PCSB Financial Corporation Announces Third Fiscal Quarter Financial Results and Declares Quarterly Cash Dividend
YORKTOWN HEIGHTS, New York, April 29, 2021 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the "Company") (NASDAQ:PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $3.6 million, or $0.25 per diluted share, for the three months ended March 31, 2021 compared to $2.7 million, or $0.18 per diluted share, for the three months ended December 31, 2020 and $1.2 million, or $0.08 per diluted share, for the three months ended March 31, 2020. Net income was $9.0 million, or $0.60 per diluted share, for the nine months ended March 31, 2021, compared to $6.4 million, or $0.40 per diluted share, for the nine months ended March 31, 2020.
Results for the three and nine months ended March 31, 2021 include a benefit for loan losses of $944,000 and $1.2 million, or $0.05 and $0.07 per diluted share, net of tax, respectively, related to the release of qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic. The prior year results include provision for loan losses of $1.7 million, or $0.09 per diluted share, net of tax, for both the three and nine months ended March 31, 2020 related to the establishment of these qualitative reserves.
On April 21, 2021, the Board of Directors declared a regular quarterly cash dividend of $0.06 per share, an increase of 50% from the prior quarter. The dividend is payable on or about May 28, 2021 to shareholders of record as of the close of business on May 14, 2021.
Third Quarter Highlights
- Earnings before income tax expense and provision (benefit) for loan losses of $3.7 million for the current quarter increased $58,000 or 1.6% from the linked quarter and $72,000 or 2.0% from the same quarter last year.
- Net interest income of $11.6 million for the current quarter increased $90,000 or 0.8% from the linked quarter and $112,000 or 1.0% from the same quarter last year.
- Tax equivalent net interest margin was 2.69% for the current quarter, a decrease from 2.71% in the linked quarter and 2.90% for the same quarter last year.
- The average cost of interest-bearing deposits was 0.59% for the current quarter, a decrease from 0.71% in the linked quarter and 1.18% for the same quarter last year.
- The efficiency ratio was 70.10% for the current quarter compared to 70.72% for the linked quarter and 70.38% for the prior year quarter.
- Average loans receivable, excluding SBA Paycheck Protection Program ("PPP") loans, of $1.21 billion for the current quarter, unchanged from the same quarter last year.
- Average deposits of $1.40 billion for the current quarter, increases of 1.6% and 11.0% compared to the linked quarter and same quarter last year, respectively.
- Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.65%, a decrease from 0.72% in the linked quarter and 0.68% in the prior year quarter.
- Non-performing loans of $2.1 million, or 0.17% of total net loans receivable (excluding PPP loans) as of March 31, 2021, compared to 0.14% as of December 31, 2020 and 0.15% as of March 31, 2020.
- Loans on a COVID-19 related payment deferral totaled $34.4 million, or 2.71% of gross loans, compared to $31.9 million, or 2.56% of the gross loans as of December 31, 2020. Loans on deferral totaling $8.7 million, $10.9 million, $1.3 million and $13.5 million are scheduled to resume payments in the next four consecutive quarters, respectively.
President's Comments
Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, commented, "We are pleased with the Company's operating and financial results for the quarter and nine months as we continue to provide stable core earnings. We are also encouraged by the improving economy resulting from the latest stimulus package and vaccine rollouts and expect our business communities to resume their operations at full capacity. That being said, we continue to be a source of strength to our customers and communities by participating in round 2 of the SBA's PPP program while assisting those small businesses as they begin the SBA's loan application forgiveness process from round 1. Meanwhile, asset quality remains very strong and our negative loan loss provision reflects the meaningful improvement in current economic conditions resulting from a decrease in COVID-19 driven stress. While there is still some uncertainty, it is good to see a recovery in the economy that will lead to opportunities for long-term growth and profitability for our shareholders.
Income Statement Summary
Net income for the three months ended March 31, 2021 was $3.6 million, an $898,000 increase from the linked quarter and a $2.4 million increase from the prior year period. The change from the linked quarter is primarily due to a $1.0 million decrease in the provision for loan losses, a $119,000 decrease in noninterest expenses and a $90,000 increase in net interest income, partially offset by a $151,000 decrease in noninterest income and a $161,000 increase in income tax expense. The change from the prior year period is primarily due to a $2.9 million decrease in the provision for loan losses and a $112,000 increase in net interest income, partially offset by a $599,000 increase in income tax expense.
Net interest income was $11.6 million for the quarter ended March 31, 2021, increases of $90,000 and $112,000, or 0.8% and 1.0%, compared to the linked quarter and prior year quarter, respectively. The increase compared to the linked quarter is primarily the result of an $18.9 million, or 1.1%, increase in average interest-earning assets, partially offset by a 2 basis point decrease in the tax equivalent net interest margin. The increase in net interest income compared to the prior year period is primarily the result of a $143.8 million, or 9.0% increase in average interest-earning assets, partially offset by a 21 basis point decrease in the tax equivalent net interest margin.
The tax equivalent net interest margin was 2.69% for the current quarter, reflecting a decrease of 2 basis points compared to 2.71% in the linked quarter and a 21 basis point decrease compared to 2.90% in the prior year quarter. When compared to the prior year period, while net interest income has increased, margin compression has resulted from significant asset growth primarily in cash and cash equivalents. However, in the current quarter, the reduction in funding costs mostly offset the decrease in asset yields, resulting in a largely unchanged tax equivalent net interest margin compared to the linked quarter. Some level of excess liquidity is expected to continue for the foreseeable future and is largely dependent on a number of factors, such as government stimulus programs as well as consumer and commercial spending activity.
Tax equivalent net interest margin, excluding the effect of PPP loans, was 2.62% for the current quarter compared to 2.66% in the linked quarter and 2.89% in the prior year quarter. Tax equivalent net interest margin, excluding the effect of PPP loans, was 2.64% for the current year to date period compared to 2.95% in the prior year period. Unearned origination fees (net of origination costs) on PPP loans totaled $1.2 million as of March 31, 2021 and will be recognized in income over the remaining lives of the loans and is largely dependent on the timing of forgiveness.
Tax equivalent yield on interest-earning assets for the current quarter was 3.23%, a 10 basis point decrease from the prior quarter and a 64 basis point decrease from the prior year quarter. A $42.6 million, or 3.5%, 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 twelve 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 0.59% for the current quarter, a decrease of 12 basis points and 59 basis points from 0.71% and 1.18% in the prior quarter and prior year quarter, respectively. 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. As of quarter end, the weighted average cost of interest-bearing deposits was 0.44%. The cost of interest-bearing liabilities was 0.70% for the current quarter, decreases of 11 basis points from 0.81% in the prior quarter and 56 basis points from 1.26% in the prior year quarter. Over the remainder of the current fiscal year, the Company has $50.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.31%. Additionally, over the same period the Company has $78.3 million of non-brokered time deposits maturing with a current weighted average cost of 0.98%. If our time deposit offer rates remain at their current levels, the Company expects the cost of these deposits to be reduced significantly or to be paid off with low-earning excess liquidity.
The benefit for loan losses was $894,000 for the three months ended March 31, 2021 compared to a provision for loan losses of $107,000 in the linked quarter and $2.0 million for the prior year quarter. Included in the prior year quarter was a provision for loan losses of $1.7 million associated with qualitative reserves established in the prior fiscal year in response to the COVID-19 pandemic. Included in the current quarter was a benefit for loan losses of $944,000 associated with release of those reserves. Loans on a COVID-19 related payment deferral totaled $34.4 million, or 2.71% of gross loans, as of March 31, 2021, compared to $31.9 million, or 2.56% of the gross loans, as of December 31, 2020. Recoveries, net of charge-offs, were $82,000 for the three months ended March 31, 2021 compared to charge-offs, net of recoveries, of $102,000 for the linked quarter and recoveries, net of charge-offs, of $122,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.17% as of March 31, 2021, an increase from 0.14% as of December 31, 2020 and 0.15% as of March 31, 2020.
Noninterest income of $592,000 for the three months ended March 31, 2021 decreased $151,000 compared to the linked quarter and increased $12,000 compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to decreases of $238,000 in swap income and $26,000 in all other noninterest income, partially offset by a $113,000 increase in net gains on the sale of investment securities. The increase compared to the prior year quarter was primarily due to a $75,000 increase in net gains on the sale of investment securities, partially offset by a decrease of $40,000 in gains on sale of foreclosed real estate and $23,000 in all other noninterest income.
Noninterest expense of $8.6 million for the three months ended March 31, 2021 decreased $119,000 compared to the linked quarter and increased $52,000 compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to decreases of $121,000 in professional fees and $144,000 in all other non-interest expenses, partially offset by increases of $75,000 in salaries and benefits and $71,000 in communications and data processing. The increase compared to the prior year quarter was caused primarily by increases of $115,000 in FDIC insurance premiums, $48,000 in occupancy expenses and $76,000 in all other expenses, partially offset by a decrease of $187,000 in salaries and benefits. 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 21.1% for the three months ended March 31, 2021, as compared to 22.8% for the prior year quarter.
Balance Sheet Summary
Total assets increased $62.7 million to $1.85 billion at March 31, 2021 as compared to $1.79 billion as of June 30, 2020 primarily due to increases of $34.1 million in total investment securities and $33.0 million in cash and cash equivalents. The increase in investment securities was primarily driven by an increase of $39.1 million in state and municipal securities, partially offset by a $5.0 million net decrease in all other securities, as the Company deployed excess liquidity. The increase in cash and cash equivalents is a result of an increase in deposits and reduced loan originations experienced during the year due to reduced economic activity resulting from the COVID-19 pandemic. Net loans receivable increased $208,000, the result of increases in commercial mortgages of $24.1 million and commercial loans of $7.1 million, partially offset by decreases in residential mortgages and home equity lines of credit of $26.4 million and $2.6 million, respectively. The increase in commercial loans includes an increase in PPP loans of $777,000, driven by the origination of $17.1 million in PPP loans, largely offset by paydowns and forgiveness of $16.3 million.
Total liabilities increased $65.2 million to $1.58 billion at March 31, 2021 as an $81.0 million increase in deposits was partially offset by decreases of $10.1 million in FHLB advances and $5.8 million all other liabilities.
Total shareholders' equity decreased $2.4 million to $271.3 million at March 31, 2021 as compared to June 30, 2020. This decrease was primarily due to the repurchase of $13.3 million (926,203 shares) of common stock and $1.8 million of cash dividends declared and paid, partially offset by net income of $9.0 million and $3.5 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period. As of March 31, 2021, there were 739,660 shares available to be repurchased under the current stock repurchase plan.
At March 31, 2021, the Company's book value per share and tangible book value per share were $16.99 and $16.60, 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 March 31, 2021, 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)
| March 31, | June 30, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 167,983 | $ | 135,045 | ||||
| Federal funds sold | 1,331 | 1,257 | ||||||
| Cash and cash equivalents | 169,314 | 136,302 | ||||||
| Held to maturity debt securities, at amortized cost (fair value of $313,974 and $281,497, respectively) | 309,692 | 275,772 | ||||||
| Available for sale debt securities, at fair value | 37,610 | 37,426 | ||||||
| Total investment securities | 347,302 | 313,198 | ||||||
| Loans receivable, net of allowance for loan losses of $7,865 and $8,639, respectively | 1,261,155 | 1,260,947 | ||||||
| Accrued interest receivable | 6,731 | 6,880 | ||||||
| FHLB stock | 5,854 | 6,308 | ||||||
| Premises and equipment, net | 19,364 | 20,853 | ||||||
| Deferred tax asset, net | 3,163 | 3,129 | ||||||
| Bank-owned life insurance | 25,400 | 25,019 | ||||||
| Goodwill | 6,106 | 6,106 | ||||||
| Other intangible assets | 168 | 229 | ||||||
| Other assets | 10,117 | 12,958 | ||||||
| Total assets | $ | 1,854,674 | $ | 1,791,929 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Interest-bearing deposits | $ | 1,250,945 | $ | 1,181,357 | ||||
| Non interest-bearing deposits | 203,345 | 191,898 | ||||||
| Total deposits | 1,454,290 | 1,373,255 | ||||||
| Mortgage escrow funds | 9,252 | 10,123 | ||||||
| Advances from Federal Home Loan Bank | 95,991 | 106,089 | ||||||
| Other liabilities | 23,844 | 28,749 | ||||||
| Total liabilities | 1,583,377 | 1,518,216 | ||||||
| Commitments and contingencies | - | - | ||||||
| Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2021 and June 30, 2020, respectively) | - | - | ||||||
| Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 and 18,712,295 shares issued as of March 31, 2021 and June 30, 2020, and 15,966,216 and 16,898,137 shares outstanding as of March 31, 2021 and June 30, 2020, respectively) | 187 | 187 | ||||||
| Additional paid in capital | 188,926 | 186,200 | ||||||
| Retained earnings | 148,466 | 141,288 | ||||||
| Unearned compensation - ESOP | (10,418 | ) | (11,145 | ) | ||||
| Accumulated other comprehensive loss, net of income taxes | (6,180 | ) | (6,403 | ) | ||||
| Treasury stock, at cost (2,737,361 and 1,814,158 shares as of March 31, 2021 and June 30, 2020, respectively) | (49,684 | ) | (36,414 | ) | ||||
| Total shareholders' equity | 271,297 | 273,713 | ||||||
| Total liabilities and shareholders' equity | $ | 1,854,674 | $ | 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 | Nine Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans receivable | $ | 12,116 | $ | 13,114 | $ | 36,845 | $ | 39,299 | ||||||||
| Investment securities | 1,700 | 2,003 | 5,489 | 6,974 | ||||||||||||
| Federal funds and other | 109 | 217 | 344 | 816 | ||||||||||||
| Total interest and dividend income | 13,925 | 15,334 | 42,678 | 47,089 | ||||||||||||
| Interest expense | ||||||||||||||||
| Deposits and escrow interest | 1,782 | 3,268 | 6,372 | 9,927 | ||||||||||||
| FHLB advances | 506 | 541 | 1,545 | 1,942 | ||||||||||||
| Total interest expense | 2,288 | 3,809 | 7,917 | 11,869 | ||||||||||||
| Net interest income | 11,637 | 11,525 | 34,761 | 35,220 | ||||||||||||
| Provision (benefit) for loan losses | (894 | ) | 2,008 | (678 | ) | 2,755 | ||||||||||
| Net interest income after provision for loan losses | 12,531 | 9,517 | 35,439 | 32,465 | ||||||||||||
| Noninterest income | ||||||||||||||||
| Fees and service charges | 353 | 366 | 1,038 | 1,170 | ||||||||||||
| Swap income | - | - | 367 | 170 | ||||||||||||
| Bank-owned life insurance | 120 | 128 | 381 | 399 | ||||||||||||
| Gains on sale of securities, net | 113 | 38 | 113 | 38 | ||||||||||||
| Other | 6 | 48 | 30 | 115 | ||||||||||||
| Total noninterest income | 592 | 580 | 1,929 | 1,892 | ||||||||||||
| Noninterest expense | ||||||||||||||||
| Salaries and employee benefits | 5,595 | 5,782 | 16,722 | 17,435 | ||||||||||||
| Occupancy and equipment | 1,359 | 1,311 | 4,051 | 3,959 | ||||||||||||
| Communications and data processing | 517 | 521 | 1,539 | 1,559 | ||||||||||||
| Professional fees | 382 | 393 | 1,285 | 1,176 | ||||||||||||
| Postage, printing, stationery and supplies | 146 | 140 | 452 | 439 | ||||||||||||
| Advertising | 100 | 100 | 300 | 300 | ||||||||||||
| FDIC assessment | 115 | - | 350 | - | ||||||||||||
| Amortization of intangible assets | 21 | 24 | 61 | 73 | ||||||||||||
| Other operating expenses | 337 | 249 | 1,127 | 1,160 | ||||||||||||
| Total noninterest expense | 8,572 | 8,520 | 25,887 | 26,101 | ||||||||||||
| Net income before income tax expense | 4,551 | 1,577 | 11,481 | 8,256 | ||||||||||||
| Income tax expense | 959 | 360 | 2,467 | 1,857 | ||||||||||||
| Net income | $ | 3,592 | $ | 1,217 | $ | 9,014 | $ | 6,399 | ||||||||
| Earnings per common share: | ||||||||||||||||
| Basic | $ | 0.25 | $ | 0.08 | $ | 0.60 | $ | 0.41 | ||||||||
| Diluted | 0.25 | 0.08 | 0.60 | 0.40 | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | 14,631,122 | 15,437,173 | 14,944,097 | 15,752,709 | ||||||||||||
| Diluted | 14,632,342 | 15,447,217 | 14,944,664 | 15,814,322 | ||||||||||||
PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)
| Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||
| Average Balance | Interest / Dividends | Average Rate | Average Balance | Interest / Dividends | Average Rate | Average Balance | Interest / Dividends | Average Rate | ||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||
| Loans receivable (1) | $ | 1,252,492 | $ | 12,116 | 3.88 | % | $ | 1,232,555 | $ | 12,182 | 3.96 | % | $ | 1,209,920 | $ | 13,114 | 4.35 | % | ||||||||||||
| Investment securities (1) | 319,239 | 1,700 | 2.18 | 313,812 | 1,933 | 2.51 | 323,942 | 2,003 | 2.48 | |||||||||||||||||||||
| Other interest-earning assets | 162,193 | 109 | 0.27 | 168,608 | 110 | 0.26 | 56,242 | 217 | 1.56 | |||||||||||||||||||||
| Total interest-earning assets | 1,733,924 | 13,925 | 3.23 | 1,714,975 | 14,225 | 3.33 | 1,590,104 | 15,334 | 3.87 | |||||||||||||||||||||
| Non-interest-earning assets | 68,748 | 70,417 | 67,889 | |||||||||||||||||||||||||||
| Total assets | $ | 1,802,672 | $ | 1,785,392 | $ | 1,657,993 | ||||||||||||||||||||||||
| Liabilities and equity: | ||||||||||||||||||||||||||||||
| NOW accounts | $ | 161,049 | 59 | 0.15 | $ | 149,620 | 79 | 0.21 | $ | 125,103 | 66 | 0.21 | ||||||||||||||||||
| Money market accounts | 274,516 | 208 | 0.31 | 255,961 | 211 | 0.33 | 179,230 | 423 | 0.96 | |||||||||||||||||||||
| Savings accounts and escrow | 368,791 | 132 | 0.15 | 362,422 | 168 | 0.18 | 342,254 | 209 | 0.25 | |||||||||||||||||||||
| Time deposits | 411,500 | 1,383 | 1.36 | 434,446 | 1,700 | 1.55 | 480,233 | 2,570 | 2.17 | |||||||||||||||||||||
| Total interest-bearing deposits | 1,215,856 | 1,782 | 0.59 | 1,202,449 | 2,158 | 0.71 | 1,126,820 | 3,268 | 1.18 | |||||||||||||||||||||
| FHLB advances | 104,604 | 506 | 1.96 | 106,034 | 520 | 1.94 | 98,364 | 541 | 2.23 | |||||||||||||||||||||
| Total interest-bearing liabilities | 1,320,460 | 2,288 | 0.70 | 1,308,483 | 2,678 | 0.81 | 1,225,184 | 3,809 | 1.26 | |||||||||||||||||||||
| Non-interest-bearing deposits | 187,778 | 178,538 | 137,930 | |||||||||||||||||||||||||||
| Other non-interest-bearing liabilities | 24,272 | 26,482 | 19,706 | |||||||||||||||||||||||||||
| Total liabilities | 1,532,510 | 1,513,503 | 1,382,820 | |||||||||||||||||||||||||||
| Total shareholders' equity | 270,162 | 271,889 | 275,173 | |||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,802,672 | $ | 1,785,392 | $ | 1,657,993 | ||||||||||||||||||||||||
| Net interest income | $ | 11,637 | $ | 11,547 | $ | 11,525 | ||||||||||||||||||||||||
| Interest rate spread - tax equivalent (2) | 2.53 | 2.52 | 2.61 | |||||||||||||||||||||||||||
| Net interest margin - tax equivalent (3) | 2.69 | 2.71 | 2.90 | |||||||||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 131.31 | % | 131.07 | % | 129.78 | % | ||||||||||||||||||||||||
| (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 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. See reconciliation of 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, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Average Balance | Interest / Dividends | Average Rate | Average Balance | Interest / Dividends | Average Rate | ||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Loans receivable (1) | $ | 1,245,881 | $ | 36,845 | 3.95 | % | $ | 1,176,733 | $ | 39,299 | 4.45 | % | |||||||||||
| Investment securities (1) | 316,114 | 5,489 | 2.36 | 360,631 | 6,974 | 2.59 | |||||||||||||||||
| Other interest-earning assets | 162,946 | 344 | 0.28 | 53,944 | 816 | 2.01 | |||||||||||||||||
| Total interest-earning assets | 1,724,941 | 42,678 | 3.31 | 1,591,308 | 47,089 | 3.95 | |||||||||||||||||
| Non-interest-earning assets | 70,364 | 68,983 | |||||||||||||||||||||
| Total assets | $ | 1,795,305 | $ | 1,660,291 | |||||||||||||||||||
| Liabilities and equity: | |||||||||||||||||||||||
| NOW accounts | $ | 153,378 | 227 | 0.20 | $ | 122,470 | 191 | 0.21 | |||||||||||||||
| Money market accounts | 260,258 | 657 | 0.34 | 163,395 | 1,358 | 1.11 | |||||||||||||||||
| Savings accounts and escrow | 363,768 | 502 | 0.18 | 353,373 | 674 | 0.25 | |||||||||||||||||
| Time deposits | 429,811 | 4,986 | 1.54 | 469,022 | 7,704 | 2.19 | |||||||||||||||||
| Total interest-bearing deposits | 1,207,215 | 6,372 | 0.70 | 1,108,260 | 9,927 | 1.19 | |||||||||||||||||
| FHLB advances | 105,569 | 1,545 | 1.95 | 112,644 | 1,942 | 2.30 | |||||||||||||||||
| Total interest-bearing liabilities | 1,312,784 | 7,917 | 0.80 | 1,220,904 | 11,869 | 1.30 | |||||||||||||||||
| Non-interest-bearing deposits | 183,467 | 138,968 | |||||||||||||||||||||
| Other non-interest-bearing liabilities | 26,570 | 20,914 | |||||||||||||||||||||
| Total liabilities | 1,522,821 | 1,380,786 | |||||||||||||||||||||
| Total shareholders' equity | 272,484 | 279,505 | |||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,795,305 | $ | 1,660,291 | |||||||||||||||||||
| Net interest income | $ | 34,761 | $ | 35,220 | |||||||||||||||||||
| Interest rate spread - tax equivalent (2) | 2.51 | 2.65 | |||||||||||||||||||||
| Net interest margin - tax equivalent (3) | 2.70 | 2.95 | |||||||||||||||||||||
| Average interest-earning assets to interest-bearing liabilities | 131.40 | % | 130.34 | % | |||||||||||||||||||
| (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 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. See reconciliation of 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, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Condensed Balance Sheets | |||||||||||||||
| Cash and cash equivalents | $ | 169,314 | $ | 162,541 | $ | 162,739 | $ | 136,302 | $ | 84,912 | |||||
| Total investment securities | 347,302 | 310,231 | 318,509 | 313,198 | 309,618 | ||||||||||
| Loans receivable, net | 1,261,155 | 1,237,550 | 1,227,913 | 1,260,947 | 1,220,682 | ||||||||||
| Other assets | 76,903 | 79,517 | 81,914 | 81,482 | 80,663 | ||||||||||
| Total assets | $ | 1,854,674 | $ | 1,789,839 | $ | 1,791,075 | $ | 1,791,929 | $ | 1,695,875 | |||||
| Total deposits and escrow | $ | 1,463,542 | $ | 1,387,897 | $ | 1,383,432 | $ | 1,383,378 | $ | 1,287,510 | |||||
| Advances from Federal Home Loan Bank | 95,991 | 106,023 | 106,056 | 106,089 | 106,121 | ||||||||||
| Other liabilities | 23,844 | 26,595 | 27,908 | 28,749 | 29,827 | ||||||||||
| Total liabilities | 1,583,377 | 1,520,515 | 1,517,396 | 1,518,216 | 1,423,458 | ||||||||||
| Total shareholders' equity | 271,297 | 269,324 | 273,679 | 273,713 | 272,417 | ||||||||||
| Total liabilities and shareholders' equity | $ | 1,854,674 | $ | 1,789,839 | $ | 1,791,075 | $ | 1,791,929 | $ | 1,695,875 | |||||
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | March 31, 2021 | March 31, 2020 | |||||||||||||||
| Condensed Income Statements | |||||||||||||||||||||
| Interest income | $ | 13,925 | $ | 14,225 | $ | 14,528 | $ | 14,821 | $ | 15,334 | $ | 42,678 | $ | 47,089 | |||||||
| Interest expense | 2,288 | 2,678 | 2,951 | 3,362 | 3,809 | 7,917 | 11,869 | ||||||||||||||
| Net interest income | 11,637 | 11,547 | 11,577 | 11,459 | 11,525 | 34,761 | 35,220 | ||||||||||||||
| Provision (benefit) for loan losses | (894 | ) | 107 | 109 | 309 | 2,008 | (678 | ) | 2,755 | ||||||||||||
| Noninterest income | 592 | 743 | 594 | 1,177 | 580 | 1,929 | 1,892 | ||||||||||||||
| Noninterest expense | 8,572 | 8,691 | 8,624 | 8,533 | 8,520 | 25,887 | 26,101 | ||||||||||||||
| Income before income tax expense | 4,551 | 3,492 | 3,438 | 3,794 | 1,577 | 11,481 | 8,256 | ||||||||||||||
| Income tax expense | 959 | 798 | 710 | 834 | 360 | 2,467 | 1,857 | ||||||||||||||
| Net income | $ | 3,592 | $ | 2,694 | $ | 2,728 | $ | 2,960 | $ | 1,217 | $ | 9,014 | $ | 6,399 | |||||||
| Earnings per share: | |||||||||||||||||||||
| Basic | $ | 0.25 | $ | 0.18 | $ | 0.18 | $ | 0.19 | $ | 0.08 | $ | 0.60 | $ | 0.41 | |||||||
| Diluted | 0.25 | 0.18 | 0.18 | 0.19 | 0.08 | 0.60 | 0.40 | ||||||||||||||
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)
| Quarter Ended | Nine Months Ended | ||||||||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | March 31, 2021 | March 31, 2020 | |||||||||||||||
| Performance Ratios (1): | |||||||||||||||||||||
| Return on average assets | 0.80 | % | 0.60 | % | 0.61 | % | 0.68 | % | 0.29 | % | 0.67 | % | 0.51 | % | |||||||
| Return on average equity | 5.32 | % | 3.96 | % | 3.96 | % | 4.30 | % | 1.77 | % | 4.41 | % | 3.05 | % | |||||||
| Interest rate spread | 2.53 | % | 2.52 | % | 2.47 | % | 2.47 | % | 2.61 | % | 2.51 | % | 2.65 | % | |||||||
| Net interest margin | 2.69 | % | 2.71 | % | 2.69 | % | 2.73 | % | 2.90 | % | 2.70 | % | 2.95 | % | |||||||
| Efficiency ratio | 70.10 | % | 70.72 | % | 70.86 | % | 67.53 | % | 70.38 | % | 70.56 | % | 70.33 | % | |||||||
| Noninterest income to average assets | 0.13 | % | 0.17 | % | 0.13 | % | 0.27 | % | 0.14 | % | 0.14 | % | 0.15 | % | |||||||
| Noninterest expense to average assets | 1.90 | % | 1.95 | % | 1.92 | % | 1.95 | % | 2.06 | % | 1.92 | % | 2.10 | % | |||||||
| Average interest-earning assets to average interest-bearing liabilities | 131.31 | % | 131.07 | % | 131.81 | % | 131.65 | % | 129.78 | % | 131.40 | % | 130.34 | % | |||||||
| Average equity to average assets | 14.99 | % | 15.23 | % | 15.32 | % | 15.70 | % | 16.60 | % | 15.18 | % | 16.83 | % | |||||||
| Dividend payout ratio (2) | 16.65 | % | 22.57 | % | 23.09 | % | 21.25 | % | 52.01 | % | 20.37 | % | 30.35 | % | |||||||
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, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Loans to deposits | 86.72 | % | 89.85 | % | 89.17 | % | 91.82 | % | 95.40 | % | |||||
| Share Data: | |||||||||||||||
| Shares outstanding | 15,966,216 | 16,097,867 | 16,634,237 | 16,898,137 | 16,898,137 | ||||||||||
| Book value per common share | $ | 16.99 | $ | 16.73 | $ | 16.45 | $ | 16.20 | $ | 16.12 | |||||
| Tangible book value per common share (3) | $ | 16.60 | $ | 16.34 | $ | 16.07 | $ | 15.82 | $ | 15.74 | |||||
| Asset Quality Ratios: | |||||||||||||||
| Non-performing loans receivable | $ | 2,054 | $ | 1,668 | $ | 2,083 | $ | 1,795 | $ | 1,802 | |||||
| Non-performing assets | $ | 2,054 | $ | 1,668 | $ | 2,083 | $ | 1,795 | $ | 1,802 | |||||
| Allowance for loan losses as a percent of total loans receivable (4) | 0.65 | % | 0.72 | % | 0.72 | % | 0.71 | % | 0.68 | % | |||||
| Allowance for loan losses as a percent of non-performing loans receivable | 382.91 | % | 520.20 | % | 416.32 | % | 481.28 | % | 463.15 | % | |||||
| Non-performing loans as a percent of total loans receivable, net (4) | 0.17 | % | 0.14 | % | 0.17 | % | 0.15 | % | 0.15 | % | |||||
| Non-performing assets as a percent of total assets | 0.11 | % | 0.09 | % | 0.12 | % | 0.10 | % | 0.11 | % | |||||
| Net (recoveries) charge-offs | $ | (82 | ) | $ | 102 | $ | 76 | $ | 17 | $ | (122 | ) | |||
| Net (recoveries) charge-offs to average outstanding loans during the period (1) | (0.03 | %) | 0.03 | % | 0.02 | % | 0.01 | % | (0.04 | %) | |||||
| Capital Ratios (5): | |||||||||||||||
| Tier 1 capital (to adjusted total assets) | 12.76 | % | 12.66 | % | 12.41 | % | 12.51 | % | 13.19 | % | |||||
| Common equity Tier 1 capital (to risk-weighted assets) | 17.72 | % | 17.74 | % | 17.56 | % | 16.98 | % | 16.80 | % | |||||
| Tier 1 capital (to risk-weighted assets) | 17.72 | % | 17.74 | % | 17.56 | % | 16.98 | % | 16.80 | % | |||||
| Total capital (to risk-weighted assets) | 18.33 | % | 18.42 | % | 18.24 | % | 17.65 | % | 17.44 | % | |||||
| (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, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Mortgage loans: | |||||||||||||||
| Residential mortgages | $ | 229,008 | $ | 237,987 | $ | 245,008 | $ | 255,382 | $ | 266,684 | |||||
| Commercial mortgage | 831,162 | 801,348 | 794,248 | 807,106 | 775,378 | ||||||||||
| Construction | 10,047 | 17,551 | 11,512 | 11,053 | 24,929 | ||||||||||
| Net deferred loan origination costs | 365 | 600 | 666 | 739 | 925 | ||||||||||
| Total mortgage loans | 1,070,582 | 1,057,486 | 1,051,434 | 1,074,280 | 1,067,916 | ||||||||||
| Commercial and consumer loans: | |||||||||||||||
| Commercial loans (1) | 171,314 | 160,678 | 155,569 | 164,257 | 128,869 | ||||||||||
| Home equity credit lines | 27,211 | 27,653 | 29,249 | 29,838 | 30,994 | ||||||||||
| Consumer and overdrafts | 269 | 328 | 308 | 481 | 444 | ||||||||||
| Net deferred loan origination costs | (356 | ) | 82 | 25 | 730 | 805 | |||||||||
| Total commercial and consumer loans | 198,438 | 188,741 | 185,151 | 195,306 | 161,112 | ||||||||||
| Total loans receivable | 1,269,020 | 1,246,227 | 1,236,585 | 1,269,586 | 1,229,028 | ||||||||||
| Allowance for loan losses | (7,865 | ) | (8,677 | ) | (8,672 | ) | (8,639 | ) | (8,346 | ) | |||||
| Loans receivable, net | $ | 1,261,155 | $ | 1,237,550 | $ | 1,227,913 | $ | 1,260,947 | $ | 1,220,682 | |||||
| (1) Includes PPP loans totaling: | $ | 50,380 | $ | 35,687 | $ | 35,687 | $ | 49,603 | $ | - | |||||
| As of | |||||||||||||||
| March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Demand deposits | $ | 203,344 | $ | 189,968 | $ | 183,844 | $ | 191,898 | $ | 145,844 | |||||
| NOW accounts | 169,077 | 159,919 | 148,176 | 151,797 | 128,103 | ||||||||||
| Money market accounts | 301,892 | 256,132 | 253,176 | 239,942 | 192,779 | ||||||||||
| Savings | 372,151 | 354,882 | 349,805 | 343,352 | 330,310 | ||||||||||
| Time deposits | 407,826 | 416,386 | 442,011 | 446,266 | 482,550 | ||||||||||
| Total deposits | $ | 1,454,290 | $ | 1,377,287 | $ | 1,377,012 | $ | 1,373,255 | $ | 1,279,586 | |||||
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, 2021 | December 31, 2020 | March 31, 2020 | March 31, 2021 | March 31, 2020 | ||||||||||||
| Computation of Tax Equivalent Net Interest Income | ||||||||||||||||
| Total interest income | $ | 13,925 | $ | 14,225 | $ | 15,334 | $ | 42,678 | $ | 47,089 | ||||||
| Total interest expense | 2,288 | 2,678 | 3,809 | 7,917 | 11,869 | |||||||||||
| Net interest income (GAAP) | 11,637 | 11,547 | 11,525 | 34,761 | 35,220 | |||||||||||
| Tax equivalent adjustment | 51 | 46 | 14 | 130 | 38 | |||||||||||
| Net interest income - tax equivalent (Non-GAAP) | $ | 11,688 | $ | 11,593 | $ | 11,539 | $ | 34,891 | $ | 35,258 | ||||||
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, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||
| Computation of Tangible Book Value per Common Share | |||||||||||||||
| Total shareholders' equity (GAAP) | $ | 271,297 | $ | 269,324 | $ | 273,679 | $ | 273,713 | $ | 272,417 | |||||
| Adjustments: | |||||||||||||||
| Goodwill | (6,106 | ) | (6,106 | ) | (6,106 | ) | (6,106 | ) | (6,106 | ) | |||||
| Other intangible assets | (168 | ) | (189 | ) | (209 | ) | (229 | ) | (250 | ) | |||||
| Tangible common shareholders' equity (Non-GAAP) | $ | 265,023 | $ | 263,029 | $ | 267,364 | $ | 267,378 | $ | 266,061 | |||||
| Common shares outstanding | 15,966,216 | 16,097,867 | 16,634,237 | 16,898,137 | 16,898,137 | ||||||||||
| Book value per share (GAAP) | $ | 16.99 | $ | 16.73 | $ | 16.45 | $ | 16.20 | $ | 16.12 | |||||
| Adjustments: | |||||||||||||||
| Effects of intangible assets | (0.39 | ) | (0.39 | ) | (0.38 | ) | (0.38 | ) | (0.38 | ) | |||||
| Tangible book value per common share (Non-GAAP) | $ | 16.60 | $ | 16.34 | $ | 16.07 | $ | 15.82 | $ | 15.74 | |||||
