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

Company Release - 1/23/2020 8:00 AM ET

YORKTOWN HEIGHTS, N.Y., Jan. 23, 2020 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $2.4 million, or $0.14 per diluted share, for the three months ended December 31, 2019 compared to $2.8 million, or $0.18 per diluted share, for the three months ended September 30, 2019 and $2.3 million, or $0.14 per diluted share, for the three months ended December 31, 2018. Net income for the six months ended December 31, 2019 was $5.2 million, or $0.32 per diluted share, compared to $4.7 million, or $0.28 per diluted share, for the same period last year.

On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded adjusted net income of $2.3 million, or $0.14 per diluted share for the three months ended December 31, 2019 as compared to adjusted net income of $2.4 million, or $0.15 per diluted share, for the three months ended September 30, 2019 and $2.1 million, or $0.13 per diluted share, for the three months ended December 31, 2018. Adjusted net income for the six months ended December 31, 2019 was $4.7 million, or $0.29 per diluted share, compared to $4.4 million, or $0.26 per diluted share, for the same period last year. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

The Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about February 28, 2020 to stockholders of record as of the close of business on February 14, 2020.

Second Quarter 2019 Highlights

  • Diluted earnings per share of $0.14 for the current quarter unchanged from the prior year quarter.
  • Net interest income of $11.7 million, an increase of $953,000, or 8.9%, compared to the same quarter last year. Fiscal year-to-date net interest income of $23.7 million, an 11.7% increase from the prior year.
  • The net interest margin was 2.93% for the quarter, a decrease from 2.99% for the same quarter last year.
  • The efficiency ratio was 71.82% for the quarter, compared to 73.56% for the same quarter last year.
  • Total loans receivable of $1.18 billion, representing year-to-date growth of $90.6 million, or 8.3%, and year-over-year growth of $279.4 million, or 30.9%.
  • Nonperforming loans decreased $1.8 million, or 52.6%, during the quarter to $1.6 million equating to 0.14% of gross loans receivable.
  • Loan to deposit ratio was 94.58%, an increase from 73.81% as of the same quarter last year.
  • The Company repurchased 251,931 shares of common stock during the quarter at a total cost of $5.1 million, or an average cost of $20.12 per share.

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 pleased with the solid growth in our core business through the first six months of our third year as a public company.  Loan volume remains strong, as evidenced by the $90.6 million, or 8.3%, increase in net loans over the six-month period. This growth resulted in a loan to deposit ratio of 94.58%, increasing from 89.17% at June 30, 2019.  Asset quality continues to remain strong as non-performing assets as a percent of total assets was 0.12% as compared to 0.27% a year ago.  Our net interest margin of 2.93% is down 6 basis points from 2.99% in the year ago period as a result of the continued low interest rate environment along with competitive loan and deposit pricing. However, we are pleased that our linked quarters’ cost of deposits has leveled off and we will look to take advantage of opportunities to reduce this cost.  As we move forward, we remain focused on enhancing shareholder value through continued growth in our core business together with capital management techniques such as share repurchases and dividends."   

Income Statement Summary

Net interest income was $11.7 million for the quarter ended December 31, 2019, a decrease of $301,000, or 2.5%, compared to the quarter ended September 30, 2019, and an increase of $953,000, or 8.9%, compared to quarter ended December 31, 2018. The increase in net interest income compared to the prior year is primarily the result of an increase in average net interest earning assets, as the Company has accomplished significant growth in average loans receivable compared to the same quarter last year, however the effect of the growth was partially offset by a decrease in net interest margin. Net interest income declined compared to the quarter ended September 30, 2019 as a result of margin compression, largely resulting from higher prepayment income earned in the prior quarter.

The net interest margin was 2.93% for the current quarter, decreases of 10 basis points compared to 3.03% in the prior quarter and 6 basis points compared to 2.99% in the prior year quarter. Excluding non-recurring prepayment income earned in these periods, net interest margin for the current quarter would have been 2.90%, unchanged from the prior quarter and a decrease from 2.97% in the prior year quarter. Despite continued asset growth and a shift in the asset mix, rising funding costs due to higher short-term interest rates along with competitive loan and deposit pricing has resulted in net interest margin compression.

The yield on interest-earning assets for the current quarter was 3.94%, a 10 basis point decrease from the prior quarter, however this represents a 26 basis point increase from the prior year quarter. Excluding the effects of prepayment income, the yield on interest-earning assets was 3.91% for the current quarter, a decrease of one basis point from the prior quarter as a higher yielding asset mix was more than offset by downward pressures on market interest rates.

The cost of interest-bearing deposits was 1.20% for the current quarter, unchanged from the prior quarter and an increase of 29 basis points from 0.91% for the prior year quarter. The Company has experienced a shift in the deposit mix over the past several quarters as customers in generally lower costing savings products moved to generally higher rate money market and time deposits, however the pace of this shift has slowed in recent quarters. The cost of interest-bearing liabilities was 1.31% for the current quarter, a decrease of 1 basis point from 1.32% for the prior quarter and an increase of 38 basis points from 0.93% for the prior year quarter.

The provision for loan losses was $412,000 for the three months ended December 31, 2019 compared to $335,000 in the prior quarter and $6,000 for the same quarter in 2018. Charge-offs, net of recoveries, were $189,000 for the three months ended December 31, 2019 compared to $6,000 for the three months ended September 30, 2019 and $22,000 for the three months ended December 31, 2018.  Current quarter charge-offs related primarily to one commercial loan relationship. Loans classified as substandard or doubtful decreased $6.3 million, or 56.2%, to $4.9 million at December 31, 2019 from $11.3 million at September 30, 2019 and decreased $5.3 million, or 51.5%, from $10.2 million at December 31, 2018. Non-performing loans as a percent of total loans receivable was 0.14% as of December 31, 2019, a decrease from 0.29% as of September 30, 2019 and 0.39% as of December 31, 2018.

Noninterest income of $547,000 for the three months ended December 31, 2019 decreased $218,000 compared to the three months ended September 30, 2019, primarily due to a $170,000 decrease in swap income and a $47,000 decrease in gains on sale of foreclosed real estate. Noninterest income decreased $373,000 compared to the same period in 2018, primarily due to decreases of $155,000 in gains on sale of bank premises, $75,000 in swap income, $56,000 in deposit-related fees, $55,000 in gains on sales of securities and $24,000 in gains on sale of foreclosed real estate.

Noninterest expense of $8.8 million for the three months ended December 31, 2019 was largely unchanged compared to the three months ended September 30, 2019 and increased $214,000 compared to the same period in 2018. The $214,000 increase from the prior year period was caused primarily by a $583,000 increase in salaries and employee benefits, partially offset by a $124,000 decrease in FDIC assessment costs, a $90,000 loss on a receivable recorded in the prior quarter and net decreases in all other operating expenses. The increase in salaries and employee benefits was caused primarily by increases of $347,000 in stock-based compensation and $251,000 in other compensation. During the current quarter, the Bank applied small bank assessment credits of $108,000 which fully offset the Bank’s FDIC assessment for the current quarter. The remaining credits available are approximately $131,000.

The effective income tax rate was 22.5% for the three months ended December 31, 2019, as compared to 22.3% for the three months ended September 30, 2019 and 24.5% for the three months ended December 31, 2018.

Balance Sheet Summary

Total assets increased $11.6 million to $1.65 billion at December 31, 2019 from $1.64 billion at June 30, 2019.  This increase was primarily due to increases of $90.6 million, or 8.3%, in net loans receivable and $11.6 million in premises and equipment, partially offset by a decrease of $89.9 million in total investment securities. The $90.6 million increase in loans was the result of $111.6 million of originations and $44.1 million of loan purchases, partially offset by $65.1 million of net amortization and repayments. Commercial mortgages increased $89.8 million, or 13.8%, and construction loans increased $9.6 million, or 72.2%, while commercial loans, residential mortgages and home equity lines of credit all had immaterial decreases.

Total liabilities increased $13.1 million to $1.37 billion at December 31, 2019 from $1.36 billion at June 30, 2019.  This increase was primarily due to a $26.5 million, or 2.1%, increase in deposits and escrow accounts and an $11.6 million increase in other liabilities, as a result of recording a $12.0 million lease liability (a related lease asset was also recorded as part of bank premises and equipment) associated with the adoption of new lease accounting standards, partially offset by a $25.1 million decrease in FHLB advances.

Total shareholders’ equity decreased $1.5 million to $279.8 million at December 31, 2019 from $281.3 million at June 30, 2019.  This decrease was primarily due to the repurchase of $8.6 million (431,731 shares) of common stock and $1.3 million of cash dividends declared and paid, partially offset by net income of $5.2 million, as well as $2.6 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period. As of December 31, 2019, there were 474,171 shares available to be repurchased under the current stock repurchase plan.

At December 31, 2019, the Company’s book value per share and tangible book value per share were $16.11 and $15.74, respectively, compared to $15.80 and $15.44, respectively, at June 30, 2019.  Reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) appear at the end of this release. At December 31, 2019, 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 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 and per share data)

 December 31,  June 30, 
 2019  2019 
        
ASSETS       
Cash and due from banks$61,603  $58,756 
Federal funds sold 1,232   1,273 
Cash and cash equivalents 62,835   60,029 
Held to maturity debt securities, at amortized cost
  (fair value of $274,850 and $346,243, respectively)
 273,381   345,545 
Available for sale debt securities, at fair value 54,454   72,228 
Total investment securities 327,835   417,773 
Loans receivable, net of allowance for loan losses of $6,216 and $5,664, respectively 1,183,740   1,093,121 
Accrued interest receivable 4,932   4,797 
FHLB stock 5,127   6,255 
Premises and equipment, net 23,438   11,802 
Deferred tax asset, net 1,956   2,478 
Foreclosed real estate 279   1,158 
Bank-owned life insurance 24,562   24,291 
Goodwill 6,106   6,106 
Other intangible assets 274   323 
Other assets 8,083   9,446 
Total assets$1,649,167  $1,637,579 
LIABILITIES AND SHAREHOLDERS' EQUITY       
Interest bearing deposits$1,111,396  $1,084,442 
Non-interest bearing deposits 140,218   141,379 
Total deposits 1,251,614   1,225,821 
Mortgage escrow funds 10,049   9,355 
Advances from Federal Home Loan Bank 86,153   111,216 
Other liabilities 21,512   9,880 
Total liabilities 1,369,328   1,356,272 
Commitments and contingencies -   - 
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2019 and June 30, 2019, respectively) -   - 
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 shares issued as of December 31, 2019 and June 30, 2019, and 17,372,308 and 17,804,039 shares outstanding as of December 31, 2019 and June 30, 2019, respectively) 187   187 
Additional paid in capital 184,276   182,129 
Retained earnings 138,373   134,500 
Unearned compensation - ESOP (11,626)  (12,114)
Accumulated other comprehensive loss, net of income taxes (4,474)  (5,090)
Treasury stock, at cost (1,339,987 and 908,256 shares as of December 31, 2019 and June 30, 2019, respectively) (26,897)  (18,305)
Total shareholders' equity 279,839   281,307 
Total liabilities and shareholders' equity$1,649,167  $1,637,579 
        

 

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

 Three Months Ended  Six Months Ended 
 December 31,  December 31, 
 2019  2018  2019  2018 
Interest and dividend income               
Loans receivable$13,149  $10,321  $26,185  $20,219 
Investment securities 2,279   2,428   4,971   4,794 
Federal funds and other 301   491   599   836 
Total interest and dividend income 15,729   13,240   31,755   25,849 
Interest expense               
Deposits and escrow interest 3,358   2,375   6,659   4,431 
FHLB advances 674   121   1,401   210 
Total interest expense 4,032   2,496   8,060   4,641 
Net interest income 11,697   10,744   23,695   21,208 
Provision for loan losses 412   6   747   64 
Net interest income after provision for loan losses 11,285   10,738   22,948   21,144 
Noninterest income               
Fees and service charges 402   457   804   875 
Bank-owned life insurance 134   139   271   279 
Swap income -   75   170   146 
Gains on sales of securities, net -   55   -   55 
Other 11   194   67   206 
Total noninterest income 547   920   1,312   1,561 
Noninterest expense               
Salaries and employee benefits 5,889   5,306   11,653   10,328 
Occupancy and equipment 1,333   1,284   2,648   2,525 
Communications and data processing 507   482   1,038   954 
Professional fees 379   417   783   786 
Postage, printing, stationary and supplies 159   178   299   316 
FDIC assessment -   124   -   217 
Advertising 100   131   200   218 
Amortization of intangible assets 25   28   49   56 
Other operating expenses 402   630   911   1,188 
Total noninterest expense 8,794   8,580   17,581   16,588 
Net income before income tax expense 3,038   3,078   6,679   6,117 
Income tax expense 685   754   1,497   1,464 
Net income$2,353  $2,324  $5,182  $4,653 
Earnings per common share:               
Basic$0.15  $0.14  $0.33  $0.28 
Diluted$0.14  $0.14  $0.32  $0.28 
Weighted average common shares outstanding:               
Basic 15,837,762   16,852,718   15,908,761   16,860,942 
Diluted 15,909,855   16,868,464   15,996,251   16,868,815 
                


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

   
 Three Months Ended December 31, 
 2019  2018 
 Average
Balance
  Interest /
Dividends
  Average
Rate
  Average
Balance
  Interest /
Dividends
  Average
Rate
 
   
   
Assets:                       
Loans receivable$1,178,253  $13,149   4.46% $909,368  $10,321   4.53%
Investment securities 358,760   2,279   2.54   439,919   2,428   2.21 
Other interest-earning assets 59,678   301   2.00   86,527   491   2.25 
Total interest-earning assets 1,596,691   15,729   3.94   1,435,814   13,240   3.68 
Non-interest-earning assets 68,793           55,135         
Total assets$1,665,484          $1,490,949         
                        
Liabilities and equity:                       
NOW accounts$122,455   67   0.22  $116,381   52   0.18 
Money market accounts 161,075   472   1.16   100,075   280   1.11 
Savings accounts and escrow 355,295   234   0.26   416,687   252   0.24 
Time deposits 467,486   2,585   2.19   403,652   1,791   1.76 
Total interest-bearing deposits 1,106,311   3,358   1.20   1,036,795   2,375   0.91 
FHLB advances 117,712   674   2.27   22,106   121   2.15 
Total interest-bearing liabilities 1,224,023   4,032   1.31   1,058,901   2,496   0.93 
Non-interest-bearing deposits 138,346           134,694         
Other non-interest-bearing liabilities 21,827           6,506         
Total liabilities 1,384,196           1,200,101         
Total shareholders' equity 281,288           290,848         
Total liabilities and shareholders' equity$1,665,484          $1,490,949         
                        
Net interest income    $11,697          $10,744     
Interest rate spread (1)         2.63           2.75 
Net interest margin (2)         2.93           2.99 
Average interest-earning assets to interest-bearing liabilities 130.45%          135.59%        
                        
(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)
(dollar amounts in thousands)

                        
 Six Months Ended December 31, 
 2019  2018 
 Average
Balance
  Interest /
Dividends
  Average
Rate
  Average
Balance
  Interest /
Dividends
  Average
Rate
 
   
   
Assets:                       
Loans receivable$1,160,139  $26,185   4.51% $906,194  $20,219   4.46%
Investment securities 378,975   4,971   2.62   446,795   4,794   2.15 
Other interest-earning assets 52,796   599   2.25   76,875   836   2.16 
Total interest-earning assets 1,591,910   31,755   3.99   1,429,864   25,849   3.61 
Non-interest-earning assets 69,530           55,193         
Total assets$1,661,440          $1,485,057         
                        
Liabilities and equity:                       
NOW accounts$121,154   124   0.20  $117,893   105   0.18 
Money market accounts 155,477   935   1.19   80,877   419   1.03 
Savings accounts and escrow 358,932   466   0.26   439,615   540   0.25 
Time deposits 463,417   5,134   2.20   397,994   3,367   1.68 
Total interest-bearing deposits 1,098,980   6,659   1.20   1,036,379   4,431   0.85 
FHLB advances 119,784   1,401   2.32   20,463   210   2.03 
Total interest-bearing liabilities 1,218,764   8,060   1.32   1,056,842   4,641   0.87 
Non-interest-bearing deposits 139,486           131,228         
Other non-interest-bearing liabilities 21,519           6,894         
Total liabilities 1,379,769           1,194,964         
Total shareholders' equity 281,671           290,093         
Total liabilities and shareholders' equity$1,661,440          $1,485,057         
                        
Net interest income    $23,695          $21,208     
Interest rate spread (1)         2.67           2.74 
Net interest margin (2)         2.98           2.97 
Average interest-earning assets to interest-bearing liabilities 130.62%          135.30%        
                        
(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 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
Condensed Balance Sheets             
Cash and cash equivalents$62,835 $37,797 $60,029 $87,105 $143,119 
Total investment securities 327,835  379,007  417,773  440,014  452,463 
Loans receivable, net 1,183,740  1,163,254  1,093,121  935,680  904,377 
Other assets 74,757  78,550  66,656  60,959  57,356 
Total assets$1,649,167 $1,658,608 $1,637,579 $1,523,758 $1,557,315 
                
Total deposits and escrow$1,261,663 $1,241,458 $1,235,176 $1,209,868 $1,234,409 
Advances from Federal Home Loan Bank 86,153  111,185  111,216  26,248  26,279 
Other liabilities 21,512  24,443  9,880  9,326  7,845 
Total liabilities 1,369,328  1,377,086  1,356,272  1,245,442  1,268,533 
Total shareholders' equity 279,839  281,522  281,307  278,316  288,782 
Total liabilities and shareholders' equity$1,649,167 $1,658,608 $1,637,579 $1,523,758 $1,557,315 
                


 Quarter Ended Six Months Ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
 
Condensed Income Statements                   
Interest income$15,729 $16,026 $13,952 $13,646 $13,240 $31,755 $25,849 
Interest expense 4,032  4,028  3,193  2,909  2,496  8,060  4,641 
Net interest income 11,697  11,998  10,759  10,737  10,744  23,695  21,208 
Provision for loan losses 412  335  737  7  6  747  64 
Noninterest income 547  765  962  579  920  1,312  1,561 
Noninterest expense 8,794  8,787  8,708  8,698  8,580  17,581  16,588 
Income before income tax expense 3,038  3,641  2,276  2,611  3,078  6,679  6,117 
Income tax expense 685  812  597  625  754  1,497  1,464 
Net income$2,353 $2,829 $1,679 $1,986 $2,324 $5,182 $4,653 
                      
Earnings per share:                     
Basic$0.15 $0.18 $0.10 $0.12 $0.14 $0.33 $0.28 
Diluted$0.14 $0.18 $0.10 $0.12 $0.14 $0.32 $0.28 
                      


PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

 Quarter Ended Six Months Ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
 
Performance Ratios (1):                   
Return on average assets0.57% 0.68% 0.44% 0.52% 0.62% 0.62% 0.63%
Return on average equity3.35% 4.01% 2.40% 2.83% 3.20% 3.68% 3.21%
Interest rate spread2.63% 2.72% 2.65% 2.67% 2.75% 2.67% 2.74%
Net interest margin2.93% 3.03% 2.94% 2.94% 2.99% 2.98% 2.97%
Adjusted Efficiency ratio (2)72.55% 71.80% 74.55% 77.04% 74.90% 72.17% 73.81%
                     
Noninterest income to average assets0.13% 0.18% 0.25% 0.15% 0.25% 0.16% 0.21%
Noninterest expense to average assets2.11% 2.12% 2.29% 2.29% 2.30% 2.12% 2.23%
                     
Average interest-earning assets to average interest-bearing liabilities130.45% 130.79% 132.96% 133.68% 135.59% 130.62% 135.30%
Average equity to average assets16.89% 17.02% 18.40% 18.52% 19.51% 16.95% 19.53%
Dividend payout ratio (3)27.62% 23.29% 39.43% 24.97% 22.42% 25.26% 22.03%
                     

 

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

 As of and for the quarter ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
Loans to deposits 94.58% 94.27% 89.17% 77.83% 73.81%
                
Share Data:               
Shares outstanding 17,372,308  17,624,239  17,804,039  17,804,039  18,490,225 
Book value per common share$16.11 $15.97 $15.80 $15.63 $15.62 
Tangible book value per common share (4)$15.74 $15.61 $15.44 $15.27 $15.27 
                
Asset Quality Ratios:               
Non-performing loans receivable$1,618 $3,425 $2,727 $2,847 $3,576 
Non-performing assets$1,897 $4,281 $3,885 $3,500 $4,148 
Allowance for loan losses as a percent of total loans receivable 0.52% 0.51% 0.52% 0.53% 0.54%
Total valuation adjustment as a percent of total gross loans receivable (5) 0.59% 0.60% 0.62% 0.66% 0.69%
Allowance for loan losses as a percent of non-performing loans receivable 384.18% 174.98% 207.70% 173.67% 138.23%
Non-performing loans as a percent of total loans receivable, net 0.14% 0.29% 0.25% 0.30% 0.39%
Non-performing assets as a percent of total assets 0.12% 0.26% 0.24% 0.23% 0.27%
                
Net charge-offs$189 $6 $18 $5 $22 
Net charge-offs to average outstanding loans during the period (1) 0.06% 0.00% 0.01% 0.00% 0.01%
                
Capital Ratios (6):               
Tier 1 capital (to adjusted total assets) 13.00% 12.89% 13.81% 13.71% 13.78%
Common equity Tier 1 capital (to risk-weighted assets) 17.24% 17.16% 17.96% 20.47% 20.73%
Tier 1 capital (to risk-weighted assets) 17.24% 17.16% 17.96% 20.47% 20.73%
Total capital (to risk-weighted assets) 17.74% 17.64% 18.45% 20.96% 21.23%
                
(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 Portfolios (unaudited)
(amounts in thousands)

 As of 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
Mortgage loans:               
Residential mortgages$262,441 $264,251 $265,167 $261,970 $248,575 
Commercial mortgage 741,171  726,315  651,396  499,284  499,930 
Construction 22,787  18,830  13,231  16,302  16,023 
Net deferred loan origination costs 1,054  1,202  1,031  843  842 
Total mortgage loans 1,027,453  1,010,598  930,825  778,399  765,370 
Commercial and consumer loans:               
Commercial loans 129,809  125,926  133,614  126,514  107,899 
Home equity credit lines 31,460  31,503  33,204  34,525  35,029 
Consumer and overdrafts 436  437  365  459  321 
Net deferred loan origination costs 798  783  777  728  701 
Total commercial and consumer loans 162,503  158,649  167,960  162,226  143,950 
Total loans receivable 1,189,956  1,169,247  1,098,785  940,625  909,320 
Allowance for loan losses (6,216) (5,993) (5,664) (4,945) (4,943)
Loans receivable, net$1,183,740 $1,163,254 $1,093,121 $935,680 $904,377 


 As of 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
Demand deposits$140,218 $141,567 $141,379 $137,899 $162,113 
NOW accounts 126,346  124,062  123,069  120,353  123,251 
Money market accounts 162,208  151,652  148,134  137,197  121,146 
Savings 354,078  350,250  357,844  379,550  397,460 
Time deposits 468,764  466,374  455,395  427,194  421,354 
Total deposits$1,251,614 $1,233,905 $1,225,821 $1,202,193 $1,225,324 
                


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

 Quarter Ended Six Months Ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
 
        
Computation of Adjusted Net Income and Adjusted Earnings Per Share       
Net income applicable to common stock (GAAP)$2,353 $2,829 $1,679 $1,986 $2,324 $5,182 $4,653 
                      
Adjustments (1):                     
Losses on other receivables -  -  -  -  68  -  68 
Prepayment income on loans receivable and investment securities (95) (371) (25) (20) (72) (466) (140)
Gain on sale of foreclosed real estate -  (37) -  -  (18) (37) (18)
Gain on sale of investment securities -  -  (5) -  (42) -  (42)
Gain on sale of bank premises -  -  -  -  (118) -  (118)
Adjusted net income (Non-GAAP)$2,258 $2,421 $1,649 $1,966 $2,142 $4,679 $4,403 
                      
Average number of common shares outstanding:             
Basic 15,837,762  15,979,762  16,033,505  16,204,393  16,852,718  15,908,761  16,860,942 
Diluted 15,909,855  16,082,276  16,099,846  16,261,755  16,868,464  15,996,251  16,868,815 
Earnings per share (GAAP):                     
Basic$0.15 $0.18 $0.10 $0.12 $0.14 $0.33 $0.28 
Diluted$0.14 $0.18 $0.10 $0.12 $0.14 $0.32 $0.28 
Adjusted earnings per common share (Non-GAAP):             
Basic$0.14 $0.15 $0.10 $0.12 $0.13 $0.29 $0.26 
Diluted$0.14 $0.15 $0.10 $0.12 $0.13 $0.29 $0.26 
                      
(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 Six months ended 
 December 31,
2019
 September 30,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
 
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin               
                
Average interest-earning assets$1,596,691 $1,587,129 $1,435,814 $1,591,910 $1,429,864 
                
Interest and dividend income (GAAP)$15,729 $16,026 $13,240 $31,755 $25,849 
Less: Prepayment income on loans receivable and investment securities (123) (477) (95) (600) (184)
Adjusted interest and dividend income (Non-GAAP)$15,606 $15,549 $13,145 $31,155 $25,665 
Adjusted yield on interest-earning assets (Non-GAAP) 3.91% 3.92% 3.66% 3.91% 3.59%
                
Net interest income (GAAP)$11,697 $11,998 $10,744 $23,695 $21,208 
Less: Prepayment income on loans receivable and investment securities (123) (477) (95) (600) (184)
Adjusted net interest income (Non-GAAP)$11,574 $11,521 $10,649 $23,095 $21,024 
Adjusted net interest margin (Non-GAAP) 2.90% 2.90% 2.97% 2.90% 2.94%
                


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

 Quarter Ended Six Months Ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 December 31,
2019
 December 31,
2018
 
           
Computation of Efficiency Ratio          
Noninterest expense (GAAP)$8,794 $8,787 $8,708 $8,698 $8,580 $17,581 $16,588 
Adjustments:                     
Losses on other receivables -  -  -  -  (90) -  (90)
Adjusted noninterest expense (non-GAAP)$8,794 $8,787 $8,708 $8,698 $8,490 $17,581 $16,498 
                      
Net interest income$11,697 $11,998 $10,759 $10,737 $10,744 $23,695 $21,208 
Noninterest income 547  765  962  579  920  1,312  1,561 
Total (GAAP) 12,244  12,763  11,721  11,316  11,664  25,007  22,769 
Adjustments:                     
Prepayment income on loans receivable and investment securities (123) (477) (34) (26) (95) (600) (184)
Gain on sale of foreclosed real estate -  (47) -  -  (24) (47) (24)
Gain on sale of investment securities -  -  (7) -  (55) -  (55)
Gain on sale of bank premises -  -  -  -  (155) -  (155)
Adjusted total (Non-GAAP)$12,121 $12,239 $11,680 $11,290 $11,335 $24,360 $22,351 
                      
Efficiency ratio (GAAP) 71.82% 68.85% 74.29% 76.86% 73.56% 70.30% 72.85%
Adjusted efficiency ratio (Non-GAAP) 72.55% 71.80% 74.55% 77.04% 74.90% 72.17% 73.81%
                      



PCSB Financial Corporation and Subsidiaries

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

   
 As of 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
     
Computation of Tangible Book Value per Common Share    
Total shareholders' equity (GAAP)$279,839 $281,522 $281,307 $278,316 $288,782 
Adjustments:               
Preferred stock -  -  -  -  - 
Common shareholders' equity 279,839  281,522  281,307  278,316  288,782 
Adjustments:               
Goodwill (6,106) (6,106) (6,106) (6,106) (6,106)
Other intangible assets (274) (298) (323) (348) (376)
Tangible common shareholders' equity (Non-GAAP)$273,459 $275,118 $274,878 $271,862 $282,300 
                
Common shares outstanding 17,372,308  17,624,239  17,804,039  17,804,039  18,490,225 
                
Book value per share (GAAP)$16.11 $15.97 $15.80 $15.63 $15.62 
Adjustments:               
Effects of intangible assets (0.37) (0.36) (0.36) (0.36) (0.35)
                
Tangible book value per common share (Non-GAAP)$15.74 $15.61 $15.44 $15.27 $15.27 


 Quarter Ended 
 December 31,
2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 
           
Computation of valuation adjustment          
Allowance for loan losses$6,216 $5,993 $5,664 $4,945 $4,943 
Add: Purchase accounting discounts on acquired loans 837  983  1,180  1,262  1,349 
Total valuation adjustments$7,053 $6,976 $6,844 $6,207 $6,292 
Total gross loans$1,189,956 $1,169,247 $1,098,785 $940,625 $909,320 
Total valuation adjustments as a percent of total gross loans 0.59% 0.60% 0.62% 0.66% 0.69%
                

PCSB_Fin_Corp_Logo@4x.png

Source: PCSB Financial Corporation