costs) of $266,000 in the current quarter, compared to $332,000 in the linked quarter and $279,000 in the prior year quarter. Unearned origination fees (net of costs) on PPP loans totaled $117,000 as of March 31, 2022 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 loan forgiveness, which the Company expects to be substantially complete by June 30, 2022.

The tax equivalent net interest margin was 2.80% for the current quarter, reflecting a decrease of 17 basis points compared to 2.97% in the linked quarter and an increase of 11 basis points compared to 2.69% in the prior year quarter. During the linked 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 2.70% for the current quarter compared to 2.75% in the linked quarter and 2.61% in the prior year quarter. Compared to the prior year quarter, reductions in the cost of funds were partially offset by a decrease in adjusted asset yield, driven by lower market interest rates. Compared to the linked quarter, margin compression was the result of an increase in cash liquidity. 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 3.12%, decreases of 21 basis points from the linked quarter and 11 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 3.03%, decreases of 8 basis points from the linked quarter and 10 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.

The cost of interest-bearing deposits was 0.37% for the current quarter, decreases of 2 basis points and 22 basis points from 0.39% and 0.59% 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 0.35%. The cost of interest-bearing liabilities was 0.43% for the current quarter, decreases of 4 basis points from 0.47% in the linked quarter and 27 basis points from 0.70% in the prior year quarter. Over the next 12 months, the Company has $50.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.03%.

The provision for loan losses was $286,000 for current quarter, compared to $264,000 for the linked quarter and a benefit for loan losses of $894,000 for the prior year quarter. Loans on COVID-19 related payment deferral totaled $3.6 million, or 0.28% of gross loans, as of March 31, 2022, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Charge-offs, net of recoveries, were $4,000 for the current quarter compared to recoveries, net of charge-offs, of $6,000 for the linked quarter and $82,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.61% as of March 31, 2022, an increase from 0.48% as of June 30, 2021.

Noninterest income of $923,000 for the current quarter decreased $272,000 compared to the linked quarter and increased $331,000 compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to decreases of $548,000 in gain on the sale of premises, $32,000 in gains on the sale of loans and $25,000 in all other noninterest income, partially offset by an increase of $333,000 in swap income. The increase compared to the prior year quarter was primarily due to increases of $333,000 in swap income, $65,000 in bank-owned life insurance income, $37,000 in fees and service charges and $9,000 in gains on the sale of loans, partially offset by a $113,000 decrease in gains on the sale of securities.

Noninterest expense of $9.0 million for the current quarter increased $151,000 compared to the linked quarter and $384,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increased professional, occupancy and data processing costs, partially offset by lower salary and benefits expense. Noninterest expenses increased compared to the prior year quarter primarily due to higher salaries and benefits and professional costs which were partially offset by lower pension costs.

The effective income tax rate was 21.0% for the current quarter, as compared to 20.4% for the linked quarter and 21.1% for the prior year quarter.

Balance Sheet Summary

Total assets increased $109.6 million to $1.98 billion at March 31, 2022 as compared to June 30, 2021, due to increases of $56.4 million in net loans receivable and $53.1 million in investment securities. Net loans receivable increased $56.4 million, or 4.6%, and $89.6 million or 7.5% excluding PPP loans. The increase was primarily the result of increases in commercial mortgage loans and construction loans of $70.8 million and $6.7 million, respectively, partially offset by decreases in commercial loans and residential mortgage loans of $9.2 million and $8.9 million, respectively. The decrease in commercial loans includes a decrease in PPP loans of $32.3 million, driven by forgiveness and paydowns, largely offset by a net increase of $23.0 million in all other commercial loans. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $28.2 million in state and municipal securities, $15.2 million in mortgage-backed securities, $5.3 million in corporate securities and $4.4 million in U.S. government and agency bonds.

Total liabilities increased $107.8 million to $1.71 billion at March 31, 2022 as compared to June 30, 2021 as an increase of $133.0 million in deposits was partially offset by decreases of $17.6 million in FHLB advances and $7.7 million in all other liabilities. The $133.0 million increase in deposits includes increases in money market, NOW, savings and demand accounts of $63.5 million, $44.2 million, $30.4 million and $24.8 million, respectively, partially offset by decreases in time deposits of $29.9 million. Current quarter deposit growth of $101.7 million or 6.7% includes approximately $38.1 million of transient deposits expected to outflow in the subsequent quarter.

Total shareholders’ equity increased $1.8 million to $276.4 million at March 31, 2022 as compared to $274.6 million as of June 30, 2021. The increase for the nine months ended March 31, 2022 was primarily due to net income of $11.4 million and $3.8 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 (443,788 shares) of common stock, $2.5 million of other comprehensive losses related primarily to unrealized losses on investment securities driven by higher market interest rates and $2.6 million of cash dividends declared and paid.

At March 31, 2022, the Company’s book value per share and tangible book value per share were $18.02 and $17.62, 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 March 31, 2022, 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, 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)

  March 31,  June 30, 
  2022  2021 
ASSETS      
Cash and due from banks $156,982  $152,070 
Federal funds sold  1,910   7,235 
Total cash and cash equivalents  158,892   159,305 
Held to maturity debt securities, at amortized cost (fair value of $379,500 and
$342,137 as of March 31, 2022 and June 30, 2021, respectively)
  410,896   337,584 
Available for sale debt securities, at fair value  37,185   57,387 
Total investment securities  448,081   394,971 
Loans receivable, net of allowance for loan losses of $8,711 and
$7,881 as of March 31, 2022 and June 30, 2021, respectively
  1,285,886   1,229,451 
Accrued interest receivable  6,583   6,398 
FHLB stock  3,715   4,507 
Premises and equipment, net  18,904   21,099 
Deferred tax asset, net  3,089   2,552 
Bank-owned life insurance  36,136   35,568 
Goodwill  6,106   6,106 
Other intangible assets  102   151 
Other assets  17,047   14,827 
Total assets $1,984,541  $1,874,935 
LIABILITIES AND SHAREHOLDERS' EQUITY      
Interest bearing deposits $1,380,811  $1,272,610 
Non-interest bearing deposits  243,908   219,072 
Total deposits  1,624,719   1,491,682 
Mortgage escrow funds  8,744   10,536 
Advances from FHLB  48,357   65,957 
Other liabilities  26,329   32,200 
Total liabilities  1,708,149   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 March 31, 2022 and June 30, 2021)  -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both March 31, 2022 and June 30, 2021, and 15,334,857 and 15,770,645 shares outstanding as of March 31, 2022 and June 30, 2021, respectively)  187   187 
Additional paid in capital  192,860   189,926 
Retained earnings  159,765   150,987 
Unearned compensation - ESOP  (9,449)  (10,176)
Accumulated other comprehensive loss, net of income taxes  (5,628)  (3,099)
Treasury stock, at cost (3,368,720 and 2,932,932 shares as of March 31, 2022 and June 30, 2021, respectively)  (61,343)  (53,265)
Total shareholders' equity  276,392   274,560 
Total liabilities and shareholders' equity $1,984,541  $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  Nine Months Ended 
  March 31,  March 31, 
  2022  2021  2022  2021 
Interest and dividend income            
Loans receivable $11,943  $12,116  $36,701  $36,845 
Investment securities  2,152   1,700   6,294   5,489 
Federal funds and other  105   109   302   344 
Total interest and dividend income  14,200   13,925   43,297   42,678 
Interest expense            
Deposits and escrow interest  1,217   1,782   3,863   6,372 
FHLB advances  266   506   924   1,545 
Total interest expense  1,483   2,288   4,787   7,917 
Net interest income  12,717   11,637   38,510   34,761 
Provision (benefit) for loan losses  286   (894)  563   (678)
Net interest income after provision for loan losses  12,431   12,531   37,947   35,439 
Noninterest income            
Fees and service charges  390   353   1,198   1,038 
Bank-owned life insurance  185   120   568   381 
Gain on sale of premises  -   -   548   - 
Swap income  333   -   333   367 
Gains on sales of loans receivable  9   -   56   - 
Gains on sales of securities  -   113   -   113 
Other  6   6   28   30 
Total noninterest income  923   592   2,731   1,929 
Noninterest expense            
Salaries and employee benefits  5,737   5,595   17,353   16,722 
Occupancy and equipment  1,414   1,359   4,115   4,051 
Communication and data processing  573   517   1,626   1,539 
Professional fees  543   382   1,356   1,285 
Postage, printing, stationery and supplies  153   146   478   452 
FDIC assessment  125   115   371   350 
Advertising  100   100   300   300 
Amortization of intangible assets  17   21   49   61 
Other operating expenses  294   337   737   1,127 
Total noninterest expense  8,956   8,572   26,385   25,887 
Net income before income tax expense  4,398   4,551   14,293   11,481 
Income tax expense  924   959   2,917   2,467 
Net income $3,474  $3,592  $11,376  $9,014 
Earnings per common share:            
Basic $0.25  $0.25  $0.80  $0.60 
Diluted  0.24   0.25   0.80   0.60 
Weighted average common shares outstanding:          
Basic  14,165,775   14,631,122   14,247,188   14,944,097 
Diluted  14,197,716   14,632,342   14,301,150   14,944,664 


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

  Three Months Ended 
  March 31, 2022  December 31, 2021  March 31, 2021 
  Average Balance  Interest / Dividends  Average Rate  Average Balance  Interest / Dividends  Average Rate  Average Balance  Interest / Dividends  Average Rate 
Assets:                           
Loans receivable (1) $1,255,117  $11,943   3.81% $1,242,109  $12,651   4.07% $1,252,492  $12,116   3.88%
Investment securities (1)  436,702   2,152   2.06   427,918   2,131   2.08   319,239   1,700   2.18 
Other interest-earning assets  141,677   105   0.30   126,586   88   0.28   162,193   109   0.27 
Total interest-earning assets  1,833,496   14,200   3.12   1,796,613   14,870   3.33   1,733,924   13,925   3.23 
Non-interest-earning assets  77,202         77,506         68,748       
Total assets $1,910,698        $1,874,119        $1,802,672       
                            
Liabilities and equity:                           
NOW accounts $215,021   94   0.18  $192,856   90   0.18  $161,049   59   0.15 
Money market accounts  360,131   144   0.16   355,708   168   0.19   274,516   208   0.31 
Savings accounts and mortgage escrow funds  415,850   113   0.11   398,076   108   0.11   368,791   132   0.15 
Time deposits  349,266   866   1.00   357,242   926   1.03   411,500   1,383   1.36 
Total interest-bearing deposits  1,340,268   1,217   0.37   1,303,882   1,292   0.39   1,215,856   1,782   0.59 
FHLB advances  57,185   266   1.89   63,805   320   1.99   104,604   506   1.96 
Total interest-bearing liabilities  1,397,453   1,483   0.43   1,367,687   1,612   0.47   1,320,460   2,288   0.70 
Non-interest-bearing deposits  220,809         214,558         187,778       
Other non-interest-bearing liabilities  15,370         16,250         24,272       
Total liabilities  1,633,632         1,598,495         1,532,510       
Total shareholders' equity  277,066         275,624         270,162       
Total liabilities and shareholders' equity $1,910,698        $1,874,119        $1,802,672       
                            
Net interest income    $12,717        $13,258        $11,637    
Interest rate spread - tax equivalent (2)        2.69         2.86         2.53 
Net interest margin - tax equivalent (3)        2.80         2.97         2.69 
Average interest-earning assets to interest-bearing liabilities  131.20%        131.36%        131.31%      
                            
(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)

  Nine Months Ended March 31, 
  2022  2021 
  Average
Balance
  Interest/
Dividends
  Average
Rate
  Average
Balance
  Interest/
Dividends
  Average
Rate
 
Assets:                  
Loans receivable (1) $1,240,253  $36,701   3.95% $1,245,881  $36,845   3.95%
Investment securities (1)  423,062   6,294   2.07   316,114   5,489   2.36 
Other interest-earning assets  142,974   302   0.28   162,946   344   0.28 
Total interest-earning assets  1,806,289   43,297   3.22   1,724,941   42,678   3.31 
Non-interest-earning assets  77,027         70,364       
Total assets $1,883,316        $1,795,305       
                   
Liabilities and equity:                  
NOW accounts $196,803   254   0.17  $153,378   227   0.20 
Money market accounts  355,471   499   0.19   260,258   657   0.34 
Savings accounts and escrow  403,740   334   0.11   363,768   502   0.18 
Time deposits  358,050   2,776   1.03   429,811   4,986   1.54 
Total interest-bearing deposits  1,314,064   3,863   0.39   1,207,215   6,372   0.70 
FHLB advances  62,309   924   1.98   105,569   1,545   1.95 
Total interest-bearing liabilities  1,376,373   4,787   0.46   1,312,784   7,917   0.80 
Non-interest-bearing deposits  214,391         183,467       
Other non-interest-bearing liabilities  17,186         26,570       
Total liabilities  1,607,950         1,522,821       
Total shareholders' equity  275,366         272,484       
Total liabilities and shareholders' equity $1,883,316        $1,795,305       
                   
Net interest income    $38,510        $34,761    
Interest rate spread - tax equivalent (2)        2.76         2.51 
Net interest margin - tax equivalent (3)        2.86         2.70 
Average interest-earning assets to interest-bearing liabilities  131.24%        131.40%      
                   
(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 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
 
Condensed Balance Sheets             
Cash and cash equivalents $158,892  $120,339  $148,012  $159,305  $169,314 
Total investment securities  448,081   433,999   423,525   394,971   347,302 
Loans receivable, net  1,285,886   1,243,646   1,210,674   1,229,451   1,261,155 
Other assets  91,682   90,137   90,968   91,208   76,903 
Total assets $1,984,541  $1,888,121  $1,873,179  $1,874,935  $1,854,674 
                
Total deposits and mortgage escrow funds $1,633,463  $1,533,947  $1,511,465  $1,502,218  $1,463,542 
Advances from Federal Home Loan Bank  48,357   58,390   65,924   65,957   95,991 
Other liabilities  26,329   20,950   21,062   32,200   23,844 
Total liabilities  1,708,149   1,613,287   1,598,451   1,600,375   1,583,377 
Total shareholders' equity  276,392   274,834   274,728   274,560   271,297 
Total liabilities and shareholders' equity $1,984,541  $1,888,121  $1,873,179  $1,874,935  $1,854,674 
                


  Quarter Ended  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Condensed Income Statements                   
Interest income $14,200  $14,870  $14,227  $14,586  $13,925  $43,297  $42,678 
Interest expense  1,483   1,612   1,692   2,005   2,288   4,787   7,917 
Net interest income  12,717   13,258   12,535   12,581   11,637   38,510   34,761 
Provision (benefit) for loan losses  286   264   13   5   (894)  563   (678)
Noninterest income  923   1,195   613   568   592   2,731   1,929 
Noninterest expense  8,956   8,805   8,624   8,867   8,572   26,385   25,887 
Income before income tax expense  4,398   5,384   4,511   4,277   4,551   14,293   11,481 
Income tax expense  924   1,096   897   867   959   2,917   2,467 
Net income $3,474  $4,288  $3,614  $3,410  $3,592  $11,376  $9,014 
                      
Earnings per share:                     
Basic $0.25  $0.30  $0.25  $0.23  $0.25  $0.80  $0.60 
Diluted  0.24   0.30   0.25   0.23   0.25   0.80   0.60 


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

  Quarter Ended  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Performance Ratios (1):                   
Return on average assets  0.73%  0.92%  0.78%  0.73%  0.80%  0.81%  0.67%
Return on average equity  5.02%  6.22%  5.29%  4.95%  5.32%  5.51%  4.41%
Interest rate spread  2.69%  2.86%  2.71%  2.67%  2.53%  2.76%  2.51%
Net interest margin  2.80%  2.97%  2.82%  2.81%  2.69%  2.86%  2.70%
Efficiency ratio  65.66%  60.92%  65.59%  67.43%  70.10%  63.98%  70.56%
                      
Noninterest income to average assets  0.19%  0.26%  0.13%  0.12%  0.13%  0.19%  0.14%
Noninterest expense to average assets  1.87%  1.88%  1.85%  1.89%  1.90%  1.87%  1.92%
                      
Average interest-earning assets to average interest-bearing liabilities  131.20%  131.36%  131.14%  131.21%  131.31%  131.24%  131.40%
Average equity to average assets  14.50%  14.71%  14.66%  14.67%  14.99%  14.62%  15.18%
Dividend payout ratio (2)  24.61%  20.22%  24.24%  26.07%  16.65%  22.84%  20.37%


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 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
 
Loans to deposits  79.15%  81.65%  80.46%  82.42%  86.72%
                
Share Data:               
Shares outstanding  15,334,857   15,337,979   15,574,310   15,770,645   15,966,216 
Book value per common share $18.02  $17.92  $17.64  $17.41  $16.99 
Tangible book value per common share (3) $17.62  $17.51  $17.24  $17.01  $16.60 
                
Asset Quality Ratios:               
Non-performing loans receivable $7,859  $7,890  $5,732  $5,764  $2,054 
Non-performing assets $7,859  $7,890  $5,732  $5,764  $2,054 
Allowance for loan losses as a percent of total loans receivable (4)  0.68%  0.68%  0.68%  0.66%  0.65%
Allowance for loan losses as a percent of non-performing loans receivable  110.84%  106.83%  142.34%  136.73%  382.91%
Non-performing loans as a percent of total loans receivable, net (4)  0.61%  0.64%  0.48%  0.48%  0.17%
Non-performing assets as a percent of total assets  0.40%  0.42%  0.31%  0.31%  0.11%
Net charge-offs (recoveries) $4  $(6) $(265) $(11) $(82)
Net charge-offs (recoveries) to average outstanding loans during the period (1)  0.00%  0.00%  (0.09%)  0.00%  (0.03%)
                
Capital Ratios (5):               
Tier 1 capital (to adjusted total assets)  12.86%  12.91%  12.72%  12.48%  12.76%
Common equity Tier 1 capital (to risk-weighted assets)  17.22%  17.67%  17.84%  17.93%  17.72%
Tier 1 capital (to risk-weighted assets)  17.22%  17.67%  17.84%  17.93%  17.72%
Total capital (to risk-weighted assets)  17.83%  18.28%  18.46%  18.53%  18.33%
                
(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 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
 
Mortgage loans:               
Residential mortgages $215,431  $212,817  $221,735  $224,305  $229,008 
Commercial mortgages  897,424   867,581   838,021   826,624   831,162 
Construction  16,894   11,857   11,639   10,151   10,047 
Net deferred loan origination (fees) costs  (23)  (18)  97   196   365 
Total mortgage loans  1,129,726   1,092,237   1,071,492   1,061,276   1,070,582 
Commercial and consumer loans:               
Commercial loans (1)  141,427   135,055   122,031   150,658   171,314 
Home equity credit lines  22,557   24,142   24,936   25,439   27,211 
Consumer and overdrafts  348   356   394   345   269 
Net deferred loan origination costs (fees)  539   285   (20)  (386)  (356)
Total commercial and consumer loans  164,871   159,838   147,341   176,056   198,438 
Total loans receivable  1,294,597   1,252,075   1,218,833   1,237,332   1,269,020 
Allowance for loan losses  (8,711)  (8,429)  (8,159)  (7,881)  (7,865)
Loans receivable, net $1,285,886  $1,243,646  $1,210,674  $1,229,451  $1,261,155 
                
(1) Includes PPP loans totaling: $4,701  $12,769  $19,763  $37,050  $50,380 


  As of 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
 
Demand deposits $243,908  $215,708  $216,470  $219,072  $203,344 
NOW accounts  221,386   198,610   181,572   177,223   169,077 
Money market accounts  396,358   361,352   363,090   332,843   301,892 
Savings  417,975   393,041   381,836   387,529   372,151 
Time deposits  345,092   354,356   361,669   375,015   407,826 
Total deposits $1,624,719  $1,523,067  $1,504,637  $1,491,682  $1,454,290 
                


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  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Computation of Adjusted Net Income and Adjusted Earnings Per Share       
Net income applicable to common stock (GAAP) $3,474  $4,288  $3,614  $3,410  $3,592  $11,376  $9,014 
                      
Adjustments (1):                     
Prepayment income on loans receivable  (43)  (442)  (26)  (532)  (43)  (511)  (147)
Prepayment income on investment securities  -   -   -   -   -   -   (90)
Gain on sale of premises  -   (436)  -   -   -   (436)  - 
PPP interest and fee income  (210)  (264)  (299)  (411)  (220)  (773)  (515)
Gains on sale of investment securities  -   -   -   -   (89)  -   (89)
Adjusted net income (Non-GAAP) $3,221  $3,146  $3,289  $2,467  $3,240  $9,656  $8,173 
                      
Average number of common shares outstanding:             
Basic  14,165,775   14,236,473   14,337,543   14,553,783   14,631,122   14,247,188   14,944,097 
Diluted  14,197,716   14,281,232   14,405,816   14,586,928   14,632,342   14,301,150   14,944,664 
Earnings per share (GAAP):                     
Basic $0.25  $0.30  $0.25  $0.23  $0.25  $0.80  $0.60 
Diluted  0.24   0.30   0.25   0.23   0.25   0.80   0.60 
Adjusted earnings per common share (Non-GAAP):             
Basic $0.23  $0.22  $0.23  $0.17  $0.22  $0.68  $0.55 
Diluted  0.23   0.22   0.23   0.17   0.22   0.68   0.55 
                      
(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  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Computation of Tax Equivalent Net Interest Income          
Total interest income $14,200  $14,870  $13,925  $43,297  $42,678 
Total interest expense  1,483   1,612   2,288   4,787   7,917 
Net interest income (GAAP)  12,717   13,258   11,637   38,510   34,761 
Tax equivalent adjustment  101   99   51   289   130 
Net interest income - tax equivalent (Non-GAAP) $12,818  $13,357  $11,688  $38,799  $34,891 


  Quarter Ended  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Computation of Efficiency Ratio          
Noninterest expense (GAAP) $8,956  $8,805  $8,624  $8,867  $8,572  $26,385  $25,887 
                      
Net interest income (GAAP) $12,717  $13,258  $12,535  $12,581  $11,637  $38,510  $34,761 
Noninterest income (GAAP)  923   1,195   613   568   592   2,731   1,929 
Total (GAAP)  13,640   14,453   13,148   13,149   12,229   41,241   36,690 
Adjustments:                     
Prepayment income on loans receivable  (55)  (555)  (32)  (667)  (55)  (642)  (187)
Prepayment income on investment securities  -   -   -   -   -   -   (117)
Gains on sales of premises  -   (548)  -   -   -   (548)  - 
PPP interest and fee income  (266)  (332)  (373)  (516)  (279)  (971)  (655)
Gains on sales of investment securities  -   -   -   -   (113)  -   (113)
Adjusted total (Non-GAAP) $13,319  $13,018  $12,743  $11,966  $11,782  $39,080  $35,618 
                      
Efficiency ratio (GAAP)  65.66%  60.92%  65.59%  67.43%  70.10%  63.98%  70.56%
Adjusted efficiency ratio (Non-GAAP)  67.24%  67.64%  67.68%  74.10%  72.76%  67.52%  72.68%


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 
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
 
Computation of Tangible Book Value per Common Share    
Total shareholders' equity (GAAP) $276,392  $274,834  $274,728  $274,560  $271,297 
Adjustments:               
Goodwill  (6,106)  (6,106)  (6,106)  (6,106)  (6,106)
Other intangible assets  (102)  (119)  (135)  (151)  (168)
Tangible common shareholders' equity (Non-GAAP) $270,184  $268,609  $268,487  $268,303  $265,023 
                
Common shares outstanding  15,334,857   15,337,979   15,574,310   15,770,645   15,966,216 
                
Book value per share (GAAP) $18.02  $17.92  $17.64  $17.41  $16.99 
Adjustments:               
Effects of intangible assets  (0.40)  (0.41)  (0.40)  (0.40)  (0.39)
                
Tangible book value per common share (Non-GAAP) $17.62  $17.51  $17.24  $17.01  $16.60 


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  Nine Months Ended 
  March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
 
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin       
Average interest-earning assets $1,833,496  $1,796,613  $1,733,924  $1,806,289  $1,724,941 
                
Interest and dividend income (GAAP) $14,200  $14,870  $13,925  $43,297  $42,678 
Less: PPP interest and fee income  (266)  (332)  (279)  (971)  (655)
Less: Prepayment income on loans receivable  (55)  (555)  (55)  (642)  (187)
Adjusted interest and dividend income (Non-GAAP) $13,879  $13,983  $13,591  $41,684  $41,836 
                
Yield on interest-earning assets (GAAP)  3.12%  3.33%  3.23%  3.22%  3.31%
Adjusted yield on interest-earning assets (Non-GAAP)  3.03%  3.11%  3.14%  3.08%  3.23%
                
Net interest income (GAAP) $12,717  $13,258  $11,637  $38,510  $34,761 
Less: PPP interest and fee income  (266)  (332)  (279)  (971)  (655)
Less: Prepayment income on loans receivable  (55)  (555)  (55)  (642)  (187)
Adjusted net interest income (Non-GAAP) $12,396  $12,371  $11,303  $36,897  $33,919 
                
Net interest margin (GAAP)  2.80%  2.97%  2.69%  2.86%  2.70%
Adjusted net interest margin (Non-GAAP)  2.70%  2.75%  2.61%  2.72%  2.62%