Exhibit 99.1
PCSB Financial Corporation Announces Third Quarter Results and Declares Quarterly Cash Dividend
Yorktown Heights, New York; April 26, 2018 – PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $2.2 million, or $0.13 per basic and diluted share, for the three months ended March 31, 2018 compared to $2,000, or $0.00 per basic and diluted share, for the quarter ended December 31, 2017 and $1.9 million for the three months ended March 31, 2017. For the nine months ended March 31, 2018, net income was $3.9 million, or $0.23 per basic and diluted share, compared to $5.0 million for the nine months ended March 31, 2017. Results for the nine months ended March 31, 2018 include a $1.6 million tax re-measurement charge associated with federal tax law changes enacted in the second quarter.
The following nonrecurring items were recorded in the periods indicated:
| • | In connection with the passage of the Tax Cuts and Jobs Act, the Company recorded a $1.6 million charge to income tax expense for the nine months ended March 31, 2018, including a $182,000 benefit recorded in the current quarter, primarily reflecting a write-down of our deferred tax assets resulting from a decrease in the corporate income tax rate from 34% to 21%. |
| • | A $173,000 pre-tax gain on sale of securities recorded during the nine months ended March 31, 2018. |
| • | A $919,000 pre-tax curtailment of the Bank’s defined benefit plan resulting in a reduction to the salaries and benefits component of noninterest expense recorded in the three and nine months ended March 31, 2017. |
| • | A $1.6 million settlement on an acquired loan included in other noninterest income in the nine months ended March 31, 2017. |
| • | A $521,000 lease write-down expense in the nine months ended March 31, 2017. |
On a non-GAAP basis, which excludes the nonrecurring items discussed above, the Company recorded net income of $2.0 million and $5.4 million for the three and nine months ended March 31, 2018, or $0.12 and $0.32 per diluted share, respectively. This compares to non-GAAP net income of $1.3 and $3.7 million for the three and nine months ended March 31, 2017. Reconciliations of GAAP to non-GAAP measures begin on page 12.
Effective April 20, 2017, PCSB Bank completed its mutual-to-stock conversion and the Company completed its related initial public offering. Accordingly, financial results for dates and periods prior to April 20, 2017 are for the Bank only.
President’s Comments
Commenting on the Company's results, Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation, said, "I am proud of the Company's accomplishment as we bring to a close our one-year anniversary as a public company. Some of these accomplishments include a $77.1 million (9.5%) increase in net loans from June 30, 2017, along with a 15.0% increase in net interest income leading to continued earnings growth and operating efficiency. Additionally, we continue to reduce problem assets as the Bank's non-performing asset to total assets declined to 0.50% at March 31, 2018 from 0.91% at June 30, 2017. These results continue to follow our strategy to leverage our capital in a safe and disciplined way in order to maximize stockholder value. We also continue to be focused on capital management and I am pleased to announce our first quarterly cash dividend of $0.03 per share."
Income Statement Summary
Net interest income increased $1.2 million, or 13.2%, to $10.1 million for the three months ended March 31, 2018, compared to the same period in 2017 and decreased $43,000 from the previous quarter. The increase in net interest income compared to the prior year is a result of a $172.6 million increase in average net interest earning assets and a 3 basis point increase in the net interest margin. The increase in net interest earning assets is due to the Company deploying the capital raised in the initial public offering into loans receivable and investments. The net interest margin was 2.99% for the three months ended March 31, 2018, increasing from 2.96% for the three months ended March 31, 2017 and down slightly from 3.00% for the three months ended December 31, 2017.
The provision for loan losses decreased $181,000 to $54,000 for the three months March 31, 2018 compared to the same period in 2017 due to increases in specific reserves on impaired loans in the prior year period. The provision for loan losses decreased $146,000 compared to prior quarter due primarily to recoveries realized in the current quarter. Recoveries, net of charge-offs, were $99,000 for the three months ended March 31, 2018, compared to
charge-offs net of recoveries, of $997,000 for the three months ended December 31, 2017 and $33,000 for the three months ended March 31, 2017. Loans classified as substandard and doubtful decreased $1.0 million or 5.2% to $19.6 million at March 31, 2018 from $20.6 million at December 31, 2017 and decreased $5.6 million or 22.2% from $25.1 million at June 30, 2017. Non-performing loans were 0.80% of gross loans as of March 31, 2018, down from 0.97% as of December 31, 2017 and 1.48% as of June 30, 2017.
Noninterest income decreased $114,000 to $512,000 for the three months ended March 31, 2018 compared to the same period in 2017, primarily due to higher loan-related fees earned in the prior year period, and decreased $180,000 from the three months ended December 31, 2017, due primarily to higher loan-related fees and nonrecurring rental income on the settlement of a nonperforming asset earned in the prior quarter.
Noninterest expense increased $1.3 million to $7.8 million for the three months ended March 31, 2018 compared to the same period in 2017 and decreased $292,000 from the three months ended December 31, 2017. The $1.3 million increase was caused primarily by increases in salaries and employee benefits, primarily reflecting a $919,000 curtailment gain recognized in the prior year period related to the defined benefit pension plan, $192,000 of net increases in other retirement expenses, including ESOP expense which commenced in April 2017, and a $181,000 increase in salaries expense due primarily to increased staffing. Additionally, salaries and employee benefits expense increased $2.2 million to $14.4 million for the nine months ended March 31, 2018 compared to the prior year, primarily due to a $1.8 million increase in ESOP expense and a $598,000 increase due to additional headcount, partially offset by a $73,000 net decrease in defined benefit pension and other retirement plan costs. Occupancy expense and other operating expenses were unchanged compared to the prior year quarter as increases in Director and Officer insurance expense and other professional fees associated with being a public company were offset by lower FDIC assessments and expenses on foreclosed real estate. The $292,000 decrease in noninterest expense from the three months ended December 31, 2017 was primarily due to a loss recorded on a receivable in the three months ended December 31, 2017 as well as lower advertising costs.
Income tax expense decreased $287,000 or 32.7% to $591,000 for the three months ended March 31, 2018 compared to the same period in 2017 due to a $182,000 tax benefit from the adjustment of the re-measurement charge associated with the recent tax reform and the related reduction of the corporate income tax rate from 34% to 21%. The effective income tax rate was 21.4% (27.9% excluding the effects of the current quarter re-measurement charge) for the three months ended March 31, 2018 as compared to 31.7% for the three months ended March 31, 2017. Income tax expense decreased $2.0 million compared to the three months ended December 31, 2017 due primarily to the $1.8 million deferred tax re-measurement charge recorded in the prior quarter.
Balance Sheet Summary
Total assets increased $30.5 million to $1.46 billion at March 31, 2018 from $1.43 billion at June 30, 2017. This increase was primarily due to an increase of $77.1 million in net loans receivable, partially offset by decreases of $24.0 million and $21.8 million in cash and cash equivalents and total investment securities, respectively. The $77.1 million increase in net loans included increases of $47.2 million in commercial mortgage loans, $36.1 million in residential mortgage loans, and $2.6 million in commercial loans, partially offset by decreases of $6.3 million in construction loans and $3.7 million in home equity lines of credit. Loan growth was funded by decreases in cash and cash equivalents and investment securities, as well as increased FHLB advances.
Total liabilities increased $25.7 million to $1.17 billion at March 31, 2018 from $1.15 billion at June 30, 2017. This increase was primarily due to a $26.3 million increase in advances from FHLB.
Total shareholders’ equity increased $4.9 million to $284.7 million at March 31, 2018 from $279.8 million at June 30, 2017. This increase was primarily due to net income of $3.9 million and a $1.7 million reduction in unearned ESOP shares for plan shares earned during the period, partially offset by other comprehensive losses of $861,000 due largely to increased unrealized losses in the available for sale investment securities portfolio driven by increased market interest rates. At March 31, 2018, the Company’s book value per share and tangible book value per share were $15.67 and $15.31, respectively, compared to $15.41 and $15.04, respectively, at June 30, 2017. For reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure), see page 14. At March 31, 2018, the Bank was considered “well capitalized” under applicable regulatory guidelines.
Dividend
The Board of Directors has declared a regular quarterly cash dividend of $0.03 per share. The dividend is payable on or about May 25, 2018 to stockholders of record on May 11, 2018.
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 stock savings bank and 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 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 data)
| | March 31, | | | June 30, | |
| | 2018 | | | 2017 | |
ASSETS | | | | | | | | |
Cash and due from banks | | $ | 35,307 | | | $ | 59,115 | |
Federal funds sold | | | 1,198 | | | | 1,371 | |
Cash and cash equivalents | | | 36,505 | | | | 60,486 | |
Investment Securities: | | | | | | | | |
Held to maturity investment securities, at amortized cost (fair value of $357,761 and $383,588, respectively) | | | 366,362 | | | | 383,551 | |
Available for sale securities, at fair value | | | 107,321 | | | | 111,889 | |
Total investment securities | | | 473,683 | | | | 495,440 | |
Loans receivable, net of allowance for loan losses of $4,624 and $5,150, respectively | | | 886,718 | | | | 809,648 | |
Accrued interest receivable | | | 4,458 | | | | 3,693 | |
Federal Home Loan Bank stock | | | 4,112 | | | | 3,132 | |
Premises and equipment, net | | | 12,522 | | | | 12,959 | |
Deferred tax asset, net | | | 2,832 | | | | 4,770 | |
Foreclosed real estate | | | 142 | | | | 977 | |
Bank-owned life insurance | | | 23,609 | | | | 23,179 | |
Goodwill | | | 6,106 | | | | 6,106 | |
Other intangible assets | | | 463 | | | | 559 | |
Other assets | | | 5,819 | | | | 5,509 | |
Total assets | | $ | 1,456,969 | | | $ | 1,426,458 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
Interest bearing deposits | | $ | 960,666 | | | $ | 952,109 | |
Non-interest bearing deposits | | | 127,319 | | | | 136,352 | |
Total deposits | | | 1,087,985 | | | | 1,088,461 | |
Mortgage escrow funds | | | 7,596 | | | | 8,084 | |
Advances from Federal Home Loan Bank | | | 68,872 | | | | 42,598 | |
Other liabilities | | | 7,856 | | | | 7,469 | |
Total liabilities | | | 1,172,309 | | | | 1,146,612 | |
Commitments and contingencies | | | - | | | | - | |
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2018 and June 30, 2017, respectively) | | | - | | | | - | |
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,165,110 shares issued and outstanding as of March 31, 2018 and June 30, 2017, respectively) | | | 182 | | | | 182 | |
Additional paid in capital | | | 178,795 | | | | 177,993 | |
Retained earnings | | | 126,200 | | | | 121,148 | |
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") | | | (13,324 | ) | | | (14,262 | ) |
Accumulated other comprehensive loss, net of income taxes | | | (7,193 | ) | | | (5,215 | ) |
Total shareholders' equity | | | 284,660 | | | | 279,846 | |
Total liabilities and shareholders' equity | | $ | 1,456,969 | | | $ | 1,426,458 | |
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, | |
| | 2018 | | | 2017 | | | 2018 | | | 2017 | |
Interest and dividend income | | | | | | | | | | | | | | | | |
Loans receivable | | $ | 9,103 | | | $ | 8,493 | | | $ | 27,092 | | | $ | 25,256 | |
Investment securities | | | 2,368 | | | | 1,633 | | | | 6,882 | | | | 4,643 | |
Federal funds and other | | | 177 | | | | 150 | | | | 628 | | | | 336 | |
Total interest and dividend income | | | 11,648 | | | | 10,276 | | | | 34,602 | | | | 30,235 | |
Interest expense | | | | | | | | | | | | | | | | |
Deposits | | | 1,380 | | | | 1,263 | | | | 3,954 | | | | 3,839 | |
FHLB advances | | | 125 | | | | 55 | | | | 443 | | | | 136 | |
Total interest expense | | | 1,505 | | | | 1,318 | | | | 4,397 | | | | 3,975 | |
Net interest income | | | 10,143 | | | | 8,958 | | | | 30,205 | | | | 26,260 | |
Provision for loan losses | | | 54 | | | | 235 | | | | 389 | | | | 823 | |
Net interest income after provision for loan losses | | | 10,089 | | | | 8,723 | | | | 29,816 | | | | 25,437 | |
Noninterest income | | | | | | | | | | | | | | | | |
Fees and service charges | | | 241 | | | | 353 | | | | 810 | | | | 955 | |
Gains on sales of securities, net | | | - | | | | - | | | | 173 | | | | - | |
Bank-owned life insurance | | | 136 | | | | 146 | | | | 430 | | | | 474 | |
Settlement on acquired loan | | | - | | | | - | | | | - | | | | 1,615 | |
Other | | | 135 | | | | 127 | | | | 505 | | | | 393 | |
Total noninterest income | | | 512 | | | | 626 | | | | 1,918 | | | | 3,437 | |
Noninterest expense | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 4,755 | | | | 3,495 | | | | 14,391 | | | | 12,189 | |
Occupancy and equipment | | | 1,326 | | | | 1,362 | | | | 3,904 | | | | 4,497 | |
Professional fees | | | 465 | | | | 273 | | | | 1,257 | | | | 858 | |
Advertising | | | 112 | | | | 135 | | | | 456 | | | | 364 | |
Postage, printing, stationary and supplies | | | 161 | | | | 140 | | | | 435 | | | | 404 | |
FDIC assessment | | | 93 | | | | 160 | | | | 235 | | | | 481 | |
Amortization of intangible assets | | | 32 | | | | 36 | | | | 97 | | | | 109 | |
Other operating expenses | | | 889 | | | | 979 | | | | 3,077 | | | | 2,670 | |
Total noninterest expense | | | 7,833 | | | | 6,580 | | | | 23,852 | | | | 21,572 | |
Net income before income tax expense | | | 2,768 | | | | 2,769 | | | | 7,882 | | | | 7,302 | |
Income tax expense | | | 591 | | | | 878 | | | | 3,947 | | | | 2,283 | |
Net income | | $ | 2,177 | | | $ | 1,891 | | | $ | 3,935 | | | $ | 5,019 | |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.13 | | | n/a | | | $ | 0.23 | | | n/a | |
Diluted | | $ | 0.13 | | | n/a | | | $ | 0.23 | | | n/a | |
| | | | | | | | | | | | | | | | |
Weighted average common share - basic and diluted | | | 16,820,726 | | | n/a | | | | 16,789,131 | | | n/a | |
PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, | |
| 2018 | | | 2017 | |
| Average Balance | | | Interest / Dividends | | | Average Rate | | | Average Balance | | | Interest / Dividends | | | Average Rate | |
| | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable | $ | 843,557 | | | $ | 9,103 | | | | 4.32 | % | | $ | 773,022 | | | $ | 8,493 | | | | 4.40 | % |
Investment securities | | 471,932 | | | | 2,368 | | | | 2.01 | | | | 379,364 | | | | 1,633 | | | | 1.72 | |
Other interest-earning assets | | 42,860 | | | | 177 | | | | 1.68 | | | | 59,915 | | | | 150 | | | | 1.02 | |
Total interest-earning assets | | 1,358,349 | | | | 11,648 | | | | 3.44 | | | | 1,212,301 | | | | 10,276 | | | | 3.39 | |
Non-interest-earning assets | | 56,874 | | | | | | | | | | | | 61,354 | | | | | | | | | |
Total assets | $ | 1,415,223 | | | | | | | | | | | $ | 1,273,655 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and equity: | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | $ | 113,178 | | | | 49 | | | | 0.18 | | | $ | 139,306 | | | | 54 | | | | 0.17 | |
Money market accounts | | 42,448 | | | | 50 | | | | 0.48 | | | | 31,689 | | | | 21 | | | | 0.26 | |
Savings accounts and escrow | | 496,574 | | | | 297 | | | | 0.24 | | | | 523,045 | | | | 315 | | | | 0.24 | |
Time deposits | | 314,815 | | | | 984 | | | | 1.27 | | | | 311,092 | | | | 873 | | | | 1.14 | |
Total interest-bearing deposits | | 967,015 | | | | 1,380 | | | | 0.58 | | | | 1,005,132 | | | | 1,263 | | | | 0.52 | |
Federal Home Loan Bank advances | | 27,444 | | | | 125 | | | | 1.84 | | | | 15,920 | | | | 55 | | | | 1.38 | |
Total interest-bearing liabilities | | 994,459 | | | | 1,505 | | | | 0.62 | | | | 1,021,052 | | | | 1,318 | | | | 0.52 | |
Non-interest-bearing deposits | | 129,905 | | | | | | | | | | | | 125,774 | | | | | | | | | |
Other non-interest-bearing liabilities | | 6,719 | | | | | | | | | | | | 12,617 | | | | | | | | | |
Total liabilities | | 1,131,083 | | | | | | | | | | | | 1,159,443 | | | | | | | | | |
Total shareholders' equity | | 284,140 | | | | | | | | | | | | 114,212 | | | | | | | | | |
Total liabilities and shareholders' equity | $ | 1,415,223 | | | | | | | | | | | $ | 1,273,655 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 10,143 | | | | | | | | | | | $ | 8,958 | | | | | |
Interest rate spread (1) | | | | | | | | | | 2.82 | | | | | | | | | | | | 2.87 | |
Net interest margin (2) | | | | | | | | | | 2.99 | | | | | | | | | | | | 2.96 | |
Average interest-earning assets to interest-bearing liabilities | | 136.59 | % | | | | | | | | | | | 118.73 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(1) 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. | |
(2) Net interest margin represents annualized net interest income divided by average interest-earning assets. | |
PCSB Financial Corporation and Subsidiaries
Net Interest Margin Analysis (unaudited)
(dollar amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine months ended March 31, | |
| 2018 | | | 2017 | |
| Average Balance | | | Interest / Dividends | | | Average Rate | | | Average Balance | | | Interest / Dividends | | | Average Rate | |
| | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable | $ | 828,138 | | | $ | 27,092 | | | | 4.36 | % | | $ | 770,567 | | | $ | 25,256 | | | | 4.37 | % |
Investment securities | | 477,199 | | | | 6,882 | | | | 1.92 | | | | 372,358 | | | | 4,643 | | | | 1.66 | |
Other interest-earning assets | | 55,502 | | | | 628 | | | | 1.51 | | | | 59,838 | | | | 336 | | | | 0.75 | |
Total interest-earning assets | | 1,360,839 | | | | 34,602 | | | | 3.39 | | | | 1,202,763 | | | | 30,235 | | | | 3.35 | |
Non-interest-earning assets | | 57,927 | | | | | | | | | | | | 58,405 | | | | | | | | | |
Total assets | $ | 1,418,766 | | | | | | | | | | | $ | 1,261,168 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Liabilities and equity: | | | | | | | | | | | | | | | | | | | | | | | |
NOW accounts | $ | 113,365 | | | | 146 | | | | 0.17 | | | $ | 118,304 | | | | 142 | | | | 0.16 | |
Money market accounts | | 33,854 | | | | 93 | | | | 0.37 | | | | 31,658 | | | | 63 | | | | 0.26 | |
Savings accounts and escrow | | 508,259 | | | | 930 | | | | 0.24 | | | | 526,735 | | | | 970 | | | | 0.25 | |
Time deposits | | 306,527 | | | | 2,785 | | | | 1.21 | | | | 318,214 | | | | 2,664 | | | | 1.12 | |
Total interest-bearing deposits | | 962,005 | | | | 3,954 | | | | 0.55 | | | | 994,911 | | | | 3,839 | | | | 0.52 | |
Federal Home Loan Bank advances | | 34,712 | | | | 443 | | | | 1.70 | | | | 12,583 | | | | 136 | | | | 1.43 | |
Total interest-bearing liabilities | | 996,717 | | | | 4,397 | | | | 0.59 | | | | 1,007,494 | | | | 3,975 | | | | 0.52 | |
Non-interest-bearing deposits | | 131,629 | | | | | | | | | | | | 126,559 | | | | | | | | | |
Other non-interest-bearing liabilities | | 7,590 | | | | | | | | | | | | 14,468 | | | | | | | | | |
Total liabilities | | 1,135,936 | | | | | | | | | | | | 1,148,521 | | | | | | | | | |
Total shareholders' equity | | 282,830 | | | | | | | | | | | | 112,647 | | | | | | | | | |
Total liabilities and shareholders' equity | $ | 1,418,766 | | | | | | | | | | | $ | 1,261,168 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | $ | 30,205 | | | | | | | | | | | $ | 26,260 | | | | | |
Interest rate spread (1) | | | | | | | | | | 2.80 | | | | | | | | | | | | 2.83 | |
Net interest margin (2) | | | | | | | | | | 2.96 | | | | | | | | | | | | 2.91 | |
Average interest-earning assets to interest-bearing liabilities | | 136.53 | % | | | | | | | | | | | 119.38 | % | | | | | | | | |
| |
(1) 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. | |
(2) Net interest margin represents annualized net interest income divided by average interest-earning assets. | |
PCSB Financial Corporation and Subsidiaries
Condensed Financial Information (unaudited)
(amounts in thousands, except per share data)
| As of | |
| March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | |
| | | | | | | | | | | | | | | |
Condensed Balance Sheets | | | | | | | | | | | | | | | |
Cash and cash equivalents | $ | 36,505 | | $ | 77,106 | | $ | 34,733 | | $ | 60,486 | | $ | 178,409 | |
Total investment securities | | 473,683 | | | 470,360 | | | 475,823 | | | 495,440 | | | 391,359 | |
Loans receivable, net | | 886,718 | | | 838,120 | | | 839,963 | | | 809,648 | | | 776,756 | |
Other assets | | 60,063 | | | 57,682 | | | 61,187 | | | 60,884 | | | 60,797 | |
Total assets | $ | 1,456,969 | | $ | 1,443,268 | | $ | 1,411,706 | | $ | 1,426,458 | | $ | 1,407,321 | |
| | | | | | | | | | | | | | | |
Total deposits and escrow | $ | 1,095,581 | | $ | 1,122,558 | | $ | 1,086,662 | | $ | 1,096,545 | | $ | 1,121,201 | |
Advances from Federal Home Loan Bank | | 68,872 | | | 30,720 | | | 35,750 | | | 42,598 | | | 24,446 | |
Other liabilities | | 7,856 | | | 7,579 | | | 7,209 | | | 7,469 | | | 144,404 | |
Total liabilities | | 1,172,309 | | | 1,160,857 | | | 1,129,621 | | | 1,146,612 | | | 1,290,051 | |
Total shareholders' equity | | 284,660 | | | 282,411 | | | 282,085 | | | 279,846 | | | 117,270 | |
Total liabilities and shareholders' equity | $ | 1,456,969 | | $ | 1,443,268 | | $ | 1,411,706 | | $ | 1,426,458 | | $ | 1,407,321 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended | | | Nine Months Ended | |
| March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | | | March 31, 2018 | | March 31, 2017 | |
Condensed Income Statements | | | | | | | | | | | | | | | | | | | | | | |
Interest income | $ | 11,648 | | $ | 11,657 | | $ | 11,297 | | $ | 10,723 | | $ | 10,276 | | | $ | 34,602 | | $ | 30,235 | |
Interest expense | | 1,505 | | | 1,471 | | | 1,421 | | | 1,318 | | | 1,318 | | | | 4,397 | | | 3,975 | |
Net interest income | | 10,143 | | | 10,186 | | | 9,876 | | | 9,405 | | | 8,958 | | | | 30,205 | | | 26,260 | |
Provision for loan losses | | 54 | | | 200 | | | 135 | | | - | | | 235 | | | | 389 | | | 823 | |
Noninterest income | | 512 | | | 692 | | | 714 | | | 647 | | | 626 | | | | 1,918 | | | 3,437 | |
Noninterest expense | | 7,833 | | | 8,125 | | | 7,894 | | | 12,859 | | | 6,580 | | | | 23,852 | | | 21,572 | |
Income before income tax expense (benefit) | | 2,768 | | | 2,553 | | | 2,561 | | | (2,807 | ) | | 2,769 | | | | 7,882 | | | 7,302 | |
Income tax expense (benefit) | | 591 | | | 2,551 | | | 805 | | | (1,017 | ) | | 878 | | | | 3,947 | | | 2,283 | |
Net income (loss) | $ | 2,177 | | $ | 2 | | $ | 1,756 | | $ | (1,790 | ) | $ | 1,891 | | | $ | 3,935 | | $ | 5,019 | |
| | | | | | | | | | | | | | | | | | | | | | |
Earnings per share: | | | | | | | | | | | | | | | | | | | | | | |
Basic | $ | 0.13 | | $ | 0.00 | | $ | 0.10 | | n/a | | n/a | | | $ | 0.23 | | n/a | |
Diluted | $ | 0.13 | | $ | 0.00 | | $ | 0.10 | | n/a | | n/a | | | $ | 0.23 | | n/a | |
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)
| Quarter Ended | | | Nine Months Ended | |
| March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | | | March 31, 2018 | | March 31, 2017 | |
Performance Ratios (1): | | | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | 0.62 | % | | 0.00 | % | | 0.49 | % | | (0.50 | %) | | 0.59 | % | | | 0.37 | % | | 0.53 | % |
Return on average equity | | 3.06 | % | | 0.00 | % | | 2.44 | % | | (2.69 | %) | | 6.62 | % | | | 1.86 | % | | 5.94 | % |
Interest rate spread | | 2.82 | % | | 2.85 | % | | 2.74 | % | | 2.69 | % | | 2.87 | % | | | 2.80 | % | | 2.83 | % |
Net interest margin | | 2.99 | % | | 3.00 | % | | 2.89 | % | | 2.81 | % | | 2.96 | % | | | 2.96 | % | | 2.91 | % |
Adjusted Efficiency ratio (2) | | 73.51 | % | | 74.69 | % | | 75.78 | % | | 78.18 | % | | 78.24 | % | | | 74.65 | % | | 78.24 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Noninterest income to average assets | | 0.14 | % | | 0.20 | % | | 0.20 | % | | 0.18 | % | | 0.20 | % | | | 0.18 | % | | 0.36 | % |
Noninterest expense to average assets | | 2.21 | % | | 2.30 | % | | 2.20 | % | | 3.60 | % | | 2.07 | % | | | 2.24 | % | | 2.28 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Average interest-earning assets to average interest-bearing liabilities | | 136.59 | % | | 136.51 | % | | 136.50 | % | | 130.71 | % | | 118.73 | % | | | 136.53 | % | | 119.38 | % |
Equity to assets (3) | | 20.08 | % | | 20.00 | % | | 20.10 | % | | 18.65 | % | | 8.97 | % | | | 19.93 | % | | 8.93 | % |
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)
| As of | |
| March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | |
| | | | | | | | | | | | | | | |
Loans to deposits | | 81.50 | % | | 75.21 | % | | 77.65 | % | | 74.38 | % | | 69.70 | % |
| | | | | | | | | | | | | | | |
Share Data: | | | | | | | | | | | | | | | |
Shares outstanding | | 18,165,110 | | | 18,165,110 | | | 18,165,110 | | | 18,165,110 | | n/a | |
Book value per common share | $ | 15.67 | | $ | 15.55 | | $ | 15.53 | | $ | 15.41 | | n/a | |
Tangible book value per common share (4) | $ | 15.31 | | $ | 15.18 | | $ | 15.16 | | $ | 15.04 | | n/a | |
| | | | | | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | |
Non-performing assets | $ | 7,307 | | $ | 8,191 | | $ | 12,354 | | $ | 13,049 | | $ | 13,363 | |
Allowance for loan losses as a percent of total gross loans | | 0.52 | % | | 0.53 | % | | 0.62 | % | | 0.63 | % | | 0.62 | % |
Allowance for loan losses as a percent of non-performing loans | | 64.54 | % | | 54.58 | % | | 48.53 | % | | 42.66 | % | | 41.58 | % |
Non-performing loans as a percent of total loans | | 0.80 | % | | 0.97 | % | | 1.35 | % | | 1.48 | % | | 1.49 | % |
Non-performing assets as a percent of total assets | | 0.50 | % | | 0.57 | % | | 0.88 | % | | 0.91 | % | | 0.95 | % |
| | | | | | | | | | | | | | | |
Net charge-offs (recoveries) | $ | (99 | ) | $ | 997 | | $ | 17 | | $ | (320 | ) | $ | 33 | |
Net charge-offs (recoveries) to average outstanding loans during the period | | (0.05 | %) | | 0.48 | % | | 0.01 | % | | (0.16 | %) | | 0.02 | % |
| | | | | | | | | | | | | | | |
Capital Ratios (5): | | | | | | | | | | | | | | | |
Tier 1 capital (to adjusted total assets) | | 13.97 | % | | 13.84 | % | | 13.52 | % | | 13.65 | % | | 9.13 | % |
Common equity Tier 1 capital (to risk-weighted assets) | | 21.16 | % | | 21.64 | % | | 21.13 | % | | 21.69 | % | | 13.99 | % |
Tier 1 capital (to risk-weighted assets) | | 21.16 | % | | 21.64 | % | | 21.13 | % | | 21.69 | % | | 13.99 | % |
Total capital (to risk-weighted assets) | | 21.65 | % | | 22.13 | % | | 21.71 | % | | 22.27 | % | | 14.57 | % |
| | | | | | | | | | | | | | | |
(1) Performance ratios are annualized. | |
(2) Adjusted efficiency ratio is a non-GAAP measure and is defined as noninterest expense, less certain nonrecurring items, divided by our operating revenue, which is equal to net interest income plus non-interest income excluding certain nonrecurring items. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the impact of certain one-time items and other discrete items that are unrelated to our core business. | |
(3) Represents average shareholders' equity divided by average total assets. | |
(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. | |
(5) Represents Bank ratios. | |
PCSB Financial Corporation and Subsidiaries
Loan and Deposit Portfolio (unaudited)
(amounts in thousands)
| As of | |
| March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
| 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
Mortgage loans: | | | | | | | | | | | | | | | |
Residential mortgages | $ | 253,847 | | $ | 213,716 | | $ | 215,551 | | $ | 217,778 | | $ | 219,797 | |
Commercial mortgage | | 484,810 | | | 481,169 | | | 469,983 | | | 437,651 | | | 394,738 | |
Construction | | 16,098 | | | 16,379 | | | 23,104 | | | 22,404 | | | 28,518 | |
Net deferred loan origination costs | | 1,203 | | | 210 | | | 384 | | | 397 | | | 472 | |
| | 755,958 | | | 711,474 | | | 709,022 | | | 678,230 | | | 643,525 | |
Commercial and consumer loans: | | | | | | | | | | | | | | | |
Commercial loans | | 35,897 | | | 31,276 | | | 31,407 | | | 33,297 | | | 35,420 | |
Other loans secured | | 47,770 | | | 46,056 | | | 48,460 | | | 46,802 | | | 46,874 | |
Home equity credit lines | | 38,220 | | | 40,158 | | | 42,044 | | | 41,927 | | | 40,323 | |
Consumer and installment loans | | 12,773 | | | 12,860 | | | 13,526 | | | 13,765 | | | 14,659 | |
Net deferred loan origination costs | | 724 | | | 767 | | | 772 | | | 777 | | | 785 | |
| | 135,384 | | | 131,117 | | | 136,209 | | | 136,568 | | | 138,061 | |
Total loans receivable | | 891,342 | | | 842,591 | | | 845,231 | | | 814,798 | | | 781,586 | |
Allowance for loan loss | | (4,624 | ) | | (4,471 | ) | | (5,268 | ) | | (5,150 | ) | | (4,830 | ) |
Loans receivable, net | $ | 886,718 | | $ | 838,120 | | $ | 839,963 | | $ | 809,648 | | $ | 776,756 | |
| | | | | | | | | | | | | | | |
| As of | |
| March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
| 2018 | | 2017 | | 2017 | | 2017 | | 2017 | |
| | | | | | | | | | | | | | | |
Demand deposits | $ | 127,319 | | $ | 150,830 | | $ | 133,461 | | $ | 136,361 | | $ | 135,568 | |
Now accounts | | 114,899 | | | 118,462 | | | 110,646 | | | 115,527 | | | 112,746 | |
Money market accounts | | 40,374 | | | 31,021 | | | 28,590 | | | 29,097 | | | 31,895 | |
Savings | | 482,968 | | | 502,469 | | | 504,291 | | | 512,697 | | | 526,347 | |
Time deposits | | 322,425 | | | 311,547 | | | 304,719 | | | 294,779 | | | 307,913 | |
Total deposits | $ | 1,087,985 | | $ | 1,114,329 | | $ | 1,081,707 | | $ | 1,088,461 | | $ | 1,114,469 | |
| | | | | | | | | | | | | | | |
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(dollar amounts in thousands, except share and per share data)
| | Three Months Ended | | | Nine Months Ended | |
| | March 31, | | | March 31, | |
| | 2018 | | | 2017 | | | 2018 | | | 2017 | |
Computation of Adjusted Net Income and Earnings Per Share | | | | | | | | | | | | | | | | |
Net income | | $ | 2,177 | | | $ | 1,891 | | | $ | 3,935 | | | $ | 5,019 | |
Adjustments: | | | | | | | | | | | | | | | | |
Deferred tax re-measurement (benefit) charge | | | (182 | ) | | | - | | | | 1,570 | | | | - | |
Defined benefit pension plan curtailment (1) | | | - | | | | (607 | ) | | | - | | | | (607 | ) |
Write-down of operating lease obligation (1) | | | - | | | | - | | | | - | | | | 344 | |
Settlement on acquired loan (1) | | | - | | | | - | | | | - | | | | (1,066 | ) |
Gain on sale of securities (1) | | | - | | | | - | | | | (114 | ) | | | - | |
Adjusted net income | | $ | 1,995 | | | $ | 1,284 | | | $ | 5,391 | | | $ | 3,690 | |
| | | | | | | | | | | | | | | | |
Average number of common shares outstanding used to calculate basic earnings per common share | | | 16,820,726 | | | n/a | | | | 16,789,131 | | | n/a | |
| | | | | | | | | | | | | | | | |
Adjusted earnings per common share (basic and diluted): | | $ | 0.12 | | | n/a | | | $ | 0.32 | | | n/a | |
| | | | | | | | | | | | | | | | |
Computation of Adjusted Effective Tax Rate | | | | | | | | | | | | | | | | |
Net income before income tax expense | | $ | 2,768 | | | $ | 2,769 | | | $ | 7,882 | | | $ | 7,302 | |
| | | | | | | | | | | | | | | | |
Income tax expense | | | 591 | | | | 878 | | | | 3,947 | | | | 2,283 | |
Adjustments: | | | | | | | | | | | | | | | | |
Deferred tax re-measurement benefit (charge) | | | 182 | | | | - | | | | (1,570 | ) | | | - | |
Adjusted income tax expense | | $ | 773 | | | $ | 878 | | | $ | 2,377 | | | $ | 2,283 | |
| | | | | | | | | | | | | | | | |
Effective tax rate | | | 21.4 | % | | | 31.7 | % | | | 50.1 | % | | | 31.3 | % |
Adjusted effective tax rate | | | 27.9 | % | | | 31.7 | % | | | 30.2 | % | | | 31.3 | % |
| | | | | | | | | | | | | | | | |
(1) Amounts net of tax. | | | | | | | | | | | | | | | | |
PCSB Financial Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures (unaudited)
(dollar amounts in thousands, except share and per share data)
| Quarter Ended | | | Nine Months Ended | |
| March 31, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | | | March 31, 2018 | | March 31, 2017 | |
Computation of Efficiency Ratio | | | | | | | | | | | | | | | | | | | | | | |
Noninterest expense | $ | 7,833 | | $ | 8,125 | | $ | 7,894 | | $ | 12,859 | | $ | 6,580 | | | $ | 23,852 | | $ | 21,572 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | |
PCSB Community Foundation contribution | | - | | | - | | | - | | | (5,000 | ) | | - | | | | - | | | - | |
Defined benefit pension plan curtailment | | - | | | - | | | - | | | - | | | 919 | | | | - | | | 919 | |
Write-down of operating lease obligation | | - | | | - | | | - | | | - | | | - | | | | - | | | (521 | ) |
Adjusted noninterest expense | $ | 7,833 | | $ | 8,125 | | $ | 7,894 | | $ | 7,859 | | $ | 7,499 | | | $ | 23,852 | | $ | 21,970 | |
| | | | | | | | | | | | | | | | | | | | | | |
Net interest income | $ | 10,143 | | $ | 10,186 | | $ | 9,876 | | $ | 9,405 | | $ | 8,958 | | | $ | 30,205 | | $ | 26,260 | |
Noninterest income | | 512 | | | 692 | | | 714 | | | 647 | | | 626 | | | | 1,918 | | | 3,437 | |
Total revenue | | 10,655 | | | 10,878 | | | 10,590 | | | 10,052 | | | 9,584 | | | | 32,123 | | | 29,697 | |
Adjustments: | | | | | | | | | | | | | | | | | | | | | | |
Settlement on acquired loan | | - | | | - | | | - | | | - | | | - | | | | - | | | (1,615 | ) |
Gain on sale of securities | | - | | | - | | | (173 | ) | | - | | | - | | | | (173 | ) | | - | |
Adjusted operating revenue | $ | 10,655 | | $ | 10,878 | | $ | 10,417 | | $ | 10,052 | | $ | 9,584 | | | $ | 31,950 | | $ | 28,082 | |
| | | | | | | | | | | | | | | | | | | | | | |
Efficiency ratio | | 73.51 | % | | 74.69 | % | | 74.54 | % | | 127.92 | % | | 68.66 | % | | | 74.25 | % | | 72.64 | % |
Adjusted efficiency ratio | | 73.51 | % | | 74.69 | % | | 75.78 | % | | 78.18 | % | | 78.24 | % | | | 74.65 | % | | 78.24 | % |
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, 2018 | | December 31, 2017 | | September 30, 2017 | | June 30, 2017 | | March 31, 2017 | |
Computation of Tangible Book Value per Common Share | | | | | | | | | | | | | | | |
Total shareholders' equity | $ | 284,660 | | $ | 282,411 | | $ | 282,085 | | $ | 279,846 | | $ | 117,270 | |
Adjustments: | | | | | | | | | | | | | | | |
Preferred stock | | - | | | - | | | - | | | - | | | - | |
Common shareholders' equity | | 284,660 | | | 282,411 | | | 282,085 | | | 279,846 | | | 117,270 | |
Adjustments: | | | | | | | | | | | | | | | |
Goodwill | | (6,106 | ) | | (6,106 | ) | | (6,106 | ) | | (6,106 | ) | | (6,106 | ) |
Other intangible assets | | (463 | ) | | (495 | ) | | (527 | ) | | (559 | ) | | (593 | ) |
Tangible common shareholders' equity | $ | 278,091 | | $ | 275,810 | | $ | 275,452 | | $ | 273,181 | | $ | 110,571 | |
| | | | | | | | | | | | | | | |
Common shares outstanding | | 18,165,110 | | | 18,165,110 | | | 18,165,110 | | | 18,165,110 | | n/a | |
| | | | | | | | | | | | | | �� | |
Book value per share | $ | 15.67 | | $ | 15.55 | | $ | 15.53 | | $ | 15.41 | | n/a | |
Adjustments: | | | | | | | | | | | | | | | |
Effects of intangible assets | | (0.36 | ) | | (0.37 | ) | | (0.37 | ) | | (0.37 | ) | n/a | |
| | | | | | | | | | | | | | | |
Tangible book value per common share | $ | 15.31 | | $ | 15.18 | | $ | 15.16 | | $ | 15.04 | | n/a | |
