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


YORKTOWN HEIGHTS, N.Y., Aug. 04, 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 $0.25 per diluted share, for the three months ended June 30, 2022, compared to $3.5 million, or $0.24 per diluted share, for the three months ended March 31, 2022 and $3.4 million, or $0.23 per diluted share, for the three months ended June 30, 2021.

Net income was $14.9 million, or $1.04 per diluted share, for the year ended June 30, 2022, compared to $12.4 million, or $0.84 per diluted share, for the year ended June 30, 2021. Results for the three months and year ended June 30, 2022 include merger-related expenses of $1.2 million and $1.3 million, or $0.07 and $0.08 per diluted share, net of tax, respectively. 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.

On May 23, 2022, the Company and Brookline Bancorp, Inc. (“Brookline”), the holding company of Brookline Bank and Bank Rhode Island, entered into an Agreement and Plan of Merger (the “Merger Agreement”).  Pursuant to the  Merger Agreement, PCSB will merge with and into Brookline, with  Brookline as the surviving corporation (the “Merger”). Following the  Merger, PCSB Bank will operate as a separate bank subsidiary of  Brookline. The consummation of the Merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval by PCSB’s stockholders. The Merger is currently expected to be completed in the  fourth quarter of 2022.

On July 27, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.07 per share. The dividend is payable on or about September 9, 2022 to shareholders of record as of the close of business on August 26, 2022.

Fourth Quarter Highlights

  • Net income of $3.5 million, or $0.25 per diluted share, for the current quarter, increases of 0.8% and 2.7% compared to the linked quarter and same quarter last year, respectively. Excluding merger-related expenses and certain other non-recurring items, current quarter adjusted net income (non-GAAP) was $4.4 million or $0.31 per diluted share, increases of 34.1% and 79.3% compared to the linked quarter and same quarter last year, respectively. Reconciliation of GAAP to Non-GAAP financial measures appear at the end of this release.
  • Net interest income of $13.9 million for the current quarter, increases of 9.5% and 10.7% from the linked quarter and the same quarter last year, respectively.
  • Tax equivalent net interest margin of 3.00% for the current quarter, an increase from 2.80% in the linked quarter and 2.81% for the same quarter last year.
  • Average cost of interest-bearing deposits of 0.35% for the current quarter, a decrease from 0.37% in the linked quarter and 0.48% for the same quarter last year.
  • Efficiency ratio of 68.38% for the current quarter, compared to 65.66% for the linked quarter and 67.43% for the same quarter last year. Adjusted efficiency ratio (non-GAAP) of 61.28% for the current quarter, a decrease from 66.60% for the linked quarter and 74.10% for the same quarter last year.
  • Average loans receivable (excluding PPP loans) of $1.31 billion for the current quarter, increases of 5.2% and 9.4% compared to the linked quarter and same quarter last year, respectively.
  • Average deposits of $1.61 billion for the current quarter, increases of 3.1% and 8.4% compared to the linked quarter and same quarter last year, respectively.
  • Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.67% as of June 30, 2022, largely unchanged compared to 0.66% as of June 30, 2021.
  • Non-performing loans of $9.2 million, or 0.69% of total net loans receivable (excluding PPP loans), as of June 30, 2022, increased from 0.48% as of June 30, 2021.
  • The Company had no loans on COVID-19-related payment deferral as of June 30, 2022, compared to $27.3 million (19 loans), or 2.21% of gross loans, as of June 30, 2021.

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 our fiscal fourth quarter and year ended June 30, 2022. Annualized loan growth of 13.6% for the fourth quarter and 8.1% year over year reflects our ability to originate quality loans within our strong market footprint. The loan growth, combined with a balance sheet well-positioned to take advantage of higher interest rates, has led to higher net interest income, margins and earnings. Core net income of $4.4 million for the fourth quarter reflects a 34.1% increase over the linked quarter while core net income of $14.2 million for the year reflects a 33.1% increase over the prior year. Although economic headwinds continue to be challenging, our outlook remains positive as the PCSB team continues working to create sustainable value for our shareholders.”   

Mr. Roberto added “We are excited about our pending merger with Brookline and look forward to becoming part of a larger organization, which will benefit all of our shareholders. I want to thank our staff for their dedication and hard work, especially during this time of transition. In addition to operating PCSB Bank in a business-as-usual manner for our customers, they have also been working hard to ensure that we have a seamless transition into Brookline’s organization.”

Income Statement Summary

Net income for the current quarter was $3.5 million, which increased $29,000 from the linked quarter and $93,000 from the prior year quarter. The change from the linked quarter is primarily due to a $1.2 million increase in net interest income, a $165,000 increase in noninterest income and a $77,000 decrease in provision for loan losses, partially offset by increases of $1.3 million in noninterest expense and $113,000 in income tax expense. The change from the prior year quarter is primarily due to increases of $1.3 million in net interest income and $520,000 in noninterest income, partially offset by increases of $1.4 million in noninterest expense, $204,000 in provision for loan losses and $170,000 in income tax expense.

Net interest income was $13.9 million for the current quarter, increases of $1.2 million, or 9.5%, compared to the linked quarter and $1.3 million, or 10.7%, compared to the prior year quarter. The increase compared to the linked quarter is primarily the result of a 20 basis point increase in the tax equivalent net interest margin and a $41.5 million, or 2.3%, increase in average interest-earning assets. The increase in net interest income compared to the prior year period is primarily the result of a 19 basis point increase in the tax equivalent net interest margin and a $75.7 million, or 4.2%, increase in average interest-earning assets.

The Company recognized PPP loan interest and origination fee income (net of costs) of $36,000 in the current quarter, compared to $266,000 in the linked quarter and $516,000 in the prior year quarter. As of June 30, 2022, the Company had 5 outstanding PPP loans with balances totaling $1.9 million. Unearned origination fees (net of costs) were $85,000 as of June 30, 2022, which will be recognized in income over the remaining lives of the loans. PPP loan forgiveness is substantially complete as of June 30, 2022.

The tax equivalent net interest margin was 3.00% for the current quarter, reflecting increases of 20 basis points compared to 2.80% in the linked quarter and 19 basis points compared to 2.81% in the prior year quarter. Adjusted net interest margin, which excludes the effects of loan prepayment income and PPP loan interest and fees, was 2.94% for the current quarter compared to 2.70% in the linked quarter and 2.53% in the prior year quarter. Margin improvement compared to the linked quarter and prior year quarter was the result of a reduction in the cost of funds, driven by a lower costing deposit mix, as well as an increased asset yields, driven by higher 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 3.31%, increases of 19 basis points from the linked quarter and 5 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 3.25%, increases of 22 basis points from the linked quarter and 27 basis points from the same quarter last year. The increase in yield compared to the prior year quarter is a result of higher market interest rates driving higher yield on cash liquidity and adjustable rate loan and investment assets, along with higher investment and loan re-investment rates. Compared to the linked quarter, the increase in yield was the result of higher market interest rates and a more profitable asset mix.

The cost of interest-bearing deposits was 0.35% for the current quarter, decreases of 2 basis points and 13 basis points from 0.37% and 0.48% 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. Recent increases by the Federal Reserve in the federal funds rate beginning in March 2022 and continuing throughout the current quarter have not yet resulted in deposit cost increases, due to limited competitive pricing pressures and elevated liquidity in the banking sector. As of quarter end, the weighted average cost of interest-bearing deposits was 0.34%. The cost of interest-bearing liabilities was 0.41% for the current quarter, decreases of 2 basis points from 0.43% in the linked quarter and 18 basis points from 0.59% 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 1.79%.

The provision for loan losses was $209,000 for current quarter, compared to $286,000 for the linked quarter and $5,000 for the prior year quarter. Recoveries, net of charge-offs, were $7,000 for the current quarter compared to charge-offs, net of recoveries, of $4,000 for the linked quarter and recoveries, net of charge-offs, of $11,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.56% as of June 30, 2022, an increase from 0.48% as of June 30, 2021 but a decrease from 0.61% as of March 31, 2022. Substandard loans were $12.6 million as of June 30, 2022, a decrease from $23.1 million as of March 31, 2022 and $21.6 million as of June 30, 2021, driven primarily by sustained positive borrower operational and payment performance following the end of COVID-19 related payment deferrals. The Company had no loans remaining on COVID-19 related payment deferral as of June 30, 2022, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021.

Noninterest income of $1.1 million for the current quarter increased $165,000 compared to the linked quarter and $520,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $119,000 in swap income and $52,000 in fees and services charges. The increase compared to the prior year quarter was primarily due to increases of $452,000 in swap income, $52,000 in fees and service charges and $18,000 in bank-owned life insurance income.

Noninterest expense of $10.3 million for the current quarter increased $1.3 million compared to the linked quarter and $1.4 million compared to the prior year quarter. Excluding merger-related expenses of $1.2 million in the current quarter and $86,000 in the linked quarter, noninterest expenses increased $232,000, or 2.6%, compared to the linked quarter and $235,000, or 2.7%, compared to the same quarter last year. Excluding merger-related expenses, the $235,000 increase compared to the prior year quarter was primarily due to higher salaries and benefits,  marketing and communication and data processing costs which were partially offset by lower pension costs. The $232,000 increase compared to the linked quarter is the result of higher salaries and benefits, partially offset by lower professional fees and pension costs.

The effective income tax rate was 22.8% for the current quarter, as compared to 21.0% for the linked quarter and 20.3% for the prior year quarter. The increase for the current quarter is primarily due to non-deductible merger-related expenses. Excluding such expenses, the effective tax rate for the quarter is 20.2%.

Balance Sheet Summary

Total assets increased $114.2 million to $1.99 billion at June 30, 2022 as compared to June 30, 2021, primarily due to increases of $99.9 million in net loans receivable and $52.1 million in investment securities, partially offset by a $40.8 million decrease in cash and cash equivalents. Net loans receivable increased $99.9 million, or 8.1%, and $135.0 million or 11.3% excluding PPP loans. The increase was primarily the result of increases in commercial mortgage loans and construction loans of $115.5 million and $10.7 million, respectively, partially offset by decreases in commercial loans and residential mortgage loans of $14.4 million and $10.1 million, respectively. The decrease in commercial loans includes a decrease in PPP loans of $35.1 million, driven by forgiveness and paydowns, largely offset by a net increase of $20.7 million in all other commercial loans. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $27.2 million in state and municipal securities, $14.1 million in U.S. government and agency bonds, $5.7 million in mortgage-backed securities, and $5.1 million in corporate securities.

Total liabilities increased $111.6 million to $1.71 billion at June 30, 2022 as compared to June 30, 2021 as an increase of $134.6 million in deposits was partially offset by decreases of $17.6 million in FHLB advances and $5.4 million in all other liabilities. The $134.6 million, or 9.0% increase in deposits includes increases in NOW, money market, demand and savings  accounts of 37.1%, 19.9%, 12.0% and 6.1%, respectively, partially offset by a 12.6% decrease in time deposits. Current quarter deposit growth of $1.5 million includes the run-off of approximately $38.1 million of transient deposits as of March 31, 2022 expected to outflow in the current quarter.

Total shareholders’ equity increased $2.6 million to $277.2 million at June 30, 2022 as compared to $274.6 million as of June 30, 2021. The increase for the year was primarily due to net income of $14.9 million and $5.0 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, $5.5 million of other comprehensive losses related primarily to unrealized losses on investment securities driven by higher market interest rates and $3.6 million of cash dividends declared and paid.

At June 30, 2022, the Company’s book value per share and tangible book value per share were $18.07 and $17.67, 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 June 30, 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  asset value and 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, 
 2022  2021 
ASSETS     
Cash and due from banks$116,522  $152,070 
Federal funds sold 1,935   7,235 
Total cash and cash equivalents 118,457   159,305 
Held to maturity debt securities, at amortized cost (fair value of $361,608 and
 $342,137 as of June 30, 2022 and June 30, 2021, respectively)
 412,449   337,584 
Available for sale debt securities, at fair value 34,621   57,387 
Total investment securities 447,070   394,971 
Loans receivable, net of allowance for loan losses of $8,927 and
   $7,881 as of June 30, 2022 and June 30, 2021, respectively
 1,329,372   1,229,451 
Accrued interest receivable 6,396   6,398 
FHLB stock 3,766   4,507 
Premises and equipment, net 19,358   21,099 
Deferred tax asset, net 4,132   2,552 
Bank-owned life insurance 36,322   35,568 
Goodwill 6,106   6,106 
Other intangible assets 89   151 
Other assets 18,064   14,827 
Total assets$1,989,132  $1,874,935 
LIABILITIES AND SHAREHOLDERS' EQUITY     
Interest bearing deposits$1,380,953  $1,272,610 
Non-interest bearing deposits 245,297   219,072 
Total deposits 1,626,250   1,491,682 
Mortgage escrow funds 11,173   10,536 
Advances from FHLB 48,323   65,957 
Other liabilities 26,224   32,200 
Total liabilities 1,711,970   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 June 30, 2022 and June 30, 2021) -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both June 30, 2022 and June 30, 2021, and 15,334,857 and 15,770,645 shares outstanding as of June 30, 2022 and June 30, 2021, respectively) 187   187 
Additional paid in capital 193,893   189,926 
Retained earnings 162,262   150,987 
Unearned compensation - ESOP (9,208)  (10,176)
Accumulated other comprehensive loss, net of income taxes (8,629)  (3,099)
Treasury stock, at cost (3,368,720 and 2,932,932 shares as of June 30, 2022 and June 30, 2021, respectively) (61,343)  (53,265)
Total shareholders' equity 277,162   274,560 
Total liabilities and shareholders' equity$1,989,132  $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  Year Ended 
 June 30,  June 30, 
 2022  2021  2022  2021 
Interest and dividend income           
Loans receivable$12,801  $12,625  $49,502  $49,470 
Investment securities 2,315   1,851   8,609   7,340 
Federal funds and other 267   110   569   454 
Total interest and dividend income 15,383   14,586   58,680   57,264 
Interest expense           
Deposits and escrow interest 1,212   1,519   5,075   7,891 
FHLB advances 242   486   1,166   2,031 
Total interest expense 1,454   2,005   6,241   9,922 
Net interest income 13,929   12,581   52,439   47,342 
Provision (benefit) for loan losses 209   5   772   (673)
Net interest income after provision (benefit) for loan losses 13,720   12,576   51,667   48,015 
Noninterest income           
Fees and service charges 442   390   1,640   1,428 
Bank-owned life insurance 186   168   754   549 
Gain on sale of premises -   -   548   - 
Swap income 452   -   785   367 
Gains on sales of loans receivable -   -   56   - 
Gains on sales of securities -   -   -   113 
Other 8   10   36   40 
Total noninterest income 1,088   568   3,819   2,497 
Noninterest expense           
Salaries and employee benefits 6,063   5,795   23,416   22,517 
Occupancy and equipment 1,386   1,362   5,501   5,413 
Merger-related expenses 1,166   -   1,252   - 
Communication and data processing 585   525   2,211   2,064 
Professional fees 403   405   1,673   1,690 
Postage, printing, stationery and supplies 142   137   620   589 
FDIC assessment 125   113   496   463 
Advertising 177   100   477   400 
Amortization of intangible assets 13   17   62   78 
Other operating expenses 208   413   945   1,540 
Total noninterest expense 10,268   8,867   36,653   34,754 
Net income before income tax expense 4,540   4,277   18,833   15,758 
Income tax expense 1,037   867   3,954   3,334 
Net income$3,503  $3,410  $14,879  $12,424 
Earnings per common share:           
Basic$0.25  $0.23  $1.05  $0.84 
Diluted 0.25   0.23   1.04   0.84 
Weighted average common shares outstanding:          
Basic 14,189,701   14,553,783   14,232,855   14,846,786 
Diluted 14,248,141   14,586,928   14,289,020   14,847,579 


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

  Three Months Ended 
  June 30, 2022  March 31, 2022  June 30, 2021 
  Average Balance  Interest / Dividends  Average Rate  Average Balance  Interest / Dividends  Average Rate  Average Balance  Interest / Dividends  Average Rate 
Assets:                           
Loans receivable (1) $1,313,296  $12,801   3.90% $1,255,117  $11,943   3.81% $1,245,610  $12,625   4.06%
Investment securities (1)  443,626   2,315   2.18   436,702   2,152   2.06   363,175   1,851   2.11 
Other interest-earning assets  118,119   267   0.91   141,677   105   0.30   190,582   110   0.23 
Total interest-earning assets  1,875,041   15,383   3.31   1,833,496   14,200   3.12   1,799,367   14,586   3.26 
Non-interest-earning assets  79,993         77,202         79,015       
Total assets $1,955,034        $1,910,698        $1,878,382       
                            
Liabilities and equity:                           
NOW accounts $224,808   91   0.16  $215,021   94   0.18  $182,475   69   0.15 
Money market accounts  388,406   166   0.17   360,131   144   0.16   311,255   162   0.21 
Savings accounts and mortgage escrow funds  427,709   124   0.12   415,850   113   0.11   387,422   109   0.11 
Time deposits  335,748   831   0.99   349,266   866   1.00   395,240   1,179   1.20 
Total interest-bearing deposits  1,376,671   1,212   0.35   1,340,268   1,217   0.37   1,276,392   1,519   0.48 
FHLB advances  48,337   242   2.00   57,185   266   1.89   94,970   486   2.05 
Total interest-bearing liabilities  1,425,008   1,454   0.41   1,397,453   1,483   0.43   1,371,362   2,005   0.59 
Non-interest-bearing deposits  232,119         220,809         208,265       
Other non-interest-bearing liabilities  19,581         15,370         23,114       
Total liabilities  1,676,708         1,633,632         1,602,741       
Total shareholders' equity  278,326         277,066         275,641       
Total liabilities and shareholders' equity $1,955,034        $1,910,698        $1,878,382       
                            
Net interest income    $13,929        $12,717        $12,581    
Interest rate spread - tax equivalent (2)        2.90         2.69         2.67 
Net interest margin - tax equivalent (3)        3.00         2.80         2.81 
Average interest-earning assets to interest-bearing liabilities  131.58%        131.20%        131.21%      
                            
(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)

  Year Ended June 30, 
  2022  2021 
  Average
Balance
  Interest/
Dividends
  Average
Rate
  Average
Balance
  Interest/
Dividends
  Average
Rate
 
Assets:                  
Loans receivable (1) $1,258,513  $49,502   3.94% $1,245,818  $49,470   3.97%
Investment securities (1)  428,203   8,609   2.10   327,879   7,340   2.29 
Other interest-earning assets  136,760   569   0.42   169,855   454   0.27 
Total interest-earning assets  1,823,476   58,680   3.24   1,743,552   57,264   3.30 
Non-interest-earning assets  77,769         72,522       
Total assets $1,901,245        $1,816,074       
                   
Liabilities and equity:                  
NOW accounts $203,804   345   0.17  $160,652   296   0.18 
Money market accounts  363,705   665   0.18   273,007   819   0.30 
Savings accounts and escrow  409,732   458   0.11   369,681   611   0.17 
Time deposits  352,474   3,607   1.02   421,168   6,165   1.46 
Total interest-bearing deposits  1,329,715   5,075   0.38   1,224,508   7,891   0.64 
FHLB advances  58,816   1,166   1.98   102,919   2,031   1.97 
Total interest-bearing liabilities  1,388,531   6,241   0.45   1,327,427   9,922   0.75 
Non-interest-bearing deposits  218,823         189,667       
Other non-interest-bearing liabilities  17,785         25,707       
Total liabilities  1,625,139         1,542,801       
Total shareholders' equity  276,106         273,273       
Total liabilities and shareholders' equity $1,901,245        $1,816,074       
                   
Net interest income    $52,439        $47,342    
Interest rate spread - tax equivalent (2)        2.79         2.55 
Net interest margin - tax equivalent (3)        2.90         2.73 
Average interest-earning assets to interest-bearing liabilities  131.32%        131.35%      
                   
(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 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
 
Condensed Balance Sheets             
Cash and cash equivalents $118,457  $158,892  $120,339  $148,012  $159,305 
Total investment securities  447,070   448,081   433,999   423,525   394,971 
Loans receivable, net  1,329,372   1,285,886   1,243,646   1,210,674   1,229,451 
Other assets  94,233   91,682   90,137   90,968   91,208 
Total assets $1,989,132  $1,984,541  $1,888,121  $1,873,179  $1,874,935 
                
Total deposits and mortgage escrow funds $1,637,423  $1,633,463  $1,533,947  $1,511,465  $1,502,218 
Advances from Federal Home Loan Bank  48,323   48,357   58,390   65,924   65,957 
Other liabilities  26,224   26,329   20,950   21,062   32,200 
Total liabilities  1,711,970   1,708,149   1,613,287   1,598,451   1,600,375 
Total shareholders' equity  277,162   276,392   274,834   274,728   274,560 
Total liabilities and shareholders' equity $1,989,132  $1,984,541  $1,888,121  $1,873,179  $1,874,935 


  Quarter Ended  Year Ended 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Condensed Income Statements                   
Interest income $15,383  $14,200  $14,870  $14,227  $14,586  $58,680  $57,264 
Interest expense  1,454   1,483   1,612   1,692   2,005   6,241   9,922 
Net interest income  13,929   12,717   13,258   12,535   12,581   52,439   47,342 
Provision (benefit) for loan losses  209   286   264   13   5   772   (673)
Noninterest income  1,088   923   1,195   613   568   3,819   2,497 
Noninterest expense  10,268   8,956   8,805   8,624   8,867   36,653   34,754 
Income before income tax expense  4,540   4,398   5,384   4,511   4,277   18,833   15,758 
Income tax expense  1,037   924   1,096   897   867   3,954   3,334 
Net income $3,503  $3,474  $4,288  $3,614  $3,410  $14,879  $12,424 
                      
Earnings per share:                     
Basic $0.25  $0.25  $0.30  $0.25  $0.23  $1.05  $0.84 
Diluted  0.25   0.24   0.30   0.25   0.23   1.04   0.84 


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

  Quarter Ended  Year Ended 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Performance Ratios (1):                   
Return on average assets  0.72%  0.73%  0.92%  0.78%  0.73%  0.78%  0.68%
Return on average equity  5.03%  5.02%  6.22%  5.29%  4.95%  5.39%  4.55%
Interest rate spread  2.90%  2.69%  2.86%  2.71%  2.67%  2.79%  2.55%
Net interest margin  3.00%  2.80%  2.97%  2.82%  2.81%  2.90%  2.73%
Efficiency ratio  68.38%  65.66%  60.92%  65.59%  67.43%  65.15%  69.73%
                      
Noninterest income to average assets  0.22%  0.19%  0.26%  0.13%  0.12%  0.20%  0.14%
Noninterest expense to average assets  2.10%  1.87%  1.88%  1.85%  1.89%  1.93%  1.91%
                      
Average interest-earning assets to average interest-bearing liabilities  131.58%  131.20%  131.36%  131.14%  131.21%  131.32%  131.35%
Average equity to average assets  14.24%  14.50%  14.71%  14.66%  14.67%  14.52%  15.05%
Dividend payout ratio (2)  28.72%  24.61%  20.22%  24.24%  26.07%  24.22%  21.93%
                      
Performance Ratios excluding merger-related expenses  (3): 
Earnings per diluted share $0.32  $0.25  $0.30  $0.25  $0.23  $1.12  $0.84 
Return on average assets  0.93%  0.74%  0.92%  0.78%  0.73%  0.84%  0.68%
Return on average equity  6.54%  5.13%  6.22%  5.29%  4.95%  5.80%  4.55%
Efficiency ratio  60.61%  65.03%  60.92%  65.59%  67.43%  62.93%  73.04%
Noninterest expense to average assets  1.86%  1.86%  1.88%  1.85%  1.89%  1.86%  1.91%
Dividend payout ratio (2)  22.11%  24.06%  20.22%  24.24%  26.07%  22.52%  21.93%


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,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
 
Loans to deposits  81.74%  79.15%  81.65%  80.46%  82.42%
                
Share Data:               
Shares outstanding  15,334,857   15,334,857   15,337,979   15,574,310   15,770,645 
Book value per common share $18.07  $18.02  $17.92  $17.64  $17.41 
Tangible book value per common share (4) $17.67  $17.62  $17.51  $17.24  $17.01 
                
Asset Quality Ratios:               
Non-performing loans receivable $9,235  $7,859  $7,890  $5,732  $5,764 
Non-performing assets $9,235  $7,859  $7,890  $5,732  $5,764 
Allowance for loan losses as a percent of total loans receivable (5)  0.67%  0.68%  0.68%  0.68%  0.66%
Allowance for loan losses as a percent of non-performing loans receivable  96.66%  110.86%  106.83%  142.34%  136.73%
Non-performing loans as a percent of total loans receivable, net (5)  0.69%  0.61%  0.64%  0.48%  0.48%
Non-performing assets as a percent of total assets  0.46%  0.40%  0.42%  0.31%  0.31%
Net (recoveries) charge-offs $(7) $4  $(6) $(265) $(11)
Net (recoveries) charge-offs to average outstanding loans during the period (1)  0.00%  0.00%  0.00%  (0.09%)  0.00%
                
Capital Ratios (6):               
Tier 1 capital (to adjusted total assets)  12.78%  12.86%  12.91%  12.72%  12.48%
Common equity Tier 1 capital (to risk-weighted assets)  17.22%  17.22%  17.67%  17.84%  17.93%
Tier 1 capital (to risk-weighted assets)  17.22%  17.22%  17.67%  17.84%  17.93%
Total capital (to risk-weighted assets)  17.83%  17.83%  18.28%  18.46%  18.53%
                
(1) Performance ratios for quarter ended periods are annualized.
(2) Dividends declared per share divided by net income per share.
(3) Merger-related expenses, primarily consisting of legal and consulting costs, total $1.2 million and $1.3 million for the current quarter and year-to-date, respectively.
(4) 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.
(5) Total loans receivable excludes PPP loans.
(6) Represents Bank ratios.


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

  As of 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
 
Mortgage loans:               
Residential mortgages $214,167  $215,431  $212,817  $221,735  $224,305 
Commercial mortgages  942,130   897,424   867,581   838,021   826,624 
Construction  20,896   16,894   11,857   11,639   10,151 
Net deferred loan origination (fees) costs  (100)  (23)  (18)  97   196 
Total mortgage loans  1,177,093   1,129,726   1,092,237   1,071,492   1,061,276 
Commercial and consumer loans:               
Commercial loans (1)  136,304   141,427   135,055   122,031   150,658 
Home equity credit lines  23,688   22,557   24,142   24,936   25,439 
Consumer and overdrafts  594   348   356   394   345 
Net deferred loan origination costs (fees)  620   539   285   (20)  (386)
Total commercial and consumer loans  161,206   164,871   159,838   147,341   176,056 
Total loans receivable  1,338,299   1,294,597   1,252,075   1,218,833   1,237,332 
Allowance for loan losses  (8,927)  (8,711)  (8,429)  (8,159)  (7,881)
Loans receivable, net $1,329,372  $1,285,886  $1,243,646  $1,210,674  $1,229,451 
                
(1) Includes PPP loans totaling: $1,940  $4,701  $12,769  $19,763  $37,050 


  As of 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
 
Demand deposits $245,297  $243,908  $215,708  $216,470  $219,072 
NOW accounts  243,006   221,386   198,610   181,572   177,223 
Money market accounts  399,026   396,358   361,352   363,090   332,843 
Savings  411,332   417,975   393,041   381,836   387,529 
Time deposits  327,589   345,092   354,356   361,669   375,015 
Total deposits $1,626,250  $1,624,719  $1,523,067  $1,504,637  $1,491,682 
                


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,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Computation of Adjusted Net Income and Adjusted Earnings Per Share       
Net income applicable to common stock (GAAP) $3,503  $3,474  $4,288  $3,614  $3,410  $14,879  $12,424 
                      
Adjustments (1):                     
Merger-related expenses  1,048   79   -   -   -   1,127   - 
Prepayment income on loans receivable  (99)  (43)  (442)  (26)  (532)  (610)  (679)
PPP loan interest and fee income  (28)  (210)  (264)  (299)  (411)  (801)  (926)
Gain on sale of premises  -   -   (436)  -   -   (436)  - 
Prepayment income on investment securities  -   -   -   -   -   -   (90)
Gains on sale of investment securities  -   -   -   -   -   -   (89)
Adjusted net income (Non-GAAP) $4,424  $3,300  $3,146  $3,289  $2,467  $14,159  $10,640 
                      
Average number of common shares outstanding:             
Basic  14,189,701   14,165,775   14,236,473   14,337,543   14,553,783   14,232,855   14,846,786 
Diluted  14,248,141   14,197,716   14,281,232   14,405,816   14,586,928   14,289,020   14,847,579 
Earnings per share (GAAP):                     
Basic $0.25  $0.25  $0.30  $0.25  $0.23  $1.05  $0.84 
Diluted  0.25   0.24   0.30   0.25   0.23   1.04   0.84 
Adjusted earnings per common share (Non-GAAP):             
Basic $0.31  $0.23  $0.22  $0.23  $0.17  $0.99  $0.72 
Diluted  0.31   0.23   0.22   0.23   0.17   0.99   0.72 
                      
(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  Year Ended 
  June 30,
2022
  March 31,
2022
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Computation of Tax Equivalent Net Interest Income          
Total interest income $15,383  $14,200  $14,586  $58,680  $57,264 
Total interest expense  1,454   1,483   2,005   6,241   9,922 
Net interest income (GAAP)  13,929   12,717   12,581   52,439   47,342 
Tax equivalent adjustment  111   101   68   400   198 
Net interest income - tax equivalent (Non-GAAP) $14,040  $12,818  $12,649  $52,839  $47,540 


  Quarter Ended  Year Ended 
  June 30,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Computation of Efficiency Ratio          
Noninterest expense (GAAP) $10,268  $8,956  $8,805  $8,624  $8,867  $36,653  $34,754 
Adjustments:                     
Merger-related expenses  (1,166)  (86)  -   -   -   (1,252)   
Adjusted total (Non-GAAP) $9,102  $8,870  $8,805  $8,624  $8,867  $35,401  $34,754 
                      
Net interest income (GAAP) $13,929  $12,717  $13,258  $12,535  $12,581  $52,439  $47,342 
Noninterest income (GAAP)  1,088   923   1,195   613   568   3,819   2,497 
Total (GAAP)  15,017   13,640   14,453   13,148   13,149   56,258   49,839 
Adjustments:                     
PPP loan interest and fee income  (36)  (266)  (332)  (373)  (516)  (1,007)  (1,171)
Prepayment income on loans receivable  (128)  (55)  (555)  (32)  (667)  (770)  (854)
Gains on sales of premises  -   -   (548)  -   -   (548)  - 
Prepayment income on investment securities  -   -   -   -   -   -   (117)
Gains on sales of investment securities  -   -   -   -   -   -   (113)
Adjusted total (Non-GAAP) $14,853  $13,319  $13,018  $12,743  $11,966  $53,933  $47,584 
                      
Efficiency ratio (GAAP)  68.38%  65.66%  60.92%  65.59%  67.43%  65.15%  69.73%
Adjusted efficiency ratio (Non-GAAP)  61.28%  66.60%  67.64%  67.68%  74.10%  65.64%  73.04%


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,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
 
Computation of Tangible Book Value per Common Share    
Total shareholders' equity (GAAP) $277,162  $276,392  $274,834  $274,728  $274,560 
Adjustments:               
Goodwill  (6,106)  (6,106)  (6,106)  (6,106)  (6,106)
Other intangible assets  (89)  (102)  (119)  (135)  (151)
Tangible common shareholders' equity (Non-GAAP) $270,967  $270,184  $268,609  $268,487  $268,303 
                
Common shares outstanding  15,334,857   15,334,857   15,337,979   15,574,310   15,770,645 
                
Book value per share (GAAP) $18.07  $18.02  $17.92  $17.64  $17.41 
Adjustments:               
Effects of intangible assets  (0.40)  (0.40)  (0.41)  (0.40)  (0.40)
                
Tangible book value per common share (Non-GAAP) $17.67  $17.62  $17.51  $17.24  $17.01 


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,
2022
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  June 30,
2022
  June 30,
2021
 
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin       
Average interest-earning assets $1,875,041  $1,833,496  $1,796,613  $1,788,756  $1,799,367  $1,823,476  $1,743,552 
                      
Interest and dividend income (GAAP) $15,383  $14,200  $14,870  $14,227  $14,586  $58,680  $57,264 
Less: PPP loan interest and fee income  (36)  (266)  (332)  (373)  (516)  (1,007)  (1,171)
Less: Prepayment income on loans receivable  (128)  (55)  (555)  (32)  (667)  (770)  (854)
Adjusted interest and dividend income (Non-GAAP) $15,219  $13,879  $13,983  $13,822  $13,403  $56,903  $55,239 
                      
Yield on interest-earning assets (GAAP)  3.31%  3.12%  3.33%  3.20%  3.26%  3.24%  3.30%
Adjusted yield on interest-earning assets (Non-GAAP)  3.25%  3.03%  3.11%  3.09%  2.98%  3.12%  3.17%
                      
Net interest income (GAAP) $13,929  $12,717  $13,258  $12,535  $12,581  $52,439  $47,342 
Less: PPP loan interest and fee income  (36)  (266)  (332)  (373)  (516)  (1,007)  (1,171)
Less: Prepayment income on loans receivable  (128)  (55)  (555)  (32)  (667)  (770)  (854)
Adjusted net interest income (Non-GAAP) $13,765  $12,396  $12,371  $12,130  $11,398  $50,662  $45,317 
                      
Net interest margin (GAAP)  3.00%  2.80%  2.97%  2.82%  2.81%  2.90%  2.73%
Adjusted net interest margin (Non-GAAP)  2.94%  2.70%  2.75%  2.71%  2.53%  2.78%  2.60%