PCSB Financial Corporation Announces Third Fiscal Quarter Financial Results and Declares a 17% Increase In Quarterly Cash Dividend

Rhea-AI Summary

PCSB Financial Corporation reported a net income of $3.5 million ($0.24 per diluted share) for Q3 2022, down 19% from the previous quarter and 3.3% year-over-year. The quarterly cash dividend was increased by 17% to $0.07 per share. Net interest income stood at $12.7 million, a 4.1% decline quarter-over-quarter but a 9.3% increase year-over-year. Additionally, noninterest income fell to $923,000, with an efficiency ratio of 65.66% compared to 60.92% in the prior quarter. The company experienced loan growth of 13.6% for the quarter.

Positive

• Quarterly cash dividend increased by 17% to $0.07 per share.
• Net interest income rose 9.3% year-over-year to $12.7 million.
• Average loans receivable increased to $1.25 billion, growing from $1.21 billion year-over-year.
• Non-performing loans decreased to 0.61% of total loans.
• Company reported adjusted net income of $3.2 million, a 2.4% increase from the previous quarter.

Negative

• Net income decreased by 19% from the previous quarter and 3.3% year-over-year.
• Provision for loan losses increased by $1.2 million compared to the prior year quarter.
• Efficiency ratio rose to 65.66%, indicating higher operational costs.
• Tax equivalent net interest margin declined to 2.80%, a decrease from the previous quarter.

YORKTOWN HEIGHTS, N.Y., April 28, 2022 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $3.5 million, or $0.24 per diluted share, for the three months ended March 31, 2022, compared to $4.3 million, or $0.30 per diluted share, for the three months ended December 31, 2021 and $3.6 million, or $0.25 per diluted share, for the three months ended March 31, 2021.

Results for the three months ended March 31, 2021 include a benefit for loan losses of $944,000, or $0.05 per diluted share, net of tax, related to the release of qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic.

On April 27, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.07 per share, representing a 17% increase compared to the linked quarter. The dividend is payable on or about May 27, 2022 to shareholders of record as of the close of business on May 13, 2022.

Third Quarter Highlights

• Net income of $3.5 million or $0.24 per diluted share for the current quarter, decreases of 19.0% and 3.3% compared to the linked quarter and same quarter last year, respectively. Excluding certain non-recurring items, current quarter adjusted net income (non-GAAP) was $3.2 million or $0.23 per diluted share, an increase of 2.4% compared to the linked quarter and a decrease of 0.6% compared to the same quarter last year. The decrease in net income compared to the prior year quarter includes a $1.2 million increase in the provision for loan losses, as the prior year quarter included a $944,000 release of qualitative reserves associated with the COVID-19 pandemic. Reconciliations of GAAP to non-GAAP financial measures are included at the end of this release.
  
  
• Net interest income of $12.7 million for the current quarter, a decrease of 4.1% from the linked quarter and an increase of 9.3% from the same quarter last year. Adjusted net interest income (non-GAAP) of $12.4 million for the current quarter, unchanged from the linked quarter and an increase of 9.7% from the same quarter last year.
  
  
• Tax equivalent net interest margin of 2.80% for the current quarter, a decrease from 2.97% in the linked quarter and an increase from 2.69% for the same quarter last year. Adjusted tax equivalent net interest margin (non-GAAP) of 2.70% for the current quarter, a decrease from 2.75% for the linked quarter and an increase from 2.61% for the same quarter last year.
  
  
• Average cost of interest-bearing deposits of 0.37% for the current quarter, a decrease from 0.39% in the linked quarter and 0.59% for the same quarter last year.
  
  
• Efficiency ratio of 65.66% for the current quarter, compared to 60.92% for the linked quarter and 70.10% for the same quarter last year. Adjusted efficiency ratio (non-GAAP) of 67.24% for the current quarter, largely unchanged from the linked quarter and improved from 72.76% for the same quarter last year.
  
  
• Average loans receivable, excluding SBA Paycheck Protection Program (“PPP”) loans, of $1.25 billion for the current quarter, increased from $1.23 billion and $1.21 billion in the linked quarter and the same quarter last year, respectively.
  
  
• Average deposits of $1.56 billion for the current quarter, increases of 2.8% and 11.2% compared to the linked quarter and same quarter last year, respectively.
  
  
• Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.68% as of March 31, 2022, an increase from 0.66% as of June 30, 2021.
  
  
• Non-performing loans of $7.9 million, or 0.61% of total net loans receivable (excluding PPP loans), as of March 31, 2022, increased from 0.48% as of June 30, 2021.
  
  
• Loans on COVID-19-related payment deferral totaled $3.6 million (1 loan), or 0.28% of gross loans, as of March 31, 2022, compared to $27.3 million (19 loans), or 2.21% of gross loans, as of June 30, 2021.

President’s Comments

“We are extremely pleased with our third quarter and nine-month financial results which exhibited solid core earnings combined with strong loan and deposit growth despite continued economic uncertainty,” said Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation. “Annualized loan growth excluding PPP loans was 10.0% for the nine months and 13.6% for the current quarter. I am encouraged by the increased opportunities to originate quality loans within our strong market footprint. We believe we are well positioned to take advantage of the increase in market rates because of our current elevated liquidity position, resulting from significant deposit growth, and expected loan and securities portfolio repricing opportunities. Of the $1.3 billion of loan balances, 15% are subject to daily or monthly repricing with another 4% scheduled to mature or re-price within the next 12 months; additionally, approximately 13% of our securities portfolio have adjustable rates, more than half of which are subject to re-pricing in the June quarter. I am proud of what our PCSB team has accomplished as we continue working to create sustainable value for our shareholders.”

Income Statement Summary

Net income for the current quarter was $3.5 million, which decreased $814,000 from the linked quarter and $118,000 from the prior year quarter. The change from the linked quarter is primarily due to a $541,000 decrease in net interest income, a $272,000 decrease in noninterest income and increases of $151,000 in noninterest expense and $22,000 in provision for loan losses, partially offset by a $172,000 decrease in income tax expense. The change from the prior year quarter is primarily due to increases of $1.2 million in provision for loan losses and $384,000 in noninterest expense, largely offset by increases of $1.1 million in net interest income and $331,000 in noninterest income, and a $35,000 decrease in income tax expense.

Net interest income was $12.7 million for the current quarter, a decrease of $541,000, or 4.1%, compared to the linked quarter and an increase of $1.1 million, or 9.3%, compared to the prior year quarter. The decrease compared to the linked quarter is primarily the result of a 17 basis point decrease in the tax equivalent net interest margin, partially offset by a $36.9 million, or 2.1%, increase in average interest-earning assets. The increase in net interest income compared to the prior year period is primarily the result of an 11 basis point increase in the tax equivalent net interest margin and a $99.6 million, or 5.7%, increase in average interest-earning assets.

The Company recognized PPP loan interest and origination fee income (net of costs) of $266,000 in the current quarter, compared to $332,000 in the linked quarter and $279,000 in the prior year quarter. Unearned origination fees (net of costs) on PPP loans totaled $117,000 as of March 31, 2022 and will be recognized in income over the remaining lives of the loans. The timing of such recognition is largely dependent on the timing of loan forgiveness, which the Company expects to be substantially complete by June 30, 2022.

The tax equivalent net interest margin was 2.80% for the current quarter, reflecting a decrease of 17 basis points compared to 2.97% in the linked quarter and an increase of 11 basis points compared to 2.69% in the prior year quarter. During the linked quarter, the Company recognized $555,000 of loan prepayment income. Adjusted net interest margin, which excludes the effects of loan prepayment income and PPP loan interest and fees, was 2.70% for the current quarter compared to 2.75% in the linked quarter and 2.61% in the prior year quarter. Compared to the prior year quarter, reductions in the cost of funds were partially offset by a decrease in adjusted asset yield, driven by lower market interest rates. Compared to the linked quarter, margin compression was the result of an increase in cash liquidity. Reconciliations of GAAP to non-GAAP financial measures are included at the end of this release.

Tax equivalent yield on interest-earning assets for the current quarter was 3.12%, decreases of 21 basis points from the linked quarter and 11 basis point from the prior year quarter. Excluding the effects of non-recurring PPP loan income and loan prepayment income, the tax equivalent yield on interest-earning assets for the current quarter was 3.03%, decreases of 8 basis points from the linked quarter and 10 basis points from the same quarter last year. The decrease in yield compared to the prior year quarter is a result of the loan and investment portfolios continuing to re-price downward due to lower market interest rates.

The cost of interest-bearing deposits was 0.37% for the current quarter, decreases of 2 basis points and 22 basis points from 0.39% and 0.59% in the linked quarter and prior year quarter, respectively. In response to lower market interest rates and increased liquidity levels, deposit rate reductions have been implemented throughout the last 2 years, the effects of which continue to be realized. As of quarter end, the weighted average cost of interest-bearing deposits was 0.35%. The cost of interest-bearing liabilities was 0.43% for the current quarter, decreases of 4 basis points from 0.47% in the linked quarter and 27 basis points from 0.70% in the prior year quarter. Over the next 12 months, the Company has $50.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.03%.

The provision for loan losses was $286,000 for current quarter, compared to $264,000 for the linked quarter and a benefit for loan losses of $894,000 for the prior year quarter. Loans on COVID-19 related payment deferral totaled $3.6 million, or 0.28% of gross loans, as of March 31, 2022, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Charge-offs, net of recoveries, were $4,000 for the current quarter compared to recoveries, net of charge-offs, of $6,000 for the linked quarter and $82,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.61% as of March 31, 2022, an increase from 0.48% as of June 30, 2021.

Noninterest income of $923,000 for the current quarter decreased $272,000 compared to the linked quarter and increased $331,000 compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to decreases of $548,000 in gain on the sale of premises, $32,000 in gains on the sale of loans and $25,000 in all other noninterest income, partially offset by an increase of $333,000 in swap income. The increase compared to the prior year quarter was primarily due to increases of $333,000 in swap income, $65,000 in bank-owned life insurance income, $37,000 in fees and service charges and $9,000 in gains on the sale of loans, partially offset by a $113,000 decrease in gains on the sale of securities.

Noninterest expense of $9.0 million for the current quarter increased $151,000 compared to the linked quarter and $384,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increased professional, occupancy and data processing costs, partially offset by lower salary and benefits expense. Noninterest expenses increased compared to the prior year quarter primarily due to higher salaries and benefits and professional costs which were partially offset by lower pension costs.

The effective income tax rate was 21.0% for the current quarter, as compared to 20.4% for the linked quarter and 21.1% for the prior year quarter.

Balance Sheet Summary

Total assets increased $109.6 million to $1.98 billion at March 31, 2022 as compared to June 30, 2021, due to increases of $56.4 million in net loans receivable and $53.1 million in investment securities. Net loans receivable increased $56.4 million, or 4.6%, and $89.6 million or 7.5% excluding PPP loans. The increase was primarily the result of increases in commercial mortgage loans and construction loans of $70.8 million and $6.7 million, respectively, partially offset by decreases in commercial loans and residential mortgage loans of $9.2 million and $8.9 million, respectively. The decrease in commercial loans includes a decrease in PPP loans of $32.3 million, driven by forgiveness and paydowns, largely offset by a net increase of $23.0 million in all other commercial loans. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $28.2 million in state and municipal securities, $15.2 million in mortgage-backed securities, $5.3 million in corporate securities and $4.4 million in U.S. government and agency bonds.

Total liabilities increased $107.8 million to $1.71 billion at March 31, 2022 as compared to June 30, 2021 as an increase of $133.0 million in deposits was partially offset by decreases of $17.6 million in FHLB advances and $7.7 million in all other liabilities. The $133.0 million increase in deposits includes increases in money market, NOW, savings and demand accounts of $63.5 million, $44.2 million, $30.4 million and $24.8 million, respectively, partially offset by decreases in time deposits of $29.9 million. Current quarter deposit growth of $101.7 million or 6.7% includes approximately $38.1 million of transient deposits expected to outflow in the subsequent quarter.

Total shareholders’ equity increased $1.8 million to $276.4 million at March 31, 2022 as compared to $274.6 million as of June 30, 2021. The increase for the nine months ended March 31, 2022 was primarily due to net income of $11.4 million and $3.8 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, partially offset by the repurchase of $8.2 million (443,788 shares) of common stock, $2.5 million of other comprehensive losses related primarily to unrealized losses on investment securities driven by higher market interest rates and $2.6 million of cash dividends declared and paid.

At March 31, 2022, the Company’s book value per share and tangible book value per share were $18.02 and $17.62, respectively, compared to $17.41 and $17.01, respectively, at June 30, 2021. Reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) appear at the end of this release. At March 31, 2022, the Bank was considered “well capitalized” under applicable regulatory guidelines.

About PCSB Financial Corporation and PCSB Bank

PCSB Financial Corporation is the bank holding company for PCSB Bank. PCSB Bank is a New York-chartered commercial bank that has served the banking needs of its customers in the Lower Hudson Valley of New York State since 1871. It operates from its executive offices/headquarters and 14 branch offices located in Dutchess, Putnam, Rockland and Westchester Counties in New York.

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

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the duration, extent and severity of the COVID-19 pandemic, including its impact on our business and operations, the impact of lost fee revenue and increased operating expenses, as well as its effect on our customers and issuers of securities, including their ability to make timely payments on obligations, service providers and on economies and markets more generally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce 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)

		March 31,				June 30,
		2022				2021
ASSETS
Cash and due from banks		$	156,982			$	152,070
Federal funds sold			1,910				7,235
Total cash and cash equivalents			158,892				159,305
Held to maturity debt securities, at amortized cost (fair value of $379,500 and $342,137 as of March 31, 2022 and June 30, 2021, respectively)			410,896				337,584
Available for sale debt securities, at fair value			37,185				57,387
Total investment securities			448,081				394,971
Loans receivable, net of allowance for loan losses of $8,711 and $7,881 as of March 31, 2022 and June 30, 2021, respectively			1,285,886				1,229,451
Accrued interest receivable			6,583				6,398
FHLB stock			3,715				4,507
Premises and equipment, net			18,904				21,099
Deferred tax asset, net			3,089				2,552
Bank-owned life insurance			36,136				35,568
Goodwill			6,106				6,106
Other intangible assets			102				151
Other assets			17,047				14,827
Total assets		$	1,984,541			$	1,874,935
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits		$	1,380,811			$	1,272,610
Non-interest bearing deposits			243,908				219,072
Total deposits			1,624,719				1,491,682
Mortgage escrow funds			8,744				10,536
Advances from FHLB			48,357				65,957
Other liabilities			26,329				32,200
Total liabilities			1,708,149				1,600,375
Commitments and contingencies			-				-
Shareholders' equity:
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2022 and June 30, 2021)			-				-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both March 31, 2022 and June 30, 2021, and 15,334,857 and 15,770,645 shares outstanding as of March 31, 2022 and June 30, 2021, respectively)			187				187
Additional paid in capital			192,860				189,926
Retained earnings			159,765				150,987
Unearned compensation - ESOP			(9,449	)			(10,176	)
Accumulated other comprehensive loss, net of income taxes			(5,628	)			(3,099	)
Treasury stock, at cost (3,368,720 and 2,932,932 shares as of March 31, 2022 and June 30, 2021, respectively)			(61,343	)			(53,265	)
Total shareholders' equity			276,392				274,560
Total liabilities and shareholders' equity		$	1,984,541			$	1,874,935

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

		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2022				2021				2022				2021
Interest and dividend income
Loans receivable		$	11,943			$	12,116			$	36,701			$	36,845
Investment securities			2,152				1,700				6,294				5,489
Federal funds and other			105				109				302				344
Total interest and dividend income			14,200				13,925				43,297				42,678
Interest expense
Deposits and escrow interest			1,217				1,782				3,863				6,372
FHLB advances			266				506				924				1,545
Total interest expense			1,483				2,288				4,787				7,917
Net interest income			12,717				11,637				38,510				34,761
Provision (benefit) for loan losses			286				(894	)			563				(678	)
Net interest income after provision for loan losses			12,431				12,531				37,947				35,439
Noninterest income
Fees and service charges			390				353				1,198				1,038
Bank-owned life insurance			185				120				568				381
Gain on sale of premises			-				-				548				-
Swap income			333				-				333				367
Gains on sales of loans receivable			9				-				56				-
Gains on sales of securities			-				113				-				113
Other			6				6				28				30
Total noninterest income			923				592				2,731				1,929
Noninterest expense
Salaries and employee benefits			5,737				5,595				17,353				16,722
Occupancy and equipment			1,414				1,359				4,115				4,051
Communication and data processing			573				517				1,626				1,539
Professional fees			543				382				1,356				1,285
Postage, printing, stationery and supplies			153				146				478				452
FDIC assessment			125				115				371				350
Advertising			100				100				300				300
Amortization of intangible assets			17				21				49				61
Other operating expenses			294				337				737				1,127
Total noninterest expense			8,956				8,572				26,385				25,887
Net income before income tax expense			4,398				4,551				14,293				11,481
Income tax expense			924				959				2,917				2,467
Net income		$	3,474			$	3,592			$	11,376			$	9,014
Earnings per common share:
Basic		$	0.25			$	0.25			$	0.80			$	0.60
Diluted			0.24				0.25				0.80				0.60
Weighted average common shares outstanding:
Basic			14,165,775				14,631,122				14,247,188				14,944,097
Diluted			14,197,716				14,632,342				14,301,150				14,944,664

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

		Three Months Ended
		March 31, 2022												December 31, 2021												March 31, 2021
		Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable (1)		$	1,255,117			$	11,943				3.81	%		$	1,242,109			$	12,651				4.07	%		$	1,252,492			$	12,116				3.88	%
Investment securities (1)			436,702				2,152				2.06				427,918				2,131				2.08				319,239				1,700				2.18
Other interest-earning assets			141,677				105				0.30				126,586				88				0.28				162,193				109				0.27
Total interest-earning assets			1,833,496				14,200				3.12				1,796,613				14,870				3.33				1,733,924				13,925				3.23
Non-interest-earning assets			77,202												77,506												68,748
Total assets		$	1,910,698											$	1,874,119											$	1,802,672
Liabilities and equity:
NOW accounts		$	215,021				94				0.18			$	192,856				90				0.18			$	161,049				59				0.15
Money market accounts			360,131				144				0.16				355,708				168				0.19				274,516				208				0.31
Savings accounts and mortgage escrow funds			415,850				113				0.11				398,076				108				0.11				368,791				132				0.15
Time deposits			349,266				866				1.00				357,242				926				1.03				411,500				1,383				1.36
Total interest-bearing deposits			1,340,268				1,217				0.37				1,303,882				1,292				0.39				1,215,856				1,782				0.59
FHLB advances			57,185				266				1.89				63,805				320				1.99				104,604				506				1.96
Total interest-bearing liabilities			1,397,453				1,483				0.43				1,367,687				1,612				0.47				1,320,460				2,288				0.70
Non-interest-bearing deposits			220,809												214,558												187,778
Other non-interest-bearing liabilities			15,370												16,250												24,272
Total liabilities			1,633,632												1,598,495												1,532,510
Total shareholders' equity			277,066												275,624												270,162
Total liabilities and shareholders' equity		$	1,910,698											$	1,874,119											$	1,802,672
Net interest income						$	12,717											$	13,258											$	11,637
Interest rate spread - tax equivalent (2)											2.69												2.86												2.53
Net interest margin - tax equivalent (3)											2.80												2.97												2.69
Average interest-earning assets to interest-bearing liabilities			131.20	%											131.36	%											131.31	%
(1) Tax exempt yield is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all periods presented. See reconciliation of GAAP to non-GAAP measures at the end of this release.
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets. See reconciliation of GAAP to non-GAAP measures at the end of this release.

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

		Nine Months Ended March 31,
		2022												2021
		Average Balance				Interest/ Dividends				Average Rate				Average Balance				Interest/ Dividends				Average Rate
Assets:
Loans receivable (1)		$	1,240,253			$	36,701				3.95	%		$	1,245,881			$	36,845				3.95	%
Investment securities (1)			423,062				6,294				2.07				316,114				5,489				2.36
Other interest-earning assets			142,974				302				0.28				162,946				344				0.28
Total interest-earning assets			1,806,289				43,297				3.22				1,724,941				42,678				3.31
Non-interest-earning assets			77,027												70,364
Total assets		$	1,883,316											$	1,795,305
Liabilities and equity:
NOW accounts		$	196,803				254				0.17			$	153,378				227				0.20
Money market accounts			355,471				499				0.19				260,258				657				0.34
Savings accounts and escrow			403,740				334				0.11				363,768				502				0.18
Time deposits			358,050				2,776				1.03				429,811				4,986				1.54
Total interest-bearing deposits			1,314,064				3,863				0.39				1,207,215				6,372				0.70
FHLB advances			62,309				924				1.98				105,569				1,545				1.95
Total interest-bearing liabilities			1,376,373				4,787				0.46				1,312,784				7,917				0.80
Non-interest-bearing deposits			214,391												183,467
Other non-interest-bearing liabilities			17,186												26,570
Total liabilities			1,607,950												1,522,821
Total shareholders' equity			275,366												272,484
Total liabilities and shareholders' equity		$	1,883,316											$	1,795,305
Net interest income						$	38,510											$	34,761
Interest rate spread - tax equivalent (2)											2.76												2.51
Net interest margin - tax equivalent (3)											2.86												2.70
Average interest-earning assets to interest-bearing liabilities			131.24	%											131.40	%
(1) Tax exempt yield is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for all periods presented. See reconciliation of GAAP to non-GAAP measures at the end of this release.
(2) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities.
(3) Net interest margin represents tax equivalent net interest income divided by average interest-earning assets. See reconciliation of GAAP to non-GAAP measures at the end of this release.

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

		As of
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Condensed Balance Sheets
Cash and cash equivalents		$	158,892			$	120,339			$	148,012			$	159,305			$	169,314
Total investment securities			448,081				433,999				423,525				394,971				347,302
Loans receivable, net			1,285,886				1,243,646				1,210,674				1,229,451				1,261,155
Other assets			91,682				90,137				90,968				91,208				76,903
Total assets		$	1,984,541			$	1,888,121			$	1,873,179			$	1,874,935			$	1,854,674
Total deposits and mortgage escrow funds		$	1,633,463			$	1,533,947			$	1,511,465			$	1,502,218			$	1,463,542
Advances from Federal Home Loan Bank			48,357				58,390				65,924				65,957				95,991
Other liabilities			26,329				20,950				21,062				32,200				23,844
Total liabilities			1,708,149				1,613,287				1,598,451				1,600,375				1,583,377
Total shareholders' equity			276,392				274,834				274,728				274,560				271,297
Total liabilities and shareholders' equity		$	1,984,541			$	1,888,121			$	1,873,179			$	1,874,935			$	1,854,674

		Quarter Ended																				Nine Months Ended
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Condensed Income Statements
Interest income		$	14,200			$	14,870			$	14,227			$	14,586			$	13,925			$	43,297			$	42,678
Interest expense			1,483				1,612				1,692				2,005				2,288				4,787				7,917
Net interest income			12,717				13,258				12,535				12,581				11,637				38,510				34,761
Provision (benefit) for loan losses			286				264				13				5				(894	)			563				(678	)
Noninterest income			923				1,195				613				568				592				2,731				1,929
Noninterest expense			8,956				8,805				8,624				8,867				8,572				26,385				25,887
Income before income tax expense			4,398				5,384				4,511				4,277				4,551				14,293				11,481
Income tax expense			924				1,096				897				867				959				2,917				2,467
Net income		$	3,474			$	4,288			$	3,614			$	3,410			$	3,592			$	11,376			$	9,014
Earnings per share:
Basic		$	0.25			$	0.30			$	0.25			$	0.23			$	0.25			$	0.80			$	0.60
Diluted			0.24				0.30				0.25				0.23				0.25				0.80				0.60

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

		Quarter Ended																				Nine Months Ended
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Performance Ratios (1):
Return on average assets			0.73	%			0.92	%			0.78	%			0.73	%			0.80	%			0.81	%			0.67	%
Return on average equity			5.02	%			6.22	%			5.29	%			4.95	%			5.32	%			5.51	%			4.41	%
Interest rate spread			2.69	%			2.86	%			2.71	%			2.67	%			2.53	%			2.76	%			2.51	%
Net interest margin			2.80	%			2.97	%			2.82	%			2.81	%			2.69	%			2.86	%			2.70	%
Efficiency ratio			65.66	%			60.92	%			65.59	%			67.43	%			70.10	%			63.98	%			70.56	%
Noninterest income to average assets			0.19	%			0.26	%			0.13	%			0.12	%			0.13	%			0.19	%			0.14	%
Noninterest expense to average assets			1.87	%			1.88	%			1.85	%			1.89	%			1.90	%			1.87	%			1.92	%
Average interest-earning assets to average interest-bearing liabilities			131.20	%			131.36	%			131.14	%			131.21	%			131.31	%			131.24	%			131.40	%
Average equity to average assets			14.50	%			14.71	%			14.66	%			14.67	%			14.99	%			14.62	%			15.18	%
Dividend payout ratio (2)			24.61	%			20.22	%			24.24	%			26.07	%			16.65	%			22.84	%			20.37	%

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, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Loans to deposits			79.15	%			81.65	%			80.46	%			82.42	%			86.72	%
Share Data:
Shares outstanding			15,334,857				15,337,979				15,574,310				15,770,645				15,966,216
Book value per common share		$	18.02			$	17.92			$	17.64			$	17.41			$	16.99
Tangible book value per common share (3)		$	17.62			$	17.51			$	17.24			$	17.01			$	16.60
Asset Quality Ratios:
Non-performing loans receivable		$	7,859			$	7,890			$	5,732			$	5,764			$	2,054
Non-performing assets		$	7,859			$	7,890			$	5,732			$	5,764			$	2,054
Allowance for loan losses as a percent of total loans receivable (4)			0.68	%			0.68	%			0.68	%			0.66	%			0.65	%
Allowance for loan losses as a percent of non-performing loans receivable			110.84	%			106.83	%			142.34	%			136.73	%			382.91	%
Non-performing loans as a percent of total loans receivable, net (4)			0.61	%			0.64	%			0.48	%			0.48	%			0.17	%
Non-performing assets as a percent of total assets			0.40	%			0.42	%			0.31	%			0.31	%			0.11	%
Net charge-offs (recoveries)		$	4			$	(6	)		$	(265	)		$	(11	)		$	(82	)
Net charge-offs (recoveries) to average outstanding loans during the period (1)			0.00	%			0.00	%			(0.09	%)			0.00	%			(0.03	%)
Capital Ratios (5):
Tier 1 capital (to adjusted total assets)			12.86	%			12.91	%			12.72	%			12.48	%			12.76	%
Common equity Tier 1 capital (to risk-weighted assets)			17.22	%			17.67	%			17.84	%			17.93	%			17.72	%
Tier 1 capital (to risk-weighted assets)			17.22	%			17.67	%			17.84	%			17.93	%			17.72	%
Total capital (to risk-weighted assets)			17.83	%			18.28	%			18.46	%			18.53	%			18.33	%
(1) Performance ratios for quarter ended periods are annualized.
(2) Dividends declared per share divided by net income per share.
(3) Tangible book value per share is a non-GAAP measure and equals total shareholders’ equity, less goodwill and other intangible assets, divided by shares outstanding. We believe this disclosure may be meaningful to those investors who seek to evaluate our equity without giving effect to goodwill and other intangible assets. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.
(4) Total loans receivable excludes PPP loans.
(5) Represents Bank ratios.

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

		As of
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Mortgage loans:
Residential mortgages		$	215,431			$	212,817			$	221,735			$	224,305			$	229,008
Commercial mortgages			897,424				867,581				838,021				826,624				831,162
Construction			16,894				11,857				11,639				10,151				10,047
Net deferred loan origination (fees) costs			(23	)			(18	)			97				196				365
Total mortgage loans			1,129,726				1,092,237				1,071,492				1,061,276				1,070,582
Commercial and consumer loans:
Commercial loans (1)			141,427				135,055				122,031				150,658				171,314
Home equity credit lines			22,557				24,142				24,936				25,439				27,211
Consumer and overdrafts			348				356				394				345				269
Net deferred loan origination costs (fees)			539				285				(20	)			(386	)			(356	)
Total commercial and consumer loans			164,871				159,838				147,341				176,056				198,438
Total loans receivable			1,294,597				1,252,075				1,218,833				1,237,332				1,269,020
Allowance for loan losses			(8,711	)			(8,429	)			(8,159	)			(7,881	)			(7,865	)
Loans receivable, net		$	1,285,886			$	1,243,646			$	1,210,674			$	1,229,451			$	1,261,155
(1) Includes PPP loans totaling:		$	4,701			$	12,769			$	19,763			$	37,050			$	50,380

		As of
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Demand deposits		$	243,908			$	215,708			$	216,470			$	219,072			$	203,344
NOW accounts			221,386				198,610				181,572				177,223				169,077
Money market accounts			396,358				361,352				363,090				332,843				301,892
Savings			417,975				393,041				381,836				387,529				372,151
Time deposits			345,092				354,356				361,669				375,015				407,826
Total deposits		$	1,624,719			$	1,523,067			$	1,504,637			$	1,491,682			$	1,454,290

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, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Computation of Adjusted Net Income and Adjusted Earnings Per Share
Net income applicable to common stock (GAAP)		$	3,474			$	4,288			$	3,614			$	3,410			$	3,592			$	11,376			$	9,014
Adjustments (1):
Prepayment income on loans receivable			(43	)			(442	)			(26	)			(532	)			(43	)			(511	)			(147	)
Prepayment income on investment securities			-				-				-				-				-				-				(90	)
Gain on sale of premises			-				(436	)			-				-				-				(436	)			-
PPP interest and fee income			(210	)			(264	)			(299	)			(411	)			(220	)			(773	)			(515	)
Gains on sale of investment securities			-				-				-				-				(89	)			-				(89	)
Adjusted net income (Non-GAAP)		$	3,221			$	3,146			$	3,289			$	2,467			$	3,240			$	9,656			$	8,173
Average number of common shares outstanding:
Basic			14,165,775				14,236,473				14,337,543				14,553,783				14,631,122				14,247,188				14,944,097
Diluted			14,197,716				14,281,232				14,405,816				14,586,928				14,632,342				14,301,150				14,944,664
Earnings per share (GAAP):
Basic		$	0.25			$	0.30			$	0.25			$	0.23			$	0.25			$	0.80			$	0.60
Diluted			0.24				0.30				0.25				0.23				0.25				0.80				0.60
Adjusted earnings per common share (Non-GAAP):
Basic		$	0.23			$	0.22			$	0.23			$	0.17			$	0.22			$	0.68			$	0.55
Diluted			0.23				0.22				0.23				0.17				0.22				0.68				0.55
(1) Amounts included in income before income tax expense are presented net of tax.

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

		Quarter Ended												Nine Months Ended
		March 31, 2022				December 31, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Computation of Tax Equivalent Net Interest Income
Total interest income		$	14,200			$	14,870			$	13,925			$	43,297			$	42,678
Total interest expense			1,483				1,612				2,288				4,787				7,917
Net interest income (GAAP)			12,717				13,258				11,637				38,510				34,761
Tax equivalent adjustment			101				99				51				289				130
Net interest income - tax equivalent (Non-GAAP)		$	12,818			$	13,357			$	11,688			$	38,799			$	34,891

		Quarter Ended																				Nine Months Ended
		March 31, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Computation of Efficiency Ratio
Noninterest expense (GAAP)		$	8,956			$	8,805			$	8,624			$	8,867			$	8,572			$	26,385			$	25,887
Net interest income (GAAP)		$	12,717			$	13,258			$	12,535			$	12,581			$	11,637			$	38,510			$	34,761
Noninterest income (GAAP)			923				1,195				613				568				592				2,731				1,929
Total (GAAP)			13,640				14,453				13,148				13,149				12,229				41,241				36,690
Adjustments:
Prepayment income on loans receivable			(55	)			(555	)			(32	)			(667	)			(55	)			(642	)			(187	)
Prepayment income on investment securities			-				-				-				-				-				-				(117	)
Gains on sales of premises			-				(548	)			-				-				-				(548	)			-
PPP interest and fee income			(266	)			(332	)			(373	)			(516	)			(279	)			(971	)			(655	)
Gains on sales of investment securities			-				-				-				-				(113	)			-				(113	)
Adjusted total (Non-GAAP)		$	13,319			$	13,018			$	12,743			$	11,966			$	11,782			$	39,080			$	35,618
Efficiency ratio (GAAP)			65.66	%			60.92	%			65.59	%			67.43	%			70.10	%			63.98	%			70.56	%
Adjusted efficiency ratio (Non-GAAP)			67.24	%			67.64	%			67.68	%			74.10	%			72.76	%			67.52	%			72.68	%

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, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
Computation of Tangible Book Value per Common Share
Total shareholders' equity (GAAP)		$	276,392			$	274,834			$	274,728			$	274,560			$	271,297
Adjustments:
Goodwill			(6,106	)			(6,106	)			(6,106	)			(6,106	)			(6,106	)
Other intangible assets			(102	)			(119	)			(135	)			(151	)			(168	)
Tangible common shareholders' equity (Non-GAAP)		$	270,184			$	268,609			$	268,487			$	268,303			$	265,023
Common shares outstanding			15,334,857				15,337,979				15,574,310				15,770,645				15,966,216
Book value per share (GAAP)		$	18.02			$	17.92			$	17.64			$	17.41			$	16.99
Adjustments:
Effects of intangible assets			(0.40	)			(0.41	)			(0.40	)			(0.40	)			(0.39	)
Tangible book value per common share (Non-GAAP)		$	17.62			$	17.51			$	17.24			$	17.01			$	16.60

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, 2022				December 31, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin
Average interest-earning assets		$	1,833,496			$	1,796,613			$	1,733,924			$	1,806,289			$	1,724,941
Interest and dividend income (GAAP)		$	14,200			$	14,870			$	13,925			$	43,297			$	42,678
Less: PPP interest and fee income			(266	)			(332	)			(279	)			(971	)			(655	)
Less: Prepayment income on loans receivable			(55	)			(555	)			(55	)			(642	)			(187	)
Adjusted interest and dividend income (Non-GAAP)		$	13,879			$	13,983			$	13,591			$	41,684			$	41,836
Yield on interest-earning assets (GAAP)			3.12	%			3.33	%			3.23	%			3.22	%			3.31	%
Adjusted yield on interest-earning assets (Non-GAAP)			3.03	%			3.11	%			3.14	%			3.08	%			3.23	%
Net interest income (GAAP)		$	12,717			$	13,258			$	11,637			$	38,510			$	34,761
Less: PPP interest and fee income			(266	)			(332	)			(279	)			(971	)			(655	)
Less: Prepayment income on loans receivable			(55	)			(555	)			(55	)			(642	)			(187	)
Adjusted net interest income (Non-GAAP)		$	12,396			$	12,371			$	11,303			$	36,897			$	33,919
Net interest margin (GAAP)			2.80	%			2.97	%			2.69	%			2.86	%			2.70	%
Adjusted net interest margin (Non-GAAP)			2.70	%			2.75	%			2.61	%			2.72	%			2.62	%

FAQ

What were PCSB's Q3 2022 earnings?

PCSB reported a net income of $3.5 million, or $0.24 per diluted share, for Q3 2022.

How did PCSB's net interest income perform in Q3 2022?

Net interest income for Q3 2022 was $12.7 million, a decrease of 4.1% from the linked quarter.

What dividend did PCSB declare for Q3 2022?

PCSB declared a quarterly cash dividend of $0.07 per share, a 17% increase from the previous quarter.

What is the status of non-performing loans at PCSB?

As of March 31, 2022, non-performing loans were $7.9 million, or 0.61% of total net loans receivable.

What was the efficiency ratio for PCSB in Q3 2022?

PCSB's efficiency ratio for Q3 2022 was 65.66%, compared to 60.92% in the previous quarter.