YORKTOWN HEIGHTS, N.Y., Aug. 01, 2019 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced its results for the three months and year ended June 30, 2019. For the three months ended June 30, 2019, net income was $1.7 million, or $0.10 per share, compared to $2.0 million, or $0.12 per share, for the three months ended March 31, 2019 and $2.7 million, or $0.16 per share, for the three months ended June 30, 2018. Provision for loan losses was $737,000, or $0.03 per share, net of tax, for the three months ended June 30, 2019, driven by a $157.4 million increase in net loans during the quarter. Net income was $8.3 million, or $0.50 per share, for the year ended June 30, 2019 compared to $6.6 million, or $0.39 per share, for the year ended June 30, 2018.

On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded net income of $1.7 million, or $0.10 per share for the three months ended June 30, 2019 as compared to net income of $2.0 million, or $0.12 per share for the three months ended March 31, 2019 and $2.2 million, or $0.13 per share, for the three months ended June 30, 2018. On a non-GAAP basis, the Company recorded net income of $8.2 million, or $0.50 per share, for the year ended June 30, 2019 compared to $7.6 million, or $0.46 per share, for the year ended June 30, 2018. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

In conjunction with grants made under the stockholder-approved 2018 Equity Incentive Plan, the Company recorded $829,000, or $627,000 net of taxes, of stock-based compensation expense in the current and prior quarter. No such expense was recorded in the prior year quarter. This additional expense reduced earnings per share by $0.04 in the current and prior quarter and had no impact in the prior year quarter as the plan was not in effect. Stock-based compensation expense for the year ended June 30, 2019 was $2.1 million, or $1.6 million net of taxes, or $0.10 per share, compared to no such expense in the year ended June 30, 2018.

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 pleased to report continued progress and strong growth in our core business as we complete our second fiscal year as a public company. Strong loan growth in the fourth quarter has resulted in a year over year 21.1% increase in total loan receivables while driving increased non-interest income through swap fees. Although the fourth quarter earnings were impacted by the loan loss provision on the growth in the loan portfolio, the increase in loans is expected to have a positive impact on future earnings. In addition, asset quality remains extremely strong as the ratio of non-performing assets to total assets decreased to 0.24% at June 30, 2019 from 0.43% at June 30, 2018.  We are also pleased to report that although our year over year net interest margin decreased 7 basis points to 2.96% from 3.03%, our linked quarter’s net interest margin held steady at 2.94%. During the fourth fiscal quarter we also announced the commencement of our second share repurchase program as we continue to deploy our excess capital. As we move forward in our third year as a public company, we hope to continue to build on these results in order to create value for our shareholders.”

Year End Results

Net income totaled $8.3 million for the year ended June 30, 2019, an increase of $1.7 million, or 26.0%, compared to $6.6 million for the year ended June 30, 2018. The increase is primarily due to a $1.1 million increase in net interest income, a $2.3 million decrease in income tax expense, and a $583,000 increase in noninterest income, partially offset by a $1.9 million increase in noninterest expense and an increase of $394,000 in the provision for loan losses. The increase in net interest income was primarily due to a $70.1 million, or 5.1%, increase in average interest earning assets, partially offset by a 7 basis point decrease in net interest margin. Despite continued asset growth and a higher yielding asset mix, which resulted in a 21 basis point increase in the yield on interest earning assets, the margin has been impacted by rising funding costs due to higher short-term interest rates along with competitive pricing, which caused a 37 basis point increase in the average cost of interest bearing liabilities. The income tax expense decrease is a result of a $1.6 million one-time deferred tax remeasurement charge recorded in the prior year, and a lower effective tax rate in the current year, both a result of federal tax reform legislation enacted in December 2017. The increase in noninterest income is largely due to a $507,000 increase in swap income. Despite continued improvements in asset quality, which resulted in minimal charge-offs and a decrease in the ratio of non-performing loans as a percent of total loans receivable from 0.66% as of June 30, 2018 to 0.25% as of June 30, 2019, a $190.8 million increase in the loan portfolio resulted in a provision for loan losses of $808,000 for the year, an increase of $394,000 compared to the prior year. As of June 30, 2019, the allowance for loan losses as a percent of total loans receivable was 0.52%, a decrease from 0.54% as of June 30, 2018.

Income Statement Summary

Net interest income decreased $673,000, or 5.9%, to $10.8 million for the three months ended June 30, 2019, compared to the same period in 2018 and increased $22,000 from the previous quarter. The decrease in net interest income compared to the prior year period is primarily a result of a 29 basis point decrease in net interest margin, partially offset by a $45.8 million, or 3.2%, increase in average interest earning assets. Included in prior year quarter net interest income is $879,000 of interest income recorded from the pay-off of two nonaccrual loans. Excluding this interest income, net interest margin for the quarter ended June 30, 2018 would have been 2.98%. Despite a 29 basis point increase in the yield on interest earning assets (adjusted for the impact of the nonaccrual loan interest discussed above), the cost of interest-bearing deposits increased 47 basis points to 1.12% for the three months ended June 30, 2019 compared to 0.65% for the three months ended June 30, 2018. The Company has experienced a shift in the deposit mix as some customers in lower yielding saving products moved to higher rate money market and time deposit accounts. The increase in average interest earning assets is primarily due to a $69.7 million increase in average loans, partially offset by a $28.3 million decrease in average investment securities.

Net interest income was largely unchanged compared to the prior quarter as a result of minimal growth in average interest earning assets and an unchanged net interest margin. Net interest margin remained at 2.94% as a 6 basis point increase in the yield on assets, driven by a shift from lower yielding cash and cash equivalent and investment securities into higher yielding loans, was offset by an 8 basis point increase in the cost of interest-bearing liabilities.

The provision for loan losses was $737,000 for the three months ended June 30, 2019 compared to $7,000 in the prior quarter and $25,000 for the same period in 2018. Charge-offs, net of recoveries, were $18,000 for the three months ended June 30, 2019 compared to $5,000 for the three months ended March 31, 2019 and recoveries, net of charge-offs, of $255,000 for the three months ended June 30, 2018.  Loans classified as substandard or doubtful decreased $559,000, or 6.2%, to $8.5 million at June 30, 2019 from $9.0 million at March 31, 2019 and decreased $6.9 million, or 45.0%, from $15.4 million at June 30, 2018. Non-performing loans as a percent of total loans receivable was 0.25% as of June 30, 2019, a decrease from 0.30% as of March 31, 2019 and 0.66% as of June 30, 2018.

Noninterest income increased $361,000 to $962,000 for the three months ended June 30, 2019 compared to the same period in 2018, primarily due to increases of $361,000 in swap income and $68,000 in fees and services charges, partially offset by a $56,000 decrease in gains on the sale of securities. Noninterest income increased $383,000 from the three months ended March 31, 2019, primarily due to a $361,000 increase in swap income.

Noninterest expense increased $444,000 to $8.7 million for the three months ended June 30, 2019 compared to the same period in 2018 and increased $10,000 compared to the three months ended March 31, 2019. The $444,000 increase from the prior year period was caused primarily by $829,000 of stock-based compensation expense recorded in the current quarter, compared to no such expense in the prior year period, partially offset by a $370,000 loss on a receivable recorded in the prior year quarter and a $15,000 decrease in all other noninterest expenses.

The effective income tax rate was 26.2% for the three months ended June 30, 2019, as compared to 23.9% for the three months ended March 31, 2019 and 28.7% for the three months ended June 30, 2018. Beginning on July 1, 2018, the Company began to realize the full benefits of the reduction in the corporate income tax rate which became effective in January 2018.

Balance Sheet Summary

Total assets increased $157.4 million to $1.64 billion at June 30, 2019 from $1.48 billion at June 30, 2018.  This increase was primarily due to an increase of $190.8 million in net loans receivable, partially offset by a decrease of $40.9 million in total investment securities. The $190.8 million increase in loans was the result of $213.6 million of originations and $94.5 million of loan purchases, partially offset by $117.3 million of net amortization and repayments on the remaining portfolio. Commercial mortgages increased $156.1 million or 31.5%, commercial loans increased $29.5 million, or 28.3%, and residential mortgages increased $14.6 million, or 5.8%, with net decreases in all other loan types of $9.4 million.

Total liabilities increased $163.6 million to $1.36 billion at June 30, 2019 from $1.19 billion at June 30, 2018.  This increase was primarily due to increases of $92.4 million in FHLB advances and $68.4 million, or 5.9%, in total deposits.

Total shareholders’ equity decreased $6.3 million to $281.3 million at June 30, 2019 from $287.6 million at June 30, 2018.  This decrease was primarily due to the repurchase of $18.3 million in common stock and $2.2 million of cash dividends declared, partially offset by net income of $8.3 million, $4.1 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, and other comprehensive income of $1.9 million. During the current quarter, the Company announced its second stock repurchase plan, under which up to 890,021 shares may be repurchased, representing 5% of its outstanding shares of common stock.

At June 30, 2019, the Company’s book value per share and tangible book value per share were $15.80 and $15.44, respectively, compared to $15.83 and $15.47, respectively, at June 30, 2018.  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, 2019, the Bank was considered “well capitalized” under applicable regulatory guidelines.

Dividend

The Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about August 30, 2019 to stockholders of record on August 16, 2019.

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 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)

		June 30,				June 30,
		2019				2018
ASSETS
Cash and due from banks		$	58,756			$	60,684
Federal funds sold			1,273				1,461
Cash and cash equivalents			60,029				62,145
Held to maturity debt securities, at amortized cost   (fair value of $346,243 and $343,188, respectively)			345,545				353,183
Available for sale debt securities, at fair value			72,228				105,472
Total investment securities			417,773				458,655
Loans receivable, net of allowance for loan losses of $5,664 and $4,904, respectively			1,093,121				902,336
Accrued interest receivable			4,797				4,358
Federal Home Loan Bank stock			6,255				2,050
Premises and equipment, net			11,802				11,598
Deferred tax asset, net			2,478				2,622
Foreclosed real estate			1,158				460
Bank-owned life insurance			24,291				23,747
Goodwill			6,106				6,106
Other intangible assets			323				433
Other assets			9,446				5,677
Total assets		$	1,637,579			$	1,480,187
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits		$	1,084,442			$	1,025,574
Non-interest bearing deposits			141,379				131,883
Total deposits			1,225,821				1,157,457
Mortgage escrow funds			9,355				8,803
Advances from Federal Home Loan Bank			111,216				18,841
Other liabilities			9,880				7,527
Total liabilities			1,356,272				1,192,628
Commitments and contingencies			-				-
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of June 30, 2019 and June 30, 2018)			-				-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 and 18,165,110 shares issued, and 17,804,039 and 18,165,110 shares outstanding as of June 30, 2019 and June 30, 2018, respectively)			187				182
Additional paid in capital			182,129				179,045
Retained earnings			134,500				128,365
Unearned compensation - ESOP			(12,114	)			(13,083	)
Accumulated other comprehensive loss, net of income taxes			(5,090	)			(6,950	)
Treasury stock, at cost (908,256 shares as of June 30, 2019 and no shares as of June 30, 2018)			(18,305	)			-
Total shareholders' equity			281,307				287,559
Total liabilities and shareholders' equity		$	1,637,579			$	1,480,187

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

		Three Months Ended								Year Ended
		June 30,								June 30,
		2019				2018				2019				2018
Interest and dividend income
Loans receivable		$	10,987			$	10,706			$	41,619			$	37,798
Investment securities			2,609				2,384				10,022				9,266
Federal funds and other			356				268				1,806				896
Total interest and dividend income			13,952				13,358				53,447				47,960
Interest expense
Deposits			3,005				1,600				10,177				5,554
FHLB advances			188				326				566				769
Total interest expense			3,193				1,926				10,743				6,323
Net interest income			10,759				11,432				42,704				41,637
Provision for loan losses			737				25				808				414
Net interest income after provision for loan losses			10,022				11,407				41,896				41,223
Noninterest income
Fees and service charges			452				384				1,763				1,529
Bank-owned life insurance			134				138				544				568
Swap income			361				-				507				-
Gains on sales of securities, net			7				63				62				236
Other			8				16				226				186
Total noninterest income			962				601				3,102				2,519
Noninterest expense
Salaries and employee benefits			5,270				4,889				21,611				19,419
Occupancy and equipment			1,320				1,289				5,185				5,193
Communications and data processing			523				527				1,953				1,974
Professional fees			369				452				1,551				1,709
Postage, printing, stationary and supplies			132				143				586				578
FDIC assessment			99				93				421				328
Advertising			-				-				349				456
Loss on receivable			-				370				90				570
Amortization of intangible assets			25				29				110				126
Other operating expenses			970				472				2,138				1,763
Total noninterest expense			8,708				8,264				33,994				32,116
Net income before income tax expense			2,276				3,744				11,004				11,626
Income tax expense			597				1,075				2,686				5,022
Net income		$	1,679			$	2,669			$	8,318			$	6,604
Earnings per common share:
Basic		$	0.10			$	0.16			$	0.50			$	0.39
Diluted		$	0.10			$	0.16			$	0.50			$	0.39
Weighted average common shares:
Basic			16,033,505				16,844,747				16,492,760				16,802,894
Diluted			16,099,846				16,844,747				16,527,117				16,802,894

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

	Three Months Ended June 30,
	2019												2018
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	970,707			$	10,987				4.53	%		$	900,998			$	10,706				4.75	%
Investment securities		436,903				2,609				2.39				465,206				2,384				2.05
Other interest-earning assets		55,988				356				2.55				51,605				268				2.09
Total interest-earning assets		1,463,598				13,952				3.81				1,417,809				13,358				3.77
Non-interest-earning assets		58,295												57,004
Total assets	$	1,521,893											$	1,474,813
Liabilities and equity:
NOW accounts	$	120,577				53				0.18			$	115,711				51				0.18
Money market accounts		143,576				428				1.20				46,104				70				0.61
Savings accounts and escrow		373,238				239				0.26				484,463				293				0.24
Time deposits		434,073				2,285				2.11				343,027				1,186				1.39
Total interest-bearing deposits		1,071,464				3,005				1.12				989,305				1,600				0.65
Federal Home Loan Bank advances		29,283				188				2.57				66,740				326				1.96
Total interest-bearing liabilities		1,100,747				3,193				1.16				1,056,045				1,926				0.73
Non-interest-bearing deposits		133,706												125,898
Other non-interest-bearing liabilities		7,403												6,671
Total liabilities		1,241,856												1,188,614
Total shareholders' equity		280,037												286,199
Total liabilities and shareholders' equity	$	1,521,893											$	1,474,813
Net interest income					$	10,759											$	11,432
Interest rate spread (1)										2.65												3.04
Net interest margin (2)										2.94												3.23
Average interest-earning assets to interest-bearing liabilities		132.96	%											134.26	%
(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) - Continued
(dollar amounts in thousands)

	Year Ended June 30,
	2019												2018
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	924,182			$	41,619				4.50	%		$	846,353			$	37,798				4.47	%
Investment securities		444,024				10,022				2.26				474,201				9,266				1.95
Other interest-earning assets		76,950				1,806				2.35				54,528				896				1.64
Total interest-earning assets		1,445,156				53,447				3.70				1,375,082				47,960				3.49
Non-interest-earning assets		56,075												57,696
Total assets	$	1,501,231											$	1,432,778
Liabilities and equity:
NOW accounts	$	118,286				210				0.18			$	113,952				197				0.17
Money market accounts		107,449				1,216				1.13				36,917				163				0.44
Savings accounts and escrow		411,251				1,019				0.25				502,310				1,223				0.24
Time deposits		414,676				7,732				1.86				315,652				3,971				1.26
Total interest-bearing deposits		1,051,662				10,177				0.97				968,831				5,554				0.57
Federal Home Loan Bank advances		24,117				566				2.34				42,719				769				1.80
Total interest-bearing liabilities		1,075,779				10,743				1.00				1,011,550				6,323				0.63
Non-interest-bearing deposits		132,057												130,196
Other non-interest-bearing liabilities		8,108												7,360
Total liabilities		1,215,944												1,149,106
Total shareholders' equity		285,287												283,672
Total liabilities and shareholders' equity	$	1,501,231											$	1,432,778
Net interest income					$	42,704											$	41,637
Interest rate spread (1)										2.70												2.86
Net interest margin (2)										2.96												3.03
Average interest-earning assets to interest-bearing liabilities		134.34	%											135.94	%
(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
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Condensed Balance Sheets
Cash and cash equivalents	$	60,029		$	87,105		$	143,119		$	68,323		$	62,145
Total investment securities		417,773			440,014			452,463			441,748			458,655
Loans receivable, net		1,093,121			935,680			904,377			905,093			902,336
Other assets		66,656			60,959			57,356			59,331			57,051
Total assets	$	1,637,579		$	1,523,758		$	1,557,315		$	1,474,495		$	1,480,187
Total deposits and escrow	$	1,235,176		$	1,209,868		$	1,234,409		$	1,158,102		$	1,166,260
Advances from Federal Home Loan Bank		111,216			26,248			26,279			18,810			18,841
Other liabilities		9,880			9,326			7,845			7,706			7,527
Total liabilities		1,356,272			1,245,442			1,268,533			1,184,618			1,192,628
Total shareholders' equity		281,307			278,316			288,782			289,877			287,559
Total liabilities and shareholders' equity	$	1,637,579		$	1,523,758		$	1,557,315		$	1,474,495		$	1,480,187

	Quarter Ended															Year Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			June 30, 2019			June 30, 2018
Condensed Income Statements
Interest income	$	13,952		$	13,646		$	13,240		$	12,609		$	13,358		$	53,447		$	47,960
Interest expense		3,193			2,909			2,496			2,145			1,926			10,743			6,323
Net interest income		10,759			10,737			10,744			10,464			11,432			42,704			41,637
Provision for loan losses		737			7			6			58			25			808			414
Noninterest income		962			579			920			641			601			3,102			2,519
Noninterest expense		8,708			8,698			8,580			8,008			8,264			33,994			32,116
Income before income tax expense		2,276			2,611			3,078			3,039			3,744			11,004			11,626
Income tax expense		597			625			754			710			1,075			2,686			5,022
Net income	$	1,679		$	1,986		$	2,324		$	2,329		$	2,669		$	8,318		$	6,604
Earnings per share:
Basic	$	0.10		$	0.12		$	0.14		$	0.14		$	0.16		$	0.50		$	0.39
Diluted	$	0.10		$	0.12		$	0.14		$	0.14		$	0.16		$	0.50		$	0.39

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

	Quarter Ended															Year Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			June 30, 2019			June 30, 2018
Performance Ratios (1):
Return on average assets		0.44	%		0.52	%		0.62	%		0.63	%		0.72	%		0.55	%		0.46	%
Return on average equity		2.40	%		2.83	%		3.20	%		3.22	%		3.73	%		2.92	%		2.33	%
Interest rate spread		2.65	%		2.67	%		2.75	%		2.73	%		3.04	%		2.70	%		2.86	%
Net interest margin		2.94	%		2.94	%		3.00	%		2.94	%		3.23	%		2.96	%		3.03	%
Adjusted Efficiency ratio (2)		74.34	%		76.86	%		74.12	%		72.11	%		71.17	%		74.37	%		73.54	%
Noninterest income to average assets		0.25	%		0.15	%		0.25	%		0.17	%		0.16	%		0.21	%		0.18	%
Noninterest expense to average assets		2.29	%		2.29	%		2.30	%		2.17	%		2.24	%		2.26	%		2.24	%
Average interest-earning assets to average interest-bearing liabilities		132.96	%		133.68	%		135.40	%		135.38	%		134.26	%		134.34	%		135.94	%
Average equity to average assets		18.40	%		18.52	%		19.48	%		19.63	%		19.41	%		19.00	%		19.80	%
Dividend payout ratio (3)		39.43	%		24.97	%		22.42	%		21.64	%		18.88	%		26.24	%		7.63	%

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
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Loans to deposits		89.17	%		77.83	%		73.81	%		78.49	%		77.96	%
Share Data:
Shares outstanding		17,804,039			17,804,039			18,490,225			18,165,110			18,165,110
Book value per common share	$	15.80		$	15.63		$	15.62		$	15.96		$	15.83
Tangible book value per common share (4)	$	15.44		$	15.27		$	15.27		$	15.60		$	15.47
Asset Quality Ratios:
Non-performing loans receivable	$	2,727		$	2,847		$	3,576		$	5,630		$	6,002
Non-performing assets	$	3,885		$	3,500		$	4,148		$	6,384		$	6,462
Allowance for loan losses as a percent of total loans receivable		0.52	%		0.53	%		0.54	%		0.54	%		0.54	%
Total valuation adjustment as a percent of total gross loans receivable (5)		0.62	%		0.66	%		0.69	%		0.70	%		0.71	%
Allowance for loan losses as a percent of non-performing loans receivable		207.70	%		173.67	%		138.23	%		88.08	%		81.71	%
Non-performing loans as a percent of total loans receivable, net		0.25	%		0.30	%		0.39	%		0.62	%		0.66	%
Non-performing assets as a percent of total assets		0.24	%		0.23	%		0.27	%		0.43	%		0.44	%
Net charge-offs (recoveries)	$	18		$	5		$	22		$	3		$	(255	)
Net charge-offs (recoveries) to average outstanding loans during the period (1)		0.01	%		0.00	%		0.00	%		0.00	%		(0.11	%)
Capital Ratios (6):
Tier 1 capital (to adjusted total assets)		13.81	%		13.71	%		13.78	%		13.80	%		13.61	%
Common equity Tier 1 capital (to risk-weighted assets)		17.96	%		20.47	%		20.73	%		21.17	%		21.11	%
Tier 1 capital (to risk-weighted assets)		17.96	%		20.47	%		20.73	%		21.17	%		21.11	%
Total capital (to risk-weighted assets)		18.45	%		20.96	%		21.23	%		21.68	%		21.62	%
(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 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. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.
(3) Dividends declared per share divided by net income per share.
(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.

 
PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands)

(5) Loans acquired in 2015 as part of the CMS Bancorp. Inc./CMS Bank acquisition were recorded at their estimated fair value at the acquisition date and did not include a carry-over of the related pre-acquisition allowance for loan losses. Total valuation adjustments equal the allowance for loan losses plus the remaining discounts on acquired loans. We believe this ratio provides investors a more meaningful comparison to periods presented prior to the 2015 acquisition, as well as to our peers. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

(6) Represents Bank ratios.

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

	As of
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Mortgage loans:
Residential mortgages	$	265,167		$	261,970		$	248,575		$	249,894		$	250,578
Commercial mortgage		651,396			499,284			499,930			495,944			495,265
Construction		13,231			16,302			16,023			16,890			17,352
Net deferred loan origination costs		1,031			843			842			859			1,041
Total mortgage loans		930,825			778,399			765,370			763,587			764,236
Commercial and consumer loans:
Commercial loans		133,614			126,514			107,899			110,196			104,135
Home equity credit lines		33,204			34,525			35,029			35,191			37,395
Consumer and overdrafts		365			459			321			344			745
Net deferred loan origination costs		777			728			701			734			729
Total commercial and consumer loans		167,960			162,226			143,950			146,465			143,004
Total loans receivable		1,098,785			940,625			909,320			910,052			907,240
Allowance for loan loss		(5,664	)		(4,945	)		(4,943	)		(4,959	)		(4,904	)
Loans receivable, net	$	1,093,121		$	935,680		$	904,377		$	905,093		$	902,336

	As of
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Demand deposits	$	141,379		$	137,899		$	162,113		$	131,024		$	131,883
Now accounts		123,069			120,353			123,251			121,449			117,875
Money market accounts		148,134			137,197			121,146			79,266			49,885
Savings		357,844			379,550			397,460			425,189			465,441
Time deposits		455,395			427,194			421,354			396,193			392,373
Total deposits	$	1,225,821		$	1,202,193		$	1,225,324		$	1,153,121		$	1,157,457

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															Year Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			June 30, 2019			June 30, 2018
Computation of Adjusted Net Income and Earnings Per Share
Net income applicable to common stock	$	1,679		$	1,986		$	2,324		$	2,329		$	2,669		$	8,318		$	6,604
Adjustments (1):
Losses on other receivables		-			-			68			-			292			68			424
Nonaccrual loan interest earned		-			-			-			-			(694	)		-			(788	)
Gain on sale of securities		(5	)		-			(42	)		-			(49	)		(47	)		(163	)
Gain on sale of bank premises		-			-			(118	)		-			-			(118	)		-
Deferred tax re-measurement charge		-			-			-			-			-			-			1,570
Adjusted net income	$	1,674		$	1,986		$	2,232		$	2,329		$	2,218		$	8,221		$	7,647
Average number of common shares outstanding:
Basic		16,033,505			16,204,393			16,852,718			16,869,100			16,844,747			16,492,760			16,802,894
Diluted		16,099,846			16,261,755			16,868,464			16,869,100			16,844,747			16,527,117			16,802,894
GAAP Earnings per share:
Basic	$	0.10		$	0.12		$	0.14		$	0.14		$	0.16		$	0.50		$	0.39
Diluted	$	0.10		$	0.12		$	0.14		$	0.14		$	0.16		$	0.50		$	0.39
Adjusted earnings per common share:
Basic	$	0.10		$	0.12		$	0.13		$	0.14		$	0.13		$	0.50		$	0.46
Diluted	$	0.10		$	0.12		$	0.13		$	0.14		$	0.13		$	0.50		$	0.46
(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) - Continued
(dollar amounts in thousands, except share and per share data)

	Quarter Ended															Year Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018			June 30, 2019			June 30, 2018
Computation of Efficiency Ratio
Noninterest expense	$	8,708		$	8,698		$	8,580		$	8,008		$	8,264		$	33,994		$	32,116
Adjustments:
Losses on other receivables		-			-			(90	)		-			(370	)		(90	)		(570	)
Adjusted noninterest expense	$	8,708		$	8,698		$	8,490		$	8,008		$	7,894		$	33,904		$	31,546
Net interest income	$	10,759		$	10,737		$	10,744		$	10,464		$	11,432		$	42,704		$	41,637
Noninterest income		962			579			920			641			601			3,102			2,519
Total revenue		11,721			11,316			11,664			11,105			12,033			45,806			44,156
Adjustments:
Nonaccrual loan interest earned		-			-			-			-			(879	)		-			(1,021	)
Gain on sale of securities		(7	)		-			(55	)		-			(63	)		(62	)		(236	)
Gain on sale of bank premises		-			-			(155	)		-			-			(155	)		-
Adjusted operating revenue	$	11,714		$	11,316		$	11,454		$	11,105		$	11,091		$	45,589		$	42,899
Efficiency ratio (GAAP)		74.29	%		76.86	%		73.56	%		72.11	%		68.68	%		74.21	%		72.73	%
Adjusted efficiency ratio (Non-GAAP)		74.34	%		76.86	%		74.12	%		72.11	%		71.17	%		74.37	%		73.54	%

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
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Computation of Tangible Book Value per Common Share
Total shareholders' equity	$	281,307		$	278,316		$	288,782		$	289,877		$	287,559
Adjustments:
Preferred stock		-			-			-			-			-
Common shareholders' equity		281,307			278,316			288,782			289,877			287,559
Adjustments:
Goodwill		(6,106	)		(6,106	)		(6,106	)		(6,106	)		(6,106	)
Other intangible assets		(323	)		(348	)		(376	)		(405	)		(433	)
Tangible common shareholders' equity	$	274,878		$	271,862		$	282,300		$	283,366		$	281,020
Common shares outstanding		17,804,039			17,804,039			18,490,225			18,165,110			18,165,110
Book value per share (GAAP)	$	15.80		$	15.63		$	15.62		$	15.96		$	15.83
Adjustments:
Effects of intangible assets		(0.36	)		(0.36	)		(0.35	)		(0.36	)		(0.36	)
Tangible book value per common share (Non-GAAP)	$	15.44		$	15.27		$	15.27		$	15.60		$	15.47

	Quarter Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Computation of valuation adjustment
Allowance for loan losses	$	5,664		$	4,945		$	4,943		$	4,959		$	4,904
Add: Purchase accounting discounts on acquired loans		1,180			1,262			1,349			1,442			1,538
Total valuation adjustments	$	6,844		$	6,207		$	6,292		$	6,401		$	6,442
Total gross loans	$	1,098,785		$	940,625		$	909,320		$	910,052		$	907,240
Total valuation adjustments as a percent of total gross loans		0.62	%		0.66	%		0.69	%		0.70	%		0.71	%

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

		Three Months Ended								Year Ended
		June 30,								June 30,
		2019				2018				2019				2018
Computation of Adjusted Effective Tax Rate
Net income before income tax expense		$	2,276			$	3,744			$	11,004			$	11,626
Income tax expense			597				1,075				2,686				5,022
Adjustments:
Deferred tax re-measurement charge			-				-				-				(1,570	)
Adjusted income tax expense		$	597			$	1,075			$	2,686			$	3,452
Effective tax rate (GAAP)			26.2	%			28.7	%			24.4	%			43.2	%
Adjusted effective tax rate (Non-GAAP)			26.2	%			28.7	%			24.4	%			29.7	%

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