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

Rhea-AI Summary

PCSB Financial Corporation (NASDAQ: PCSB) reported a net income of $2.7 million, or $0.18 per diluted share, for Q2 of fiscal 2021, matching Q1 results and increasing from $2.4 million in Q2 2020. For the six months ended December 31, 2020, net income reached $5.4 million, up from $5.2 million the previous year. The Board declared a quarterly cash dividend of $0.04 per share. Average loans increased 1.6% year-over-year, while deposits surged 11.0%. However, net interest income saw a slight decline due to lower asset yields.

Positive

• Net income of $2.7 million for Q2, stable compared to Q1.
• Earnings per share increased to $0.36 for the six months ended December 31, 2020.
• Average loans grew 1.6% year-over-year to $1.20 billion.
• Average deposits increased 11.0% year-over-year to $1.38 billion.
• Declared quarterly dividend of $0.04 per share.

Negative

• Net interest income decreased by $150,000 or 1.3% year-over-year.
• Net interest margin declined to 2.70%, down from 2.94% year-over-year.
• Non-performing loans increased by $50,000 year-over-year.

YORKTOWN HEIGHTS, N.Y., Jan. 28, 2021 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the “Bank”), today announced net income of $2.7 million, or $0.18 per diluted share, for the three months ended December 31, 2020 compared to $2.7 million, or $0.18 per diluted share, for the three months ended September 30, 2020 and $2.4 million, or $0.14 per diluted share, for the three months ended December 31, 2019. Net income was $5.4 million, or $0.36 per diluted share, for the six months ended December 31, 2020, compared to $5.2 million, or $0.32 per diluted, for the six months ended December 31, 2019.

On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded adjusted net income of $2.6 million, or $0.17 per diluted share, for the three months ended December 31, 2020 compared to adjusted net income of $2.7 million, or $0.17 per diluted share, for the three months ended September 30, 2020 and $2.3 million, or $0.14 per diluted share, for the three months ended December 31, 2019. Adjusted net income was $5.2 million, or $0.35 per diluted share, for the six months ended December 31, 2020 compared to $4.7 million, or $0.29 per diluted share, for the six months ended December 31, 2019. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

On January 27, 2021, the Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about February 26, 2021 to stockholders of record as of the close of business on February 12, 2021.

Second Quarter Highlights

• Earnings before income taxes of $3.5 million for the quarter increased $54,000 or 1.6% from the linked quarter and $454,000 or 14.9% from the same quarter last year.
• Net interest income of $11.5 million for the current quarter decreased $30,000 or 0.3% from the linked quarter and decreased $150,000 or 1.3% from the same quarter last year.
• The net interest margin was 2.70% for the quarter, an increase from 2.69% in the linked quarter but a decrease from 2.94% for the same quarter last year.
• Cost of interest-bearing deposits was 0.71% for the quarter, a decrease from 0.80% in the linked quarter and 1.20% for the same quarter last year.
• The efficiency ratio was 70.72% for the current quarter compared to 70.86% for the linked quarter and 71.82% for the prior year quarter.
• Average loans receivable, excluding SBA Paycheck Protection Program (“PPP”) loans, of $1.20 billion for the current quarter, an increase of 1.6% compared to the same quarter last year.
• Average deposits of $1.38 billion for the current quarter, an increase of 11.0% compared to the same quarter last year.
• Non-performing loans of $1.7 million increased $50,000 year-over-year and equates to 0.13% of total net loans receivable as of December 31, 2020.

President’s Comments

Commenting on the Company’s performance, Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, said, “I am pleased with the Company’s operating and financial results despite the challenges presented by the prolonged pandemic. As our quarter and six-month results indicate, we continue to provide stable core earnings and very strong asset quality. We continue to follow strong safety protocols to protect the health and well-being of our employees and customers including the technology that allows them to work and bank remotely when necessary. Meanwhile, with additional funding available for PPP loans we will continue to be a source of strength to our customers and communities in addressing their financial needs during these uncertain economic times. As we look ahead to 2021, we are optimistic that the latest stimulus package along with the progress on vaccinations will lead not only to a strong national economic recovery but opportunities for continued long-term growth and profitability for our shareholders.”

Loan Payment Deferrals

The COVID-19 pandemic has created extensive disruptions to the local economy and our customers. Through December 31, 2020, the Company has granted loan payment deferrals on 320 consumer and commercial loans whose borrowers have demonstrated financial hardship caused by COVID-19 with loan balances totaling $213.6 million. As of December 31, 2020, 26 loans totaling $31.9 million were still on deferral. Of those loans still on deferral as of December 31, 2020, $6.2 million are scheduled to resume payments prior to March 31, 2021, with the remainder scheduled to resume payments prior to January 31, 2022, however as we continue to assess our borrowers’ financial condition and individual circumstances in the coming weeks and months, additional payment deferrals may be granted.

The table below provides additional detail for those loans on deferral as of December 31, 2020 (dollar amounts in thousands):

Industry Sector:	Number of loans			Recorded Investment (2)			% secured by real estate collateral			Loan-to-Value % (3)			Weighted average term of remaining deferral (in months)
Consumer (1)		13		$	5,531			100.0	%		61.9	%		2.7
Commercial:
Retail		3			11,591			100.0			53.4			12.0
Hotels and accommodation services		2			7,648			100.0			60.3			6.0
Food service		3			5,793			100.0			46.1			5.6
All other commercial		5			1,370			83.3			63.8			3.7
Total commercial		13			26,402			99.1			54.2			8.5
Total		26		$	31,933			99.3	%		55.6	%		7.5

      ⁽¹⁾   Includes first and second lien residential mortgages of $5.2 million and $294,000, respectively.
      ⁽²⁾   Includes loans classified as special mention and substandard of $2.5 million and $15.2 million, respectively.
      ⁽³⁾   Generally based on collateral values upon origination.

As of December 31, 2020, the Company does not participate in leveraged lending, shared national credits or credit card lending.

Income Statement Summary

Net income for the three months ended December 31, 2020 was $2.7 million, unchanged from the linked quarter and a $341,000 increase from $2.4 million in the prior year period. The change from the prior year period is primarily due to a $305,000 decrease in provision for loan loss, a $196,000 increase in noninterest income and a $103,000 decrease in noninterest expenses, partially offset by a $150,000 decrease in net interest income and a $113,000 increase in income tax expense.

Net interest income was $11.5 million for the quarter ended December 31, 2020, decreases of $30,000, or 0.3%, compared to the linked quarter, and $150,000, or 1.3%, compared to the prior year quarter. The decrease compared to the linked quarter is primarily the result of a $11.0 million, or 0.6%, decrease in average interest-earning assets, partially offset by a 1 basis point increase in net interest margin. The decrease in net interest income compared to the prior year period is primarily the result of a 24 basis point decrease in net interest margin, partially offset by a $118.3 million, or 7.4% increase in average interest-earning assets.

The net interest margin was 2.70% for the current quarter reflecting an increase of 1 basis point compared to 2.69% in the linked quarter and a 24 basis point decrease compared to 2.94% in the prior year quarter. When compared to the prior year period, despite continued asset growth and a decrease in funding costs, margin compression has resulted from significant decreases in market interest rates over the past year and a less profitable asset mix due to an increase in cash and cash equivalents. However, in the current quarter, the reduction in funding costs more than offset the decrease in asset yields, resulting in slight net interest margin expansion.

Net interest margin, excluding the effect of PPP loans was 2.66% for the current quarter compared to 2.63% in the linked quarter and 2.94% in the prior year quarter. Net interest margin, excluding the effect of PPP loans was 2.65% for the current year to date period compared to 2.98% in the prior year period.

The Company has experienced significant excess liquidity balances beginning in the June 2020 quarter due to deposit growth stemming from the various impacts of the pandemic, including, but not limited to, government stimulus, a decrease in consumer and commercial spending, and reduced loan growth due to suppressed originations and higher prepayment rates. Excluding the effects of this excess liquidity, net interest margin is estimated to have been 2.89% and 2.86% for the current and linked quarters, respectively. Some level of excess liquidity is expected to continue for the foreseeable future and is largely dependent on future government stimulus programs.

The yield on interest-earning assets for the current quarter was 3.32%, a 5 basis point decrease from the prior quarter and a 62 basis point decrease from the prior year quarter. A $54.3 million or 4.6% increase in average loans compared to the prior year quarter was more than offset by a decrease in asset yields, a result of decreases in market interest rates, the origination of lower yielding PPP loans, and significant increases in liquidity over the last nine months. The rate of asset yield decrease has slowed in recent quarters due to a more stable yield curve and earning asset composition.

The cost of interest-bearing deposits was 0.71% for the current quarter, decreases of 9 basis points from 0.80% in the prior quarter and 49 basis points from 1.20% in the prior year quarter. In response to the significant decrease in market interest rates in March 2020, deposit rate reductions have been implemented throughout the last year, the effects of which continue to be realized. At December 31, 2020, the weighted average cost of interest-bearing deposits was 0.54%. The cost of interest-bearing liabilities was 0.81% for the current quarter, decreases of 8 basis points from 0.89% in the prior quarter and 50 basis points from 1.31% in the prior year quarter. Over the remainder of the current fiscal year, the Company has $60.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.08%. Additionally, over the same period the Company has $155.2 million of non-brokered time deposits maturing with a current weighted average cost of 1.05%. If interest rates stay constant, the Company expects the cost of these deposits to be reduced significantly.

The provision for loan losses was $107,000 for the three months ended December 31, 2020 compared to $109,000 in the linked quarter and $412,000 for the prior year quarter. Charge-offs, net of recoveries, were $102,000 for the three months ended December 31, 2020 compared to $76,000 for the linked quarter and $189,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable was 0.13% as of December 31, 2020, a decrease from 0.17% as of September 30, 2020 and 0.14% as of December 31, 2019.

Noninterest income of $743,000 for the three months ended December 31, 2020 increased $149,000 compared to the linked quarter and $196,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to a $109,000 increase in swap income and a $41,000 increase in fees and service charges. The increase compared to the prior year quarter was primarily due to a $238,000 increase in swap income, partially offset by a decrease of $39,000 in fees and service charges. The reduction in fees and service charge income compared to the prior year quarter was due to the effects of reduced customer transaction activity since the start of the COVID-19 pandemic, however fee and service charge income has increased compared to the linked quarter.

Noninterest expense of $8.7 million for the three months ended December 31, 2020 increased $67,000 compared to the linked quarter and decreased $103,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $103,000 in professional fees, $93,000 in pension costs and $88,000 in all other non-interest expenses, partially offset by a $130,000 decrease in communications and data processing and $87,000 in salaries and benefits. The decrease compared to the prior year quarter was caused primarily by decreases of $369,000 in salaries and benefits and $61,000 in communication and data processing costs, partially offset by increases of $124,000 in professional fees, $122,000 in FDIC insurance premiums and $81,000 in all other expenses. The Bank applied small bank assessment credits of $108,000 which fully offset its FDIC assessment for the prior year quarter. All available credits were applied as of June 30, 2020.

The effective income tax rate was 22.9% for the three months ended December 31, 2020, as compared to 22.5% for the prior year quarter. The Company expects an effective tax rate of approximately 21.5% for the year ending June 30, 2021.

Balance Sheet Summary

Total assets decreased $2.0 million to $1.79 billion at December 31, 2020 as compared to June 30, 2020. However, the mix of assets changed due to decreases of $23.4 million in net loans receivable and $3.0 million in total investment securities, which was mostly offset by an increase of $26.2 million in cash and cash equivalents. The $23.4 million decrease in net loans receivable was the result of decreases in residential mortgages of $17.4 million, commercial mortgages of $5.8 million, commercial loans of $3.6 million, which included a decrease in PPP loans of $13.9 million, and home equity lines of credit of $2.2 million, partially offset by an increase in construction loans of $6.5 million. The increase in cash and cash equivalents is a result of an increase in deposits and reduced loan originations experienced during the quarter due to reduced economic activity resulting from the COVID-19 pandemic.

Total liabilities increased $2.3 million to $1.52 billion at December 31, 2020 as a $4.0 million increase in deposits which was partially offset by a $1.7 million decrease in all other liabilities.

Total shareholders’ equity decreased $4.4 million to $269.3 million at December 31, 2020 as compared to June 30, 2020. This decrease was primarily due to the repurchase of $11.3 million (784,170 shares) of common stock and $1.2 million of cash dividends declared and paid, partially offset by net income of $5.4 million and $2.3 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period. As of December 31, 2020, there were 60,737 shares available to be repurchased under the current stock repurchase plan. On January 20, 2021, the stock repurchase plan was completed, in which the Company repurchased a total of 844,907 shares at an average price of $14.24 per share.

At December 31, 2020, the Company’s book value per share and tangible book value per share were $16.73 and $16.34, respectively, compared to $16.20 and $15.82, respectively, at June 30, 2020. 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, 2020, 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 duration, extent and severity of the COVID-19 pandemic, including its impact on our business and operations, the impact of lost fee revenue and increased operating expenses, as well as its effect on our customers and issuers of securities, including their ability to make timely payments on obligations, service providers and on economies and markets more generally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the Company’s business; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company’s financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

Contact: Joseph D. Roberto
Chairman, President and Chief Executive Officer
(914) 248-7272

PCSB Financial Corporation and Subsidiaries
Consolidated Balance Sheets (unaudited)
(amounts in thousands, except share and per share data)

		December 31,				June 30,
		2020				2020
ASSETS
Cash and due from banks		$	159,000			$	135,045
Federal funds sold			3,541				1,257
Cash and cash equivalents			162,541				136,302
Held to maturity debt securities, at amortized cost   (fair value of $273,858 and $281,497, respectively)			266,949				275,772
Available for sale debt securities, at fair value			43,282				37,426
Total investment securities			310,231				313,198
Loans receivable, net of allowance for loan losses of $8,677 and $8,639, respectively			1,237,550				1,260,947
Accrued interest receivable			6,117				6,880
FHLB stock			6,305				6,308
Premises and equipment, net			19,524				20,853
Deferred tax asset, net			3,665				3,129
Bank-owned life insurance			25,280				25,019
Goodwill			6,106				6,106
Other intangible assets			189				229
Other assets			12,331				12,958
Total assets		$	1,789,839			$	1,791,929
LIABILITIES AND SHAREHOLDERS’ EQUITY
Interest-bearing deposits		$	1,187,319			$	1,181,357
Non interest-bearing deposits			189,968				191,898
Total deposits			1,377,287				1,373,255
Mortgage escrow funds			10,610				10,123
Advances from Federal Home Loan Bank			106,023				106,089
Other liabilities			26,595				28,749
Total liabilities			1,520,515				1,518,216
Commitments and contingencies			-				-
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of December 31, 2020 and June 30, 2020, respectively)			-				-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 shares issued as of December 31, 2020 and June 30, 2020, and 16,097,867 and 16,898,137 shares outstanding as of December 31, 2020 and June 30, 2020, respectively)			187				187
Additional paid in capital			187,964				186,200
Retained earnings			145,472				141,288
Unearned compensation - ESOP			(10,657	)			(11,145	)
Accumulated other comprehensive loss, net of income taxes			(5,945	)			(6,403	)
Treasury stock, at cost (2,614,428 and 1,814,158 shares as of December 31, 2020 and June 30, 2020, respectively)			(47,697	)			(36,414	)
Total shareholders’ equity			269,324				273,713
Total liabilities and shareholders’ equity		$	1,789,839			$	1,791,929

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,
		2020				2019				2020				2019
Interest and dividend income
Loans receivable		$	12,182			$	13,149			$	24,729			$	26,185
Investment securities			1,933				2,279				3,789				4,971
Federal funds and other			110				301				235				599
Total interest and dividend income			14,225				15,729				28,753				31,755
Interest expense
Deposits and escrow interest			2,158				3,358				4,590				6,659
FHLB advances			520				674				1,039				1,401
Total interest expense			2,678				4,032				5,629				8,060
Net interest income			11,547				11,697				23,124				23,695
Provision for loan losses			107				412				216				747
Net interest income after provision for loan losses			11,440				11,285				22,908				22,948
Noninterest income
Fees and service charges			363				402				685				804
Swap income			238				-				367				170
Bank-owned life insurance			129				134				261				271
Other			13				11				24				67
Total noninterest income			743				547				1,337				1,312
Noninterest expense
Salaries and employee benefits			5,520				5,889				11,127				11,653
Occupancy and equipment			1,374				1,333				2,692				2,648
Communications and data processing			446				507				1,022				1,038
Professional fees			503				379				903				783
Postage, printing, stationery and supplies			167				159				306				299
Advertising			100				100				200				200
FDIC assessment			122				-				235				-
Amortization of intangible assets			20				25				40				49
Other operating expenses			439				402				790				911
Total noninterest expense			8,691				8,794				17,315				17,581
Net income before income tax expense			3,492				3,038				6,930				6,679
Income tax expense			798				685				1,508				1,497
Net income		$	2,694			$	2,353			$	5,422			$	5,182
Earnings per common share:
Basic		$	0.18			$	0.15			$	0.36			$	0.33
Diluted			0.18				0.14				0.36				0.32
Weighted average common shares outstanding:
Basic			14,888,528				15,837,762				15,094,982				15,908,761
Diluted			14,899,020				15,909,855				15,094,982				15,996,251

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

	Three Months Ended
	December 31, 2020												September 30, 2020												December 31, 2019
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	1,232,555			$	12,182				3.95	%		$	1,252,595			$	12,547				4.00	%		$	1,178,253			$	13,149				4.46	%
Investment securities (1)		313,812				1,933				2.51				315,292				1,856				2.40				358,760				2,279				2.55
Other interest-earning assets		168,608				110				0.26				158,038				125				0.31				59,678				301				2.00
Total interest-earning assets		1,714,975				14,225				3.32				1,725,925				14,528				3.37				1,596,691				15,729				3.94
Non-interest-earning assets		70,417												71,926												68,793
Total assets	$	1,785,392											$	1,797,851											$	1,665,484
Liabilities and equity:
NOW accounts	$	149,620				79				0.21			$	149,466				89				0.24			$	122,455				67				0.22
Money market accounts		255,961				211				0.33				250,297				238				0.38				161,075				472				1.16
Savings accounts and escrow		362,422				168				0.18				360,091				202				0.22				355,295				234				0.26
Time deposits		434,446				1,700				1.55				443,487				1,903				1.70				467,486				2,585				2.19
Total interest-bearing deposits		1,202,449				2,158				0.71				1,203,341				2,432				0.80				1,106,311				3,358				1.20
FHLB advances		106,034				520				1.94				106,067				519				1.94				117,712				674				2.27
Total interest-bearing liabilities		1,308,483				2,678				0.81				1,309,408				2,951				0.89				1,224,023				4,032				1.31
Non-interest-bearing deposits		178,538												184,085												138,346
Other non-interest-bearing liabilities		26,482												28,958												21,827
Total liabilities		1,513,503												1,522,451												1,384,196
Total shareholders' equity		271,889												275,400												281,288
Total liabilities and shareholders' equity	$	1,785,392											$	1,797,851											$	1,665,484
Net interest income					$	11,547											$	11,577											$	11,697
Interest rate spread - tax equivalent (2)										2.51												2.48												2.63
Net interest margin - tax equivalent (3)										2.70												2.69												2.94
Average interest-earning assets to interest-bearing liabilities		131.07	%											131.81	%											130.45	%
(1) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all period presented. See reconciliation of non-GAAP measures at the end of this release.
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets.

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

	Six Months Ended December 31,
	2020												2019
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	1,242,575			$	24,729				3.98	%		$	1,160,139			$	26,185				4.51	%
Investment securities (1)		314,552				3,789				2.44				378,975				4,971				2.63
Other interest-earning assets		163,323				235				0.29				52,796				599				2.25
Total interest-earning assets		1,720,450				28,753				3.35				1,591,910				31,755				3.99
Non-interest-earning assets		71,172												69,530
Total assets	$	1,791,622											$	1,661,440
Liabilities and equity:
NOW accounts	$	149,543				168				0.22			$	121,154				124				0.20
Money market accounts		253,129				449				0.35				155,477				935				1.19
Savings accounts and escrow		361,256				370				0.20				358,932				466				0.26
Time deposits		438,966				3,603				1.63				463,417				5,134				2.20
Total interest-bearing deposits		1,202,894				4,590				0.76				1,098,980				6,659				1.20
FHLB advances		106,051				1,039				1.94				119,784				1,401				2.32
Total interest-bearing liabilities		1,308,945				5,629				0.86				1,218,764				8,060				1.32
Non-interest-bearing deposits		181,312												139,486
Other non-interest-bearing liabilities		27,720												21,519
Total liabilities		1,517,977												1,379,769
Total shareholders’ equity		273,645												281,671
Total liabilities and shareholders’ equity	$	1,791,622											$	1,661,440
Net interest income					$	23,124											$	23,695
Interest rate spread - tax equivalent (2)										2.49												2.67
Net interest margin - tax equivalent (3)										2.70												2.98
Average interest-earning assets to interest-bearing liabilities		131.44	%											130.62	%
(1) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all period presented. See reconciliation of non-GAAP measures at the end of this release.
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets.

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

	As of
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Condensed Balance Sheets
Cash and cash equivalents	$	162,541		$	162,739		$	136,302		$	84,912		$	62,835
Total investment securities		310,231			318,509			313,198			309,618			327,835
Loans receivable, net		1,237,550			1,227,913			1,260,947			1,220,682			1,183,740
Other assets		79,517			81,914			81,482			80,663			74,757
Total assets	$	1,789,839		$	1,791,075		$	1,791,929		$	1,695,875		$	1,649,167
Total deposits and escrow	$	1,387,897		$	1,383,432		$	1,383,378		$	1,287,510		$	1,261,663
Advances from Federal Home Loan Bank		106,023			106,056			106,089			106,121			86,153
Other liabilities		26,595			27,908			28,749			29,827			21,512
Total liabilities		1,520,515			1,517,396			1,518,216			1,423,458			1,369,328
Total shareholders’ equity		269,324			273,679			273,713			272,417			279,839
Total liabilities and shareholders’ equity	$	1,789,839		$	1,791,075		$	1,791,929		$	1,695,875		$	1,649,167

	Quarter Ended															Six Months Ended
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Condensed Income Statements
Interest income	$	14,225		$	14,528		$	14,821		$	15,334		$	15,729		$	28,753		$	31,755
Interest expense		2,678			2,951			3,362			3,809			4,032			5,629			8,060
Net interest income		11,547			11,577			11,459			11,525			11,697			23,124			23,695
Provision for loan losses		107			109			309			2,008			412			216			747
Noninterest income		743			594			1,177			580			547			1,337			1,312
Noninterest expense		8,691			8,624			8,533			8,520			8,794			17,315			17,581
Income before income tax expense		3,492			3,438			3,794			1,577			3,038			6,930			6,679
Income tax expense		798			710			834			360			685			1,508			1,497
Net income	$	2,694		$	2,728		$	2,960		$	1,217		$	2,353		$	5,422		$	5,182
Earnings per share:
Basic	$	0.18		$	0.18		$	0.19		$	0.08		$	0.15		$	0.36		$	0.33
Diluted		0.18			0.18			0.19			0.08			0.14			0.36			0.32

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

	Quarter Ended															Six Months Ended
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Performance Ratios (1):
Return on average assets		0.60	%		0.61	%		0.68	%		0.29	%		0.57	%		0.61	%		0.62	%
Return on average equity		3.96	%		3.96	%		4.30	%		1.77	%		3.35	%		3.96	%		3.68	%
Interest rate spread		2.51	%		2.48	%		2.47	%		2.60	%		2.63	%		2.49	%		2.67	%
Net interest margin		2.70	%		2.69	%		2.72	%		2.89	%		2.94	%		2.70	%		2.98	%
Efficiency ratio		70.72	%		70.86	%		67.53	%		70.38	%		71.82	%		70.79	%		70.30	%
Adjusted efficiency ratio (2)		71.74	%		71.28	%		67.74	%		70.87	%		72.55	%		71.51	%		72.17	%
Noninterest income to average assets		0.17	%		0.13	%		0.27	%		0.14	%		0.13	%		0.15	%		0.16	%
Noninterest expense to average assets		1.95	%		1.92	%		1.95	%		2.06	%		2.11	%		1.93	%		2.12	%
Average interest-earning assets to average interest-bearing liabilities		131.07	%		131.81	%		131.65	%		129.78	%		130.45	%		131.44	%		130.62	%
Average equity to average assets		15.23	%		15.32	%		15.70	%		16.60	%		16.89	%		15.27	%		16.95	%
Dividend payout ratio (3)		22.57	%		23.09	%		21.25	%		52.01	%		27.62	%		22.83	%		25.26	%

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, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Loans to deposits		89.85	%		89.17	%		91.82	%		95.40	%		94.58	%
Share Data:
Shares outstanding		16,097,867			16,634,237			16,898,137			16,898,137			17,372,308
Book value per common share	$	16.73		$	16.45		$	16.20		$	16.12		$	16.11
Tangible book value per common share (4)	$	16.34		$	16.07		$	15.82		$	15.74		$	15.74
Asset Quality Ratios:
Non-performing loans receivable	$	1,668		$	2,083		$	1,795		$	1,802		$	1,618
Non-performing assets	$	1,668		$	2,083		$	1,795		$	1,802		$	1,897
Allowance for loan losses as a percent of total loans receivable		0.70	%		0.70	%		0.68	%		0.68	%		0.52	%
Allowance for loan losses as a percent of non-performing loans receivable		520.20	%		416.32	%		481.28	%		463.15	%		384.18	%
Non-performing loans as a percent of total loans receivable, net		0.13	%		0.17	%		0.14	%		0.15	%		0.14	%
Non-performing assets as a percent of total assets		0.09	%		0.12	%		0.10	%		0.11	%		0.12	%
Net charge-offs (recoveries)	$	102		$	76		$	17		$	(122	)	$	189
Net charge-offs (recoveries) to average outstanding loans during the period (1)		0.03	%		0.02	%		0.01	%		(0.04	%)		0.06	%
Capital Ratios (5):
Tier 1 capital (to adjusted total assets)		12.66	%		12.41	%		12.51	%		13.19	%		13.00	%
Common equity Tier 1 capital (to risk-weighted assets)		17.74	%		17.56	%		16.98	%		16.80	%		17.24	%
Tier 1 capital (to risk-weighted assets)		17.74	%		17.56	%		16.98	%		16.80	%		17.24	%
Total capital (to risk-weighted assets)		18.42	%		18.24	%		17.65	%		17.44	%		17.74	%
(1) Performance ratios for quarter ended periods 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.
(5) Represents Bank ratios.

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

	As of
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Mortgage loans:
Residential mortgages	$	237,987		$	245,008		$	255,382		$	266,684		$	262,441
Commercial mortgage		801,348			794,248			807,106			775,378			741,171
Construction		17,551			11,512			11,053			24,929			22,787
Net deferred loan origination costs		600			666			739			925			1,054
Total mortgage loans		1,057,486			1,051,434			1,074,280			1,067,916			1,027,453
Commercial and consumer loans:
Commercial loans (1)		160,678			155,569			164,257			128,869			129,809
Home equity credit lines		27,653			29,249			29,838			30,994			31,460
Consumer and overdrafts		328			308			481			444			436
Net deferred loan origination costs		82			25			730			805			798
Total commercial and consumer loans		188,741			185,151			195,306			161,112			162,503
Total loans receivable		1,246,227			1,236,585			1,269,586			1,229,028			1,189,956
Allowance for loan losses		(8,677	)		(8,672	)		(8,639	)		(8,346	)		(6,216	)
Loans receivable, net	$	1,237,550		$	1,227,913		$	1,260,947		$	1,220,682		$	1,183,740
(1) Includes PPP loans of $35.7 million as of December 31, 2020 and September 30, 2020, $49.6 million as of June 30, 2020 and none at all other dates.

	As of
	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Demand deposits	$	189,968		$	183,844		$	191,898		$	145,844		$	140,218
NOW accounts		159,919			148,176			151,797			128,103			126,346
Money market accounts		256,132			253,176			239,942			192,779			162,208
Savings		354,882			349,805			343,352			330,310			354,078
Time deposits		416,386			442,011			446,266			482,550			468,764
Total deposits	$	1,377,287		$	1,377,012		$	1,373,255		$	1,279,586		$	1,251,614

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, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Computation of Adjusted Net Income and Adjusted Earnings Per Share
Net income applicable to common stock (GAAP)	$	2,694		$	2,728		$	2,960		$	1,217		$	2,353		$	5,422		$	5,182
Adjustments (1):
Prepayment income on loans receivable and investment securities		(136	)		(58	)		(30	)		(4	)		(95	)		(195	)		(466	)
Gain on sale of foreclosed real estate		-			-			-			(31	)		-			-			(37	)
Gain on sale of investment securities		-			-			-			(29	)		-			-			-
Adjusted net income (Non-GAAP)	$	2,558		$	2,670		$	2,930		$	1,153		$	2,258		$	5,227		$	4,679
Average number of common shares outstanding:
Basic		14,888,528			15,302,838			15,334,098			15,437,173			15,837,762			15,094,982			15,908,761
Diluted		14,899,020			15,302,949			15,334,098			15,447,217			15,909,855			15,094,982			15,996,251
Earnings per share (GAAP):
Basic	$	0.18		$	0.18		$	0.19		$	0.08		$	0.15		$	0.36		$	0.33
Diluted		0.18			0.18			0.19			0.08			0.14			0.36			0.32
Adjusted earnings per common share (Non-GAAP):
Basic	$	0.17		$	0.17		$	0.19		$	0.07		$	0.14		$	0.35		$	0.29
Diluted		0.17			0.17			0.19			0.07			0.14			0.35			0.29
(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, 2020			September 30, 2020			December 31, 2019				December 31, 2020			December 31, 2019
Computation of tax equivalent net interest income
Total interest income	$	14,225		$	14,528		$	15,729			$	28,753		$	31,755
Total interest expense		2,678			2,951			4,032				5,629			8,060
Net interest income (GAAP)		11,547			11,577			11,697				23,124			23,695
Tax equivalent adjustment		35			21			6				55			12
Net interest income - tax equivalent (Non-GAAP)	$	11,582		$	11,598		$	11,703			$	23,179		$	23,707

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, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Computation of Efficiency Ratio
Noninterest expense (GAAP)	$	8,691		$	8,624		$	8,533		$	8,520		$	8,794		$	17,315		$	17,581
Net interest income (GAAP)	$	11,547		$	11,577		$	11,459		$	11,525		$	11,697		$	23,124		$	23,695
Noninterest income (GAAP)		743			594			1,177			580			547			1,337			1,312
Total (GAAP)		12,290			12,171			12,636			12,105			12,244			24,461			25,007
Adjustments:
Prepayment income on loans receivable and investment securities		(176	)		(73	)		(39	)		(5	)		(123	)		(249	)		(600	)
Gain on sale of foreclosed real estate		-			-			-			(40	)		-			-			(47	)
Gain on sale of investment securities		-			-			-			(38	)		-			-			-
Adjusted total (Non-GAAP)	$	12,114		$	12,098		$	12,597		$	12,022		$	12,121		$	24,212		$	24,360
Efficiency ratio (GAAP)		70.72	%		70.86	%		67.53	%		70.38	%		71.82	%		70.79	%		70.30	%
Adjusted efficiency ratio (Non-GAAP)		71.74	%		71.28	%		67.74	%		70.87	%		72.55	%		71.51	%		72.17	%

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, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Computation of Tangible Book Value per Common Share
Total shareholders' equity (GAAP)	$	269,324		$	273,679		$	273,713		$	272,417		$	279,839
Adjustments:
Goodwill		(6,106	)		(6,106	)		(6,106	)		(6,106	)		(6,106	)
Other intangible assets		(189	)		(209	)		(229	)		(250	)		(274	)
Tangible common shareholders' equity (Non-GAAP)	$	263,029		$	267,364		$	267,378		$	266,061		$	273,459
Common shares outstanding		16,097,867			16,634,237			16,898,137			16,898,137			17,372,308
Book value per share (GAAP)	$	16.73		$	16.45		$	16.20		$	16.12		$	16.11
Adjustments:
Effects of intangible assets		(0.39	)		(0.38	)		(0.38	)		(0.38	)		(0.37	)
Tangible book value per common share (Non-GAAP)	$	16.34		$	16.07		$	15.82		$	15.74		$	15.74

 

FAQ

What are PCSB's earnings results for Q2 2021?

PCSB reported net income of $2.7 million, or $0.18 per diluted share, for Q2 2021.

How did PCSB's net income change compared to last year?

Net income for the six months ended December 31, 2020 was $5.4 million, up from $5.2 million for the same period in 2019.

What is the outlook for PCSB following recent results?

PCSB remains optimistic about future growth due to economic recovery and additional funding for PPP loans.

What dividend was declared by PCSB?

PCSB declared a regular quarterly cash dividend of $0.04 per share, payable on or about February 26, 2021.