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

Company Release - 8/2/2018 8:30 AM ET

YORKTOWN HEIGHTS, N.Y., Aug. 02, 2018 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $2.7 million, or $0.16 per basic and diluted share, for the three months ended June 30, 2018 compared to $2.2 million, or $0.13 per basic and diluted share, for the three months ended March 31, 2018 and a loss of $1.8 million for the three months ended June 30, 2017. For the year ended June 30, 2018, net income was $6.6 million, or $0.39 per basic and diluted share, compared to $3.2 million for the year ended June 30, 2017.

The following nonrecurring items were recorded in the current quarter:

  • Interest income of $879,000 recorded upon the pay-off of two nonaccrual loans
  • A $370,000 loss on a receivable
  • A $63,000 gain on sale of securities

On a non-GAAP basis, which excludes certain nonrecurring items, including those discussed above, the Company recorded net income of $2.2 million and $7.6 million for the three months and year ended June 30, 2018, or $0.13 and $0.46 per diluted share, respectively. This compares to non-GAAP net income of $1.5 million and $5.2 million for the three months and year ended June 30, 2017, respectively. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

Effective April 20, 2017, PCSB Bank completed its mutual-to-stock conversion and the Company completed its related initial public offering. Accordingly, financial results for dates and periods prior to April 20, 2017 are for the Bank only.

President’s Comments
Commenting on the Company’s results, Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, said “I am proud of the Company’s progress and successful achievements as we completed our first full year as a public company.  Some of these accomplishments include fourth quarter net income of $2.7 million, the highest quarterly income in the Company’s history, a $92.7 million, or 11.4%, year-over-year increase in net loans and a 16.7% increase in net interest income.  Problem assets continue to decline as the ratio of non-performing assets to total assets fell by more than half to 0.44% from 0.91% a year ago.  Additionally, as the Federal Reserve increased the Fed Funds Rate by 1.75%, the Bank’s average cost of funds, at 0.55%, increased minimally year-over-year.  As we head into fiscal year 2019, we hope to build on these results by continuing to grow the balance sheet with loans while maintaining high credit quality standards.  I am also pleased to announce that our Board of Directors approved our second quarterly cash dividend of $0.03 per share.”

Income Statement Summary
Net interest income increased $2.0 million, or 21.6%, to $11.4 million for the three months ended June 30, 2018, compared to the same period in 2017 and increased $1.3 million or 12.7% from the previous quarter.  The increase in net interest income compared to the prior year is a result of a $44.2 million increase in average net interest earning assets and a 43-basis point increase in the net interest margin. The increase in net interest earning assets is due primarily to the deployment of the capital raised in the initial public offering into loans receivable and investments. The net interest margin was 3.23% for the three months ended June 30, 2018, an increase from 2.80% for the three months ended June 30, 2017 and 2.99% for the three months ended March 31, 2018. Included in current quarter net interest income is $879,000 of interest income recorded from the pay-off of two nonaccrual loans. Excluding this interest, net interest margin for the quarter would have been 2.98%, an increase of 18 basis points from the prior year and a decrease of 1 basis point from the prior quarter.

The provision for loan losses was $25,000 for the three months June 30, 2018 compared to no provision expense for the same period in 2017. The provision for loan losses decreased $29,000 compared to prior quarter due primarily to recoveries realized in the current quarter.  Recoveries, net of charge-offs, were $255,000 for the three months ended June 30, 2018 compared to $99,000 for the three months ended March 31, 2018 and $320,000 for the three months ended June 30, 2017.  Loans classified as substandard and doubtful decreased $4.2 million, or 21.4%, to $15.4 million at June 30, 2018 from $19.6 million at March 31, 2018 and decreased $9.7 million, or 38.8%, from $25.1 million at June 30, 2017. Non-performing loans were 0.66% of total loans receivable as of June 30, 2018, down from 0.80% as of March 31, 2018 and 1.48% as of June 30, 2017.

Noninterest income decreased $46,000 to $601,000 for the three months ended June 30, 2018 compared to the same period in 2017, due primarily to $142,000 of gains on the sale of foreclosed real estate recorded in the quarter ended June 30, 2017, partially offset by $63,000 of gains on the sale of securities recorded in the current quarter and a $45,000 increase in deposit-related fee income. Noninterest income increased $89,000 from the three months ended March 31, 2018, due primarily to $63,000 of gains on the sale of securities realized in the current quarter.

Noninterest expense decreased $4.6 million to $8.3 million for the three months ended June 30, 2018 compared to the same period in 2017 and increased $431,000 compared to the three months ended March 31, 2018. The $4.6 million decrease was caused primarily by a $5.0 million contribution expense recognized in the prior year related to the establishment of the PCSB Community Foundation, partially offset by a $370,000 loss recorded on a receivable in the current quarter. All other operating expenses were largely unchanged compared to the prior year quarter as increases in salaries and employee benefits, as well as increases in Director and Officer insurance expense and other professional fees associated with being a public company, were primarily offset by lower FDIC assessments, advertising costs and expenses on foreclosed real estate.  The $431,000 increase in noninterest expense from the three months ended March 31, 2018 was due primarily to a $370,000 loss recorded on a receivable in the current quarter.                                                                                     

Income tax expense was $1.1 million for the three months ended June 30, 2018 compared to an income tax benefit of $1.0 million for the same period in 2017. The effective income tax rate was 28.7% for the three months ended June 30, 2018 as compared to 36.2% for the three months ended June 30, 2017. Income tax expense increased $484,000 compared to the three months ended March 31, 2018 due primarily to higher net income before income tax expense, partially offset by a $182,000 deferred tax re-measurement benefit recorded in the prior quarter.

Balance Sheet Summary
Total assets increased $53.7 million to $1.48 billion at June 30, 2018 from $1.43 billion at June 30, 2017.  This increase was due primarily to an increase of $92.7 million, or 11.4%, in net loans receivable, partially offset by a decrease of $36.8 million in total investment securities. The $92.7 million increase in net loans included increases of $57.6 million in commercial mortgage loans, $32.8 million in residential mortgage loans, and $11.0 million in commercial loans, partially offset by decreases of $5.1 million in construction loans and $4.5 million in home equity lines of credit. Loan growth was funded by a decrease in investment securities as well as an increase in deposits.

Total liabilities increased $46.0 million to $1.19 billion at June 30, 2018 from $1.15 billion at June 30, 2017.  This increase was due primarily to a $69.0 million increase in deposits, partially offset by a $23.8 million decrease in advances from FHLB. 

Total shareholders’ equity increased $7.8 million to $287.6 million at June 30, 2018 from $279.8 million at June 30, 2017.  This increase was due primarily to net income of $6.6 million and a $2.2 million reduction in unearned ESOP shares for plan shares earned during the period, partially offset by other comprehensive losses of $618,000 due largely to increased unrealized losses in the available for sale investment securities portfolio driven by increased market interest rates, as well as $504,000 of cash dividends paid.  At June 30, 2018, the Company’s book value per share and tangible book value per share were $15.83 and $15.47, respectively, compared to $15.41 and $15.04, respectively, at June 30, 2017.  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, 2018, the Bank was considered “well capitalized” under applicable regulatory guidelines.

Dividend
The Board of Directors has declared a regular quarterly cash dividend of $0.03 per share. The dividend is payable on or about August 31, 2018 to stockholders of record on August 17, 2018.

Equity Incentive Plan
The Company has sought and received the New York State Department of Financial Services' requisite non-objection to its proposed 2018 Equity Incentive Plan and will seek stockholder approval of the Plan at its 2018 Annual Meeting of Stockholders scheduled for October 24, 2018.

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 stock savings bank and has served the banking needs of its customers in the Lower Hudson Valley of New York State since 1871. It operates from its executive offices/headquarters and 15 branch offices located in Dutchess, Putnam, Rockland and Westchester Counties in New York.

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

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the 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 data)

      
   June 30, June 30,
   2018 2017
ASSETS       
Cash and due from banks  $60,684 $59,115
Federal funds sold   1,461  1,371
Cash and cash equivalents   62,145  60,486
Investment Securities:       
Held to maturity investment securities, at amortized cost   353,183  383,551
(fair value of $343,188 and $383,588, respectively) 
Available for sale securities, at fair value   105,504  111,889
Total investment securities   458,687  495,440
Loans receivable, net of allowance for loan losses of $4,904 and $5,150, respectively  902,336  809,648
Accrued interest receivable   4,358  3,693
Federal Home Loan Bank stock   2,050  3,132
Premises and equipment, net   11,598  12,959
Deferred tax asset, net   2,622  4,770
Foreclosed real estate   460  977
Bank-owned life insurance   23,747  23,179
Goodwill   6,106  6,106
Other intangible assets   433  559
Other assets   5,645  5,509
Total assets  $1,480,187 $1,426,458
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing deposits  $1,025,574 $952,109
Non-interest bearing deposits   131,883  136,352
Total deposits   1,157,457  1,088,461
Mortgage escrow funds   8,803  8,084
Advances from Federal Home Loan Bank   18,841  42,598
Other liabilities   7,527  7,469
Total liabilities   1,192,628  1,146,612
Commitments and contingencies   -  -
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2018 and June 30, 2017, respectively)  -  -
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,165,110 shares issued and outstanding as of June 30, 2018 and June 30, 2017, respectively)  182  182
Additional paid in capital   179,045  177,993
Retained earnings   128,365  121,148
Unallocated common stock of Employee Stock Ownership Plan ("ESOP")   (13,083)  (14,262)
Accumulated other comprehensive loss, net of income taxes   (6,950)  (5,215)
Total shareholders' equity   287,559  279,846
Total liabilities and shareholders' equity  $1,480,187 $1,426,458
 
 

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,
   2018  2017 2018 2017
Interest and dividend income              
Loans receivable  $10,706  $8,408 $37,798 $33,664
Investment securities   2,384   2,018  9,266  6,661
Federal funds and other   268   297  896  633
Total interest and dividend income   13,358   10,723  47,960  40,958
Interest expense              
Deposits   1,600   1,244  5,554  5,083
FHLB advances   326   74  769  210
Total interest expense   1,926   1,318  6,323  5,293
Net interest income   11,432   9,405  41,637  35,665
Provision for loan losses   25   -  414  823
Net interest income after provision for loan losses  11,407   9,405  41,223  34,842
Noninterest income              
Fees and service charges   260   223  1,070  1,178
Gains on sales of securities, net   63   -  236  -
Bank-owned life insurance   138   149  568  622
Settlement on acquired loan   -   -     1,615
Other   140   275  645  669
Total noninterest income   601   647  2,519  4,084
Noninterest expense              
Salaries and employee benefits   4,844   4,712  19,235  16,901
Occupancy and equipment   1,289   1,367  5,193  5,864
Charitable foundation contribution   -   5,000  -  5,000
Professional fees   452   450  1,709  1,308
Advertising   -   165  456  529
Postage, printing, stationary and supplies   143   143  578  547
FDIC assessment   93   77  328  558
Amortization of intangible assets   29   34  126  143
Other operating expenses   1,414   911  4,491  3,581
Total noninterest expense   8,264   12,859  32,116  34,431
Net income (loss) before income tax expense   3,744   (2,807)  11,626  4,495
Income tax expense (benefit)   1,075   (1,017)  5,022  1,266
Net income (loss)  $2,669  $(1,790) $6,604 $3,229
               
Earnings per common share:              
Basic  $0.16  n/a $0.39 n/a
Diluted  $0.16  n/a $0.39 n/a
               
Weighted average common share - basic and diluted  16,844,747  n/a  16,802,894 n/a
             
             

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

                   
  Three months ended June 30,
  2018  2017
  Average Balance Interest / Dividends Average Rate  Average Balance Interest / Dividends Average Rate
   
Assets:                  
Loans receivable $900,998 $10,706  4.75%  $782,658 $8,408 4.3%
Investment securities  465,206  2,384  2.05   447,826  2,018 1.8
Other interest-earning assets  51,605  268  2.09   111,821  297 1.07
Total interest-earning assets  1,417,809  13,358  3.77   1,342,305  10,723 3.20
Non-interest-earning assets  57,004         84,528     
Total assets $1,474,813        $1,426,833     
                   
Liabilities and equity:                  
NOW accounts $115,711  51  0.18  $148,361  53 0.15
Money market accounts  46,104  70  0.61   30,067  20 0.26
Savings accounts and escrow  484,463  293  0.24   521,739  319 0.24
Time deposits  343,027  1,186  1.39   298,694  852 1.14
Total interest-bearing deposits  989,305  1,600  0.65   998,861  1,244 0.51
Federal Home Loan Bank advances  66,740  326  1.96   25,895  74 1.16
Total interest-bearing liabilities  1,056,045  1,926  0.73   1,024,756  1,318 0.52
Non-interest-bearing deposits  125,898         126,987     
Other non-interest-bearing liabilities  6,671         8,929     
Total liabilities  1,188,614         1,160,672     
Total shareholders' equity  286,199         266,161     
Total liabilities and shareholders' equity $1,474,813        $1,426,833     
                   
                   
Net interest income    $11,432        $9,405  
Interest rate spread (1)        3.04        2.68
Net interest margin (2)        3.23        2.80
Average interest-earning assets to interest-bearing liabilities 134.26%         130.99%     
                   
(1) 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.
(2) Net interest margin represents annualized net interest income divided by average interest-earning assets.
 
 

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

 
 Year ended June 30,
 2018 2017
 Average Balance Interest / Dividends Average Rate Average Balance Interest / Dividends Average Rate
  
Assets:                 
Loans receivable$846,353 $37,798  4.47% $773,590 $33,664  4.35%
Investment securities 474,201  9,266  1.95  389,910  6,661  1.71
Other interest-earning assets 54,528  896  1.64  74,149  633  0.85
Total interest-earning assets 1,375,082  47,960  3.49  1,237,649  40,958  3.31
Non-interest-earning assets 57,696        64,935      
Total assets$1,432,778       $1,302,584      
                  
Liabilities and equity:                 
NOW accounts$113,952  197  0.17 $125,818  195  0.16
Money market accounts 36,917  163  0.44  31,260  83  0.26
Savings accounts and escrow 502,310  1,223  0.24  525,486  1,289  0.25
Time deposits 315,652  3,971  1.26  313,334  3,516  1.12
Total interest-bearing deposits 968,831  5,554  0.57  995,898  5,083  0.52
Federal Home Loan Bank advances 42,719  769  1.8  15,911  210  1.32
Total interest-bearing liabilities 1,011,550  6,323  0.63  1,011,809  5,293  0.52
Non-interest-bearing deposits 130,196        126,666      
Other non-interest-bearing liabilities 7,360        13,083      
Total liabilities 1,149,106        1,151,558      
Total shareholders' equity 283,672        151,026      
Total liabilities and shareholders' equity$1,432,778       $1,302,584      
                  
                  
Net interest income   $41,637       $35,665   
Interest rate spread (1)       2.86        2.79
Net interest margin (2)       3.03        2.88
Average interest-earning assets to interest-bearing liabilities 135.94%        122.32%      
 
(1) 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.
(2) Net interest margin represents annualized net interest income divided by average interest-earning assets.
 
 

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

  
 As of
 June 30, March 31, December 31, September 30, June 30,
20182018201720172017
               
Condensed Balance Sheets              
Cash and cash equivalents$62,145 $36,505 $77,106 $34,733 $60,486
Total investment securities 458,687  473,683  470,360  475,823  495,440
Loans receivable, net 902,336  886,718  838,120  839,963  809,648
Other assets 57,019  60,063  57,682  61,187  60,884
Total assets$1,480,187 $1,456,969 $1,443,268 $1,411,706 $1,426,458
               
Total deposits and escrow$1,166,260 $1,095,581 $1,122,558 $1,086,662 $1,096,545
Advances from Federal Home Loan Bank 18,841  68,872  30,720  35,750  42,598
Other liabilities 7,527  7,856  7,579  7,209  7,469
Total liabilities 1,192,628  1,172,309  1,160,857  1,129,621  1,146,612
Total shareholders' equity 287,559  284,660  282,411  282,085  279,846
Total liabilities and shareholders' equity$1,480,187 $1,456,969 $1,443,268 $1,411,706 $1,426,458
               


 
 Quarter Ended Year Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2018201820172017201720182017
Condensed Income Statements                    
Interest income$13,358 $11,648 $11,657 $11,297 $10,723 $47,960 $40,958
Interest expense 1,926  1,505  1,471  1,421  1,318  6,323  5,293
Net interest income 11,432  10,143  10,186  9,876  9,405  41,637  35,665
Provision for loan losses 25  54  200  135  -  414  823
Noninterest income 601  512  692  714  647  2,519  4,084
Noninterest expense 8,264  7,833  8,125  7,894  12,859  32,116  34,431
Income before income tax expense (benefit) 3,744  2,768  2,553  2,561  (2,807) 11,626  4,495
Income tax expense (benefit) 1,075  591  2,551  805  (1,017) 5,022  1,266
Net income (loss)$2,669 $2,177 $2 $1,756 $(1,790)$6,604 $3,229
                     
Earnings per share:                    
Basic$0.16 $0.13 $0.00 $0.10 n/a $0.39 n/a
Diluted$0.16 $0.13 $0.00 $0.10 n/a $0.39 n/a
                   
                   

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

     
  Quarter Ended Year Ended
  June 30, March 31, December 31, September 30, June 30, June 30, June 30,
 2018201820172017201720182017
Performance Ratios (1):                     
Return on average assets  0.72%  0.62%  0.00%  0.49%  (0.50%)  0.46%  0.25%
Return on average equity  3.73%  3.06%  0.00%  2.44%  (2.69%)  2.33%  2.14%
Interest rate spread  3.04%  2.82%  2.85%  2.74%  2.69%  2.86%  2.79%
Net interest margin  3.23%  2.99%  3%  2.89%  2.81%  3.03%  2.88%
Adjusted Efficiency ratio (2)  71.17%  73.51%  74.69%  75.78%  78.18%  73.54%  78.22%
                      
Noninterest income to average assets  0.16%  0.14%  0.20%  0.20%  0.18%  0.18%  0.31%
Noninterest expense to average assets  2.24%  2.21%  2.3%  2.2%  3.6%  2.24%  2.64%
                      
Average interest-earning assets to average interest-bearing liabilities 134.26%  136.59%  136.51%  136.5%  130.71%  135.94%  122.32%
Average equity to average assets  19.41%  20.08%  20.00%  20.10%  18.65%  19.80%  11.59%
                      
                      

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

  
 As of or for the quarter ended
 June 30, March 31, December 31, September 30, June 30,
20182018201720172017
                 
Loans to deposits   77.96%  81.5%  75.21%  77.65%  74.38%
                 
Share Data:                
Shares outstanding   18,165,110  18,165,110  18,165,110  18,165,110  18,165,110
Book value per common share  $15.83 $15.67 $15.55 $15.53 $15.41
Tangible book value per common share (3)  $15.47 $15.31 $15.18 $15.16 $15.04
                 
Asset Quality Ratios:                
Non-performing assets  $6,462 $7,307 $8,191 $12,354 $13,049
Allowance for loan losses as a percent of total loans receivable   0.54%  0.52%  0.53%  0.62%  0.63%
Allowance for loan losses as a percent of non-performing loans   81.71%  64.54%  54.58%  48.53%  42.66%
Non-performing loans as a percent of total loans receivable, net   0.66%  0.80%  0.97%  1.35%  1.48%
Non-performing assets as a percent of total assets   0.44%  0.5%  0.57%  0.88%  0.91%
                 
Net charge-offs (recoveries)  $(255) $(99) $997 $17 $(320)
Net charge-offs (recoveries) to average outstanding loans during the period (1)   (0.11%)  (0.05%)  0.48%  0.01%  (0.16%)
                 
Capital Ratios (4):                
Tier 1 capital (to adjusted total assets)   13.61%  13.97%  13.84%  13.52%  13.65%
Common equity Tier 1 capital (to risk-weighted assets)   21.11%  21.16%  21.64%  21.13%  21.69%
Tier 1 capital (to risk-weighted assets)   21.11%  21.16%  21.64%  21.13%  21.69%
Total capital (to risk-weighted assets)   21.62%  21.65%  22.13%  21.71%  22.27%
                 
(1) Performance ratios are annualized.
(2) Adjusted efficiency ratio is a non-GAAP measure and is defined as noninterest expense, less certain nonrecurring items, divided by operating revenue, which is equal to net interest income plus non-interest income excluding certain nonrecurring items. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the impact of certain one-time items and other discrete items that are unrelated to our core business.
(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.
(4) Represents Bank ratios.
 
 

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

  
 As of
 June 30, March 31, December 31, September 30, June 30,
 2018 2018 2017 2017 2017
Mortgage loans:              
Residential mortgages$250,578 $253,847 $213,716 $215,551 $217,778
Commercial mortgage 495,265  484,810  481,169  469,983  437,651
Construction 17,352  16,098  16,379  23,104  22,404
Net deferred loan origination costs 1,041  1,203  210  384  397
  764,236  755,958  711,474  709,022  678,230
Commercial and consumer loans:              
Commercial loans 104,135  96,096  89,941  93,180  93,631
Home equity credit lines 37,395  38,220  40,158  42,044  41,927
Consumer and overdrafts 745  344  251  213  233
Net deferred loan origination costs 729  724  767  772  777
  143,004  135,384  131,117  136,209  136,568
Total loans receivable 907,240  891,342  842,591  845,231  814,798
Allowance for loan loss (4,904)  (4,624)  (4,471)  (5,268)  (5,150)
Loans receivable, net$902,336 $886,718 $838,120 $839,963 $809,648
               
 
 As of
 June 30, March 31, December 31, September 30, June 30,
 2018 2018 2017 2017 2017
               
Demand deposits$131,883 $127,319 $150,830 $133,461 $136,361
Now accounts 117,875  114,899  118,462  110,646  115,527
Money market accounts 49,885  40,374  31,021  28,590  29,097
Savings 465,441  482,968  502,469  504,291  512,697
Time deposits 392,373  322,425  311,547  304,719  294,779
Total deposits$1,157,457 $1,087,985 $1,114,329 $1,081,707 $1,088,461
               
               

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

         
      Three Months Ended Year Ended
      June 30, June 30,
      2018 2017 2018 2017
Computation of Adjusted Net Income and Earnings Per Share
              
Net income (loss)     $2,669 $(1,790) $6,604 $3,229
Adjustments (1):                
Losses on other receivables      292  -  424  -
Nonaccrual loan interest earned      (694)  -  (788)  -
Gain on sale of securities      (49)  -  (163)  -
Deferred tax re-measurement charge      -  -  1,570  -
Charitable foundation contribution      -  3,300  -  3,300
Defined benefit pension plan curtailment      -  -  -  (607)
Write-down of operating lease obligation      -  -  -  344
Settlement on acquired loan      -  -  -  (1,066)
Adjusted net income     $2,218 $1,510 $7,647 $5,200
                 
Average number of common shares outstanding used to calculate basic earnings per common share  16,844,747 n/a  16,802,894 n/a
                 
Adjusted earnings per common share (basic and diluted):    $0.13 n/a $0.46 n/a
                 
Computation of Adjusted Effective Tax Rate                
Net income (loss) before income tax expense     $3,744 $(2,807) $11,626 $4,495
                 
Income tax expense (benefit)      1,075  (1,017)  5,022  1,266
Adjustments:                
Deferred tax re-measurement charge      -  -  (1,570)  -
Adjusted income tax expense (benefit)     $1,075 $(1,017) $3,452 $1,266
                 
Effective tax rate      28.7%  36.2%  43.2%  28.2%
Adjusted effective tax rate      28.7%  36.2%  29.7%  28.2%
                 
(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) - Continued
(dollar amounts in thousands, except share and per share data)

    
 Quarter Ended Year Ended
 June 30, March 31, December 31, September 30, June 30, June 30, June 30,
2018201820172017201720182017
Computation of Efficiency Ratio                    
Noninterest expense$8,264 $7,833 $8,125 $7,894 $12,859 $32,116 $34,431
Adjustments:                    
Losses on other receivables (370)  -  (200)  -  -  (570)  -
PCSB Community Foundation contribution -  -  -  -  (5,000)  -  (5,000)
Defined benefit pension plan curtailment -  -  -  -  -  -  919
Write-down of operating lease obligation -  -  -  -  -  -  (521)
Adjusted noninterest expense$7,894 $7,833 $7,925 $7,894 $7,859 $31,546 $29,829
                     
Net interest income$11,432 $10,143 $10,186 $9,876 $9,405 $41,637 $35,665
Noninterest income 601  512  692  714  647  2,519  4,084
Total revenue 12,033  10,655  10,878  10,590  10,052  44,156  39,749
Adjustments:                    
Nonaccrual loan interest earned (879)  -  (142)  -  -  (1,021)  -
Gain on sale of securities (63)  -  -  (173)  -  (236)  -
Settlement on acquired loan -  -  -  -  -  -  (1,615)
Adjusted operating revenue$11,091 $10,655 $10,736 $10,417 $10,052 $42,899 $38,134
                     
Efficiency ratio 68.68%  73.51%  74.69%  74.54%  127.92%  72.73%  86.62%
Adjusted efficiency ratio 71.17%  73.51%  73.82%  75.78%  78.18%  73.54%  78.22%
                     
                     

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, March 31, December 31, September 30, June 30,
20182018201720172017
Computation of Tangible Book Value per Common Share              
Total shareholders' equity$287,559 $284,660 $282,411 $282,085 $279,846
Adjustments:              
Preferred stock -  -  -  -  -
Common shareholders' equity 287,559  284,660  282,411  282,085  279,846
Adjustments:              
Goodwill (6,106)  (6,106)  (6,106)  (6,106)  (6,106)
Other intangible assets (433)  (463)  (495)  (527)  (559)
Tangible common shareholders' equity$281,020 $278,091 $275,810 $275,452 $273,181
               
Common shares outstanding 18,165,110  18,165,110  18,165,110  18,165,110  18,165,110
               
Book value per share$15.83 $15.67 $15.55 $15.53 $15.41
Adjustments:              
Effects of intangible assets (0.36)  (0.36)  (0.37)  (0.37)  (0.37)
               
Tangible book value per common share$15.47 $15.31 $15.18 $15.16 $15.04
               

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Source: PCSB Financial Corporation