PCSB Financial Corporation Announces Fourth Fiscal Quarter and Year End Financial Results and Declares Quarterly Cash Dividend
08/04/2022 - 08:00 AM
YORKTOWN HEIGHTS, N.Y., Aug. 04, 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 $0.25 per diluted share, for the three months ended June 30, 2022, compared to $3.5 million , or $0.24 per diluted share, for the three months ended March 31, 2022 and $3.4 million , or $0.23 per diluted share, for the three months ended June 30, 2021.
Net income was $14.9 million , or $1.04 per diluted share, for the year ended June 30, 2022, compared to $12.4 million , or $0.84 per diluted share, for the year ended June 30, 2021. Results for the three months and year ended June 30, 2022 include merger-related expenses of $1.2 million and $1.3 million , or $0.07 and $0.08 per diluted share, net of tax, respectively. Results for the year ended June 30, 2021 include a benefit for loan losses of $673,000 , or $0.04 per diluted share, net of tax, which includes the release of the qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic.
On May 23, 2022, the Company and Brookline Bancorp, Inc. (“Brookline”), the holding company of Brookline Bank and Bank Rhode Island, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, PCSB will merge with and into Brookline, with Brookline as the surviving corporation (the “Merger”). Following the Merger, PCSB Bank will operate as a separate bank subsidiary of Brookline. The consummation of the Merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval by PCSB’s stockholders. The Merger is currently expected to be completed in the fourth quarter of 2022.
On July 27, 2022, the Board of Directors declared a regular quarterly cash dividend of $0.07 per share. The dividend is payable on or about September 9, 2022 to shareholders of record as of the close of business on August 26, 2022.
Fourth Quarter Highlights
Net income of $3.5 million , or $0.25 per diluted share, for the current quarter, increases of 0.8% and 2.7% compared to the linked quarter and same quarter last year, respectively. Excluding merger-related expenses and certain other non-recurring items, current quarter adjusted net income (non-GAAP) was $4.4 million or $0.31 per diluted share, increases of 34.1% and 79.3% compared to the linked quarter and same quarter last year, respectively. Reconciliation of GAAP to Non-GAAP financial measures appear at the end of this release. Net interest income of $13.9 million for the current quarter, increases of 9.5% and 10.7% from the linked quarter and the same quarter last year, respectively. Tax equivalent net interest margin of 3.00% for the current quarter, an increase from 2.80% in the linked quarter and 2.81% for the same quarter last year. Average cost of interest-bearing deposits of 0.35% for the current quarter, a decrease from 0.37% in the linked quarter and 0.48% for the same quarter last year. Efficiency ratio of 68.38% for the current quarter, compared to 65.66% for the linked quarter and 67.43% for the same quarter last year. Adjusted efficiency ratio (non-GAAP) of 61.28% for the current quarter, a decrease from 66.60% for the linked quarter and 74.10% for the same quarter last year. Average loans receivable (excluding PPP loans) of $1.31 billion for the current quarter, increases of 5.2% and 9.4% compared to the linked quarter and same quarter last year, respectively. Average deposits of $1.61 billion for the current quarter, increases of 3.1% and 8.4% compared to the linked quarter and same quarter last year, respectively. Allowance for loan losses to total net loans receivable (excluding PPP loans) of 0.67% as of June 30, 2022, largely unchanged compared to 0.66% as of June 30, 2021. Non-performing loans of $9.2 million , or 0.69% of total net loans receivable (excluding PPP loans), as of June 30, 2022, increased from 0.48% as of June 30, 2021. The Company had no loans on COVID-19-related payment deferral as of June 30, 2022, compared to $27.3 million (19 loans), or 2.21% of gross loans, as of June 30, 2021. President’s Comments
Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation, commented, “We are pleased with the Company’s solid operating and financial results for our fiscal fourth quarter and year ended June 30, 2022. Annualized loan growth of 13.6% for the fourth quarter and 8.1% year over year reflects our ability to originate quality loans within our strong market footprint. The loan growth, combined with a balance sheet well-positioned to take advantage of higher interest rates, has led to higher net interest income, margins and earnings. Core net income of $4.4 million for the fourth quarter reflects a 34.1% increase over the linked quarter while core net income of $14.2 million for the year reflects a 33.1% increase over the prior year. Although economic headwinds continue to be challenging, our outlook remains positive as the PCSB team continues working to create sustainable value for our shareholders.”
Mr. Roberto added “We are excited about our pending merger with Brookline and look forward to becoming part of a larger organization, which will benefit all of our shareholders. I want to thank our staff for their dedication and hard work, especially during this time of transition. In addition to operating PCSB Bank in a business-as-usual manner for our customers, they have also been working hard to ensure that we have a seamless transition into Brookline’s organization.”
Income Statement Summary
Net income for the current quarter was $3.5 million , which increased $29,000 from the linked quarter and $93,000 from the prior year quarter. The change from the linked quarter is primarily due to a $1.2 million increase in net interest income, a $165,000 increase in noninterest income and a $77,000 decrease in provision for loan losses, partially offset by increases of $1.3 million in noninterest expense and $113,000 in income tax expense. The change from the prior year quarter is primarily due to increases of $1.3 million in net interest income and $520,000 in noninterest income, partially offset by increases of $1.4 million in noninterest expense, $204,000 in provision for loan losses and $170,000 in income tax expense.
Net interest income was $13.9 million for the current quarter, increases of $1.2 million , or 9.5% , compared to the linked quarter and $1.3 million , or 10.7% , compared to the prior year quarter. The increase compared to the linked quarter is primarily the result of a 20 basis point increase in the tax equivalent net interest margin and a $41.5 million , or 2.3% , increase in average interest-earning assets. The increase in net interest income compared to the prior year period is primarily the result of a 19 basis point increase in the tax equivalent net interest margin and a $75.7 million , or 4.2% , increase in average interest-earning assets.
The Company recognized PPP loan interest and origination fee income (net of costs) of $36,000 in the current quarter, compared to $266,000 in the linked quarter and $516,000 in the prior year quarter. As of June 30, 2022, the Company had 5 outstanding PPP loans with balances totaling $1.9 million . Unearned origination fees (net of costs) were $85,000 as of June 30, 2022, which will be recognized in income over the remaining lives of the loans. PPP loan forgiveness is substantially complete as of June 30, 2022.
The tax equivalent net interest margin was 3.00% for the current quarter, reflecting increases of 20 basis points compared to 2.80% in the linked quarter and 19 basis points compared to 2.81% in the prior year quarter. Adjusted net interest margin, which excludes the effects of loan prepayment income and PPP loan interest and fees, was 2.94% for the current quarter compared to 2.70% in the linked quarter and 2.53% in the prior year quarter. Margin improvement compared to the linked quarter and prior year quarter was the result of a reduction in the cost of funds, driven by a lower costing deposit mix, as well as an increased asset yields, driven by higher market interest rates. 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 3.31% , increases of 19 basis points from the linked quarter and 5 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 3.25% , increases of 22 basis points from the linked quarter and 27 basis points from the same quarter last year. The increase in yield compared to the prior year quarter is a result of higher market interest rates driving higher yield on cash liquidity and adjustable rate loan and investment assets, along with higher investment and loan re-investment rates. Compared to the linked quarter, the increase in yield was the result of higher market interest rates and a more profitable asset mix.
The cost of interest-bearing deposits was 0.35% for the current quarter, decreases of 2 basis points and 13 basis points from 0.37% and 0.48% 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. Recent increases by the Federal Reserve in the federal funds rate beginning in March 2022 and continuing throughout the current quarter have not yet resulted in deposit cost increases, due to limited competitive pricing pressures and elevated liquidity in the banking sector. As of quarter end, the weighted average cost of interest-bearing deposits was 0.34% . The cost of interest-bearing liabilities was 0.41% for the current quarter, decreases of 2 basis points from 0.43% in the linked quarter and 18 basis points from 0.59% in the prior year quarter. Over the next 12 months, the Company has $40.0 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 1.79% .
The provision for loan losses was $209,000 for current quarter, compared to $286,000 for the linked quarter and $5,000 for the prior year quarter. Recoveries, net of charge-offs, were $7,000 for the current quarter compared to charge-offs, net of recoveries, of $4,000 for the linked quarter and recoveries, net of charge-offs, of $11,000 for the prior year quarter. Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.56% as of June 30, 2022, an increase from 0.48% as of June 30, 2021 but a decrease from 0.61% as of March 31, 2022. Substandard loans were $12.6 million as of June 30, 2022, a decrease from $23.1 million as of March 31, 2022 and $21.6 million as of June 30, 2021, driven primarily by sustained positive borrower operational and payment performance following the end of COVID-19 related payment deferrals. The Company had no loans remaining on COVID-19 related payment deferral as of June 30, 2022, compared to $27.3 million , or 2.21% of gross loans, as of June 30, 2021.
Noninterest income of $1.1 million for the current quarter increased $165,000 compared to the linked quarter and $520,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $119,000 in swap income and $52,000 in fees and services charges. The increase compared to the prior year quarter was primarily due to increases of $452,000 in swap income, $52,000 in fees and service charges and $18,000 in bank-owned life insurance income.
Noninterest expense of $10.3 million for the current quarter increased $1.3 million compared to the linked quarter and $1.4 million compared to the prior year quarter. Excluding merger-related expenses of $1.2 million in the current quarter and $86,000 in the linked quarter, noninterest expenses increased $232,000 , or 2.6% , compared to the linked quarter and $235,000 , or 2.7% , compared to the same quarter last year. Excluding merger-related expenses, the $235,000 increase compared to the prior year quarter was primarily due to higher salaries and benefits, marketing and communication and data processing costs which were partially offset by lower pension costs. The $232,000 increase compared to the linked quarter is the result of higher salaries and benefits, partially offset by lower professional fees and pension costs.
The effective income tax rate was 22.8% for the current quarter, as compared to 21.0% for the linked quarter and 20.3% for the prior year quarter. The increase for the current quarter is primarily due to non-deductible merger-related expenses. Excluding such expenses, the effective tax rate for the quarter is 20.2% .
Balance Sheet Summary
Total assets increased $114.2 million to $1.99 billion at June 30, 2022 as compared to June 30, 2021, primarily due to increases of $99.9 million in net loans receivable and $52.1 million in investment securities, partially offset by a $40.8 million decrease in cash and cash equivalents. Net loans receivable increased $99.9 million , or 8.1% , and $135.0 million or 11.3% excluding PPP loans. The increase was primarily the result of increases in commercial mortgage loans and construction loans of $115.5 million and $10.7 million , respectively, partially offset by decreases in commercial loans and residential mortgage loans of $14.4 million and $10.1 million , respectively. The decrease in commercial loans includes a decrease in PPP loans of $35.1 million , driven by forgiveness and paydowns, largely offset by a net increase of $20.7 million in all other commercial loans. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $27.2 million in state and municipal securities, $14.1 million in U.S. government and agency bonds, $5.7 million in mortgage-backed securities, and $5.1 million in corporate securities.
Total liabilities increased $111.6 million to $1.71 billion at June 30, 2022 as compared to June 30, 2021 as an increase of $134.6 million in deposits was partially offset by decreases of $17.6 million in FHLB advances and $5.4 million in all other liabilities. The $134.6 million , or 9.0% increase in deposits includes increases in NOW, money market, demand and savings accounts of 37.1% , 19.9% , 12.0% and 6.1% , respectively, partially offset by a 12.6% decrease in time deposits. Current quarter deposit growth of $1.5 million includes the run-off of approximately $38.1 million of transient deposits as of March 31, 2022 expected to outflow in the current quarter.
Total shareholders’ equity increased $2.6 million to $277.2 million at June 30, 2022 as compared to $274.6 million as of June 30, 2021. The increase for the year was primarily due to net income of $14.9 million and $5.0 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, $5.5 million of other comprehensive losses related primarily to unrealized losses on investment securities driven by higher market interest rates and $3.6 million of cash dividends declared and paid.
At June 30, 2022, the Company’s book value per share and tangible book value per share were $18.07 and $17.67 , 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 June 30, 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 asset value and 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)
June 30, June 30, 2022 2021 ASSETS Cash and due from banks $ 116,522 $ 152,070 Federal funds sold 1,935 7,235 Total cash and cash equivalents 118,457 159,305 Held to maturity debt securities, at amortized cost (fair value of $361,608 and$342,137 as of June 30, 2022 and June 30, 2021, respectively) 412,449 337,584 Available for sale debt securities, at fair value 34,621 57,387 Total investment securities 447,070 394,971 Loans receivable, net of allowance for loan losses of $8,927 and$7,881 as of June 30, 2022 and June 30, 2021, respectively 1,329,372 1,229,451 Accrued interest receivable 6,396 6,398 FHLB stock 3,766 4,507 Premises and equipment, net 19,358 21,099 Deferred tax asset, net 4,132 2,552 Bank-owned life insurance 36,322 35,568 Goodwill 6,106 6,106 Other intangible assets 89 151 Other assets 18,064 14,827 Total assets $ 1,989,132 $ 1,874,935 LIABILITIES AND SHAREHOLDERS' EQUITY Interest bearing deposits $ 1,380,953 $ 1,272,610 Non-interest bearing deposits 245,297 219,072 Total deposits 1,626,250 1,491,682 Mortgage escrow funds 11,173 10,536 Advances from FHLB 48,323 65,957 Other liabilities 26,224 32,200 Total liabilities 1,711,970 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 June 30, 2022 and June 30, 2021) - - Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both June 30, 2022 and June 30, 2021, and 15,334,857 and 15,770,645 shares outstanding as of June 30, 2022 and June 30, 2021, respectively) 187 187 Additional paid in capital 193,893 189,926 Retained earnings 162,262 150,987 Unearned compensation - ESOP (9,208 ) (10,176 ) Accumulated other comprehensive loss, net of income taxes (8,629 ) (3,099 ) Treasury stock, at cost (3,368,720 and 2,932,932 shares as of June 30, 2022 and June 30, 2021, respectively) (61,343 ) (53,265 ) Total shareholders' equity 277,162 274,560 Total liabilities and shareholders' equity $ 1,989,132 $ 1,874,935
PCSB Financial Corporation and Subsidiaries Consolidated Statements of Operations (unaudited)
Three Months Ended Year Ended June 30, June 30, 2022 2021 2022 2021 Interest and dividend income Loans receivable $ 12,801 $ 12,625 $ 49,502 $ 49,470 Investment securities 2,315 1,851 8,609 7,340 Federal funds and other 267 110 569 454 Total interest and dividend income 15,383 14,586 58,680 57,264 Interest expense Deposits and escrow interest 1,212 1,519 5,075 7,891 FHLB advances 242 486 1,166 2,031 Total interest expense 1,454 2,005 6,241 9,922 Net interest income 13,929 12,581 52,439 47,342 Provision (benefit) for loan losses 209 5 772 (673 ) Net interest income after provision (benefit) for loan losses 13,720 12,576 51,667 48,015 Noninterest income Fees and service charges 442 390 1,640 1,428 Bank-owned life insurance 186 168 754 549 Gain on sale of premises - - 548 - Swap income 452 - 785 367 Gains on sales of loans receivable - - 56 - Gains on sales of securities - - - 113 Other 8 10 36 40 Total noninterest income 1,088 568 3,819 2,497 Noninterest expense Salaries and employee benefits 6,063 5,795 23,416 22,517 Occupancy and equipment 1,386 1,362 5,501 5,413 Merger-related expenses 1,166 - 1,252 - Communication and data processing 585 525 2,211 2,064 Professional fees 403 405 1,673 1,690 Postage, printing, stationery and supplies 142 137 620 589 FDIC assessment 125 113 496 463 Advertising 177 100 477 400 Amortization of intangible assets 13 17 62 78 Other operating expenses 208 413 945 1,540 Total noninterest expense 10,268 8,867 36,653 34,754 Net income before income tax expense 4,540 4,277 18,833 15,758 Income tax expense 1,037 867 3,954 3,334 Net income $ 3,503 $ 3,410 $ 14,879 $ 12,424 Earnings per common share: Basic $ 0.25 $ 0.23 $ 1.05 $ 0.84 Diluted 0.25 0.23 1.04 0.84 Weighted average common shares outstanding: Basic 14,189,701 14,553,783 14,232,855 14,846,786 Diluted 14,248,141 14,586,928 14,289,020 14,847,579
PCSB Financial Corporation and Subsidiaries Net Interest Margin Analysis (unaudited)
Three Months Ended June 30, 2022 March 31, 2022 June 30, 2021 Average Balance Interest / Dividends Average Rate Average Balance Interest / Dividends Average Rate Average Balance Interest / Dividends Average Rate Assets: Loans receivable (1) $ 1,313,296 $ 12,801 3.90 % $ 1,255,117 $ 11,943 3.81 % $ 1,245,610 $ 12,625 4.06 % Investment securities (1) 443,626 2,315 2.18 436,702 2,152 2.06 363,175 1,851 2.11 Other interest-earning assets 118,119 267 0.91 141,677 105 0.30 190,582 110 0.23 Total interest-earning assets 1,875,041 15,383 3.31 1,833,496 14,200 3.12 1,799,367 14,586 3.26 Non-interest-earning assets 79,993 77,202 79,015 Total assets $ 1,955,034 $ 1,910,698 $ 1,878,382 Liabilities and equity: NOW accounts $ 224,808 91 0.16 $ 215,021 94 0.18 $ 182,475 69 0.15 Money market accounts 388,406 166 0.17 360,131 144 0.16 311,255 162 0.21 Savings accounts and mortgage escrow funds 427,709 124 0.12 415,850 113 0.11 387,422 109 0.11 Time deposits 335,748 831 0.99 349,266 866 1.00 395,240 1,179 1.20 Total interest-bearing deposits 1,376,671 1,212 0.35 1,340,268 1,217 0.37 1,276,392 1,519 0.48 FHLB advances 48,337 242 2.00 57,185 266 1.89 94,970 486 2.05 Total interest-bearing liabilities 1,425,008 1,454 0.41 1,397,453 1,483 0.43 1,371,362 2,005 0.59 Non-interest-bearing deposits 232,119 220,809 208,265 Other non-interest-bearing liabilities 19,581 15,370 23,114 Total liabilities 1,676,708 1,633,632 1,602,741 Total shareholders' equity 278,326 277,066 275,641 Total liabilities and shareholders' equity $ 1,955,034 $ 1,910,698 $ 1,878,382 Net interest income $ 13,929 $ 12,717 $ 12,581 Interest rate spread - tax equivalent (2) 2.90 2.69 2.67 Net interest margin - tax equivalent (3) 3.00 2.80 2.81 Average interest-earning assets to interest-bearing liabilities 131.58 % 131.20 % 131.21 % (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)
Year Ended June 30, 2022 2021 Average Interest/ Average Average Interest/ Average Assets: Loans receivable (1) $ 1,258,513 $ 49,502 3.94 % $ 1,245,818 $ 49,470 3.97 % Investment securities (1) 428,203 8,609 2.10 327,879 7,340 2.29 Other interest-earning assets 136,760 569 0.42 169,855 454 0.27 Total interest-earning assets 1,823,476 58,680 3.24 1,743,552 57,264 3.30 Non-interest-earning assets 77,769 72,522 Total assets $ 1,901,245 $ 1,816,074 Liabilities and equity: NOW accounts $ 203,804 345 0.17 $ 160,652 296 0.18 Money market accounts 363,705 665 0.18 273,007 819 0.30 Savings accounts and escrow 409,732 458 0.11 369,681 611 0.17 Time deposits 352,474 3,607 1.02 421,168 6,165 1.46 Total interest-bearing deposits 1,329,715 5,075 0.38 1,224,508 7,891 0.64 FHLB advances 58,816 1,166 1.98 102,919 2,031 1.97 Total interest-bearing liabilities 1,388,531 6,241 0.45 1,327,427 9,922 0.75 Non-interest-bearing deposits 218,823 189,667 Other non-interest-bearing liabilities 17,785 25,707 Total liabilities 1,625,139 1,542,801 Total shareholders' equity 276,106 273,273 Total liabilities and shareholders' equity $ 1,901,245 $ 1,816,074 Net interest income $ 52,439 $ 47,342 Interest rate spread - tax equivalent (2) 2.79 2.55 Net interest margin - tax equivalent (3) 2.90 2.73 Average interest-earning assets to interest-bearing liabilities 131.32 % 131.35 % (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)
As of June 30, March 31, December 31, September 30, June 30, Condensed Balance Sheets Cash and cash equivalents $ 118,457 $ 158,892 $ 120,339 $ 148,012 $ 159,305 Total investment securities 447,070 448,081 433,999 423,525 394,971 Loans receivable, net 1,329,372 1,285,886 1,243,646 1,210,674 1,229,451 Other assets 94,233 91,682 90,137 90,968 91,208 Total assets $ 1,989,132 $ 1,984,541 $ 1,888,121 $ 1,873,179 $ 1,874,935 Total deposits and mortgage escrow funds $ 1,637,423 $ 1,633,463 $ 1,533,947 $ 1,511,465 $ 1,502,218 Advances from Federal Home Loan Bank 48,323 48,357 58,390 65,924 65,957 Other liabilities 26,224 26,329 20,950 21,062 32,200 Total liabilities 1,711,970 1,708,149 1,613,287 1,598,451 1,600,375 Total shareholders' equity 277,162 276,392 274,834 274,728 274,560 Total liabilities and shareholders' equity $ 1,989,132 $ 1,984,541 $ 1,888,121 $ 1,873,179 $ 1,874,935
Quarter Ended Year Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, Condensed Income Statements Interest income $ 15,383 $ 14,200 $ 14,870 $ 14,227 $ 14,586 $ 58,680 $ 57,264 Interest expense 1,454 1,483 1,612 1,692 2,005 6,241 9,922 Net interest income 13,929 12,717 13,258 12,535 12,581 52,439 47,342 Provision (benefit) for loan losses 209 286 264 13 5 772 (673 ) Noninterest income 1,088 923 1,195 613 568 3,819 2,497 Noninterest expense 10,268 8,956 8,805 8,624 8,867 36,653 34,754 Income before income tax expense 4,540 4,398 5,384 4,511 4,277 18,833 15,758 Income tax expense 1,037 924 1,096 897 867 3,954 3,334 Net income $ 3,503 $ 3,474 $ 4,288 $ 3,614 $ 3,410 $ 14,879 $ 12,424 Earnings per share: Basic $ 0.25 $ 0.25 $ 0.30 $ 0.25 $ 0.23 $ 1.05 $ 0.84 Diluted 0.25 0.24 0.30 0.25 0.23 1.04 0.84
PCSB Financial Corporation and Subsidiaries Selected Financial Data (unaudited)
Quarter Ended Year Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, Performance Ratios (1) : Return on average assets 0.72 % 0.73 % 0.92 % 0.78 % 0.73 % 0.78 % 0.68 % Return on average equity 5.03 % 5.02 % 6.22 % 5.29 % 4.95 % 5.39 % 4.55 % Interest rate spread 2.90 % 2.69 % 2.86 % 2.71 % 2.67 % 2.79 % 2.55 % Net interest margin 3.00 % 2.80 % 2.97 % 2.82 % 2.81 % 2.90 % 2.73 % Efficiency ratio 68.38 % 65.66 % 60.92 % 65.59 % 67.43 % 65.15 % 69.73 % Noninterest income to average assets 0.22 % 0.19 % 0.26 % 0.13 % 0.12 % 0.20 % 0.14 % Noninterest expense to average assets 2.10 % 1.87 % 1.88 % 1.85 % 1.89 % 1.93 % 1.91 % Average interest-earning assets to average interest-bearing liabilities 131.58 % 131.20 % 131.36 % 131.14 % 131.21 % 131.32 % 131.35 % Average equity to average assets 14.24 % 14.50 % 14.71 % 14.66 % 14.67 % 14.52 % 15.05 % Dividend payout ratio (2) 28.72 % 24.61 % 20.22 % 24.24 % 26.07 % 24.22 % 21.93 % Performance Ratios excluding merger-related expenses (3) : Earnings per diluted share $ 0.32 $ 0.25 $ 0.30 $ 0.25 $ 0.23 $ 1.12 $ 0.84 Return on average assets 0.93 % 0.74 % 0.92 % 0.78 % 0.73 % 0.84 % 0.68 % Return on average equity 6.54 % 5.13 % 6.22 % 5.29 % 4.95 % 5.80 % 4.55 % Efficiency ratio 60.61 % 65.03 % 60.92 % 65.59 % 67.43 % 62.93 % 73.04 % Noninterest expense to average assets 1.86 % 1.86 % 1.88 % 1.85 % 1.89 % 1.86 % 1.91 % Dividend payout ratio (2) 22.11 % 24.06 % 20.22 % 24.24 % 26.07 % 22.52 % 21.93 %
PCSB Financial Corporation and Subsidiaries Selected Financial Data (unaudited) - Continued
As of and for the quarter ended June 30, March 31, December 31, September 30, June 30, Loans to deposits 81.74 % 79.15 % 81.65 % 80.46 % 82.42 % Share Data: Shares outstanding 15,334,857 15,334,857 15,337,979 15,574,310 15,770,645 Book value per common share $ 18.07 $ 18.02 $ 17.92 $ 17.64 $ 17.41 Tangible book value per common share (4) $ 17.67 $ 17.62 $ 17.51 $ 17.24 $ 17.01 Asset Quality Ratios: Non-performing loans receivable $ 9,235 $ 7,859 $ 7,890 $ 5,732 $ 5,764 Non-performing assets $ 9,235 $ 7,859 $ 7,890 $ 5,732 $ 5,764 Allowance for loan losses as a percent of total loans receivable (5) 0.67 % 0.68 % 0.68 % 0.68 % 0.66 % Allowance for loan losses as a percent of non-performing loans receivable 96.66 % 110.86 % 106.83 % 142.34 % 136.73 % Non-performing loans as a percent of total loans receivable, net (5) 0.69 % 0.61 % 0.64 % 0.48 % 0.48 % Non-performing assets as a percent of total assets 0.46 % 0.40 % 0.42 % 0.31 % 0.31 % Net (recoveries) charge-offs $ (7 ) $ 4 $ (6 ) $ (265 ) $ (11 ) Net (recoveries) charge-offs to average outstanding loans during the period (1) 0.00 % 0.00 % 0.00 % (0.09 %) 0.00 % Capital Ratios (6) : Tier 1 capital (to adjusted total assets) 12.78 % 12.86 % 12.91 % 12.72 % 12.48 % Common equity Tier 1 capital (to risk-weighted assets) 17.22 % 17.22 % 17.67 % 17.84 % 17.93 % Tier 1 capital (to risk-weighted assets) 17.22 % 17.22 % 17.67 % 17.84 % 17.93 % Total capital (to risk-weighted assets) 17.83 % 17.83 % 18.28 % 18.46 % 18.53 % (1) Performance ratios for quarter ended periods are annualized.(2) Dividends declared per share divided by net income per share.(3) Merger-related expenses, primarily consisting of legal and consulting costs, total $1.2 million and $1.3 million for the current quarter and year-to-date, respectively.(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) Total loans receivable excludes PPP loans.(6) Represents Bank ratios.
PCSB Financial Corporation and Subsidiaries Loan and Deposit Portfolios (unaudited)
As of June 30, March 31, December 31, September 30, June 30, Mortgage loans: Residential mortgages $ 214,167 $ 215,431 $ 212,817 $ 221,735 $ 224,305 Commercial mortgages 942,130 897,424 867,581 838,021 826,624 Construction 20,896 16,894 11,857 11,639 10,151 Net deferred loan origination (fees) costs (100 ) (23 ) (18 ) 97 196 Total mortgage loans 1,177,093 1,129,726 1,092,237 1,071,492 1,061,276 Commercial and consumer loans: Commercial loans (1) 136,304 141,427 135,055 122,031 150,658 Home equity credit lines 23,688 22,557 24,142 24,936 25,439 Consumer and overdrafts 594 348 356 394 345 Net deferred loan origination costs (fees) 620 539 285 (20 ) (386 ) Total commercial and consumer loans 161,206 164,871 159,838 147,341 176,056 Total loans receivable 1,338,299 1,294,597 1,252,075 1,218,833 1,237,332 Allowance for loan losses (8,927 ) (8,711 ) (8,429 ) (8,159 ) (7,881 ) Loans receivable, net $ 1,329,372 $ 1,285,886 $ 1,243,646 $ 1,210,674 $ 1,229,451 (1) Includes PPP loans totaling: $ 1,940 $ 4,701 $ 12,769 $ 19,763 $ 37,050
As of June 30, March 31, December 31, September 30, June 30, Demand deposits $ 245,297 $ 243,908 $ 215,708 $ 216,470 $ 219,072 NOW accounts 243,006 221,386 198,610 181,572 177,223 Money market accounts 399,026 396,358 361,352 363,090 332,843 Savings 411,332 417,975 393,041 381,836 387,529 Time deposits 327,589 345,092 354,356 361,669 375,015 Total deposits $ 1,626,250 $ 1,624,719 $ 1,523,067 $ 1,504,637 $ 1,491,682
PCSB Financial Corporation and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures (unaudited)
Quarter Ended Year Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, Computation of Adjusted Net Income and Adjusted Earnings Per Share Net income applicable to common stock (GAAP) $ 3,503 $ 3,474 $ 4,288 $ 3,614 $ 3,410 $ 14,879 $ 12,424 Adjustments (1) : Merger-related expenses 1,048 79 - - - 1,127 - Prepayment income on loans receivable (99 ) (43 ) (442 ) (26 ) (532 ) (610 ) (679 ) PPP loan interest and fee income (28 ) (210 ) (264 ) (299 ) (411 ) (801 ) (926 ) Gain on sale of premises - - (436 ) - - (436 ) - Prepayment income on investment securities - - - - - - (90 ) Gains on sale of investment securities - - - - - - (89 ) Adjusted net income (Non-GAAP) $ 4,424 $ 3,300 $ 3,146 $ 3,289 $ 2,467 $ 14,159 $ 10,640 Average number of common shares outstanding: Basic 14,189,701 14,165,775 14,236,473 14,337,543 14,553,783 14,232,855 14,846,786 Diluted 14,248,141 14,197,716 14,281,232 14,405,816 14,586,928 14,289,020 14,847,579 Earnings per share (GAAP): Basic $ 0.25 $ 0.25 $ 0.30 $ 0.25 $ 0.23 $ 1.05 $ 0.84 Diluted 0.25 0.24 0.30 0.25 0.23 1.04 0.84 Adjusted earnings per common share (Non-GAAP): Basic $ 0.31 $ 0.23 $ 0.22 $ 0.23 $ 0.17 $ 0.99 $ 0.72 Diluted 0.31 0.23 0.22 0.23 0.17 0.99 0.72 (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)
Quarter Ended Year Ended June 30, March 31, June 30, June 30, June 30, Computation of Tax Equivalent Net Interest Income Total interest income $ 15,383 $ 14,200 $ 14,586 $ 58,680 $ 57,264 Total interest expense 1,454 1,483 2,005 6,241 9,922 Net interest income (GAAP) 13,929 12,717 12,581 52,439 47,342 Tax equivalent adjustment 111 101 68 400 198 Net interest income - tax equivalent (Non-GAAP) $ 14,040 $ 12,818 $ 12,649 $ 52,839 $ 47,540
Quarter Ended Year Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, Computation of Efficiency Ratio Noninterest expense (GAAP) $ 10,268 $ 8,956 $ 8,805 $ 8,624 $ 8,867 $ 36,653 $ 34,754 Adjustments: Merger-related expenses (1,166 ) (86 ) - - - (1,252 ) Adjusted total (Non-GAAP) $ 9,102 $ 8,870 $ 8,805 $ 8,624 $ 8,867 $ 35,401 $ 34,754 Net interest income (GAAP) $ 13,929 $ 12,717 $ 13,258 $ 12,535 $ 12,581 $ 52,439 $ 47,342 Noninterest income (GAAP) 1,088 923 1,195 613 568 3,819 2,497 Total (GAAP) 15,017 13,640 14,453 13,148 13,149 56,258 49,839 Adjustments: PPP loan interest and fee income (36 ) (266 ) (332 ) (373 ) (516 ) (1,007 ) (1,171 ) Prepayment income on loans receivable (128 ) (55 ) (555 ) (32 ) (667 ) (770 ) (854 ) Gains on sales of premises - - (548 ) - - (548 ) - Prepayment income on investment securities - - - - - - (117 ) Gains on sales of investment securities - - - - - - (113 ) Adjusted total (Non-GAAP) $ 14,853 $ 13,319 $ 13,018 $ 12,743 $ 11,966 $ 53,933 $ 47,584 Efficiency ratio (GAAP) 68.38 % 65.66 % 60.92 % 65.59 % 67.43 % 65.15 % 69.73 % Adjusted efficiency ratio (Non-GAAP) 61.28 % 66.60 % 67.64 % 67.68 % 74.10 % 65.64 % 73.04 %
PCSB Financial Corporation and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
As of June 30, March 31, December 31, September 30, June 30, Computation of Tangible Book Value per Common Share Total shareholders' equity (GAAP) $ 277,162 $ 276,392 $ 274,834 $ 274,728 $ 274,560 Adjustments: Goodwill (6,106 ) (6,106 ) (6,106 ) (6,106 ) (6,106 ) Other intangible assets (89 ) (102 ) (119 ) (135 ) (151 ) Tangible common shareholders' equity (Non-GAAP) $ 270,967 $ 270,184 $ 268,609 $ 268,487 $ 268,303 Common shares outstanding 15,334,857 15,334,857 15,337,979 15,574,310 15,770,645 Book value per share (GAAP) $ 18.07 $ 18.02 $ 17.92 $ 17.64 $ 17.41 Adjustments: Effects of intangible assets (0.40 ) (0.40 ) (0.41 ) (0.40 ) (0.40 ) Tangible book value per common share (Non-GAAP) $ 17.67 $ 17.62 $ 17.51 $ 17.24 $ 17.01
PCSB Financial Corporation and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures (unaudited) - Continued
Quarter Ended Year Ended June 30, March 31, December 31, September 30, June 30, June 30, June 30, Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin Average interest-earning assets $ 1,875,041 $ 1,833,496 $ 1,796,613 $ 1,788,756 $ 1,799,367 $ 1,823,476 $ 1,743,552 Interest and dividend income (GAAP) $ 15,383 $ 14,200 $ 14,870 $ 14,227 $ 14,586 $ 58,680 $ 57,264 Less: PPP loan interest and fee income (36 ) (266 ) (332 ) (373 ) (516 ) (1,007 ) (1,171 ) Less: Prepayment income on loans receivable (128 ) (55 ) (555 ) (32 ) (667 ) (770 ) (854 ) Adjusted interest and dividend income (Non-GAAP) $ 15,219 $ 13,879 $ 13,983 $ 13,822 $ 13,403 $ 56,903 $ 55,239 Yield on interest-earning assets (GAAP) 3.31 % 3.12 % 3.33 % 3.20 % 3.26 % 3.24 % 3.30 % Adjusted yield on interest-earning assets (Non-GAAP) 3.25 % 3.03 % 3.11 % 3.09 % 2.98 % 3.12 % 3.17 % Net interest income (GAAP) $ 13,929 $ 12,717 $ 13,258 $ 12,535 $ 12,581 $ 52,439 $ 47,342 Less: PPP loan interest and fee income (36 ) (266 ) (332 ) (373 ) (516 ) (1,007 ) (1,171 ) Less: Prepayment income on loans receivable (128 ) (55 ) (555 ) (32 ) (667 ) (770 ) (854 ) Adjusted net interest income (Non-GAAP) $ 13,765 $ 12,396 $ 12,371 $ 12,130 $ 11,398 $ 50,662 $ 45,317 Net interest margin (GAAP) 3.00 % 2.80 % 2.97 % 2.82 % 2.81 % 2.90 % 2.73 % Adjusted net interest margin (Non-GAAP) 2.94 % 2.70 % 2.75 % 2.71 % 2.53 % 2.78 % 2.60 %
