Results

PCSB Financial Corporation

10/28/2021 | Press release | Distributed by Public on 10/28/2021 06:21

PCSB Financial Corporation Announces First Fiscal Quarter Financial Results and Declares Quarterly Cash Dividend - Form 8-K

PCSB Financial Corporation Announces First Fiscal Quarter Financial Results and

Declares Quarterly Cash Dividend

Yorktown Heights, New York; October 28, 2021 - 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 September 30, 2021, compared to $3.4 million, or $0.23 per diluted share, for the three months ended June 30, 2021 and $2.7 million, or $0.18 per diluted share, for the three months ended September 30, 2020.

On October 20, 2021, the Board of Directors declared a regular quarterly cash dividend of $0.06 per share. The dividend is payable on or about November 26, 2021 to shareholders of record as of the close of business on November 12, 2021.

First Quarter Highlights

Net income of $3.6 million for the current quarter, increases of 6.0% and 32.5% compared to the linked quarter and the same quarter last year, respectively.

Net interest income of $12.5 million for the current quarter, unchanged from the linked quarter and increased 8.3% from the same quarter last year.

Tax equivalent net interest margin was 2.82% for the current quarter, an increase from 2.81% in the linked quarter and 2.69% for the same quarter last year.

The average cost of interest-bearing deposits was 0.41% for the current quarter, a decrease from 0.48% in the linked quarter and 0.80% for the same quarter last year.

The efficiency ratio was 65.59% for the current quarter, decreased from 67.43% for the linked quarter and 70.86% for the prior year quarter.

Average loans receivable, excluding SBA Paycheck Protection Program ("PPP") loans, of $1.20 billion for the current quarter, unchanged from the linked quarter and a decrease from $1.21 billion in the same quarter last year.

Average deposits of $1.51 billion for the current quarter, increases of 1.4% and 8.5% 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 September 30, 2021, an increase from 0.66% as of June 30, 2021.

Non-performing loans of $5.7 million, or 0.48% of total net loans receivable (excluding PPP loans), as of September 30, 2021, unchanged compared to June 30, 2021 and increased from 0.17% as of September 30, 2020.

Loans on COVID-19-related payment deferral totaled $18.5 million, or 1.52% of gross loans, as of September 30, 2021, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Loans on deferral totaling $3.5 million and $15.0 million are scheduled to resume payments in the next two quarters, respectively.

President's Comments

"As we celebrate our 150th anniversary, we are extremely pleased with the Company's solid first quarter financial performance which resulted in record earnings", said Joseph D. Roberto, Chairman, President & Chief Executive Officer of PCSB Financial Corporation. "Despite the challenging low interest rate environment, improvement in our year over year financial performance was largely driven by net interest margin expansion and control over operating expenses. With respect to maintaining control over operating expenses, we have received notice of non-objection from the New York State Department of Financial Services to consolidate one of our branch offices which is expected to occur on or about December 30, 2021. Meanwhile, our staff remains a source of strength to our customers and communities by providing them with personal attention to help them get through lingering economic challenges caused by the pandemic. Moving forward, our sustained focus on our communities' needs is a core principle that has made PCSB successful over the past 150 years and will continue to create sustainable value for our shareholders."

Income Statement Summary

Net income for the current quarter was $3.6 million, which increased $204,000 from the linked quarter and $886,000 from the prior year period. The change from the linked quarter is primarily due to a $243,000 decrease in noninterest

1

expense and a $45,000 increase in noninterest income, partially offset by a $46,000 decrease in net interest income, a $30,000 increase in income tax expense and an $8,000 increase in the provision for loan losses.The change from the prior year period is primarily due to a $958,000increase in net interest income, a $96,000 decrease in provision for loan losses and a $19,000 increase in noninterest income, partially offset by a$187,000 increase in income tax expense.

Net interest income was $12.5 million for the current quarter, a decrease of $46,000, or 0.4%, compared to the linked quarter and an increase of $958,000, or 8.3%, compared to the prior year quarter. The decrease compared to the linked quarter is primarily the result of a $10.6 million, or 0.6%, decrease in average interest-earning assets, partially offset by a 1 basis point increase 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 $62.8 million, or 3.6%, increase in average interest-earning assets and a 13 basis point increase in the tax equivalent net interest margin.

The tax equivalent net interest margin was 2.82% for the current quarter, reflecting increases of 1 basis point compared to 2.81% in the linked quarter and 13 basis points compared to 2.69% in the prior year quarter. Adjusted net interest margin, which excludes the effect of PPP loan interest and fees, was 2.72% for the current quarter compared to 2.68% in the linked quarter and 2.63% in the prior year quarter, as reductions in the cost of funds were partially offset by decreases in asset yields, driven by lower market interest rates.

The Company recognized PPP loan interest and origination fee income (net of costs) of $381,000 in the current quarter, compared to $516,000 in the linked quarter and $217,000 in the prior year quarter. Unearned origination fees (net of costs) on PPP loans totaled $698,000 as of September 30, 2021 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 forgiveness.

Tax equivalent yield on interest-earning assets for the current quarter was 3.20%, a 6 basis point decrease from the linked quarter and a 17 basis point decrease from the prior year quarter.The decrease in yield compared to the linked quarter and the prior year quarter is a result of decreases in market interest rates, lower average loan balances due to muted origination activity and elevated amounts of liquidity over the last twelve months. The decline in asset yields (excluding the effects of PPP income) has slowed in recent quarters due to a more stable yield curve and a more favorable earning asset composition.

The cost of interest-bearing deposits was 0.41% for the current quarter, decreases of 7 basis points and 39 basis points from 0.48% and 0.80% 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 18 months, the effects of which continue to be realized.As of quarter end, the weighted average cost of interest-bearing deposits was 0.34%. The cost of interest-bearing liabilities was 0.49% for the current quarter, decreases of 10 basis points from 0.59% in the linked quarter and 40 basis points from 0.89% in the prior year quarter. During the remainder of fiscal year 2022, the Company has $27.5 million of wholesale funding maturing, comprised of FHLB advances and brokered time deposits, with a weighted average cost of 2.43%.

The provision for loan losses was $13,000 for current quarter, compared to $5,000 for the linked quarter and $109,000 for the prior year quarter. Loans on COVID-19 related payment deferral totaled $18.5 million, or 1.52% of gross loans, as of September 30, 2021, compared to $27.3 million, or 2.21% of gross loans, as of June 30, 2021. Recoveries, net of charge-offs, were $265,000 for the current quarter compared to $11,000 for the linked quarter and charge-offs, net of recoveries, of $76,000 for the prior year quarter.Non-performing loans as a percent of total loans receivable (excluding PPP loans) was 0.48% as of September 30, 2021, unchanged compared to June 30, 2021 and increased from 0.17% as of September 30, 2020.

2

The table below provides additional detail for those loans on deferral as of September 30, 2021 (dollar amounts in thousands):

Industry Sector:

Number of loans

Recorded Investment (1) (2)

% secured by real estate collateral

Loan-to-Value % (3)

Weighted average term of remaining deferral (in months)

Retail

3

$

11,590

100.0

%

59.8

%

3.1

Hotels and accommodation services

1

2,013

100.0

54.8

0.1

Food service

2

3,018

100.0

48.7

1.7

All other commercial

5

1,903

89.2

70.0

2.7

Total

11

$

18,524

98.9

%

58.3

%

2.5

(1) Includes loans classified as special mention and substandard of $1.7 million and $8.6 million, respectively.

(2) Includes $3.6 million of nonaccrual loans. All loans are considered current.

(3) Generally based on collateral values upon origination.

Noninterest income of $613,000 for the current quarter increased $45,000 compared to the linked quarter and $19,000 compared to the prior year quarter. The increase compared to the linked quarter was primarily due to increases of $24,000 in bank-owned life insurance income, $11,000 in fees and service charges and $10,000 in all other noninterest income. The increase compared to the prior year quarter was primarily due to increases of $79,000 in fees and service charges, $60,000 in bank-owned life insurance income and $9,000 in all other noninterest income, partially offset by a $129,000 decrease in swap income. The increase in fees and service charges compared to the prior year quarter was partially the result of the waiver in the prior year of certain overdraft fees, ATM usage fees, wire and CD early withdrawal fees in response to COVID-19, as well an increase in debit card and interchange income. Current quarter noninterest income includes net gains on the sale of loans of $6,000, compared to none in the linked quarter and prior year quarter.

Noninterest expense of $8.6 million for the current quarter decreased $243,000 compared to the linked quarter and was unchanged compared to the prior year quarter. The decrease compared to the linked quarter was primarily due to lower pension costs. Noninterest expenses were unchanged compared to the prior year quarter primarily due to increases in New York State capital-based taxes and ESOP costs, which were largely offset by lower pension costs.

The effective income tax rate was 19.9% for the current quarter, as compared to 20.2% for the linked quarter and 20.7% for the prior year quarter.

Balance Sheet Summary

Total assets were largely unchanged at $1.87 billion at September 30, 2021 as compared to June 30, 2021, as an increase of $28.6 million in total investment securities, was largely offset by decreases of $18.8 million in net loans receivable and $11.3 million in cash and cash equivalents. The increase in investment securities was the result of the Company deploying excess liquidity and included increases of $26.9 million in state and municipal securities, $5.5 million in corporate securities and $5.1 million in mortgage-backed securities, partially offset by a $9.0 million decrease in U.S. government and agency bonds. Net loans receivable decreased $18.8 million, primarily the result of decreases in commercial loans and residential mortgage loans of $28.6 million and $2.6 million, respectively, partially offset by increases in commercial mortgage loans and construction loans of $11.4 million and $1.5 million, respectively.The decrease in commercial loans includes a decrease in PPP loans of $17.3 million, driven by paydowns and forgiveness.

Total liabilities were largely unchanged at $1.60 billion at September 30, 2021 compared to June 30, 2021 as an increase of $13.0 million in deposits was largely offset by decreases of $11.1 million in other liabilities and $3.7 million in mortgage escrow funds. The $13.0 million increase in deposits includes increases in money market and NOW accounts of $30.2 million and $4.4 million, respectively, partially offset by decreases in time deposits, savings and demand accounts of $13.3 million, $5.7 million and $2.6 million, respectively.

Total shareholders' equity increased $168,000 to $274.7 million at September 30, 2021 as compared to $274.6 million as of June 30, 2021. This increase was primarily due to net income of $3.6 million and $1.3 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, partially offset by the repurchase of $3.7 million (204,335 shares) of common stock and $876,000 of cash dividends declared and

3

paid. As of September 30, 2021, there were 339,828 shares available to be repurchased under the current stock repurchase plan.

At September 30, 2021, the Company's book value per share and tangible book value per share were $17.64 and $17.24, 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 September 30, 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

4

PCSB Financial Corporation and Subsidiaries

Consolidated Balance Sheets (unaudited)

(amounts in thousands, except share and per share data)

September 30,

June 30,

2021

2021

ASSETS

Cash and due from banks

$

145,875

$

152,070

Federal funds sold

2,137

7,235

Cash and cash equivalents

148,012

159,305

Held to maturity debt securities, at amortized cost

(fair value of $381,521 and $342,137, respectively)

378,510

337,584

Available for sale debt securities, at fair value

45,015

57,387

Total investment securities

423,525

394,971

Loans receivable, net of allowance for loan losses of $8,159 and $7,881, respectively

1,210,674

1,229,451

Accrued interest receivable

6,550

6,398

FHLB stock

4,506

4,507

Premises and equipment, net

20,536

21,099

Deferred tax asset, net

2,540

2,552

Bank-owned life insurance

35,760

35,568

Goodwill

6,106

6,106

Other intangible assets

135

151

Other assets

14,835

14,827

Total assets

$

1,873,179

$

1,874,935

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing deposits

$

1,288,167

$

1,272,610

Non interest-bearing deposits

216,470

219,072

Total deposits

1,504,637

1,491,682

Mortgage escrow funds

6,828

10,536

Advances from Federal Home Loan Bank

65,924

65,957

Other liabilities

21,062

32,200

Total liabilities

1,598,451

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 September 30, 2021 and June 30, 2021)

-

-

Common stock ($0.01 par value, 200,000,000 shares authorized, 18,703,577 shares issued as of both September 30, 2021 and June 30, 2021, 15,574,310 and 15,770,645 shares outstanding as of September 30, 2021 and June 30, 2021, respectively)

187

187

Additional paid in capital

190,793

189,926

Retained earnings

153,725

150,987

Unearned compensation - ESOP

(9,932

)

(10,176

)

Accumulated other comprehensive loss, net of income taxes

(3,204

)

(3,099

)

Treasury stock, at cost, 3,129,267 and 2,932,932 shares as of September 30, 2021 and June 30, 2021, respectively)

(56,841

)

(53,265

)

Total shareholders' equity

274,728

274,560

Total liabilities and shareholders' equity

$

1,873,179

$

1,874,935

5

PCSB Financial Corporation and Subsidiaries

Consolidated Statements of Operations (unaudited)

(amounts in thousands, except share and per share data)

Three Months Ended

September 30,

2021

2020

Interest and dividend income

Loans receivable

$

12,107

$

12,547

Investment securities

2,011

1,856

Federal funds and other

109

125

Total interest and dividend income

14,227

14,528

Interest expense

Deposits and escrow interest

1,354

2,432

FHLB advances

338

519

Total interest expense

1,692

2,951

Net interest income

12,535

11,577

Provision for loan losses

13

109

Net interest income after provision for loan losses

12,522

11,468

Noninterest income

Fees and service charges

401

322

Swap income

-

129

Bank-owned life insurance

192

132

Other

20

11

Total noninterest income

613

594

Noninterest expense

Salaries and employee benefits

5,773

5,607

Occupancy and equipment

1,353

1,318

Communications and data processing

527

576

Professional fees

393

400

Postage, printing, stationery and supplies

143

139

Advertising

100

100

FDIC assessment

125

113

Amortization of intangible assets

16

20

Other operating expenses

194

351

Total noninterest expense

8,624

8,624

Net income before income tax expense

4,511

3,438

Income tax expense

897

710

Net income

$

3,614

$

2,728

Earnings per common share:

Basic

$

0.25

$

0.18

Diluted

0.25

0.18

Weighted average common shares outstanding:

Basic

14,337,543

15,302,838

Diluted

14,405,816

15,302,949

6

PCSB Financial Corporation and Subsidiaries

Net Interest Margin Analysis (unaudited)

(dollar amounts in thousands)

Three Months Ended

September 30, 2021

June 30, 2021

September 30, 2020

Average Balance

Interest / Dividends

Average Rate

Average Balance

Interest / Dividends

Average Rate

Average Balance

Interest / Dividends

Average Rate

Assets:

Loans receivable (1)

$

1,223,532

$

12,107

3.96

%

$

1,245,610

$

12,625

4.06

%

$

1,252,595

$

12,547

4.01

%

Investment securities (1)

404,565

2,011

2.07

363,175

1,851

2.11

315,292

1,856

2.38

Other interest-earning assets

160,659

109

0.27

190,582

110

0.23

158,038

125

0.31

Total interest-earning assets

1,788,756

14,227

3.20

1,799,367

14,586

3.26

1,725,925

14,528

3.37

Non-interest-earning assets

76,375

79,015

71,926

Total assets

$

1,865,131

$

1,878,382

$

1,797,851

Liabilities and equity:

NOW accounts

$

182,531

70

0.15

$

182,475

69

0.15

$

149,466

89

0.24

Money market accounts

350,575

186

0.21

311,255

162

0.21

250,297

238

0.38

Savings accounts and mortgage escrow funds

397,292

113

0.11

387,422

109

0.11

360,091

202

0.22

Time deposits

367,641

985

1.06

395,240

1,179

1.20

443,487

1,903

1.70

Total interest-bearing deposits

1,298,039

1,354

0.41

1,276,392

1,519

0.48

1,203,341

2,432

0.80

FHLB advances

65,935

338

2.03

94,970

486

2.05

106,067

519

1.94

Total interest-bearing liabilities

1,363,974

1,692

0.49

1,371,362

2,005

0.59

1,309,408

2,951

0.89

Non-interest-bearing deposits

207,806

208,265

184,085

Other non-interest-bearing liabilities

19,943

23,114

28,958

Total liabilities

1,591,723

1,602,741

1,522,451

Total shareholders' equity

273,408

275,641

275,400

Total liabilities and shareholders' equity

$

1,865,131

$

1,878,382

$

1,797,851

Net interest income

$

12,535

$

12,581

$

11,577

Interest rate spread - tax equivalent (2)

2.71

2.67

2.48

Net interest margin - tax equivalent (3)

2.82

2.81

2.69

Average interest-earning assets to interest-bearing liabilities

131.14

%

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.

7

PCSB Financial Corporation and Subsidiaries

Condensed Financial Information (unaudited)

(amounts in thousands, except per share data)

As of

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Condensed Balance Sheets

Cash and cash equivalents

$

148,012

$

159,305

$

169,314

$

162,541

$

162,739

Total investment securities

423,525

394,971

347,302

310,231

318,509

Loans receivable, net

1,210,674

1,229,451

1,261,155

1,237,550

1,227,913

Other assets

90,968

91,208

76,903

79,517

81,914

Total assets

$

1,873,179

$

1,874,935

$

1,854,674

$

1,789,839

$

1,791,075

Total deposits and mortgage escrow funds

$

1,511,465

$

1,502,218

$

1,463,542

$

1,387,897

$

1,383,432

Advances from Federal Home Loan Bank

65,924

65,957

95,991

106,023

106,056

Other liabilities

21,062

32,200

23,844

26,595

27,908

Total liabilities

1,598,451

1,600,375

1,583,377

1,520,515

1,517,396

Total shareholders' equity

274,728

274,560

271,297

269,324

273,679

Total liabilities and shareholders' equity

$

1,873,179

$

1,874,935

$

1,854,674

$

1,789,839

$

1,791,075

Quarter Ended

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Condensed Income Statements

Interest income

$

14,227

$

14,586

$

13,925

$

14,225

$

14,528

Interest expense

1,692

2,005

2,288

2,678

2,951

Net interest income

12,535

12,581

11,637

11,547

11,577

Provision (benefit) for loan losses

13

5

(894

)

107

109

Noninterest income

613

568

592

743

594

Noninterest expense

8,624

8,867

8,572

8,691

8,624

Income before income tax expense

4,511

4,277

4,551

3,492

3,438

Income tax expense

897

867

959

798

710

Net income

$

3,614

$

3,410

$

3,592

$

2,694

$

2,728

Earnings per share:

Basic

$

0.25

$

0.23

$

0.25

$

0.18

$

0.18

Diluted

0.25

0.23

0.25

0.18

0.18

8

PCSB Financial Corporation and Subsidiaries

Selected Financial Data (unaudited)

Quarter Ended

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Performance Ratios (1):

Return on average assets

0.78

%

0.73

%

0.80

%

0.60

%

0.61

%

Return on average equity

5.29

%

4.95

%

5.32

%

3.96

%

3.96

%

Interest rate spread

2.71

%

2.67

%

2.53

%

2.52

%

2.47

%

Net interest margin

2.82

%

2.81

%

2.69

%

2.71

%

2.69

%

Efficiency ratio

65.59

%

67.43

%

70.10

%

70.72

%

70.86

%

Noninterest income to average assets

0.13

%

0.12

%

0.13

%

0.17

%

0.13

%

Noninterest expense to average assets

1.85

%

1.89

%

1.90

%

1.95

%

1.92

%

Average interest-earning assets to average interest-bearing liabilities

131.14

%

131.21

%

131.31

%

131.07

%

131.81

%

Average equity to average assets

14.66

%

14.67

%

14.99

%

15.23

%

15.32

%

Dividend payout ratio (2)

24.24

%

26.07

%

16.65

%

22.57

%

23.09

%

9

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

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Loans to deposits

80.46

%

82.42

%

86.72

%

89.85

%

89.17

%

Share Data:

Shares outstanding

15,574,310

15,770,645

15,966,216

16,097,867

16,634,237

Book value per common share

$

17.64

$

17.41

$

16.99

$

16.73

$

16.45

Tangible book value per common share (3)

$

17.24

$

17.01

$

16.60

$

16.34

$

16.07

Asset Quality Ratios:

Non-performing loans receivable

$

5,732

$

5,764

$

2,054

$

1,668

$

2,083

Non-performing assets

$

5,732

$

5,764

$

2,054

$

1,668

$

2,083

Allowance for loan losses as a percent of total loans receivable (4)

0.68

%

0.66

%

0.65

%

0.72

%

0.72

%

Allowance for loan losses as a percent of non-performing loans receivable

142.34

%

136.73

%

382.91

%

520.20

%

416.32

%

Non-performing loans as a percent of total loans receivable, net (4)

0.48

%

0.48

%

0.17

%

0.14

%

0.17

%

Non-performing assets as a percent of total assets

0.31

%

0.31

%

0.11

%

0.09

%

0.12

%

Net (recoveries) charge-offs

$

(265

)

$

(11

)

$

(82

)

$

102

$

76

Net (recoveries) charge-offs to average outstanding loans during the period (1)

(0.09

%)

0.00

%

(0.03

%)

0.03

%

0.02

%

Capital Ratios (5):

Tier 1 capital (to adjusted total assets)

12.72

%

12.48

%

12.76

%

12.66

%

12.41

%

Common equity Tier 1 capital (to risk-weighted assets)

17.84

%

17.93

%

17.72

%

17.74

%

17.56

%

Tier 1 capital (to risk-weighted assets)

17.84

%

17.93

%

17.72

%

17.74

%

17.56

%

Total capital (to risk-weighted assets)

18.46

%

18.53

%

18.33

%

18.42

%

18.24

%

(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.

10

PCSB Financial Corporation and Subsidiaries

Loan and Deposit Portfolios (unaudited)

(amounts in thousands)

As of

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Mortgage loans:

Residential mortgages

$

221,735

$

224,305

$

229,008

$

237,987

$

245,008

Commercial mortgages

838,021

826,624

831,162

801,348

794,248

Construction

11,639

10,151

10,047

17,551

11,512

Net deferred loan origination costs

97

196

365

600

666

Total mortgage loans

1,071,492

1,061,276

1,070,582

1,057,486

1,051,434

Commercial and consumer loans:

Commercial loans (1)

122,031

150,658

171,314

160,678

155,569

Home equity credit lines

24,936

25,439

27,211

27,653

29,249

Consumer and overdrafts

394

345

269

328

308

Net deferred loan origination costs

(20

)

(386

)

(356

)

82

25

Total commercial and consumer loans

147,341

176,056

198,438

188,741

185,151

Total loans receivable

1,218,833

1,237,332

1,269,020

1,246,227

1,236,585

Allowance for loan losses

(8,159

)

(7,881

)

(7,865

)

(8,677

)

(8,672

)

Loans receivable, net

$

1,210,674

$

1,229,451

$

1,261,155

$

1,237,550

$

1,227,913

(1) Includes PPP loans totaling:

$

19,763

$

37,050

$

50,380

$

35,687

$

35,687

As of

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Demand deposits

$

216,470

$

219,072

$

203,344

$

189,968

$

183,844

NOW accounts

181,572

177,223

169,077

159,919

148,176

Money market accounts

363,090

332,843

301,892

256,132

253,176

Savings

381,836

387,529

372,151

354,882

349,805

Time deposits

361,669

375,015

407,826

416,386

442,011

Total deposits

$

1,504,637

$

1,491,682

$

1,454,290

$

1,377,287

$

1,377,012

11

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

September 30,

2021

June 30,

2021

September 30,

2020

Computation of Tax Equivalent Net Interest Income

Total interest income

$

14,227

$

14,586

$

14,528

Total interest expense

1,692

2,005

2,951

Net interest income (GAAP)

12,535

12,581

11,577

Tax equivalent adjustment

89

68

33

Net interest income - tax equivalent (Non-GAAP)

$

12,624

$

12,649

$

11,610

12

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

September 30,

2021

June 30,

2021

March 31,

2021

December 31,

2020

September 30,

2020

Computation of Tangible Book Value per Common Share

Total shareholders' equity (GAAP)

$

274,728

$

274,560

$

271,297

$

269,324

$

273,679

Adjustments:

Goodwill

(6,106

)

(6,106

)

(6,106

)

(6,106

)

(6,106

)

Other intangible assets

(135

)

(151

)

(168

)

(189

)

(209

)

Tangible common shareholders' equity (Non-GAAP)

$

268,487

$

268,303

$

265,023

$

263,029

$

267,364

Common shares outstanding

15,574,310

15,770,645

15,966,216

16,097,867

16,634,237

Book value per share (GAAP)

$

17.64

$

17.41

$

16.99

$

16.73

$

16.45

Adjustments:

Effects of intangible assets

(0.40

)

(0.40

)

(0.39

)

(0.39

)

(0.38

)

Tangible book value per common share (Non-GAAP)

$

17.24

$

17.01

$

16.60

$

16.34

$

16.07

13

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

September 30,

2021

June 30,

2021

September 30,

2020

Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin, Excluding PPP interest and fee income

Average interest-earning assets

$

1,788,756

$

1,799,367

$

1,725,925

Interest and dividend income (GAAP)

$

14,227

$

14,586

$

14,528

Less: PPP interest and fee income

(381

)

(516

)

(217

)

Adjusted interest and dividend income (Non-GAAP)

$

13,846

$

14,070

$

14,311

Yield on interest-earning assets (GAAP)

3.20

%

3.26

%

3.37

%

Adjusted yield on interest-earning assets (Non-GAAP)

3.10

%

3.13

%

3.32

%

Net interest income (GAAP)

$

12,535

$

12,581

$

11,577

Less: PPP interest and fee income

(381

)

(516

)

(217

)

Adjusted net interest income (Non-GAAP)

$

12,154

$

12,065

$

11,360

Net interest margin (GAAP)

2.82

%

2.81

%

2.69

%

Adjusted net interest margin (Non-GAAP)

2.72

%

2.68

%

2.63

%

14