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Press Release

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

Company Release - 4/25/2019 8:00 AM ET

YORKTOWN HEIGHTS, N.Y., April 25, 2019 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $2.0 million, or $0.12 per basic and diluted share, for the three months ended March 31, 2019 compared to $2.3 million, or $0.14 per basic and diluted share, for the three months ended December 31, 2018 and $2.2 million, or $0.13 per basic and diluted share, for the three months ended March 31, 2018.

On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded net income of $2.0 million, or $0.12 per diluted share for the three months ended March 31, 2019 as compared to net income of $2.2 million, or $0.13 per diluted share for the three months ended December 31, 2018 and $2.0 million, or $0.12 per diluted share, for the three months ended March 31, 2018. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

In conjunction with grants under the stockholder-approved 2018 Equity Incentive Plan, the Company recorded $829,000, or $631,000 net of taxes, of stock-based compensation expense in the current quarter, compared to $482,000, or $364,000 net of taxes in the prior quarter. No such expense was recorded in the prior year period. This additional expense reduced diluted earnings per share by $0.04 in the current quarter, $0.02 in the prior quarter, and had no impact in the prior year quarter.

President’s Comments
Commenting on the Company’s results, Joseph Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, said, “I am pleased to report continued progress in our second year as a public company. Year-to-date non-GAAP net income improved by 20.6% over the year ago period, supported by a nearly 10% increase in the average balance of loans for the same period. Asset quality remains strong as the ratio of non-performing assets to total assets decreased to 0.23% at March 31, 2019 from 0.27% at December 31, 2018, and decreased by more than half from 0.50% a year ago. During the third fiscal quarter, we also completed our first share repurchase program as part of our capital management program. As we continue to move forward in our third year as public company, we hope to build on these results as we strive to create value for our shareholders. I am also pleased to announce that our Board of Directors declared a quarterly cash dividend of $0.04 per share, representing a 33% increase over last quarter’s dividend.”

Income Statement Summary
Net interest income increased $594,000, or 5.9%, to $10.7 million for the three months ended March 31, 2019, compared to the same period in 2018 and was unchanged from the previous quarter. The increase in net interest income compared to the prior year is primarily a result of a $99.6 million, or 7.3%, increase in average interest earning assets, partially offset by a five basis point decrease in the net interest margin. The increase in average interest earning assets is primarily due to a $70.1 million increase in average loans. The net interest margin was 2.94% for the three months ended March 31, 2019, a decrease of five basis points compared to 2.99% in the prior year quarter. Despite continued asset growth and a higher yielding asset mix, the margin has been impacted by rising funding costs due to higher short-term interest rates along with competitive pricing. The cost of interest-bearing deposits was 1.04% for the three months ended March 31, 2019 compared to 0.58% for the three months ended March 31, 2018, an increase of 46 basis points. The Company has experienced a shift in deposit mix as customers in lower costing saving products moved to higher rate money market and time deposits. Net interest income was unchanged compared to the prior quarter as balance sheet growth was offset by a six basis point decrease in net interest margin, driven by higher market interest rates on deposits.

The provision for loan losses was $7,000 for the three months ended March 31, 2019 compared to $6,000 in the prior quarter and $54,000 for the same period in 2018. Charge-offs, net of recoveries, were $5,000 for the three months ended March 31, 2019 compared to $22,000 for the three months ended December 31, 2018 and recoveries, net of charge-offs, of $99,000 for the three months ended March 31, 2018.  Loans classified as substandard or doubtful decreased $1.2 million, or 11.3%, to $9.0 million at March 31, 2019 from $10.2 million at December 31, 2018 and decreased $10.6 million, or 53.9%, from $19.6 million at March 31, 2018. Non-performing loans as a percent of total loans receivable was 0.30% as of March 31, 2019, a decrease from 0.39% as of December 31, 2018 and 0.80% as of March 31, 2018.

Noninterest income increased $67,000 to $579,000 for the three months ended March 31, 2019 compared to the same period in 2018, primarily due to increased deposit fees and loan processing fees. Noninterest income decreased $341,000 from the three months ended December 31, 2018, primarily due to a $76,000 decrease in swap income, as well as nonrecurring gains recognized in the prior quarter totaling $239,000 related to the sales of bank premises, securities, and REO.

Noninterest expense increased $865,000 to $8.7 million for the three months ended March 31, 2019 compared to the same period in 2018 and increased $118,000 compared to the three months ended December 31, 2018. The $865,000 increase from the prior year period was caused primarily by a $957,000 increase in salaries and employee benefits, partially offset by a $92,000 decrease in all other noninterest expenses. The increase in salaries and employee benefits was primarily due to $829,000 of stock-based compensation expense recorded in the current quarter, as well as a $110,000 increase in salaries as a result of additional staffing. The $118,000 increase in noninterest expense from the three months ended December 31, 2018 was primarily due to a $313,000 increase in salaries and benefits expense driven primarily by $347,000 increase in stock-based compensation as it was a partial expense in the prior quarter, partially offset by a $90,000 loss on a receivable recorded in the prior quarter, and a net decrease of $105,000 in all other noninterest expenses.

The effective income tax rate was 23.9% for the three months ended March 31, 2019, as compared to 24.5% for the three months ended December 31, 2018. The effective tax rate, adjusted for the one-time effects of the Tax Cuts and Jobs Act, was 27.9% for the three months ended March 31, 2018. Beginning on July 1, 2018, the Company began to realize the full benefits of the reduction in the corporate income tax rate which became effective in January 2018.

Balance Sheet Summary
Total assets increased $43.6 million to $1.52 billion at March 31, 2019 from $1.48 billion at June 30, 2018.  This increase was primarily due to increases of $33.3 million in loans receivable and $25.0 million in cash and cash equivalents, partially offset by a decrease of $18.6 million in total investment securities. The increase in cash and cash equivalents is primarily due to increases in deposits and FHLB advances. The $33.3 million increase in loans was the result of $127.7 million of originations and loan purchases, partially offset by $94.4 million of net amortization and repayments on the remaining portfolio.

Total liabilities increased $52.8 million to $1.25 billion at March 31, 2019 from $1.19 billion at June 30, 2018.  This increase was primarily due to increases of $44.7 million in total deposits and $7.4 million in FHLB advances.

Total shareholders’ equity decreased $9.2 million to $278.3 million at March 31, 2019 from $287.6 million at June 30, 2018.  This decrease was primarily due to the repurchase of $18.3 million in common stock and $1.5 million of cash dividends paid, partially offset by net income of $6.6 million, $2.8 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, as well as other comprehensive income of $1.2 million, primarily due to the decrease in net unrealized losses on investment securities. During the current quarter, the Company completed its first stock repurchase plan, under which 908,256 shares of common stock were repurchased at an average cost of $20.15 per share.

At March 31, 2019, the Company’s book value per share and tangible book value per share were $15.63 and $15.27, respectively, compared to $15.83 and $15.47, respectively, at June 30, 2018.  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, 2019, the Bank was considered “well capitalized” under applicable regulatory guidelines.

Dividend
The Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about May 31, 2019 to stockholders of record on May 17, 2019.

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 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)

  March 31,  June 30, 
  2019  2018 
ASSETS        
Cash and due from banks $85,875  $60,684 
Federal funds sold  1,230   1,461 
Cash and cash equivalents  87,105   62,145 
Held to maturity debt securities, at amortized cost (fair value of $351,184 and $343,188, respectively)  354,000   353,183 
Available for sale debt securities, at fair value  86,014   105,472 
Total investment securities  440,014   458,655 
Loans receivable, net of allowance for loan losses of $4,945 and $4,904, respectively  935,680   902,336 
Accrued interest receivable  5,037   4,358 
Federal Home Loan Bank stock  2,384   2,050 
Premises and equipment, net  11,497   11,598 
Deferred tax asset, net  2,372   2,622 
Foreclosed real estate  653   460 
Bank-owned life insurance  24,157   23,747 
Goodwill  6,106   6,106 
Other intangible assets  348   433 
Other assets  8,405   5,677 
Total assets $1,523,758  $1,480,187 
LIABILITIES AND SHAREHOLDERS' EQUITY        
Interest bearing deposits $1,064,294  $1,025,574 
Non-interest bearing deposits  137,899   131,883 
Total deposits  1,202,193   1,157,457 
Mortgage escrow funds  7,675   8,803 
Advances from Federal Home Loan Bank  26,248   18,841 
Other liabilities  9,326   7,527 
Total liabilities  1,245,442   1,192,628 
Commitments and contingencies  -   - 
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2019 and June 30, 2018, respectively)  -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 and 18,165,110 shares issued, and 17,804,039 and 18,165,110 shares outstanding as of March 31, 2019 and June 30, 2018, respectively)  187   182 
Additional paid in capital  181,066   179,045 
Retained earnings  133,483   128,365 
Unearned compensation - ESOP  (12,364)  (13,083)
Accumulated other comprehensive loss, net of income taxes  (5,751)  (6,950)
Treasury stock, at cost (908,256 shares as of March 31, 2019 and no shares as of June 30, 2018)  (18,305)  - 
Total shareholders' equity  278,316   287,559 
Total liabilities and shareholders' equity $1,523,758  $1,480,187 
  
  
  

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,
 2019 2018 2019 2018
Interest and dividend income           
Loans receivable$10,413 $9,103 $30,632 $27,092
Investment securities 2,619  2,368  7,413  6,882
Federal funds and other 614  177  1,450  628
Total interest and dividend income 13,646  11,648  39,495  34,602
Interest expense           
Deposits 2,741  1,380  7,172  3,954
FHLB advances 168  125  378  443
Total interest expense 2,909  1,505  7,550  4,397
Net interest income 10,737  10,143  31,945  30,205
Provision for loan losses 7  54  71  389
Net interest income after provision for loan losses 10,730  10,089  31,874  29,816
Noninterest income           
Fees and service charges 436  352  1,311  1,145
Bank-owned life insurance 131  136  410  430
Gains on sales of securities, net -  -  55  173
Other 12  24  364  170
Total noninterest income 579  512  2,140  1,918
Noninterest expense           
Salaries and employee benefits 5,757  4,800  16,341  14,530
Occupancy and equipment 1,340  1,326  3,865  3,904
Communications and data processing 476  477  1,430  1,447
Professional fees 396  465  1,182  1,257
Postage, printing, stationary and supplies 138  161  454  435
FDIC assessment 105  93  322  235
Advertising 131  112  349  456
Amortization of intangible assets 29  32  85  97
Other operating expenses 326  367  1,258  1,491
Total noninterest expense 8,698  7,833  25,286  23,852
Net income before income tax expense 2,611  2,768  8,728  7,882
Income tax expense 625  591  2,089  3,947
Net income$1,986 $2,177 $6,639 $3,935
Earnings per common share:           
Basic$0.12 $0.13 $0.40 $0.23
Diluted$0.12 $0.13 $0.40 $0.23
Weighted average common shares:           
Basic 16,204,393  16,820,726  16,645,287  16,789,131
Diluted 16,261,755  16,820,726  16,659,746  16,789,131
            
            
            


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

                      
 Three Months Ended March 31, 
 2019  2018 
 Average Balance  Interest / Dividends Average Rate  Average Balance  Interest / Dividends Average Rate 
Assets:                     
Loans receivable$913,634  $10,413  4.57% $843,557  $9,103  4.32%
Investment securities 445,604   2,619  2.35   471,932   2,368  2.01 
Other interest-earning assets 98,717   614  2.52   42,860   177  1.68 
Total interest-earning assets 1,457,955   13,646  3.75   1,358,349   11,648  3.44 
Non-interest-earning assets 58,541          56,874        
Total assets$1,516,496         $1,415,223        
                      
Liabilities and equity:                     
NOW accounts$116,781   52  0.18  $113,178   49  0.18 
Money market accounts 126,438   368  1.18   42,448   50  0.48 
Savings accounts and escrow 392,537   239  0.24   496,574   297  0.24 
Time deposits 428,643   2,082  1.97   314,815   984  1.27 
Total interest-bearing deposits 1,064,399   2,741  1.04   967,015   1,380  0.58 
Federal Home Loan Bank advances 26,259   168  2.61   27,444   125  1.84 
Total interest-bearing liabilities 1,090,658   2,909  1.08   994,459   1,505  0.62 
Non-interest-bearing deposits 133,671          129,905        
Other non-interest-bearing liabilities 11,242          6,719        
Total liabilities 1,235,571          1,131,083        
Total shareholders' equity 280,925          284,140        
Total liabilities and shareholders' equity$1,516,496         $1,415,223        
                      
                      
Net interest income    $10,737         $10,143    
Interest rate spread (1)        2.67          2.82 
Net interest margin (2)        2.94          2.99 
Average interest-earning assets to interest-bearing liabilities 133.68%         136.59%       
                      
(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) - Continued
(dollar amounts in thousands)

                        
 Nine Months Ended March 31, 
 2019  2018 
 Average Balance  Interest / Dividends  Average Rate  Average Balance  Interest / Dividends  Average Rate 
Assets:                       
Loans receivable$908,674  $30,632   4.49% $828,138  $27,092   4.36%
Investment securities 446,398   7,413   2.21   477,199   6,882   1.92 
Other interest-earning assets 83,938   1,450   2.30   55,502   628   1.51 
Total interest-earning assets 1,439,010   39,495   3.66   1,360,839   34,602   3.39 
Non-interest-earning assets 55,334           57,927         
Total assets$1,494,344          $1,418,766         
                        
Liabilities and equity:                       
NOW accounts$117,522   157   0.18  $113,365   146   0.17 
Money market accounts 95,407   788   1.10   33,854   93   0.37 
Savings accounts and escrow 423,922   780   0.25   508,259   930   0.24 
Time deposits 408,210   5,447   1.78   306,527   2,785   1.21 
Total interest-bearing deposits 1,045,061   7,172   0.91   962,005   3,954   0.55 
Federal Home Loan Bank advances 22,395   378   2.25   34,712   443   1.70 
Total interest-bearing liabilities 1,067,456   7,550   0.94   996,717   4,397   0.59 
Non-interest-bearing deposits 131,507           131,629         
Other non-interest-bearing liabilities 8,344           7,590         
Total liabilities 1,207,307           1,135,936         
Total shareholders' equity 287,037           282,830         
Total liabilities and shareholders' equity$1,494,344          $1,418,766         
                        
                        
Net interest income    $31,945          $30,205     
Interest rate spread (1)         2.72           2.80 
Net interest margin (2)         2.96           2.96 
Average interest-earning assets to interest-bearing liabilities 134.81%          136.53%        
  
(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
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
Condensed Balance Sheets            
Cash and cash equivalents$87,105 $143,119 $68,323 $62,145 $36,505
Total investment securities 440,014  452,463  441,748  458,655  473,651
Loans receivable, net 935,680  904,377  905,093  902,336  886,718
Other assets 60,959  57,356  59,331  57,051  60,095
Total assets$1,523,758 $1,557,315 $1,474,495 $1,480,187 $1,456,969
               
Total deposits and escrow$1,209,868 $1,234,409 $1,158,102 $1,166,260 $1,095,581
Advances from Federal Home Loan Bank 26,248  26,279  18,810  18,841  68,872
Other liabilities 9,326  7,845  7,706  7,527  7,856
Total liabilities 1,245,442  1,268,533  1,184,618  1,192,628  1,172,309
Total shareholders' equity 278,316  288,782  289,877  287,559  284,660
Total liabilities and shareholders' equity$1,523,758 $1,557,315 $1,474,495 $1,480,187 $1,456,969
               
               
               


 Quarter Ended Nine Months Ended
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 March 31,
2019
 March 31,
2018
Condensed Income Statements                  
Interest income$13,646 $13,240 $12,609 $13,358 $11,648 $39,495 $34,602
Interest expense 2,909  2,496  2,145  1,926  1,505  7,550  4,397
Net interest income 10,737  10,744  10,464  11,432  10,143  31,945  30,205
Provision for loan losses 7  6  58  25  54  71  389
Noninterest income 579  920  641  601  512  2,140  1,918
Noninterest expense 8,698  8,580  8,008  8,264  7,833  25,286  23,852
Income before income tax expense 2,611  3,078  3,039  3,744  2,768  8,728  7,882
Income tax expense 625  754  710  1,075  591  2,089  3,947
Net income$1,986 $2,324 $2,329 $2,669 $2,177 $6,639 $3,935
                     
Earnings per share:                    
Basic$0.12 $0.14 $0.14 $0.16 $0.13 $0.40 $0.23
Diluted$0.12 $0.14 $0.14 $0.16 $0.13 $0.40 $0.23
                     
                     
                     


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

 Quarter Ended  Nine Months Ended 
 March 31,
2019
  December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  March 31,
2019
  March 31,
2018
 
Performance Ratios (1):                    
Return on average assets0.52% 0.62% 0.63% 0.72% 0.62% 0.59% 0.37%
Return on average equity2.83% 3.20% 3.22% 3.73% 3.06% 3.08% 1.86%
Interest rate spread2.67% 2.75% 2.73% 3.04% 2.82% 2.72% 2.80%
Net interest margin2.94% 3.00% 2.94% 3.23% 2.99% 2.96% 2.96%
Adjusted Efficiency ratio (2)76.86% 74.12% 72.11% 71.17% 73.51% 74.38% 74.36%
                     
Noninterest income to average assets0.15% 0.25% 0.17% 0.16% 0.14% 0.19% 0.18%
Noninterest expense to average assets2.29% 2.30% 2.17% 2.24% 2.21% 2.26% 2.24%
                     
Average interest-earning assets to average interest-bearing liabilities133.68% 135.40% 135.38% 134.26% 136.59% 134.81% 136.53%
Average equity to average assets18.52% 19.48% 19.63% 19.41% 20.08% 19.21% 19.93%
Dividend payout ratio (3)24.97% 22.42% 21.64% 18.88% 0.00% 22.91% 0.00%
                     
                     
                     


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,
2019
  December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
 
Loans to deposits  77.83%  73.81%  78.49%  77.96%  81.50%
                     
Share Data:                    
Shares outstanding  17,804,039   18,490,225   18,165,110   18,165,110   18,165,110 
Book value per common share $15.63  $15.62  $15.96  $15.83  $15.67 
Tangible book value per common share (4) $15.27  $15.27  $15.60  $15.47  $15.31 
                     
Asset Quality Ratios:                    
Non-performing loans receivable $2,847  $3,576  $5,630  $6,002  $7,165 
Non-performing assets $3,500  $4,148  $6,384  $6,462  $7,307 
Allowance for loan losses as a percent of total loans receivable  0.53%  0.54%  0.54%  0.54%  0.52%
Total valuation adjustment as a percent of total gross loans receivable (5)  0.66%  0.69%  0.70%  0.71%  0.70%
Allowance for loan losses as a percent of non-performing loans receivable  173.67%  138.23%  88.08%  81.71%  64.54%
Non-performing loans as a percent of total loans receivable, net  0.30%  0.39%  0.62%  0.66%  0.80%
Non-performing assets as a percent of total assets  0.23%  0.27%  0.43%  0.44%  0.50%
                     
Net charge-offs (recoveries) $5  $22  $3  $(255) $(99)
Net charge-offs (recoveries) to average outstanding loans during the period (1)  0.00%  0.00%  0.00%  (0.11%)  (0.05%)
                     
Capital Ratios (6):                    
Tier 1 capital (to adjusted total assets)  13.71%  13.78%  13.80%  13.61%  13.97%
Common equity Tier 1 capital (to risk-weighted assets)  20.47%  20.73%  21.17%  21.11%  21.16%
Tier 1 capital (to risk-weighted assets)  20.47%  20.73%  21.17%  21.11%  21.16%
Total capital (to risk-weighted assets)  20.96%  21.23%  21.68%  21.62%  21.65%
                     
(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. Reconciliations of GAAP to non-GAAP measures appear at the end of this release. 
(3) Dividends declared per share divided by net income per share. 
(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. 
  
  
  


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands)

(5) Loans acquired in 2015 as part of the CMS Bancorp. Inc./CMS Bank acquisition were recorded at their estimated fair value at the acquisition date and did not include a carry-over of the related pre-acquisition allowance for loan losses. Total valuation adjustments equal the allowance for loan losses plus the remaining discounts on acquired loans. We believe this ratio provides investors a more meaningful comparison to periods presented prior to the 2015 acquisition, as well as to our peers. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.
(6) Represents Bank ratios.
 


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

 As of 
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 
Mortgage loans:               
Residential mortgages$261,970 $248,575 $249,894 $250,578 $253,847 
Commercial mortgage 499,284  499,930  495,944  495,265  484,810 
Construction 16,302  16,023  16,890  17,352  16,098 
Net deferred loan origination costs 843  842  859  1,041  1,203 
Total mortgage loans 778,399  765,370  763,587  764,236  755,958 
Commercial and consumer loans:               
Commercial loans 126,514  107,899  110,196  104,135  96,096 
Home equity credit lines 34,525  35,029  35,191  37,395  38,220 
Consumer and overdrafts 459  321  344  745  344 
Net deferred loan origination costs 728  701  734  729  724 
Total commercial and consumer loans 162,226  143,950  146,465  143,004  135,384 
Total loans receivable 940,625  909,320  910,052  907,240  891,342 
Allowance for loan loss (4,945) (4,943) (4,959) (4,904) (4,624)
Loans receivable, net$935,680 $904,377 $905,093 $902,336 $886,718 
                
                
                


 As of
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
Demand deposits$137,899 $162,113 $131,024 $131,883 $127,319
Now accounts 120,353  123,251  121,449  117,875  114,899
Money market accounts 137,197  121,146  79,266  49,885  40,374
Savings 379,550  397,460  425,189  465,441  482,968
Time deposits 427,194  421,354  396,193  392,373  322,425
Total deposits$1,202,193 $1,225,324 $1,153,121 $1,157,457 $1,087,985
               
               
               



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,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 March 31,
2019
 March 31,
2018
 
Computation of Adjusted Net Income and Earnings Per Share       
Net income applicable to common stock$1,986 $2,324 $2,329 $2,669 $2,177 $6,639 $3,935 
                      
Adjustments (1):                     
Losses on other receivables -  68  -  292  -  68  132 
Nonaccrual loan interest earned -  -  -  (694) -  -  (94)
Gain on sale of securities -  (42) -  (49) -  (42) (114)
Gain on sale of bank premises -  (118) -  -  -  (118) - 
Deferred tax re-measurement charge -  -  -  -  (182) -  1,570 
Adjusted net income$1,986 $2,232 $2,329 $2,218 $1,995 $6,547 $5,429 
                      
Average number of common shares outstanding:             
Basic 16,204,393  16,852,718  16,869,100  16,844,747  16,820,726  16,645,287  16,789,131 
Diluted 16,261,755  16,868,464  16,869,100  16,844,747  16,820,726  16,659,746  16,789,131 
GAAP Earnings per share:                     
Basic$0.12 $0.14 $0.14 $0.16 $0.13 $0.40 $0.23 
Diluted$0.12 $0.14 $0.14 $0.16 $0.13 $0.40 $0.23 
Adjusted earnings per common share:             
Basic$0.12 $0.13 $0.14 $0.13 $0.12 $0.39 $0.32 
Diluted$0.12 $0.13 $0.14 $0.13 $0.12 $0.39 $0.32 
                      
(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 Nine Months Ended 
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 March 31,
2019
 March 31,
2018
 
Computation of Efficiency Ratio          
Noninterest expense$8,698 $8,580 $8,008 $8,264 $7,833 $25,286 $23,852 
Adjustments:                     
Losses on other receivables -  (90) -  (370) -  (90) (200)
Adjusted noninterest expense$8,698 $8,490 $8,008 $7,894 $7,833 $25,196 $23,652 
                      
Net interest income$10,737 $10,744 $10,464 $11,432 $10,143 $31,945 $30,205 
Noninterest income 579  920  641  601  512  2,140  1,918 
Total revenue 11,316  11,664  11,105  12,033  10,655  34,085  32,123 
Adjustments:                     
Nonaccrual loan interest earned -  -  -  (879) -  -  (142)
Gain on sale of securities -  (55) -  (63) -  (55) (173)
Gain on sale of bank premises -  (155) -  -  -  (155) - 
Adjusted operating revenue$11,316 $11,454 $11,105 $11,091 $10,655 $33,875 $31,808 
                      
Efficiency ratio 76.86% 73.56% 72.11% 68.68% 73.51% 74.19% 74.25%
Adjusted efficiency ratio 76.86% 74.12% 72.11% 71.17% 73.51% 74.38% 74.36%
                      
                      
                      



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,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 
Computation of Tangible Book Value per Common Share    
Total shareholders' equity$278,316 $288,782 $289,877 $287,559 $284,660 
Adjustments:               
Preferred stock -  -  -  -  - 
Common shareholders' equity 278,316  288,782  289,877  287,559  284,660 
Adjustments:               
Goodwill (6,106) (6,106) (6,106) (6,106) (6,106)
Other intangible assets (348) (376) (405) (433) (463)
Tangible common shareholders' equity$271,862 $282,300 $283,366 $281,020 $278,091 
                
Common shares outstanding 17,804,039  18,490,225  18,165,110  18,165,110  18,165,110 
                
Book value per share$15.63 $15.62 $15.96 $15.83 $15.67 
Adjustments:               
Effects of intangible assets (0.36) (0.35) (0.36) (0.36) (0.36)
                
Tangible book value per common share$15.27 $15.27 $15.60 $15.47 $15.31 


 Quarter Ended 
 March 31,
2019
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 
Computation of valuation adjustment          
Allowance for Loan losses$4,945 $4,943 $4,959 $4,904 $4,624 
Add: Purchase accounting marks 1,262  1,349  1,442  1,538  1,630 
Total valuation adjustments$6,207 $6,292 $6,401 $6,442 $6,254 
Total gross loans$940,625 $909,320 $910,052 $907,240 $891,342 
Total valuation adjustments as a percent of total gross loans 0.66% 0.69% 0.70% 0.71% 0.70%
                
                
                


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

  Three Months Ended  Nine Months Ended 
  March 31,  March 31, 
  2019  2018  2019  2018 
Computation of Adjusted Effective Tax Rate                
Net income (loss) before income tax expense $2,611  $2,768  $8,728  $7,882 
                 
Income tax expense (benefit)  625   591   2,089   3,947 
Adjustments:                
Deferred tax re-measurement charge  -   182   -   (1,570)
Adjusted income tax expense (benefit) $625  $773  $2,089  $2,377 
                 
Effective tax rate  23.9%  21.4%  23.9%  50.1%
Adjusted effective tax rate  23.9%  27.9%  23.9%  30.2%

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Source: PCSB Financial Corporation