YORKTOWN HEIGHTS, New York, April 30, 2020 (GLOBE NEWSWIRE) -- PCSB Financial Corporation (the “Company”) (NASDAQ: PCSB), parent of PCSB Bank (the "Bank"), today announced net income of $1.2 million, or $0.08 per diluted share, for the three months ended March 31, 2020 compared to $2.4 million, or $0.14 per diluted share, for the three months ended December 31, 2019 and $2.0 million, or $0.12 per diluted share, for the three months ended March 31, 2019. Net income for the nine months ended March 31, 2020 was $6.4 million, or $0.40 per diluted share, compared to $6.6 million, or $0.40 per diluted share, for the same period last year. Provision for loan losses for the three and nine months ended March 31, 2020 includes $1.7 million, or $0.09 per diluted share, net of tax, related to reserves established as a result of the economic impacts of the COVID-19 pandemic.

On a non-GAAP basis, which excludes certain nonrecurring items, the Company recorded adjusted net income of $1.2 million, or $0.07 per diluted share, for the three months ended March 31, 2020 as compared to adjusted net income of $2.3 million, or $0.14 per diluted share, for the three months ended December 31, 2019 and $2.0 million, or $0.12 per diluted share, for the three months ended March 31, 2019. Adjusted net income for the nine months ended March 31, 2020 was $5.8 million, or $0.37 per diluted share, compared to $6.4 million, or $0.38 per diluted share, for the same period last year. Reconciliations of GAAP to non-GAAP measures appear at the end of this release.

The Board of Directors declared a regular quarterly cash dividend of $0.04 per share. The dividend is payable on or about May 29, 2020 to stockholders of record as of the close of business on May 15, 2020.

Third Quarter 2020 Highlights

• Absent the extraordinary COVID-19-related provision for loan losses, net income would have been $2.5 million, or $0.17 per diluted share, compared to $2.0 million, or $0.12 per diluted share, in the prior year quarter.
• Net interest income was $11.5 million, an increase of $788,000, or 7.3%, compared to the same quarter last year. Fiscal year-to-date net interest income was $35.2 million, a 10.3% increase from the prior year period.
• The net interest margin was 2.89% for the quarter, a decrease from 2.94% for the same quarter last year.
• The efficiency ratio was 70.38% for the quarter, compared to 76.86% for the same quarter last year.
• Total loans receivable of $1.22 billion, representing year-to-date growth of $127.6 million, or 11.7%, and year-over-year growth of $285.0 million, or 30.5%.
• Non-performing loans increased $184,000 during the quarter to $1.8 million, equating to 0.15% of gross loans receivable.
• Loan to deposit ratio was 95.40%, an increase from 77.83% as of the same quarter last year.
• The Company repurchased 474,171 shares of common stock during the quarter at a total cost of $9.5 million, or an average cost of $20.07 per share.

President’s Comments

“I want to first express how extremely proud I am of the tireless effort our employees made in working with customers to provide them with resources to address their financial needs during this time of uncertainty,” said Joseph D. Roberto, Chairman, President and Chief Executive Officer of PCSB Financial Corporation. “The COVID-19 related pandemic is presenting our country and our industry with unprecedented challenges in dealing with this crisis. Our challenge, as a community bank, is to assist and support our customers, local communities and shareholders in dealing with the financial impact this crisis will have caused.  Some of the actions taken by the Bank have included loan payment deferrals, loan modifications, lending through the Small Business Administration’s Payroll Protection Program (“PPP Loans”), fee waivers and donations to non-profit organizations at the center of this crisis through our PCSB Community Foundation. The full effect of the economic shutdown is not yet known and it remains to be seen how effective the federal lending programs, loan payment deferrals and stimulus checks will be to offset the expected negative impact on credit quality and growth moving forward. We enter this crisis from a strong capital and liquidity position as we begin to assess the credit impact of the current economic shutdown. There will be more clarity to come in the months that follow; however, we believe that our $1.7 million addition to our loan loss reserves is a prudent first step in recognizing the potential credit risk resulting from the current economic downturn.”

COVID-19 Response

In response to the COVID-19 pandemic, the Company has been active in providing assistance to our employees, customers and communities, as well as assessing the risks and potential impact on the Company’s financial position, including liquidity, credit quality, earnings and capital. The following is a summary of these actions through April 28, 2020:

Support for our Employees and Branch Locations

• No furloughs; all employees at 100% pay
• Administrative employees with ability to work from home; stagger essential front-line employee schedules.
• Reduced branch hours and use of lobbies, use of drive-thru capabilities, promote use of personal protective equipment by employees and customers.

Support for Individual and Business Customers

• Waive or reduce certain fees, including overdraft fees, ATM fees, late charges and early CD withdrawal penalties.
• Moratorium on foreclosures and certain credit bureau reporting.
• Consumer loan payment deferrals granted for 97 loans totaling $27.0 million, representing approximately 9.1% of the residential mortgage and home equity line of credit portfolios.
• Commercial loan payment deferrals granted for 172 loans totaling $125.1 million, representing approximately 13.5% of the commercial mortgage, commercial loan and construction portfolios.
• Processed $46.4 million in PPP loans to over 240 small business employing over 3,900 employees across our local communities.

Support for Our Communities

• Through the PCSB Community Foundation, since the beginning of the year we have donated over $150,000 to a number of local organizations providing essential services to our community.

Risk Assessment and Financial Impact

Liquidity

Management believes the Company’s liquidity is strong. At March 31, 2020, cash and cash equivalents totaled $84.9 million and securities available for sale totaled $46.0 million. Additionally, the Company had remaining borrowing capacity of $270.6 million, including $127.1 million from the Federal Home Loan Bank of New York, $118.5 million from the Federal Reserve Bank of New York discount window, as well as $25.0 million in other lines of credit. The Company did not experience significant draws on working capital lines of credit or home equity lines of credit during the quarter. Unused lines of credit totaled $98.6 million (43% usage rate) as of March 31, 2020, compared to $105.5 million (41% usage rate) as of December 31, 2019.

Capital

The Company’s capital position is also strong. At March 31, 2020, all of the Bank’s regulatory capital ratios significantly exceeded well-capitalized standards. Specifically, the Bank’s Tier 1 Leverage Ratio was 13.2% as of March 31, 2020, which represents 2 ½ times the well-capitalized regulatory standard of 5.0%. Additionally, as of March 31, 2020, PCSB Financial Corporation (parent of PCSB Bank) has $41.1 million of additional funds that could be contributed to the Bank as capital, which would result in a proforma Tier 1 Leverage ratio of 15.7%.

Credit Risk

The Company has taken actions to identify, assess and address its COVID-19 related credit exposure. Many factors are unknown, including the length of the resulting economic shutdown imposed by New York State and other neighboring states, the impacts of the government fiscal and monetary relief measures, including payment deferral programs, as well as the long-term impacts COVID-19 may have on our consumer and commercial borrowers. The Company has begun to assess its credit exposures based on asset class and borrower type. The following table provides the Company’s commercial and construction exposures to those industries believed to be the most directly and significantly impacted by the pandemic:

Industry Sector:	Total Balance Outstanding as of March 31, 2020 (amounts in thousands)			% of Total Loans Receivable			% Secured by Real Estate Collateral
Retail (1)	$	126,976			10.3	%		97.8	%
Mixed-use with retail component		119,444			9.7			98.7
Hotels and accommodation services (2)		39,569			3.2			100.0
Food service (incl. restaurants)		22,364			1.8			95.3
Arts, entertainment and recreation		10,371			0.8			97.4

(1)	Includes $42.5 million of loans supported by properties with credit-rated or anchored tenants.
(2)	Includes one construction relationship with an outstanding balance of $4.5 million.

As of March 31, 2020, the Company has no exposure to leveraged lending, shared national credits or energy exploration.

Income Statement Summary

Net interest income was $11.5 million for the quarter ended March 31, 2020, a decrease of $172,000, or 1.5%, compared to the quarter ended December 31, 2019, and an increase of $788,000, or 7.3%, compared to the quarter ended March 31, 2019. The increase in net interest income compared to the prior year is primarily the result of an increase in average interest earning assets, as the Company experienced significant growth in average loans receivable compared to the same quarter last year. However, the effect of the growth was partially offset by a decrease in net interest margin. Net interest income declined compared to the quarter ended December 31, 2019 as a result of margin compression.

The net interest margin was 2.89% for the current quarter reflecting decreases of 4 basis points compared to 2.93% in the prior quarter and 5 basis points compared to 2.94% in the prior year quarter. Despite continued asset growth and a more profitable asset mix, along with a decrease in funding costs, margin compression has resulted from significant decreases in market interest rates over the past quarter disproportionately affecting asset yields.

The yield on interest-earning assets for the current quarter was 3.86%, an 8 basis point decrease from the prior quarter driven by lower market rates, and an 11 basis point increase from the prior year quarter, as a higher yielding asset mix more than offset the downward pressures on market interest rates.

The cost of interest-bearing deposits was 1.18% for the current quarter, a decrease of 2 basis points from the prior quarter and an increase of 14 basis points from 1.04% for the prior year quarter. The Company has experienced a shift in deposit mix over the past several quarters as customers in generally lower rate savings products moved to generally higher rate money market and time deposits, however the pace of this shift has slowed in recent quarters. In response to the decrease in market interest rates late in the current quarter, deposit rate reductions were implemented, the effects of which are expected be fully realized in future quarters. As of March 31, 2020, the Company had $192.8 million of money market accounts with a weighted average cost of 0.55% compared to 1.03% as of December 31, 2019. Additionally, as of the end of the quarter, time deposits maturing in the next three and twelve months totaled $104.9 million and $277.9 million, with weighted average costs of 2.21% and 2.00%, respectively. These deposits, should they remain with the Company in their current products and re-price to our current offer rates, would be expected to carry an estimated weighted average cost of 1.02% and 0.99%, respectively.

The provision for loan losses was $2.0 million for the three months ended March 31, 2020 compared to $412,000 in the prior quarter and $7,000 for the same quarter in 2019. The current quarter provision includes a $1.7 million increase in qualitative reserves as the Company begins to assess the economic impacts the COVID-19 pandemic has had on our local economy and loan portfolio. Recoveries, net of charge-offs, were $122,000 for the three months ended March 31, 2020 compared to net charge-offs of $189,000 for the three months ended December 31, 2019 and $5,000 for the three months ended March 31, 2019.  Loans classified as substandard or doubtful totaled $5.0 million, an increase of $27,000, or 0.5%, from December 31, 2019 and a decrease of $4.0 million, or 45.0%, from $9.0 million at March 31, 2019. Non-performing loans as a percent of total loans receivable was 0.15% as of March 31, 2020, a slight increase from 0.14% as of December 31, 2019 and a decrease from 0.30% as of March 31, 2019.

Noninterest income of $580,000 for the three months ended March 31, 2020 increased $33,000 compared to the three months ended December 31, 2019, as increases of $38,000 in gains on sale of securities and $40,000 in gains on sale of foreclosed real estate were partially offset by a $36,000 decrease in fees and service charges. The reduction in fee and service charge income was primarily due to our waiver of certain overdraft fees, ATM usage fees, wire and CD early withdrawal fees in response to COVID-19, as required by emergency regulations promulgated by the New York State Department of Financial Services. The Company began waiving such fees in accordance with this guidance on or about March 20, 2020, with approximately $22,000 in fees waived in the current quarter. Noninterest income for the current year to date period was largely unchanged compared to the prior year to date period, as increases of $38,000 in gains on sale of securities and $40,000 in gains on sale of foreclosed real estate were mostly offset by a $70,000 decrease in fees and service charges.

Noninterest expense of $8.5 million for the three months ended March 31, 2020 decreased $274,000 compared to the three months ended December 31, 2019 and decreased $178,000 compared to the same period in 2019. The $274,000 decrease from the prior quarter was caused primarily by decreases of $107,000 in salaries and benefits, $109,000 in other post-retirement benefit costs, as well as $58,000 in all other expenses. The $178,000 decrease from the prior year period was caused primarily by decreases of $232,000 decrease in other post-retirement benefit costs, $105,000 in FDIC assessment costs and $44,000 in all other expenses, partially offset by a $203,000 increase in salaries and benefits expense. During the current quarter, the Bank applied small bank assessment credits of $108,000 which fully offset its FDIC assessment for the current quarter. The remaining credits available are approximately $22,000.

The effective income tax rate was 22.8% for the three months ended March 31, 2020, as compared to 22.5% for the three months ended December 31, 2019 and 23.9% for the three months ended March 31, 2019.

Balance Sheet Summary

Total assets increased $58.3 million to $1.70 billion at March 31, 2020 from $1.64 billion at June 30, 2019.  This increase was primarily due to increases of $127.6 million, or 11.7%, in net loans receivable, $24.9 million in cash and cash equivalents and $11.1 million in premises and equipment, partially offset by a decrease of $108.2 million in total investment securities. The $127.6 million increase in loans was the result of $172.4 million of originations and $47.9 million of loan purchases, partially offset by $92.7 million of net amortization, repayments and other loan activity. Commercial mortgages increased $124.0 million, or 19.0%, and construction loans increased $11.7 million, or 88.4%, while commercial loans, residential mortgages and home equity lines of credit all had immaterial changes.

Total liabilities increased $67.2 million to $1.42 billion at March 31, 2020 from $1.36 billion at June 30, 2019.  This increase was primarily due to a $53.8 million, or 4.4%, increase in deposits and escrow accounts and a $19.9 million increase in other liabilities, primarily as a result of recording a $12.0 million lease liability (a related lease asset was also recorded as part of premises and equipment) associated with the adoption of new lease accounting standards, partially offset by a $5.1 million decrease in FHLB advances.

Total shareholders’ equity decreased $8.9 million to $272.4 million at March 31, 2020 from $281.3 million at June 30, 2019. This decrease was primarily due to the repurchase of $18.1 million (905,902 shares) of common stock and $1.9 million of cash dividends declared and paid, partially offset by net income of $6.4 million, as well as $3.9 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period. During the quarter, the Company completed its second stock repurchase plan. To date, no additional repurchase plans have been authorized.

At March 31, 2020, the Company’s book value per share and tangible book value per share were $16.12 and $15.74, respectively, compared to $15.80 and $15.44, respectively, at June 30, 2019. Reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) appear at the end of this release. At March 31, 2020, 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 recent COVID-19 pandemic, including its impact on our business and operations, including the impact of lost fee revenue and operating expenses, as well as its effect on our customers and issuers of securities, including their ability to make timely payments on obligations, service providers and on economies and markets more generally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the Company's business; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

Contact: Joseph D. Roberto
Chairman, President and Chief Executive Officer
(914) 248-7272

PCSB Financial Corporation and Subsidiaries
Consolidated Balance Sheets (unaudited)
(amounts in thousands, except share and per share data)

		March 31,				June 30,
		2020				2019
ASSETS
Cash and due from banks		$	83,665			$	58,756
Federal funds sold			1,247				1,273
Cash and cash equivalents			84,912				60,029
Held to maturity debt securities, at amortized cost   (fair value of $266,704 and $346,243, respectively)			263,626				345,545
Available for sale debt securities, at fair value			45,992				72,228
Total investment securities			309,618				417,773
Loans receivable, net of allowance for loan losses of $8,346 and $5,664, respectively			1,220,682				1,093,121
Accrued interest receivable			5,384				4,797
FHLB stock			6,026				6,255
Premises and equipment, net			21,437				11,802
Deferred tax asset, net			2,421				2,478
Foreclosed real estate			—				1,158
Bank-owned life insurance			24,890				24,291
Goodwill			6,106				6,106
Other intangible assets			250				323
Other assets			14,149				9,446
Total assets		$	1,695,875			$	1,637,579
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits		$	1,133,742			$	1,084,442
Non-interest bearing deposits			145,844				141,379
Total deposits			1,279,586				1,225,821
Mortgage escrow funds			7,924				9,355
Advances from Federal Home Loan Bank			106,121				111,216
Other liabilities			29,827				9,880
Total liabilities			1,423,458				1,356,272
Commitments and contingencies			-				-
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of March 31, 2020 and June 30, 2019, respectively)			-				-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 shares issued as of March 31, 2020 and June 30, 2019, and 16,898,137 and 17,804,039 shares outstanding as of March 31, 2020 and June 30, 2019, respectively)			187				187
Additional paid in capital			185,301				182,129
Retained earnings			138,957				134,500
Unearned compensation - ESOP			(11,384	)			(12,114	)
Accumulated other comprehensive loss, net of income taxes			(4,230	)			(5,090	)
Treasury stock, at cost (1,814,158 and 908,256 shares as of March 31, 2020 and June 30, 2019, respectively)			(36,414	)			(18,305	)
Total shareholders' equity			272,417				281,307
Total liabilities and shareholders' equity		$	1,695,875			$	1,637,579

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,
		2020				2019				2020				2019
Interest and dividend income
Loans receivable		$	13,114			$	10,413			$	39,299			$	30,632
Investment securities			2,003				2,619				6,974				7,413
Federal funds and other			217				614				816				1,450
Total interest and dividend income			15,334				13,646				47,089				39,495
Interest expense
Deposits and escrow interest			3,268				2,741				9,927				7,172
FHLB advances			541				168				1,942				378
Total interest expense			3,809				2,909				11,869				7,550
Net interest income			11,525				10,737				35,220				31,945
Provision for loan losses			2,008				7				2,755				71
Net interest income after provision for loan losses			9,517				10,730				32,465				31,874
Noninterest income
Fees and service charges			366				436				1,170				1,311
Bank-owned life insurance			128				131				399				410
Swap income			-				-				170				146
Gains on sales of securities, net			38				-				38				55
Other			48				12				115				218
Total noninterest income			580				579				1,892				2,140
Noninterest expense
Salaries and employee benefits			5,782				5,579				17,435				15,907
Occupancy and equipment			1,311				1,340				3,959				3,865
Communications and data processing			521				476				1,559				1,430
Professional fees			393				396				1,176				1,182
Postage, printing, stationery and supplies			140				138				439				454
FDIC assessment			-				105				-				322
Advertising			100				131				300				349
Amortization of intangible assets			24				29				73				85
Other operating expenses			249				504				1,160				1,692
Total noninterest expense			8,520				8,698				26,101				25,286
Net income before income tax expense			1,577				2,611				8,256				8,728
Income tax expense			360				625				1,857				2,089
Net income		$	1,217			$	1,986			$	6,399			$	6,639
Earnings per common share:
Basic		$	0.08			$	0.12			$	0.41			$	0.40
Diluted		$	0.08			$	0.12			$	0.40			$	0.40
Weighted average common shares outstanding:
Basic			15,437,173				16,204,393				15,752,709				16,645,287
Diluted			15,447,217				16,261,755				15,814,322				16,659,746

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

	Three Months Ended
	March 31, 2020												December 31, 2019												March 31, 2019
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	1,209,920			$	13,114				4.34	%		$	1,178,253			$	13,149				4.46	%		$	913,634			$	10,413				4.57	%
Investment securities		323,942				2,003				2.47				358,760				2,279				2.54				445,604				2,619				2.35
Other interest-earning assets		56,242				217				1.56				59,678				301				2.00				99,473				614				2.50
Total interest-earning assets		1,590,104				15,334				3.86				1,596,691				15,729				3.94				1,458,711				13,646				3.75
Non-interest-earning assets		67,889												68,793												61,382
Total assets	$	1,657,993											$	1,665,484											$	1,520,093
Liabilities and equity:
NOW accounts	$	125,103				66				0.21			$	122,455				67				0.22			$	116,781				52				0.18
Money market accounts		179,230				423				0.96				161,075				472				1.16				127,509				368				1.17
Savings accounts and escrow		342,254				209				0.25				355,295				234				0.26				392,537				239				0.25
Time deposits		480,233				2,570				2.17				467,486				2,585				2.19				428,643				2,082				1.97
Total interest-bearing deposits		1,126,820				3,268				1.18				1,106,311				3,358				1.20				1,065,470				2,741				1.04
FHLB advances		98,364				541				2.23				117,712				674				2.27				26,259				168				2.61
Total interest-bearing liabilities		1,225,184				3,809				1.26				1,224,023				4,032				1.31				1,091,729				2,909				1.08
Non-interest-bearing deposits		137,930												138,346												136,196
Other non-interest-bearing liabilities		19,706												21,827												11,243
Total liabilities		1,382,820												1,384,196												1,239,168
Total shareholders' equity		275,173												281,288												280,925
Total liabilities and shareholders' equity	$	1,657,993											$	1,665,484											$	1,520,093
Net interest income					$	11,525											$	11,697											$	10,737
Interest rate spread (1)										2.60												2.63												2.67
Net interest margin (2)										2.89												2.93												2.94
Average interest-earning assets to interest-bearing liabilities		129.78	%											130.45	%											133.61	%
(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,
	2020												2019
	Average Balance				Interest / Dividends				Average Rate				Average Balance				Interest / Dividends				Average Rate
Assets:
Loans receivable	$	1,176,733			$	39,299				4.45	%		$	908,674			$	30,632				4.49	%
Investment securities		360,631				6,974				2.58				446,398				7,413				2.21
Other interest-earning assets		53,944				816				2.01				84,408				1,450				2.29
Total interest-earning assets		1,591,308				47,089				3.95				1,439,480				39,495				3.66
Non-interest-earning assets		68,983												57,256
Total assets	$	1,660,291											$	1,496,736
Liabilities and equity:
NOW accounts	$	122,470				191				0.21			$	117,522				157				0.18
Money market accounts		163,395				1,358				1.11				96,421				788				1.09
Savings accounts and escrow		353,373				674				0.25				423,922				780				0.25
Time deposits		469,022				7,704				2.19				408,210				5,447				1.78
Total interest-bearing deposits		1,108,260				9,927				1.19				1,046,075				7,172				0.91
FHLB advances		112,644				1,942				2.30				22,395				378				2.25
Total interest-bearing liabilities		1,220,904				11,869				1.30				1,068,470				7,550				0.94
Non-interest-bearing deposits		138,968												132,884
Other non-interest-bearing liabilities		20,914												8,345
Total liabilities		1,380,786												1,209,699
Total shareholders' equity		279,505												287,037
Total liabilities and shareholders' equity	$	1,660,291											$	1,496,736
Net interest income					$	35,220											$	31,945
Interest rate spread (1)										2.65												2.72
Net interest margin (2)										2.95												2.96
Average interest-earning assets to interest-bearing liabilities		130.34	%											134.72	%
(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, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Condensed Balance Sheets
Cash and cash equivalents	$	84,912		$	62,835		$	37,797		$	60,029		$	87,105
Total investment securities		309,618			327,835			379,007			417,773			440,014
Loans receivable, net		1,220,682			1,183,740			1,163,254			1,093,121			935,680
Other assets		80,663			74,757			78,550			66,656			60,959
Total assets	$	1,695,875		$	1,649,167		$	1,658,608		$	1,637,579		$	1,523,758
Total deposits and escrow	$	1,287,510		$	1,261,663		$	1,241,458		$	1,235,176		$	1,209,868
Advances from Federal Home Loan Bank		106,121			86,153			111,185			111,216			26,248
Other liabilities		29,827			21,512			24,443			9,880			9,326
Total liabilities		1,423,458			1,369,328			1,377,086			1,356,272			1,245,442
Total shareholders' equity		272,417			279,839			281,522			281,307			278,316
Total liabilities and shareholders' equity	$	1,695,875		$	1,649,167		$	1,658,608		$	1,637,579		$	1,523,758

	Quarter Ended															Nine Months Ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			March 31, 2020			March 31, 2019
Condensed Income Statements
Interest income	$	15,334		$	15,729		$	16,026		$	13,952		$	13,646		$	47,089		$	39,495
Interest expense		3,809			4,032			4,028			3,193			2,909			11,869			7,550
Net interest income		11,525			11,697			11,998			10,759			10,737			35,220			31,945
Provision for loan losses		2,008			412			335			737			7			2,755			71
Noninterest income		580			547			765			962			579			1,892			2,140
Noninterest expense		8,520			8,794			8,787			8,708			8,698			26,101			25,286
Income before income tax expense		1,577			3,038			3,641			2,276			2,611			8,256			8,728
Income tax expense		360			685			812			597			625			1,857			2,089
Net income	$	1,217		$	2,353		$	2,829		$	1,679		$	1,986		$	6,399		$	6,639
Earnings per share:
Basic	$	0.08		$	0.15		$	0.18		$	0.10		$	0.12		$	0.41		$	0.40
Diluted	$	0.08		$	0.14		$	0.18		$	0.10		$	0.12		$	0.40		$	0.40

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited)

	Quarter Ended															Nine Months Ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			March 31, 2020			March 31, 2019
Performance Ratios (1):
Return on average assets		0.29	%		0.57	%		0.68	%		0.44	%		0.52	%		0.51	%		0.59	%
Return on average equity		1.77	%		3.35	%		4.01	%		2.40	%		2.83	%		3.05	%		3.08	%
Interest rate spread		2.60	%		2.63	%		2.72	%		2.65	%		2.67	%		2.65	%		2.72	%
Net interest margin		2.89	%		2.93	%		3.03	%		2.94	%		2.94	%		2.95	%		2.96	%
Adjusted efficiency ratio (2)		70.87	%		72.55	%		71.80	%		74.55	%		77.04	%		71.74	%		74.90	%
Noninterest income to average assets		0.14	%		0.13	%		0.18	%		0.25	%		0.15	%		0.15	%		0.19	%
Noninterest expense to average assets		2.06	%		2.11	%		2.12	%		2.29	%		2.29	%		2.10	%		2.25	%
Average interest-earning assets to average interest-bearing liabilities		129.78	%		130.45	%		130.79	%		132.96	%		133.61	%		130.34	%		134.72	%
Average equity to average assets		16.60	%		16.89	%		17.02	%		18.40	%		18.48	%		16.83	%		19.18	%
Dividend payout ratio (3)		52.01	%		27.62	%		23.29	%		39.43	%		24.97	%		30.35	%		22.91	%

PCSB Financial Corporation and Subsidiaries
Selected Financial Data (unaudited) - Continued
(dollar amounts in thousands, except share and per share data)

	As of and for the quarter ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Loans to deposits		95.40	%		94.58	%		94.27	%		89.17	%		77.83	%
Share Data:
Shares outstanding		16,898,137			17,372,308			17,624,239			17,804,039			17,804,039
Book value per common share	$	16.12		$	16.11		$	15.97		$	15.80		$	15.63
Tangible book value per common share (4)	$	15.74		$	15.74		$	15.61		$	15.44		$	15.27
Asset Quality Ratios:
Non-performing loans receivable	$	1,802		$	1,618		$	3,425		$	2,727		$	2,847
Non-performing assets	$	1,802		$	1,897		$	4,281		$	3,885		$	3,500
Allowance for loan losses as a percent of total loans receivable		0.68	%		0.52	%		0.51	%		0.52	%		0.53	%
Total valuation adjustment as a percent of total gross loans receivable (5)		0.74	%		0.59	%		0.60	%		0.62	%		0.66	%
Allowance for loan losses as a percent of non-performing loans receivable		463.15	%		384.18	%		174.98	%		207.70	%		173.67	%
Non-performing loans as a percent of total loans receivable, net		0.15	%		0.14	%		0.29	%		0.25	%		0.30	%
Non-performing assets as a percent of total assets		0.11	%		0.12	%		0.26	%		0.24	%		0.23	%
Net (recoveries) charge-offs	$	(122	)	$	189		$	6		$	18		$	5
Net (recoveries) charge-offs to average outstanding loans during the period (1)		(0.04	%)		0.06	%		0.00	%		0.01	%		0.00	%
Capital Ratios (6):
Tier 1 capital (to adjusted total assets)		13.19	%		13.00	%		12.89	%		13.81	%		13.71	%
Common equity Tier 1 capital (to risk-weighted assets)		16.80	%		17.24	%		17.16	%		17.96	%		20.47	%
Tier 1 capital (to risk-weighted assets)		16.80	%		17.24	%		17.16	%		17.96	%		20.47	%
Total capital (to risk-weighted assets)		17.44	%		17.74	%		17.64	%		18.45	%		20.96	%
(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. Current period capital ratios are preliminary and subject to finalization of the FDIC Call Report.

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

	As of
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Mortgage loans:
Residential mortgages	$	266,684		$	262,441		$	264,251		$	265,167		$	261,970
Commercial mortgage		775,378			741,171			726,315			651,396			499,284
Construction		24,929			22,787			18,830			13,231			16,302
Net deferred loan origination costs		925			1,054			1,202			1,031			843
Total mortgage loans		1,067,916			1,027,453			1,010,598			930,825			778,399
Commercial and consumer loans:
Commercial loans		128,869			129,809			125,926			133,614			126,514
Home equity credit lines		30,994			31,460			31,503			33,204			34,525
Consumer and overdrafts		444			436			437			365			459
Net deferred loan origination costs		805			798			783			777			728
Total commercial and consumer loans		161,112			162,503			158,649			167,960			162,226
Total loans receivable		1,229,028			1,189,956			1,169,247			1,098,785			940,625
Allowance for loan losses		(8,346	)		(6,216	)		(5,993	)		(5,664	)		(4,945	)
Loans receivable, net	$	1,220,682		$	1,183,740		$	1,163,254		$	1,093,121		$	935,680

	As of
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Demand deposits	$	145,844		$	140,218		$	141,567		$	141,379		$	137,899
NOW accounts		128,103			126,346			124,062			123,069			120,353
Money market accounts		192,779			162,208			151,652			148,134			137,197
Savings		330,310			354,078			350,250			357,844			379,550
Time deposits		482,550			468,764			466,374			455,395			427,194
Total deposits	$	1,279,586		$	1,251,614		$	1,233,905		$	1,225,821		$	1,202,193

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, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			March 31, 2020			March 31, 2019
Computation of Adjusted Net Income and Adjusted Earnings Per Share
Net income applicable to common stock (GAAP)	$	1,217		$	2,353		$	2,829		$	1,679		$	1,986		$	6,399		$	6,639
Adjustments (1):
Losses on other receivables		-			-			-			-			-			-			68
Prepayment income on loans receivable and investment securities		(4	)		(95	)		(371	)		(25	)		(20	)		(470	)		(160	)
Gain on sale of foreclosed real estate		(31	)		-			(37	)		-			-			(68	)		(18	)
Gain on sale of investment securities		(29	)		-			-			(5	)		-			(29	)		(42	)
Gain on sale of bank premises		-			-			-			-			-			-			(118	)
Adjusted net income (Non-GAAP)	$	1,153		$	2,258		$	2,421		$	1,649		$	1,966		$	5,832		$	6,369
Average number of common shares outstanding:
Basic		15,437,173			15,837,762			15,979,762			16,033,505			16,204,393			15,752,709			16,645,287
Diluted		15,447,217			15,909,855			16,082,276			16,099,846			16,261,755			15,814,322			16,659,746
Earnings per share (GAAP):
Basic	$	0.08		$	0.15		$	0.18		$	0.10		$	0.12		$	0.41		$	0.40
Diluted	$	0.08		$	0.14		$	0.18		$	0.10		$	0.12		$	0.40		$	0.40
Adjusted earnings per common share (Non-GAAP):
Basic	$	0.07		$	0.14		$	0.15		$	0.10		$	0.12		$	0.37		$	0.38
Diluted	$	0.07		$	0.14		$	0.15		$	0.10		$	0.12		$	0.37		$	0.38
(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										Nine Months Ended
	March 31, 2020			December 31, 2019			March 31, 2019				March 31, 2020			March 31, 2019
Computation of Adjusted Yield on Assets and Adjusted Net Interest Margin
Average interest-earning assets	$	1,590,104		$	1,596,691		$	1,458,711			$	1,591,308		$	1,439,480
Interest and dividend income (GAAP)	$	15,334		$	15,729		$	13,646			$	47,089		$	39,495
Less: Prepayment income on loans receivable and investment securities		(5	)		(123	)		(26	)			(605	)		(210	)
Adjusted interest and dividend income (Non-GAAP)	$	15,329		$	15,606		$	13,620			$	46,484		$	39,285
Yield on interest-earning assets (GAAP)		3.86	%		3.94	%		3.74	%			3.95	%		3.66	%
Adjusted yield on interest-earning assets (Non-GAAP)		3.86	%		3.91	%		3.73	%			3.89	%		3.64	%
Net interest income (GAAP)	$	11,525		$	11,697		$	10,737			$	35,220		$	31,945
Less: Prepayment income on loans receivable and investment securities		(5	)		(123	)		(26	)			(605	)		(210	)
Adjusted net interest income (Non-GAAP)	$	11,520		$	11,574		$	10,711			$	34,615		$	31,735
Net interest margin (GAAP)		2.90	%		2.93	%		2.94	%			2.95	%		2.96	%
Adjusted net interest margin (Non-GAAP)		2.90	%		2.90	%		2.94	%			2.90	%		2.94	%

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															Nine Months Ended
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019			March 31, 2020			March 31, 2019
Computation of Efficiency Ratio
Noninterest expense (GAAP)	$	8,520		$	8,794		$	8,787		$	8,708		$	8,698		$	26,101		$	25,286
Adjustments:
Losses on other receivables		-			-			-			-			-			-			(90	)
Adjusted noninterest expense (non-GAAP)	$	8,520		$	8,794		$	8,787		$	8,708		$	8,698		$	26,101		$	25,196
Net interest income	$	11,525		$	11,697		$	11,998		$	10,759		$	10,737		$	35,220		$	31,945
Noninterest income		580			547			765			962			579			1,892			2,140
Total (GAAP)		12,105			12,244			12,763			11,721			11,316			37,112			34,085
Adjustments:
Prepayment income on loans receivable and investment securities		(5	)		(123	)		(477	)		(34	)		(26	)		(605	)		(210	)
Gain on sale of foreclosed real estate		(40	)		-			(47	)		-			-			(87	)		(24	)
Gain on sale of investment securities		(38	)		-			-			(7	)		-			(38	)		(55	)
Gain on sale of bank premises		-			-			-			-			-			-			(155	)
Adjusted total (Non-GAAP)	$	12,022		$	12,121		$	12,239		$	11,680		$	11,290		$	36,382		$	33,641
Efficiency ratio (GAAP)		70.38	%		71.82	%		68.85	%		74.29	%		76.86	%		70.33	%		74.19	%
Adjusted efficiency ratio (Non-GAAP)		70.87	%		72.55	%		71.80	%		74.55	%		77.04	%		71.74	%		74.90	%

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, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Computation of Tangible Book Value per Common Share
Total shareholders' equity (GAAP)	$	272,417		$	279,839		$	281,522		$	281,307		$	278,316
Adjustments:
Preferred stock		-			-			-			-			-
Common shareholders' equity		272,417			279,839			281,522			281,307			278,316
Adjustments:
Goodwill		(6,106	)		(6,106	)		(6,106	)		(6,106	)		(6,106	)
Other intangible assets		(250	)		(274	)		(298	)		(323	)		(348	)
Tangible common shareholders' equity (Non-GAAP)	$	266,061		$	273,459		$	275,118		$	274,878		$	271,862
Common shares outstanding		16,898,137			17,372,308			17,624,239			17,804,039			17,804,039
Book value per share (GAAP)	$	16.12		$	16.11		$	15.97		$	15.80		$	15.63
Adjustments:
Effects of intangible assets		(0.38	)		(0.37	)		(0.36	)		(0.36	)		(0.36	)
Tangible book value per common share (Non-GAAP)	$	15.74		$	15.74		$	15.61		$	15.44		$	15.27

  

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
	March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019			March 31, 2019
Computation of valuation adjustment
Allowance for loan losses (GAAP)	$	8,346		$	6,216		$	5,993		$	5,664		$	4,945
Add: Purchase accounting discounts on acquired loans		693			837			983			1,180			1,262
Total valuation adjustments (Non-GAAP)	$	9,039		$	7,053		$	6,976		$	6,844		$	6,207
Total gross loans	$	1,229,028		$	1,189,956		$	1,169,247		$	1,098,785		$	940,625
Allowance for loan losses as a percent of total gross loans (GAAP)		0.68	%		0.52	%		0.51	%		0.52	%		0.53	%
Total valuation adjustments as a percent of total gross loans (Non-GAAP)		0.74	%		0.59	%		0.60	%		0.62	%		0.66	%

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