UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from _____ to _____
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Small reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for completing with any or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
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Table of Contents
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Page |
PART I. |
FINANCIAL INFORMATION |
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Item 1. |
3 |
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3 |
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4 |
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5 |
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6 |
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8 |
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9 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
31 |
Item 3. |
42 |
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Item 4. |
42 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
43 |
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Item 1A. |
43 |
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Item 2. |
43 |
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Item 3. |
43 |
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Item 4. |
43 |
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Item 5. |
43 |
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Item 6. |
44 |
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45 |
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2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
PCSB Financial Corporation and Subsidiaries
Consolidated Balance Sheets (unaudited)
(Dollars in thousands, except share and per share data)
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March 31, |
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June 30, |
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2022 |
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2021 |
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ASSETS |
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Cash and due from banks |
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$ |
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$ |
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Federal funds sold |
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Total cash and cash equivalents |
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Held to maturity debt securities, at amortized cost (fair value of $ |
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Available for sale debt securities, at fair value |
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Total investment securities |
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Loans receivable, net of allowance for loan losses of $ |
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Accrued interest receivable |
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FHLB stock |
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Premises and equipment, net |
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Deferred tax asset, net |
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Bank-owned life insurance |
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Goodwill |
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Other intangible assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Interest bearing deposits |
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$ |
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$ |
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Non-interest bearing deposits |
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Total deposits |
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Mortgage escrow funds |
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Advances from FHLB |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies |
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Shareholders' equity: |
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Preferred stock ($ |
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Common stock ($ |
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Additional paid in capital |
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Retained earnings |
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Unearned compensation - ESOP |
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( |
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( |
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Accumulated other comprehensive loss, net of income taxes |
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( |
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( |
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Treasury stock, at cost ( |
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( |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements (unaudited)
3
PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollars in thousands, except share and per share data)
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Three Months Ended |
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Nine Months Ended |
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March 31, |
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March 31, |
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2022 |
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2021 |
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2022 |
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2021 |
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Interest and dividend income |
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Loans receivable |
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$ |
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$ |
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$ |
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$ |
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Investment securities |
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Federal funds and other |
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Total interest and dividend income |
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Interest expense |
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Deposits and escrow interest |
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FHLB advances |
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Total interest expense |
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Net interest income |
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Provision (benefit) for loan losses |
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Net interest income after provision (benefit) for loan losses |
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Noninterest income |
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Fees and service charges |
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Bank-owned life insurance |
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Gain on sale of premises |
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- |
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- |
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- |
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Swap income |
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- |
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Gains on sales of loans receivable |
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- |
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- |
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Gains on sales of securities |
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- |
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- |
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Other |
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Total noninterest income |
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Noninterest expense |
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Salaries and employee benefits |
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Occupancy and equipment |
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Communication and data processing |
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Professional fees |
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Postage, printing, stationery and supplies |
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FDIC assessment |
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Advertising |
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Amortization of intangible assets |
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Other operating expenses |
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Total noninterest expense |
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Net income before income tax expense |
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Income tax expense |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per common share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the consolidated financial statements (unaudited)
4
PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (unaudited)
(Dollars in thousands)
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Three Months Ended |
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Nine Months Ended |
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March 31, |
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March 31, |
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2022 |
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2021 |
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2022 |
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2021 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income: |
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Unrealized (losses) gains on available for sale debt securities: |
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Net change in unrealized gains/losses before reclassification adjustment |
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( |
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( |
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( |
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( |
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Reclassification adjustment for gains realized in net income |
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( |
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- |
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( |
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Net change in unrealized gains/losses |
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( |
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( |
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( |
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Tax effect |
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Net of tax |
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( |
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( |
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( |
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( |
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Defined benefit pension plan: |
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Net gain (loss) arising during the period |
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- |
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- |
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- |
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- |
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Reclassification adjustment for amortization of prior service cost and net gain included in net periodic pension cost |
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Net change in unrealized gains/losses |
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Tax effect |
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( |
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( |
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( |
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( |
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Net of tax |
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Supplemental retirement plans: |
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Net gain (loss) arising during the period |
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- |
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- |
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- |
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- |
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Reclassification adjustment for amortization of prior service cost and net gain included in net periodic pension cost |
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Net change in unrealized gains/losses |
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Tax effect |
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( |
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( |
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( |
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( |
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Net of tax |
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Total other comprehensive (loss) income |
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( |
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( |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the consolidated financial statements (unaudited)
5
PCSB Financial Corporation and Subsidiaries
(Dollars in thousands, except share and per share data)
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Accumulated |
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Number of |
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Additional |
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Unallocated |
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Other |
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Treasury |
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Total |
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Common |
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Common |
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Paid-In |
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Retained |
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Common Stock |
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Comprehensive |
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Stock, |
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Shareholders' |
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Shares |
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Stock |
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Capital |
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Earnings |
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of ESOP |
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Loss |
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at cost |
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Equity |
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Balance at July 1, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive loss |
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- |
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- |
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- |
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- |
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- |
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( |
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- |
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( |
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Common stock dividends declared ($ |
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- |
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- |
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- |
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( |
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- |
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- |
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- |
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( |
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Repurchase of common stock |
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( |
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- |
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- |
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- |
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- |
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- |
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( |
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( |
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Restricted stock awards granted |
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- |
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( |
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- |
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- |
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- |
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- |
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Shares withheld related to income tax withholding |
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( |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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ESOP shares committed to be released ( |
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- |
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- |
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- |
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- |
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- |
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Balance at September 30, 2021 |
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( |
) |
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( |
) |
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( |
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Net income |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive loss |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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- |
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( |
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Common stock dividends declared ($ |
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- |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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( |
) |
Repurchase of common stock |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
Shares withheld related to income tax withholding |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
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Stock-based compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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ESOP shares committed to be released ( |
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- |
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- |
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- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Balance at December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Common stock dividends declared ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
ESOP shares committed to be released ( |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Balance at March 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying notes to the consolidated financial statements (unaudited)
6
PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
(Dollars in thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
||||||||
|
|
Number of |
|
|
|
|
|
Additional |
|
|
|
|
|
Unallocated |
|
|
Other |
|
|
Treasury |
|
|
Total |
|
||||||||
|
|
Common |
|
|
Common |
|
|
Paid-In |
|
|
Retained |
|
|
Common Stock |
|
|
Comprehensive |
|
|
Stock, |
|
|
Shareholders' |
|
||||||||
|
|
Shares |
|
|
Stock |
|
|
Capital |
|
|
Earnings |
|
|
of ESOP |
|
|
Loss |
|
|
at cost |
|
|
Equity |
|
||||||||
Balance at July 1, 2020 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Common stock dividends declared ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Restricted stock awards granted |
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
ESOP shares committed to be released ( |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Balance at September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other comprehensive income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Common stock dividends declared ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Shares withheld related to income tax withholding |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
ESOP shares committed to be released ( |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Balance at December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other comprehensive loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Common stock dividends declared ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Forfeiture of restricted stock |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
ESOP shares committed to be released ( |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Balance at March 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
See accompanying notes to the consolidated financial statements (unaudited)
7
PCSB Financial Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)
|
|
Nine Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Provision (benefit) for loan losses |
|
|
|
|
|
( |
) |
|
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of net premiums on securities and net deferred loan origination costs |
|
|
|
|
|
|
||
Net (increase) decrease in accrued interest receivable |
|
|
( |
) |
|
|
|
|
Gains on sales of securities |
|
|
- |
|
|
|
( |
) |
Gains on sales of loans receivable |
|
|
( |
) |
|
|
- |
|
Gain on sale of premises |
|
|
( |
) |
|
|
- |
|
Stock-based compensation |
|
|
|
|
|
|
||
ESOP compensation |
|
|
|
|
|
|
||
Earnings from cash surrender value of BOLI |
|
|
( |
) |
|
|
( |
) |
Originations of loans receivable held for sale |
|
|
( |
) |
|
|
- |
|
Proceeds from loans receivable held for sale |
|
|
|
|
|
- |
|
|
Net accretion of purchase accounting adjustments |
|
|
( |
) |
|
|
( |
) |
Other adjustments, principally net changes in other assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Purchases of investment securities: |
|
|
|
|
|
|
||
Held to maturity |
|
|
( |
) |
|
|
( |
) |
Available for sale |
|
|
- |
|
|
|
( |
) |
Sale of investment securities available for sale |
|
|
- |
|
|
|
|
|
Maturities, calls and amortization of investment securities: |
|
|
|
|
|
|
||
Held to maturity |
|
|
|
|
|
|
||
Available for sale |
|
|
|
|
|
|
||
Loan (originations) repayments, net |
|
|
( |
) |
|
|
|
|
Net redemption of FHLB stock |
|
|
|
|
|
|
||
Sale (purchase) of bank premises and equipment |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Net increase in deposits |
|
|
|
|
|
|
||
Net decrease in short-term FHLB advances |
|
|
- |
|
|
|
( |
) |
Repayment of long-term FHLB advances |
|
|
( |
) |
|
|
( |
) |
Net decrease in mortgage escrow funds |
|
|
( |
) |
|
|
( |
) |
Common stock dividends paid |
|
|
( |
) |
|
|
( |
) |
Repurchase of shares from employees for income tax withholding purpose |
|
|
( |
) |
|
|
( |
) |
Repurchase of common stock |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental information: |
|
|
|
|
|
|
||
Cash paid for: |
|
|
|
|
|
|
||
Interest |
|
$ |
|
|
$ |
|
||
Income taxes |
|
|
|
|
|
|
||
Establishment of right to use lease asset |
|
|
- |
|
|
|
|
|
See accompanying notes to the consolidated financial statements (unaudited)
8
PCSB Financial Corporation and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)
Note 1. Basis of Presentation
Nature of Operations: PCSB Financial Corporation (the “Holding Company” and together with its direct and indirect subsidiaries, the “Company”) is a Maryland corporation organized by PCSB Bank (the “Bank”) for the purpose of acquiring all of the capital stock of the Bank issued in the Bank's conversion to stock ownership on April 20, 2017. At March 31, 2022, the significant assets of the Holding Company were the capital stock of the Bank, cash deposited in the Bank, and a loan to the PCSB Bank Employee Stock Ownership Plan (“ESOP”). The liabilities of the Holding Company were insignificant. The Company is subject to the financial reporting requirements of the Securities Exchange Act of 1934, as amended, and regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the New York State Department of Financial Services (the “NYSDFS”).
PCSB Bank is a community-oriented financial institution that provides financial services to individuals and businesses within its market area of Putnam, Southern Dutchess, Rockland and Westchester Counties in New York. The Bank is a state-chartered commercial bank, and its deposits are insured up to applicable limits by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”). The Bank’s primary regulators are the FDIC and the NYSDFS.
Basis of Presentation: The unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), and include the accounts of the Holding Company, the Bank and the Bank's
The unaudited consolidated financial statements contained herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Such adjustments are the only adjustments reflected in the consolidated financial statements contained herein. The results of operations for the current period presented are not necessarily indicative of the results of operations that may be expected for the entire current fiscal year. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended June 30, 2021, included in the Company's Annual Report on Form 10-K.
Certain prior period amounts have been reclassified to conform to the current presentation. Reclassifications had no effect on prior period net income or equity.
Loans Receivable Held For Sale: Loans receivable held for sale are those loans which management has the intent to sell in the foreseeable future, and are carried at the lower of aggregate cost or market value. Net unrealized losses, if any, are recognized by a valuation allowance through a charge to noninterest income. Realized gains and losses on the sale of loans are recognized on the trade date and are determined by the difference between the sale proceeds and the carrying value of the loans.
Loans may be sold with servicing rights released or retained. At the time of the sale, management records a servicing asset for the value of any retained servicing rights, which represents the present value of the differential between the contractual servicing fee and adequate compensation, defined as the fee a sub-servicer would require to assume the role of servicer, after considering the estimated effects of prepayments.
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the transferor does not maintain effective control over the transferred assets through either (a) an agreement that both entitles and obligates the transferor to repurchase or redeem the assets before maturity or (b) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.
Assets Held For Sale: Assets held for sale are those assets which management has the intent to sell in the foreseeable future, and are carried at the lower of aggregate cost or fair value, less estimated costs to sell, in the period in which the held for sale
9
criteria are met and every subsequent period until the asset is sold. The carrying amount of the asset is adjusted for subsequent increases or decreases in its fair value, less estimated cost to sell, except that any subsequent increase cannot exceed the cumulative loss previously recognized. Such assets are not depreciated or amortized while they are classified as held for sale. Realized gains and losses on the sale of the asset is recognized when the asset is sold and is determined by the difference between the sale proceeds and the carrying value of the asset. Assets classified as held for sale totaled $
Risks and Uncertainties:
The COVID-19 pandemic has created extensive disruptions to the global and U.S. economies and to the lives of individuals throughout the world. Governments, businesses, and the public have taken unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including vaccination mandates, quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal and monetary stimulus, and legislation designed to deliver financial aid and other relief. While the scope, duration, and full effects of COVID-19 on the economy continue to evolve and are not fully known, the pandemic and the efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted market interest rates, increased economic and market uncertainty, and disrupted trade and supply chains.
Many of the emergency actions taken to mitigate the effects of the pandemic have since been reduced or eliminated, resulting in an improved local and national economic environment, however the ultimate financial impact of the pandemic on our borrowers, and therefore on our credit quality and financial performance, is still unknown at this time. The pandemic may continue to adversely impact consumers and several industries within our geographic footprint and impair the ability of the Company’s customers to fulfill their contractual obligations to the Company. This could cause the Company to experience a material adverse effect on our business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include, but are not limited to, the valuation impairments of the Company’s intangible assets, investments, loans receivable, or deferred tax assets. Additionally, it is reasonably possible that the Company’s allowance for loan loss estimate as of March 31, 2022 could change in the near term and could result in a material change to the Company’s provision for loan losses, earnings and capital.
Note 2. Recent Accounting Pronouncements
The pronouncements discussed below are not intended to be an all-inclusive list, but rather only those pronouncements that the Company has determined could potentially have a material impact on its consolidated financial position and results of operations or on its disclosures.
There were no accounting standards adopted in the current period.
Future Application of Accounting Pronouncements Previously Issued
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 which affects entities holding financial assets that are not accounted for at fair value through net income, including loans, debt securities, and other financial assets. The ASU requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected by recording an allowance for current expected credit losses. In October 2019, the FASB unanimously voted to delay the implementation of the standard for three years for certain companies, including small reporting companies (as defined by the SEC), non-SEC public companies and private companies. The Company currently qualifies as a small reporting company and is subject to the delayed implementation. Therefore, the amendments in this update will be effective for the Company for the fiscal year beginning on July 1, 2023, including interim periods within that fiscal year. The Company is actively working through the provisions of the Update. Management has established a steering committee which is identifying the methodologies and the additional data requirements necessary to implement the Update and has engaged a third-party software service provider to assist in the Company's implementation. On March 31, 2022 the FASB issued ASU 2022-02 "Financial Instruments - Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures." The ASU eliminates the current accounting guidance on troubled debt restructurings ("TDRs") for creditors, enhances disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty and amends the guidance on vintage disclosures with respect to current period gross charge-offs. For entities that have not yet adopted ASU 2016-13, the amendments in ASU
10
2022-02 are effective upon the adoption of ASU 2016-13. Management is currently evaluating the impact that ASU 2016-13 and ASU 2022-02 will have on the Company’s consolidated financial position, results of operations and disclosures.
Note 3. Investment Securities
The amortized cost, gross unrealized/unrecognized gains and losses and fair value of available for sale and held to maturity debt securities at March 31, 2022 and June 30, 2021 were as follows (in thousands):
|
|
March 31, 2022 |
|
|||||||||||||
|
|
Amortized |
|
|
Gross Unrealized/Unrecognized |
|
|
Fair |
|
|||||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Available for sale debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
- |
|
|
$ |
( |
) |
|
$ |
|
||
Corporate |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
State and municipal |
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Mortgage-backed securities – residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Total available for sale debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Held to maturity debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Corporate |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
State and municipal |
|
|
|
|
|
- |
|
|
|
( |
) |
|
|
|
||
Mortgage-backed securities – residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – collateralized |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total held to maturity debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
11
|
|
June 30, 2021 |
|
|||||||||||||
|
|
Amortized |
|
|
Gross Unrealized/Unrecognized |
|
|
Fair |
|
|||||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Value |
|
||||
Available for sale debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Corporate |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
State and municipal |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Total available for sale debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Held to maturity debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Corporate |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
State and municipal |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – residential |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – collateralized |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Total held to maturity debt securities |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The following table presents the fair value and carrying amount of debt securities at March 31, 2022, by contractual maturity (in thousands). Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.
|
|
Held to maturity |
|
|
Available for sale |
|
||||||||||
|
|
Carrying |
|
|
Fair |
|
|
Amortized |
|
|
Fair |
|
||||
|
|
Amount |
|
|
Value |
|
|
Cost |
|
|
Value |
|
||||
1 year or less |
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
1 to 5 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
5 to 10 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
over 10 years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mortgage-backed securities and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Securities pledged had carrying amounts of $
12
The following table provides information regarding investment securities with unrealized/unrecognized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position at March 31, 2022 and June 30, 2021 (in thousands):
|
|
March 31, 2022 |
|
|||||||||||||||||||||
|
|
Less than 12 months |
|
|
12 months or greater |
|
|
Total |
|
|||||||||||||||
|
|
|
|
|
Unrealized/ |
|
|
|
|
|
Unrealized/ |
|
|
|
|
|
Unrealized/ |
|
||||||
|
|
Fair |
|
|
Unrecognized |
|
|
Fair |
|
|
Unrecognized |
|
|
Fair |
|
|
Unrecognized |
|
||||||
|
|
Value |
|
|
Loss |
|
|
Value |
|
|
Loss |
|
|
Value |
|
|
Loss |
|
||||||
Available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
||
Corporate |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
State and municipal |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Mortgage-backed securities – residential |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Total available for sale |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
Held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
Corporate |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
State and municipal |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Mortgage-backed securities – residential |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Mortgage-backed securities – collateralized |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Mortgage-backed securities – commercial |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Total held to maturity |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
|
|
June 30, 2021 |
|
|||||||||||||||||||||
|
|
Less than 12 months |
|
|
12 months or greater |
|
|
Total |
|
|||||||||||||||
|
|
|
|
|
Unrealized/ |
|
|
|
|
|
Unrealized/ |
|
|
|
|
|
Unrealized/ |
|
||||||
|
|
Fair |
|
|
Unrecognized |
|
|
Fair |
|
|
Unrecognized |
|
|
Fair |
|
|
Unrecognized |
|
||||||
|
|
Value |
|
|
Loss |
|
|
Value |
|
|
Loss |
|
|
Value |
|
|
Loss |
|
||||||
Available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
||
State and municipal |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Mortgage-backed securities – residential |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Total available for sale |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
Held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U.S. Government and agency obligations |
|
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
( |
) |
||
Corporate |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
State and municipal |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Mortgage-backed securities – residential |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Mortgage-backed securities – collateralized |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Mortgage-backed securities – commercial |
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
( |
) |
||
Total held to maturity |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As of March 31, 2022, the Company’s securities portfolio consisted of $
There were
13
Note 4. Loans Receivable
Loans receivable are summarized as follows (in thousands):
|
March 31, |
|
|
June 30, |
|
||
|
2022 |
|
|
2021 |
|
||
Mortgage loans: |
|
|
|
|
|
||
Residential |
$ |
|
|
$ |
|
||
Commercial |
|
|
|
|
|
||
Construction |
|
|
|
|
|
||
Net deferred loan origination (fees) costs |
|
( |
) |
|
|
|
|
Total mortgage loans |
|
|
|
|
|
||
Commercial and consumer loans: |
|
|
|
|
|
||
Commercial loans |
|
|
|
|
|
||
Home equity lines of credit |
|
|
|
|
|
||
Consumer and overdrafts |
|
|
|
|
|
||
Net deferred loan origination costs (fees) |
|
|
|
|
( |
) |
|
Total commercial and consumer loans |
|
|
|
|
|
||
Total loans receivable |
|
|
|
|
|
||
Allowance for loan losses |
|
( |
) |
|
|
( |
) |
Loans receivable, net |
$ |
|
|
$ |
|
||
The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine months ended March 31, 2022 and 2021 (in thousands):
|
Three Months Ended March 31, 2022 |
|
|||||||||||||||||
|
Beginning |
|
|
Provision |
|
|
Charge-offs |
|
|
Recoveries |
|
|
Ending |
|
|||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Construction |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Commercial loans |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
|||
Consumer and overdrafts |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Three Months Ended March 31, 2021 |
|
|||||||||||||||||
|
Beginning |
|
|
Provision |
|
|
Charge-offs |
|
|
Recoveries |
|
|
Ending |
|
|||||
Residential mortgages |
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
$ |
|
|||
Commercial mortgages |
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
||
Construction |
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
||
Commercial loans |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Home equity lines of credit |
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
|||
Consumer and overdrafts |
|
|
|
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|||
Total |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
14
|
Nine Months Ended March 31, 2022 |
|
|||||||||||||||||
|
Beginning |
|
|
Provision |
|
|
Charge-offs |
|
|
Recoveries |
|
|
Ending |
|
|||||
Residential mortgages |
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
$ |
|
|||
Commercial mortgages |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Construction |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Commercial loans |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Home equity lines of credit |
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
|||
Consumer and installment loans |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Nine Months Ended March 31, 2021 |
|
|||||||||||||||||
|
Beginning |
|
|
Provision |
|
|
Charge-offs |
|
|
Recoveries |
|
|
Ending |
|
|||||
Residential mortgages |
$ |
|
|
$ |
( |
) |
|
$ |
- |
|
|
$ |
|
|
$ |
|
|||
Commercial mortgages |
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
||
Construction |
|
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
|
||
Commercial loans |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|||
Home equity lines of credit |
|
|
|
|
( |
) |
|
|
- |
|
|
|
|
|
|
|
|||
Consumer and installment loans |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Total |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
The following tables present the balance in the allowance for loan losses and the recorded investment in loans, excluding net deferred fees and accrued interest, by portfolio segment, and based on impairment method as of March 31, 2022 and June 30, 2021 (in thousands):
|
|
March 31, 2022 |
|
|||||||||||||||||||||||||||||
|
|
Loans |
|
|
Allowance for Loan Losses |
|
||||||||||||||||||||||||||
|
|
Individually |
|
|
Collectively |
|
|
Acquired With |
|
|
Total |
|
|
Individually |
|
|
Collectively |
|
|
Acquired With |
|
|
Total |
|
||||||||
Residential mortgages |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||||
Commercial mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||||
Construction |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||||
Commercial loans |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||||||
Consumer and overdrafts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
June 30, 2021 |
|
|||||||||||||||||||||||||||||
|
|
Loans |
|
|
Allowance for Loan Losses |
|
||||||||||||||||||||||||||
|
|
Individually |
|
|
Collectively |
|
|
Acquired With |
|
|
Total |
|
|
Individually |
|
|
Collectively |
|
|
Acquired With |
|
|
Total |
|
||||||||
Residential mortgages |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||||
Commercial mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||||
Construction |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Commercial loans |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8 |
|
|
|
|
|
|
- |
|
|
|
|
||||||
Consumer and overdrafts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
15
The following tables present information related to loans individually evaluated for impairment (excluding loans acquired with deteriorated credit quality) by portfolio segment as of March 31, 2022 and June 30, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
March 31, 2022 |
|
|
June 30, 2021 |
|
||||||||||||||||||
|
Unpaid |
|
|
Recorded Investment |
|
|
Allowance for Loan Losses |
|
|
Unpaid |
|
|
Recorded Investment |
|
|
Allowance for Loan Losses |
|
||||||
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
||||
Construction |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||
Commercial loans |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
- |
|
||||
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The tables below present the average recorded investment and interest income recognized on loans individually evaluated for impairment, by portfolio segment, for the three and nine months ended March 31, 2022 and 2021 (in thousands):
|
Three months ended |
|
|
Three months ended |
|
||||||||||
|
March 31, 2022 |
|
|
March 31, 2021 |
|
||||||||||
|
Average |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
||||
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Construction |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
March 31, 2022 |
|
|
March 31, 2021 |
|
||||||||||
|
Average |
|
|
Interest |
|
|
Average |
|
|
Interest |
|
||||
With no related allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Construction |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
||||
With an allowance recorded: |
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
16
The following table presents the recorded investment in nonaccrual loans and in loans past due over 90 days and still on accrual status, by portfolio segment, as of March 31, 2022 and June 30, 2021 (in thousands):
|
|
|
|
Loans Past Due Over 90 Days |
|
||||||||||
|
Nonaccrual |
|
|
and Still Accruing |
|
||||||||||
|
March 31, |
|
|
June 30, |
|
|
March 31, |
|
|
June 30, |
|
||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Commercial mortgages |
|
|
|
|
|
|
|
|
|
|
|
||||
Construction |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Commercial loans |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Home equity lines of credit |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Nonperforming loans include both smaller-balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. The table above excludes acquired loans that are accounted for as purchased credit impaired loans totaling $
The following tables present the aging of the recorded investment in past due loans by portfolio segment as of March 31, 2022 and June 30, 2021 (in thousands):
|
March 31, 2022 |
|
|||||||||||||||||||||
|
30-59 |
|
|
60-89 |
|
|
90 Days or |
|
|
|
|
|
|
|
|
|
|
||||||
|
Days Past |
|
|
Days Past |
|
|
More Past |
|
|
Total Past |
|
|
|
|
|
|
|
||||||
|
Due |
|
|
Due |
|
|
Due |
|
|
Due |
|
|
Current (1) |
|
|
Total |
|
||||||
Residential mortgages |
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Construction |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Home equity lines of credit |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Consumer and overdrafts |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
June 30, 2021 |
|
|||||||||||||||||||||
|
30-59 |
|
|
60-89 |
|
|
90 Days or |
|
|
|
|
|
|
|
|
|
|
||||||
|
Days Past |
|
|
Days Past |
|
|
More Past |
|
|
Total Past |
|
|
|
|
|
|
|
||||||
|
Due |
|
|
Due |
|
|
Due |
|
|
Due |
|
|
Current (1) |
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Commercial mortgages |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Commercial loans |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Home equity lines of credit |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Consumer and overdrafts |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Troubled Debt Restructurings
The terms of certain loans have been modified as troubled debt restructurings (“TDRs”). The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. All TDRs are considered impaired loans.
As of March 31, 2022 and June 30, 2021, the Company had
17
$
The Company did
There were
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief From Troubled Debt Restructurings,” provides banks the option to temporarily suspend certain requirements under U.S. GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. On December 27, 2020, the Consolidated Appropriations Act 2021 was signed into law. Section 541 of this legislation, “Extension of Temporary Relief From Troubled Debt Restructurings and Insurer Clarification,” extends Section 4013 of the CARES Act to the earlier of January 1, 2022 or 60 days after the termination of the national emergency declared relating to COVID-19. This legislation expired on January 1, 2022. Additionally, on April 7, 2020, the banking agencies, including the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, issued a statement, “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working With Customers Affected by the Coronavirus (Revised)” (“Interagency Statement”), to encourage banks to work prudently with borrowers and to describe the agencies’ interpretation of how accounting rules under ASC 310-40, “Troubled Debt Restructurings by Creditors,” apply to certain COVID-19-related modifications.
During the three months ended March 31, 2022,
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a monthly basis. The Company utilizes the same grading process for acquired loans as it does for originated loans. The Company uses the following definitions for risk ratings:
Special Mention – Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.
Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
18
Loans not meeting the criteria above that are analyzed individually as part of the above-described process and loans in groups of homogenous loans are considered to be pass rated loans. These loans are monitored based on delinquency and performance.
|
March 31, 2022 |
|
|||||||||||||
|
Pass |
|
|
Special |
|
|
Substandard |
|
|
Total |
|
||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
|
|
|
|
||||
Construction |
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
||||
Consumer and overdrafts |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
June 30, 2021 |
|
|||||||||||||
|
Pass |
|
|
Special |
|
|
Substandard |
|
|
Total |
|
||||
Residential mortgages |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial mortgages |
|
|
|
|
|
|
|
|
|
|
|
||||
Construction |
|
|
|
|
|
|
|
- |
|
|
|
|
|||
Commercial loans |
|
|
|
|
|
|
|
|
|
|
|
||||
Home equity lines of credit |
|
|
|
|
|
|
|
|
|
|
|
||||
Consumer and overdrafts |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As of March 31, 2022, the $
Purchased Credit Impaired Loans
The Company has acquired loans for which there was, at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.
|
March 31, |
|
|
June 30, |
|
||
|
2022 |
|
|
2021 |
|
||
Residential mortgages |
$ |
|
|
$ |
|
||
Commercial mortgages |
|
|
|
|
|
||
Home equity lines of credit |
|
|
|
|
|
||
Carrying amount, net of allowance of $ |
$ |
|
|
$ |
|
||
There was
Accretable yield, or income expected to be collected, for acquired loans is as follows (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
March 31, |
|
|
March 31, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Beginning balance |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
New loans acquired |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Accretion income |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Reclassification from non-accretable difference |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Disposals |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Ending balance |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
Note 5. Accumulated Other Comprehensive (Loss) Income
The following is a summary of the accumulated other comprehensive income (loss) balances, net of tax (in thousands):
|
Net unrealized |
|
|
Unrealized loss |
|
|
Unrealized loss |
|
|
Total |
|
||||
Balance at January 1, 2022 |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss before reclassifications |
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Amounts reclassified from accumulated other |
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Less tax effect |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Net other comprehensive (loss) income |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at March 31, 2022 |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net unrealized |
|
|
Unrealized loss |
|
|
Unrealized loss |
|
|
Total |
|
||||
Balance at January 1, 2021 |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss before reclassifications |
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Amounts reclassified from accumulated other |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Less tax effect |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Net other comprehensive (loss) income |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at March 31, 2021 |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net unrealized |
|
|
Unrealized loss |
|
|
Unrealized loss |
|
|
Total |
|
||||
Balance at July 1, 2021 |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive loss before reclassifications |
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Amounts reclassified from accumulated other |
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Tax effect |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Net other comprehensive (loss) income |
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||
Balance at March 31, 2022 |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Net unrealized |
|
|
Unrealized loss |
|
|
Unrealized loss |
|
|
Total |
|
||||
Balance at July 1, 2020 |
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income before |
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Amounts reclassified from accumulated other |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Tax effect |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Net other comprehensive (loss) income |
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balance at March 31, 2021 |
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
20
Note 6. Post-Retirement Benefits
Employee Pension Plan
The Company maintains a non-contributory defined benefit pension plan that covers employees meeting specific requirements as to age and length of service. The Company’s contributions to this qualified plan are determined on the basis of (i) the maximum amount that can be deducted for federal income tax purposes, and (ii) the amount determined by a consulting actuary as necessary to avoid an accumulated funding deficiency as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”). Contributions are intended to provide for benefits attributed to service to date but also those expected to be earned in the future. On February 15, 2017, the Board of Directors approved the freezing of the defined benefit pension plan effective
Supplemental Executive Retirement Plans
The Company also maintains unfunded and non-qualified supplemental executive retirement plans ("SERP") to provide pension benefits in addition to those provided under the qualified pension plan.
Net periodic benefit cost and other amounts recognized in other comprehensive income for the three and nine months ended March 31, 2022 and 2021 (in thousands):
|
|
Three Months Ended |
|
|
Three Months Ended |
|
||||||||||
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
||||||||||
|
|
Defined |
|
|
Supplemental |
|
|
Defined |
|
|
Supplemental |
|
||||
Service cost |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Amortization of prior net loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Settlement charges |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Net periodic (benefit) cost |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
||||||||||
|
|
Defined |
|
|
Supplemental |
|
|
Defined |
|
|
Supplemental |
|
||||
Service cost |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
Amortization of prior net loss |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Settlement charges |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Net periodic (benefit) cost |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
The Company made
Employee Stock Ownership Plan
On January 1, 2017, the Company established an Employee Stock Ownership Plan (“ESOP”) to provide eligible employees the opportunity to own Company stock. The ESOP is a tax-qualified retirement plan for the benefit of Company employees. On April 20, 2017, the Holding Company granted a loan to the ESOP in the amount of $
21
Shares held by the ESOP include the following (Dollars in thousands):
|
March 31, 2022 |
|
|
June 30, 2021 |
|
||
Allocated to participants |
|
|
|
|
|
||
Unearned |
|
|
|
|
|
||
Total ESOP shares |
|
|
|
|
|
||
|
|
|
|
|
|
||
Fair value of unearned shares |
$ |
|
|
$ |
|
||
|
|
|
|
|
|
||
Note 7. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as general classification of such instruments pursuant to the valuation hierarchy, is set forth below. While management believes the Company’s valuation methodologies are appropriate and consistent with other financial institutions, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
Investment Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs), or a broker's opinion of value (Level 3 inputs).
Impaired Loans: The fair value of collateral-dependent impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. Appraisals are generally obtained annually and may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Management performs a review of all appraisals, including any such adjustments. The fair value of uncollateralized or non-collateral-dependent loans are generally based on discounted cash flows which utilize management’s assumption of discount rates and expected future cash flows, resulting in a Level 3 classification.
Foreclosed Real Estate: Assets acquired through or instead of loan foreclosure are initially recorded at fair value, less estimated costs to sell, when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value, less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
Foreclosed properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
22
Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, a member of the Credit Department, as well as a third-party specialist, where deemed appropriate, reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Once appraisals are considered appropriate, management discounts the appraised value for estimated selling costs, such as legal, broker, and property maintenance and insurance costs. The most recent analysis performed indicated discount rates ranging between
Derivatives: The Company’s derivative assets and liabilities consist of transactions undertaken as part of management’s strategy to manage interest rate risk. The valuation of the Company’s interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy.
Assets and liabilities measured at fair value are summarized below (in thousands):
|
|
Fair Value Measurements |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Measured on a recurring basis: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available for sale debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Corporate |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
State and municipal |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Mortgage-backed securities – residential |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Mortgage-backed securities – commercial |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Derivatives – interest rate contracts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total assets at fair value |
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives – interest rate contracts |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total liabilities at fair value |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Measured on a non-recurring basis: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impaired loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||
Home equity lines of credit |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total assets at fair value |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
23
|
|
Fair Value Measurements |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Measured on a recurring basis: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available for sale debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Corporate |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
State and municipal |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Mortgage-backed securities – residential |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Mortgage-backed securities – commercial |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Derivatives – interest rate contracts |
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Total assets at fair value |
|
$ |
- |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives – interest rate contracts |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
Total liabilities at fair value |
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Measured on a non-recurring basis: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impaired loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgages |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||
Home equity lines of credit |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total assets at fair value |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impaired loans in the preceding table had a carrying amount of $
The following tables present quantitative information about Level 3 fair value measurements for selected financial instruments measured at fair value on a non-recurring basis at March 31, 2022 and June 30, 2021 (Dollars in thousands):
|
|
|
|
|
Valuation |
|
Unobservable |
|
Range or |
|
|
|
Fair Value |
|
|
Technique(s) |
|
Input(s) |
|
Rate Used |
|
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
Impaired loans - residential mortgages |
|
$ |
|
|
Discounted cash flow |
|
Discount rate |
|
||
Impaired loans - home equity lines of credit |
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
||
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
Impaired loans - residential mortgages |
|
$ |
|
|
Discounted cash flow |
|
Discount rate |
|
||
Impaired loans - home equity lines of credit |
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
||
24
The following is a summary of the carrying amounts and estimated fair values of the Company’s financial assets and liabilities, none of which are held for trading purposes (in thousands):
|
Carrying |
|
|
Fair Value Measurements |
|
||||||||||||||||
|
Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
|
Level 3 |
|
|
Total |
|
||||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
|
|
$ |
|
|
$ |
- |
|
|
|
$ |
- |
|
|
$ |
|
||||
Held to maturity debt securities |
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
||||
Available for sale debt securities |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loans receivable, net |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
||||
Accrued interest receivable |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|||||
FHLB stock |
|
|
|
N/A |
|
|
N/A |
|
|
|
N/A |
|
|
N/A |
|
||||||
Derivative assets - interest rate contracts |
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Demand, NOW, money market deposits and savings accounts |
|
|
|
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
||||
Time deposits |
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Mortgage escrow funds |
|
|
|
|
|
|
|
- |
|
|
|
|
- |
|
|
|
|
||||
Advances from FHLB |
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|||||
Derivative liabilities - interest rate contracts |
|
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
||||
|
Carrying |
|
|
Fair Value Measurements |
|
||||||||||||||
|
Amount |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Financial assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|||
Held to maturity debt securities |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
||||
Available for sale debt securities |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
||||
Loans receivable, net |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||
Accrued interest receivable |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
||||
FHLB stock |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|||||
Derivative assets - interest rate contracts |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Financial liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Demand, NOW, money market deposits and savings accounts |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Time deposits |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Mortgage escrow funds |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Advances from FHLB |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Accrued interest payable |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
||||
Derivative liabilities - interest rate contracts |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
The methods of determining the fair value of assets and liabilities presented in the table above are consistent with our methodologies disclosed in the Company's Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended June 30, 2021.
25
Note 8. Regulatory Matters
The following is a summary of the Bank’s actual capital amounts and ratios as of March 31, 2022 and June 30, 2021, compared to the required ratios for minimum capital adequacy and for classification as well capitalized (Dollars in thousands).
|
|
|
|
|
|
|
|
|
|
To Be Well Capitalized |
|
||||||||||||
|
|
|
|
|
|
|
For Capital |
|
|
Under Prompt |
|
||||||||||||
|
|
|
|
Adequacy |
|
|
Corrective Action |
|
|||||||||||||||
|
Bank Actual |
|
|
Purposes |
|
|
Provisions |
|
|||||||||||||||
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||||
March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Leverage (Tier 1) |
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Risk-based: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common Tier 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tier 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Leverage (Tier 1) |
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Risk-based: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common Tier 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tier 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
In addition to the ratios above, the Basel III Capital Rules have established that community banking institutions must maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than
Note 9. Earnings Per Share (“EPS”)
Basic EPS is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.
Diluted EPS is calculated in a similar matter, except that the denominator includes the number of additional common shares that would have been outstanding if potentially dilutive common shares were issued using the treasury stock method. Dilutive financial instruments include stock options and unvested restricted stock.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
|
(Dollars in thousands, except share and per share data) |
|
|||||||||||||
Net income applicable to common stock |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average number of common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Less: Average unallocated ESOP shares |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Average number of common shares outstanding used to calculate basic earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of equity-based awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average number of common shares outstanding used to calculate diluted earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
26
Note 10. Derivatives and Hedging
Derivatives not designated as hedges may be used to manage the Company’s exposure to interest rate movements or to provide service to customers. The Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third party in order to minimize the net risk exposure resulting from such transactions. The Company presents interest rate swap assets and liabilities in other assets and other liabilities, respectively, in the Consolidated Balance Sheets. These interest rate swap agreements do not qualify for hedge accounting treatment, and therefore changes in fair value are reported in current period earnings.
The following table presents summary information about the interest rate swaps as of March 31, 2022 and June 30, 2021 (Dollars in thousands).
|
March 31, |
|
|
June 30, |
|
||
|
2022 |
|
|
2021 |
|
||
Notional amounts |
$ |
|
|
$ |
|
||
Weighted average pay rates |
|
% |
|
|
% |
||
Weighted average receive rates |
|
% |
|
|
% |
||
Weighted average maturity |
|
|
|
||||
Fair value of combined interest rate swaps |
$ |
|
|
$ |
|
||
Note 11. Revenue From Contracts With Customers
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. The Company applies the following five steps to properly recognize revenue:
The following table presents summary information about sources of revenue from contracts with customers for the periods indicated (in thousands).
27
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
March 31, |
|
|
March 31, |
|
||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
||||
Service charges on deposits |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interchange fees |
|
|
|
|
|
|
|
|
|
|
|
||||
Other fees and service charges (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Fees and service charges |
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bank-owned life insurance (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of premises (1) |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
Swap income (1) |
|
|
|
|
- |
|
|
|
|
|
|
|
|||
Gains on sales of loans receivable (1) |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Gains on sales of securities (1) |
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other noninterest income (1) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total noninterest income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fees and Service Charges on Deposit Accounts. The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payments, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of the month, representing the period over which the Company satisfied the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.
Interchange Income. The Company earns interchange fees from debit cardholder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.
Gain on Sales of Foreclosed Real Estate. The Company records a gain or loss from the sale of foreclosed real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed real estate asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present.
Note 12. Stock-Based Compensation
On October 24, 2018, the Company’s shareholders approved the PCSB Financial Corporation 2018 Equity Incentive Plan (the “Plan”), which permits the grant of stock options and restricted stock and/or restricted stock units. The total number of shares that may be granted under the Plan is
Restricted Stock Awards (“RSAs”)
RSAs awarded under the Plan provide for the issuance of shares to both employees and non-employee directors. These awards generally vest over a 5-year period, with
28
The following table presents a summary of RSA activity during the period ended March 31, 2022.
|
Number of |
|
|
Weighted-Average |
|
||
Unvested granted shares outstanding at July 1, 2021 |
|
|
|
$ |
|
||
Shares granted |
|
|
|
|
|
||
Shares vested |
|
( |
) |
|
|
|
|
Shares forfeited |
|
- |
|
|
|
- |
|
Unvested granted shares at March 31, 2022 |
|
|
|
$ |
|
||
As of March 31, 2022, there was $
Stock Option Awards
Stock options awarded to employees under the Plan are considered incentive stock options (ISOs), up to applicable limits. Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. Those issued to non-employee directors, as well as those exceeding ISO limitations, are considered non-qualified stock options (NQSOs). Options generally vest over a 5-year period, with
The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatilities of a peer group of publicly traded financial institutions. The expected term of options granted is based on the simplified “mid-point” approach which utilizes the weighted average vesting period and contractual term. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
Total options available for grant under the Plan are
|
Number of |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
|
(Dollars in thousands, except share and per share data) |
|
|||||||||||||
Options outstanding at July 1, 2021 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Options granted |
|
|
|
|
|
|
|
|
|
|
|
||||
Options expired |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Options forfeited |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Options exercised |
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Options outstanding at March 31, 2022 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercisable at March 31, 2022 |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
As of March 31, 2022, there was $
The fair value of options granted during the nine months ended March 31, 2022, was determined using the following weighted-average assumptions as of grant date.
Risk-free interest rate |
|
% |
|
Expected term (in years) |
|
|
|
Expected stock price volatility |
|
% |
|
Dividend yield |
|
% |
|
Weighted average fair value of options granted |
$ |
|
29
Note 13. Leases
As of March 31, 2022, the Company leases real estate for
The Company made a policy election to exclude the recognition requirements of ASC 842 to short-term leases, those leases with original terms of
Total operating lease cost was $
Future minimum lease payments for the fiscal years ending June 30 and a reconciliation of undiscounted lease cash flows and the lease liability recognized in the consolidated balance sheet as of March 31, 2022 is shown below:
(Dollars in thousands) |
|
|
|
2022 |
$ |
|
|
2023 |
|
|
|
2024 |
|
|
|
2025 |
|
|
|
2026 |
|
|
|
Thereafter |
|
|
|
Total future minimum lease payments (undiscounted) |
|
|
|
Discounting effect on cash flows |
|
( |
) |
$ |
|
||
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
General
Management’s discussion and analysis of financial condition at March 31, 2022 and June 30, 2021, and results of operations for the three and nine months ended March 31, 2022 and 2021 is intended to assist in understanding the consolidated financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q and with the audited consolidated financial statements included in the annual report on Form 10-K for the fiscal year ended June 30, 2021.
Cautionary Note Regarding Forward-Looking Statements
This quarterly report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:
These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
31
Additional factors that may affect our results are discussed in the annual report on Form 10-K for the fiscal year ended June 30, 2021, under the heading “Risk Factors” and in this quarterly report on Form 10-Q under Part II, Item 1A.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.
Critical Accounting Policies and Critical Accounting Estimates
Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments, estimates and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. For additional information regarding critical accounting policies, refer to the section captioned “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the June 30, 2021 Form 10-K. There have been no significant changes in our application of critical accounting policies for the three or nine months ended March 31, 2022.
Overview
PCSB Financial Corporation (the “Holding Company” and together with its direct and indirect subsidiaries, the “Company”) is a Maryland corporation organized by PCSB Bank (the “Bank”) for the purpose of acquiring all of the capital stock of the Bank issued in the Bank's conversion to stock ownership on April 20, 2017. At March 31, 2022, the significant assets of the Holding Company were the capital stock of the Bank, cash deposited in the Bank, and a loan to the PCSB Bank Employee Stock Ownership Plan (“ESOP”). The liabilities of the Holding Company were insignificant. The Company is subject to the financial reporting requirements of the Securities Exchange Act of 1934, as amended, and regulation and examination by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and the New York State Department of Financial Services (the “NYSDFS”).
PCSB Bank is a community-oriented financial institution that provides financial services to individuals and businesses within its market area of Putnam, Southern Dutchess, Rockland and Westchester Counties in New York. The Bank is a state-chartered commercial bank, and its deposits are insured up to applicable limits by the Deposit Insurance Fund of the Federal Deposit Insurance Corporation (“FDIC”). The Bank’s primary regulators are the FDIC and the NYSDFS.
The Company's primary market area encompasses all of Putnam and Westchester Counties and parts of Dutchess and Rockland Counties in New York, which are the counties in which our offices are located, and the surrounding areas. It is considered a primary area for growth, particularly for commercial lending and deposit opportunities. Westchester County includes a high concentration of office, medical, retail, industrial, mixed use and multi-family real estate buildings and businesses. Our primary focus in this marketplace is small to middle market businesses in these segments. Rising real estate values and lack of available commercial space in Brooklyn and Manhattan have caused businesses to migrate to central and lower Westchester County, which has increased the demand for flex-industrial and multi-family property loans in our market area. Dutchess, Putnam and Rockland Counties offer similar commercial opportunities to Westchester County, but on a significantly smaller scale, and provide greater opportunities in residential mortgage lending and consumer lending and in retail deposit gathering. The close proximity of Bronx County, New York City, Fairfield County, Connecticut, and Bergen County, New Jersey, to our market area also creates a secondary area of opportunity for office, industrial and multi-family property loans.
32
Selected Financial Ratios
The summary information presented below as of and for the three and nine months ended March 31, 2022 and 2021 is derived in part from and should be read in conjunction with the consolidated financial statements of the Company presented in Part I (Dollars in thousands, except share and per share data).
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
|
March 31, |
|
||||
Performance Ratios (1): |
|
|
|
|
|
|
|
|
|
|
||||||
Return on average assets |
|
|
0.73 |
% |
|
|
0.80 |
% |
|
|
0.81 |
% |
|
|
0.67 |
% |
Return on average equity |
|
|
5.02 |
% |
|
|
5.32 |
% |
|
|
5.51 |
% |
|
|
4.41 |
% |
Interest rate spread |
|
|
2.69 |
% |
|
|
2.53 |
% |
|
|
2.76 |
% |
|
|
2.51 |
% |
Net interest margin |
|
|
2.80 |
% |
|
|
2.69 |
% |
|
|
2.86 |
% |
|
|
2.70 |
% |
Efficiency ratio |
|
|
65.66 |
% |
|
|
70.10 |
% |
|
|
63.98 |
% |
|
|
70.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest income to average assets |
|
|
0.19 |
% |
|
|
0.13 |
% |
|
|
0.19 |
% |
|
|
0.14 |
% |
Noninterest expense to average assets |
|
|
1.87 |
% |
|
|
1.90 |
% |
|
|
1.87 |
% |
|
|
1.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average interest-earning assets to average interest-bearing liabilities |
|
|
131.20 |
% |
|
|
131.31 |
% |
|
|
131.24 |
% |
|
|
131.40 |
% |
Average equity to average assets |
|
|
14.50 |
% |
|
|
14.99 |
% |
|
|
14.62 |
% |
|
|
15.18 |
% |
Dividend payout ratio (2) |
|
|
24.61 |
% |
|
|
16.65 |
% |
|
|
22.84 |
% |
|
|
20.37 |
% |
|
|
As of and for the three months ended |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Loans to deposits |
|
|
79.15 |
% |
|
|
86.72 |
% |
|
|
|
|
|
|
|
||
Share Data: |
|
|
|
|
|
|
||
Shares outstanding |
|
|
15,334,857 |
|
|
|
15,966,216 |
|
Book value per common share |
|
$ |
18.02 |
|
|
$ |
16.99 |
|
Tangible book value per common share (3) |
|
$ |
17.62 |
|
|
$ |
16.60 |
|
|
|
|
|
|
|
|
||
Asset Quality Ratios: |
|
|
|
|
|
|
||
Non-performing loans receivable |
|
$ |
7,858 |
|
|
$ |
2,054 |
|
Non-performing assets |
|
$ |
7,858 |
|
|
$ |
2,054 |
|
Allowance for loan losses as a percent of total loans receivable (4) |
|
|
0.68 |
% |
|
|
0.65 |
% |
Allowance for loan losses as a percent of non-performing loans receivable |
|
|
110.86 |
% |
|
|
382.91 |
% |
Non-performing loans as a percent of total loans receivable, net (4) |
|
|
0.61 |
% |
|
|
0.17 |
% |
Non-performing assets as a percent of total assets |
|
|
0.40 |
% |
|
|
0.11 |
% |
Net charge-offs (recoveries) |
|
$ |
4 |
|
|
$ |
(82 |
) |
Net charge-offs (recoveries) to average outstanding loans during the period (1) |
|
|
0.00 |
% |
|
|
(0.03 |
%) |
|
|
|
|
|
|
|
||
Capital Ratios (5): |
|
|
|
|
|
|
||
Tier 1 capital (to adjusted total assets) |
|
|
12.86 |
% |
|
|
12.76 |
% |
Common equity Tier 1 capital (to risk-weighted assets) |
|
|
17.22 |
% |
|
|
17.72 |
% |
Tier 1 capital (to risk-weighted assets) |
|
|
17.22 |
% |
|
|
17.72 |
% |
Total capital (to risk-weighted assets) |
|
|
17.83 |
% |
|
|
18.33 |
% |
|
|
|
|
|
|
|
||
(1) Performance ratios are annualized. |
|
|||||||
(2) Dividends declared per share divided by net income per share. |
|
|||||||
(3) Tangible book value per share is a non-GAAP measure and equals total shareholders’ equity, less goodwill and other intangible assets, divided by shares outstanding. We believe this disclosure may be meaningful to those investors who seek to evaluate our equity without giving effect to goodwill and other intangible assets. Reconciliations of GAAP to non-GAAP measures appear below this table. |
|
|||||||
(4) Total loans receivable excludes PPP loans. |
|
|||||||
(5) Represents Bank ratios. |
|
|||||||
33
Non-GAAP Financial Measures
The following table is a reconciliations of book value per share (GAAP measure) to tangible book value per share (non-GAAP measure) (Dollars in thousands, except share and per share data).
|
|
As of |
|
|||||
|
|
March 31, |
|
|
March 31, |
|
||
Computation of Tangible Book Value per Common Share |
|
|
||||||
Total shareholders' equity (GAAP) |
|
$ |
276,392 |
|
|
$ |
271,297 |
|
Adjustments: |
|
|
|
|
|
|
||
Goodwill |
|
|
(6,106 |
) |
|
|
(6,106 |
) |
Other intangible assets |
|
|
(102 |
) |
|
|
(168 |
) |
Tangible common shareholders' equity (Non-GAAP) |
|
$ |
270,184 |
|
|
$ |
265,023 |
|
|
|
|
|
|
|
|
||
Common shares outstanding |
|
|
15,334,857 |
|
|
|
15,966,216 |
|
|
|
|
|
|
|
|
||
Book value per share (GAAP) |
|
$ |
18.02 |
|
|
$ |
16.99 |
|
Adjustments: |
|
|
|
|
|
|
||
Effects of intangible assets |
|
|
(0.40 |
) |
|
|
(0.39 |
) |
|
|
|
|
|
|
|
||
Tangible book value per common share (Non-GAAP) |
|
$ |
17.62 |
|
|
$ |
16.60 |
|
Financial Condition
Cash and Cash Equivalents. Cash and cash equivalents decreased $413,000, or 0.3%, to $158.9 million at March 31, 2022 from $159.3 million at June 30, 2021. The decrease is primarily due to a $56.4 million increase in net loans receivable, $53.1 million increase in total investment securities, a $17.6 million decrease in FHLB advances and a $5.9 million decrease in other liabilities, partially offset by a $133.0 million increase in deposits.
Investment Securities Portfolio
The following table is a summary of the Company's investment securities portfolio, at carrying value, as of March 31, 2022 and June 30, 2021 (Dollars in thousands):
|
|
|
|
|
|
|
|
Increase / (Decrease) |
|
|||||||
|
|
March 31, 2022 |
|
|
June 30, 2021 |
|
|
$ |
|
|
% |
|
||||
Available for sale debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
10,229 |
|
|
$ |
21,816 |
|
|
$ |
(11,587 |
) |
|
|
-53.1 |
% |
Corporate |
|
|
4,978 |
|
|
|
8,189 |
|
|
|
(3,211 |
) |
|
|
-39.2 |
% |
State and municipal |
|
|
5,533 |
|
|
|
7,115 |
|
|
|
(1,582 |
) |
|
|
-22.2 |
% |
Mortgage-backed securities – residential |
|
|
14,042 |
|
|
|
17,654 |
|
|
|
(3,612 |
) |
|
|
-20.5 |
% |
Mortgage-backed securities – commercial |
|
|
2,403 |
|
|
|
2,613 |
|
|
|
(210 |
) |
|
|
-8.0 |
% |
Total available for sale debt securities |
|
$ |
37,185 |
|
|
$ |
57,387 |
|
|
$ |
(20,202 |
) |
|
|
-35.2 |
% |
Held to maturity debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations |
|
$ |
49,995 |
|
|
$ |
33,994 |
|
|
$ |
16,001 |
|
|
|
47.1 |
% |
Corporate |
|
|
52,083 |
|
|
|
43,605 |
|
|
|
8,478 |
|
|
|
19.4 |
% |
State and municipal |
|
|
87,407 |
|
|
|
57,625 |
|
|
|
29,782 |
|
|
|
51.7 |
% |
Mortgage-backed securities – residential |
|
|
106,302 |
|
|
|
96,181 |
|
|
|
10,121 |
|
|
|
10.5 |
% |
Mortgage-backed securities – collateralized |
|
|
26,076 |
|
|
|
33,300 |
|
|
|
(7,224 |
) |
|
|
-21.7 |
% |
Mortgage-backed securities – commercial |
|
|
89,033 |
|
|
|
72,879 |
|
|
|
16,154 |
|
|
|
22.2 |
% |
Total held to maturity debt securities |
|
$ |
410,896 |
|
|
$ |
337,584 |
|
|
$ |
73,312 |
|
|
|
21.7 |
% |
The increase in investment securities was the result of the Company deploying excess liquidity.
34
Loans Receivable Portfolio
The following table is a summary of the Company's loan portfolio, as of March 31, 2022 and June 30, 2021 (Dollars in thousands):
|
|
|
|
|
|
|
|
Increase / (Decrease) |
|
|||||||
|
|
March 31, 2022 |
|
|
June 30, 2021 |
|
|
$ |
|
|
% |
|
||||
Mortgage loans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential |
|
$ |
215,431 |
|
|
$ |
224,305 |
|
|
$ |
(8,874 |
) |
|
|
-4.0 |
% |
Commercial |
|
|
897,424 |
|
|
|
826,624 |
|
|
|
70,800 |
|
|
|
8.6 |
% |
Construction |
|
|
16,894 |
|
|
|
10,151 |
|
|
|
6,743 |
|
|
|
66.4 |
% |
Net deferred loan origination (fees) costs |
|
|
(23 |
) |
|
|
196 |
|
|
|
(219 |
) |
|
|
-111.7 |
% |
Total mortgage loans |
|
|
1,129,726 |
|
|
|
1,061,276 |
|
|
|
68,450 |
|
|
|
6.4 |
% |
Commercial and consumer loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commercial loans |
|
|
141,427 |
|
|
|
150,658 |
|
|
|
(9,231 |
) |
|
|
-6.1 |
% |
Home equity lines of credit |
|
|
22,557 |
|
|
|
25,439 |
|
|
|
(2,882 |
) |
|
|
-11.3 |
% |
Consumer and overdrafts |
|
|
348 |
|
|
|
345 |
|
|
|
3 |
|
|
|
0.9 |
% |
Net deferred loan origination costs (fees) |
|
|
539 |
|
|
|
(386 |
) |
|
|
925 |
|
|
|
-239.6 |
% |
Total commercial and consumer loans |
|
|
164,871 |
|
|
|
176,056 |
|
|
|
(11,185 |
) |
|
|
-6.4 |
% |
Total loans receivable |
|
|
1,294,597 |
|
|
|
1,237,332 |
|
|
|
57,265 |
|
|
|
4.6 |
% |
Allowance for loan losses |
|
|
(8,711 |
) |
|
|
(7,881 |
) |
|
|
(830 |
) |
|
|
10.5 |
% |
Loans receivable, net |
|
$ |
1,285,886 |
|
|
$ |
1,229,451 |
|
|
$ |
56,435 |
|
|
|
4.6 |
% |
The increase in loans receivable was primarily the result of increases in commercial mortgage loans and construction loans, partially offset by decreases in commercial loans, residential mortgage loans and home equity lines of credit. The decrease in commercial loans includes a decrease in PPP loans of $32.3 million, driven by loan forgiveness and paydowns, largely offset by a net increase of $23.0 million in all other commercial loans.
Allowance for Loan Losses. The allowance for loan losses is maintained at levels considered adequate by management to provide for probable incurred loan losses inherent in the loan portfolio at the consolidated balance sheet reporting dates. The allowance for loan losses is based on management’s assessment of various factors affecting the loan portfolio, including portfolio composition, delinquent and non-accrual loans, national and local business conditions, loss experience and an overall evaluation of the quality of the underlying collateral.
The allowance for loan losses increased $830,000, or 10.5%, to $8.7 million at March 31, 2022 from $7.9 million at June 30, 2021. The increase is primarily due to loan portfolio growth. Non-performing loans as a percent of total loans receivable (excluding PPP loans) were 0.61% as of March 31, 2022, an increase from 0.48% as of June 30, 2021.
The COVID-19 pandemic has created extensive disruptions to the local economy and our customers. From March 2020 to December 2021, the Company has granted loan payment deferrals on 331 commercial and consumer loans totaling $220.3 million for borrowers experiencing financial hardship due to the pandemic. Loans on a COVID-19 related payment deferral totaled $3.6 million (1 loan), or 0.28% of gross loans, as of March 31, 2022, compared to $27.3 million (19 loans) , or 2.21% of gross loans, as of June 30, 2021.
Deposits
Deposits have traditionally been our primary source of funds for our lending and investment activities. The substantial majority of our deposits are from depositors who reside in our primary market area. Deposits are attracted through the offering of a broad selection of deposit instruments for both individuals and businesses.
The following table is a summary of the Company's deposits, as of March 31, 2022 and June 30, 2021 (Dollars in thousands):
|
|
|
|
|
|
|
|
Increase / (Decrease) |
|
|||||||
|
|
March 31, 2022 |
|
|
June 30, 2021 |
|
|
$ |
|
|
% |
|
||||
Demand |
|
$ |
243,908 |
|
|
$ |
219,072 |
|
|
$ |
24,836 |
|
|
|
11.3 |
% |
NOW Accounts |
|
|
221,386 |
|
|
|
177,223 |
|
|
|
44,163 |
|
|
|
24.9 |
% |
Money market accounts |
|
|
396,358 |
|
|
|
332,843 |
|
|
|
63,515 |
|
|
|
19.1 |
% |
Savings |
|
|
417,975 |
|
|
|
387,529 |
|
|
|
30,446 |
|
|
|
7.9 |
% |
Time deposits |
|
|
345,092 |
|
|
|
375,015 |
|
|
|
(29,923 |
) |
|
|
-8.0 |
% |
Total deposits |
|
$ |
1,624,719 |
|
|
$ |
1,491,682 |
|
|
$ |
133,037 |
|
|
|
8.9 |
% |
35
Federal Home Loan Bank Advances. FHLB advances decreased $17.6 million to $48.4 million at March 31, 2022 as compared to $66.0 million at June 30, 2021. This decrease is due to maturities and principal paydowns of $17.6 million.
Total Shareholder’s Equity. Total shareholders’ equity increased $1.8 million, or 0.7%, to $276.4 million at March 31, 2022 from $274.6 million at June 30, 2021. This increase was primarily due to net income of $11.4 million and $3.8 million of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the period, partially offset by the repurchase of $8.2 million (435,788 shares) of common stock, $2.5 million of other comprehensive losses related primarily to unrealized losses on available for sale investment securities driven by higher market interest rates and $2.6 million of cash dividends declared and paid. We would expect that further increases in market interest rates would lead to additional unrealized losses on available for sale investment securities. On February 3, 2021, a repurchase plan was authorized to repurchase up to 801,856 shares, or 5% of the Company’s then outstanding common stock. As of March 31, 2022, the Company repurchased 682,561 shares of common stock at an average cost of $18.23 per share under this plan. At March 31, 2022, the Bank was considered “well capitalized” under applicable regulatory guidelines.
Results of Operations for the Three and Nine Months Ended March 31, 2022 and March 31, 2021
Net Income. Net income decreased $118,000, or 3.3%, to $3.5 million for the three months ended March 31, 2022 compared to $3.6 million for the three months ended March 31, 2021. The decrease was primarily due to increases of $1.2 million in provision for loan losses and $384,000 in noninterest expense, largely offset by increases of $1.1 million in net interest income and $331,000 in noninterest income, and a $35,000 decrease in income tax expense. Net income increased $2.4 million, or 26.2%, to $11.4 million for the nine months ended March 31, 2022 compared to $9.0 million for the nine months ended March 31, 2021. The increase was primarily due to increases of $3.7 million in net interest income and $802,000 in noninterest income, partially offset by increases of $1.2 million in provision for loan losses, $498,000 in noninterest expense and $450,000 in income tax expense.
Net Interest Income.
The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average tax equivalent yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. Nonaccrual loans are included in average balances only. Loan fees are included in interest income on loans and are not material (Dollars in thousands).
36
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest/ |
|
|
Average |
|
|
Average |
|
|
Interest/ |
|
|
Average |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans receivable (1) |
|
$ |
1,255,117 |
|
|
$ |
11,943 |
|
|
|
3.81 |
% |
|
$ |
1,252,492 |
|
|
$ |
12,116 |
|
|
|
3.88 |
% |
Investment securities (1) |
|
|
436,702 |
|
|
|
2,152 |
|
|
|
2.06 |
|
|
|
319,239 |
|
|
|
1,700 |
|
|
|
2.18 |
|
Other interest-earning assets |
|
|
141,677 |
|
|
|
105 |
|
|
|
0.30 |
|
|
|
162,193 |
|
|
|
109 |
|
|
|
0.27 |
|
Total interest-earning assets |
|
|
1,833,496 |
|
|
|
14,200 |
|
|
|
3.12 |
|
|
|
1,733,924 |
|
|
|
13,925 |
|
|
|
3.23 |
|
Non-interest-earning assets |
|
|
77,202 |
|
|
|
|
|
|
|
|
|
68,748 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,910,698 |
|
|
|
|
|
|
|
|
$ |
1,802,672 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities and equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NOW accounts |
|
$ |
215,021 |
|
|
|
94 |
|
|
|
0.18 |
|
|
$ |
161,049 |
|
|
|
59 |
|
|
|
0.15 |
|
Money market accounts |
|
|
360,131 |
|
|
|
144 |
|
|
|
0.16 |
|
|
|
274,516 |
|
|
|
208 |
|
|
|
0.31 |
|
Savings accounts and escrow |
|
|
415,850 |
|
|
|
113 |
|
|
|
0.11 |
|
|
|
368,791 |
|
|
|
132 |
|
|
|
0.15 |
|
Time deposits |
|
|
349,266 |
|
|
|
866 |
|
|
|
1.00 |
|
|
|
411,500 |
|
|
|
1,383 |
|
|
|
1.36 |
|
Total interest-bearing deposits |
|
|
1,340,268 |
|
|
|
1,217 |
|
|
|
0.37 |
|
|
|
1,215,856 |
|
|
|
1,782 |
|
|
|
0.59 |
|
FHLB advances |
|
|
57,185 |
|
|
|
266 |
|
|
|
1.89 |
|
|
|
104,604 |
|
|
|
506 |
|
|
|
1.96 |
|
Total interest-bearing liabilities |
|
|
1,397,453 |
|
|
|
1,483 |
|
|
|
0.43 |
|
|
|
1,320,460 |
|
|
|
2,288 |
|
|
|
0.70 |
|
Non-interest-bearing deposits |
|
|
220,809 |
|
|
|
|
|
|
|
|
|
187,778 |
|
|
|
|
|
|
|
||||
Other non-interest-bearing liabilities |
|
|
15,370 |
|
|
|
|
|
|
|
|
|
24,272 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
1,633,632 |
|
|
|
|
|
|
|
|
|
1,532,510 |
|
|
|
|
|
|
|
||||
Total shareholders' equity |
|
|
277,066 |
|
|
|
|
|
|
|
|
|
270,162 |
|
|
|
|
|
|
|
||||
Total liabilities and shareholders' equity |
|
$ |
1,910,698 |
|
|
|
|
|
|
|
|
$ |
1,802,672 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income |
|
|
|
|
$ |
12,717 |
|
|
|
|
|
|
|
|
$ |
11,637 |
|
|
|
|
||||
Interest rate spread - tax equivalent (2) |
|
|
|
|
|
|
|
|
2.69 |
|
|
|
|
|
|
|
|
|
2.53 |
|
||||
Net interest margin - tax equivalent (3) |
|
|
|
|
|
|
|
|
2.80 |
|
|
|
|
|
|
|
|
|
2.69 |
|
||||
Average interest-earning assets to interest-bearing liabilities |
|
|
131.20 |
% |
|
|
|
|
|
|
|
|
131.31 |
% |
|
|
|
|
|
|
||||
37
|
|
Nine Months Ended March 31, |
|
|||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
||||||||||||||||||
|
|
Average |
|
|
Interest/ |
|
|
Average |
|
|
Average |
|
|
Interest/ |
|
|
Average |
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans receivable (1) |
|
$ |
1,240,253 |
|
|
$ |
36,701 |
|
|
|
3.95 |
% |
|
$ |
1,245,881 |
|
|
$ |
36,845 |
|
|
|
3.95 |
% |
Investment securities (1) |
|
|
423,062 |
|
|
|
6,294 |
|
|
|
2.07 |
|
|
|
316,114 |
|
|
|
5,489 |
|
|
|
2.36 |
|
Other interest-earning assets |
|
|
142,974 |
|
|
|
302 |
|
|
|
0.28 |
|
|
|
162,946 |
|
|
|
344 |
|
|
|
0.28 |
|
Total interest-earning assets |
|
|
1,806,289 |
|
|
|
43,297 |
|
|
|
3.22 |
|
|
|
1,724,941 |
|
|
|
42,678 |
|
|
|
3.31 |
|
Non-interest-earning assets |
|
|
77,027 |
|
|
|
|
|
|
|
|
|
70,364 |
|
|
|
|
|
|
|
||||
Total assets |
|
$ |
1,883,316 |
|
|
|
|
|
|
|
|
$ |
1,795,305 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Liabilities and equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NOW accounts |
|
$ |
196,803 |
|
|
|
254 |
|
|
|
0.17 |
|
|
$ |
153,378 |
|
|
|
227 |
|
|
|
0.20 |
|
Money market accounts |
|
|
355,471 |
|
|
|
499 |
|
|
|
0.19 |
|
|
|
260,258 |
|
|
|
657 |
|
|
|
0.34 |
|
Savings accounts and escrow |
|
|
403,740 |
|
|
|
334 |
|
|
|
0.11 |
|
|
|
363,768 |
|
|
|
502 |
|
|
|
0.18 |
|
Time deposits |
|
|
358,050 |
|
|
|
2,776 |
|
|
|
1.03 |
|
|
|
429,811 |
|
|
|
4,986 |
|
|
|
1.54 |
|
Total interest-bearing deposits |
|
|
1,314,064 |
|
|
|
3,863 |
|
|
|
0.39 |
|
|
|
1,207,215 |
|
|
|
6,372 |
|
|
|
0.70 |
|
FHLB advances |
|
|
62,309 |
|
|
|
924 |
|
|
|
1.98 |
|
|
|
105,569 |
|
|
|
1,545 |
|
|
|
1.95 |
|
Total interest-bearing liabilities |
|
|
1,376,373 |
|
|
|
4,787 |
|
|
|
0.46 |
|
|
|
1,312,784 |
|
|
|
7,917 |
|
|
|
0.80 |
|
Non-interest-bearing deposits |
|
|
214,391 |
|
|
|
|
|
|
|
|
|
183,467 |
|
|
|
|
|
|
|
||||
Other non-interest-bearing liabilities |
|
|
17,186 |
|
|
|
|
|
|
|
|
|
26,570 |
|
|
|
|
|
|
|
||||
Total liabilities |
|
|
1,607,950 |
|
|
|
|
|
|
|
|
|
1,522,821 |
|
|
|
|
|
|
|
||||
Total shareholders' equity |
|
|
275,366 |
|
|
|
|
|
|
|
|
|
272,484 |
|
|
|
|
|
|
|
||||
Total liabilities and shareholders' equity |
|
$ |
1,883,316 |
|
|
|
|
|
|
|
|
$ |
1,795,305 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest income |
|
|
|
|
$ |
38,510 |
|
|
|
|
|
|
|
|
$ |
34,761 |
|
|
|
|
||||
Interest rate spread - tax equivalent (2) |
|
|
|
|
|
|
|
|
2.76 |
|
|
|
|
|
|
|
|
|
2.51 |
|
||||
Net interest margin - tax equivalent (3) |
|
|
|
|
|
|
|
|
2.86 |
|
|
|
|
|
|
|
|
|
2.70 |
|
||||
Average interest-earning assets to interest-bearing liabilities |
|
|
131.24 |
% |
|
|
|
|
|
|
|
|
131.40 |
% |
|
|
|
|
|
|
||||
The following table presents information regarding tax equivalent adjustment used in the calculation of certain financial metrics (in thousands).
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
March 31, |
|
|
March 31, |
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Total interest income |
|
$ |
14,200 |
|
|
$ |
13,925 |
|
|
$ |
43,297 |
|
|
$ |
42,678 |
|
Total interest expense |
|
|
1,483 |
|
|
|
2,288 |
|
|
|
4,787 |
|
|
|
7,917 |
|
Net interest income (GAAP) |
|
|
12,717 |
|
|
|
11,637 |
|
|
|
38,510 |
|
|
|
34,761 |
|
Tax equivalent adjustment |
|
|
101 |
|
|
|
51 |
|
|
|
289 |
|
|
|
130 |
|
Net interest income - tax equivalent (non-GAAP) |
|
$ |
12,818 |
|
|
$ |
11,688 |
|
|
$ |
38,799 |
|
|
$ |
34,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
38
Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume (in thousands).
|
|
Three Months Ended March 31, |
|
|
Nine Months Ended March 31, |
|
||||||||||||||||||
|
|
2022 versus 2021 |
|
|
2022 versus 2021 |
|
||||||||||||||||||
|
|
Rate |
|
|
Volume |
|
|
Net |
|
|
Rate |
|
|
Volume |
|
|
Net |
|
||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Loans receivable |
|
$ |
(304 |
) |
|
$ |
131 |
|
|
$ |
(173 |
) |
|
$ |
(272 |
) |
|
$ |
128 |
|
|
$ |
(144 |
) |
Investment securities |
|
|
(118 |
) |
|
|
570 |
|
|
|
452 |
|
|
|
(865 |
) |
|
|
1,670 |
|
|
|
805 |
|
Other interest-earning assets |
|
|
12 |
|
|
|
(16 |
) |
|
|
(4 |
) |
|
|
6 |
|
|
|
(48 |
) |
|
|
(42 |
) |
Total interest-earning assets |
|
|
(410 |
) |
|
|
685 |
|
|
|
275 |
|
|
|
(1,131 |
) |
|
|
1,750 |
|
|
|
619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW accounts |
|
|
13 |
|
|
|
22 |
|
|
|
35 |
|
|
|
(32 |
) |
|
|
59 |
|
|
|
27 |
|
Money market accounts |
|
|
(117 |
) |
|
|
53 |
|
|
|
(64 |
) |
|
|
(350 |
) |
|
|
192 |
|
|
|
(158 |
) |
Savings and escrow accounts |
|
|
(32 |
) |
|
|
13 |
|
|
|
(19 |
) |
|
|
(212 |
) |
|
|
44 |
|
|
|
(168 |
) |
Time deposits |
|
|
(328 |
) |
|
|
(189 |
) |
|
|
(517 |
) |
|
|
(1,469 |
) |
|
|
(741 |
) |
|
|
(2,210 |
) |
FHLB advances |
|
|
(18 |
) |
|
|
(222 |
) |
|
|
(240 |
) |
|
|
21 |
|
|
|
(642 |
) |
|
|
(621 |
) |
Total interest-bearing liabilities |
|
|
(482 |
) |
|
|
(323 |
) |
|
|
(805 |
) |
|
|
(2,042 |
) |
|
|
(1,088 |
) |
|
|
(3,130 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net increase in net interest income |
|
$ |
72 |
|
|
$ |
1,008 |
|
|
$ |
1,080 |
|
|
$ |
911 |
|
|
$ |
2,838 |
|
|
$ |
3,749 |
|
Provision for Loan Losses. The provision for loan losses increased for the three and nine months ended March 31, 2022, compared to the same periods last year. The increase is primarily due to higher loan portfolio growth in the current year as well as a $944,000 benefit for loan losses in the prior year quarter associated with the release of qualitative reserves established in the prior fiscal year associated with the COVID-19 pandemic. Charge-offs net of recoveries were $4,000 and recoveries, net of charge-offs were $267,000 for the three and nine months ended March 31, 2022, respectively, compared to recoveries net of charge-offs were $82,000 and charge-offs, net of recoveries were $96,000, respectively, for the same periods last year.
Noninterest Income
The following table displays noninterest income for the three and nine months ended March 31, 2022 and 2021 (Dollars in thousands).
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
||||||||||||||
|
|
March 31, |
|
|
Net Change |
|
|
March 31, |
|
|
Net Change |
|
||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
||||||||
Fees and service charges |
|
$ |
390 |
|
|
$ |
353 |
|
|
$ |
37 |
|
|
|
10.5 |
% |
|
$ |
1,198 |
|
|
$ |
1,038 |
|
|
$ |
160 |
|
|
|
15.4 |
% |
Bank-owned life insurance |
|
|
185 |
|
|
|
120 |
|
|
|
65 |
|
|
|
54.2 |
% |
|
|
568 |
|
|
|
381 |
|
|
|
187 |
|
|
|
49.1 |
% |
Gain on sale of premises |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.0 |
% |
|
|
548 |
|
|
|
- |
|
|
|
548 |
|
|
|
100.0 |
% |
Gain on sale of securities |
|
|
- |
|
|
|
113 |
|
|
|
(113 |
) |
|
|
-100.0 |
% |
|
|
- |
|
|
|
113 |
|
|
|
(113 |
) |
|
|
-100.0 |
% |
Net gains on sales of loans receivable |
|
|
9 |
|
|
|
- |
|
|
|
9 |
|
|
|
100.0 |
% |
|
|
56 |
|
|
|
- |
|
|
|
56 |
|
|
|
100.0 |
% |
Swap income |
|
|
333 |
|
|
|
- |
|
|
|
333 |
|
|
|
100.0 |
% |
|
|
333 |
|
|
|
367 |
|
|
|
(34 |
) |
|
|
-9.3 |
% |
Other |
|
|
6 |
|
|
|
6 |
|
|
|
- |
|
|
|
0.0 |
% |
|
|
28 |
|
|
|
30 |
|
|
|
(2 |
) |
|
|
-6.7 |
% |
Total noninterest income |
|
$ |
923 |
|
|
$ |
592 |
|
|
$ |
331 |
|
|
|
55.9 |
% |
|
$ |
2,731 |
|
|
$ |
1,929 |
|
|
$ |
802 |
|
|
|
41.6 |
% |
During the nine months ended March 31, 2022, the Company sold a parcel of unused land, resulting in the gain on sale of premises. The increase in fees and service charges compared to the same period last year was primarily the result of increases in debit card and interchange income, as well as increases in overdraft, ATM and wire fees which declined substantially during the beginning of the COVID-19 pandemic and have since recovered to near pre-pandemic levels.
39
Noninterest Expense
The following table displays noninterest expense for the three and nine months ended March 31, 2022 and 2021 (Dollars in thousands).
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|||||||||||||||||
|
|
March 31, |
|
|
Net Change |
|
|
March 31, |
|
|
Net Change |
|
||||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
|
2022 |
|
|
2021 |
|
|
$ |
|
|
% |
|
||||||||
Salaries and employee benefits |
|
$ |
5,737 |
|
|
$ |
5,595 |
|
|
$ |
142 |
|
|
|
2.5 |
% |
|
$ |
17,353 |
|
|
$ |
16,722 |
|
|
$ |
631 |
|
|
|
3.8 |
% |
Occupancy and equipment |
|
|
1,414 |
|
|
|
1,359 |
|
|
|
55 |
|
|
|
4.0 |
% |
|
|
4,115 |
|
|
|
4,051 |
|
|
|
64 |
|
|
|
1.6 |
% |
Communication and data processing |
|
|
573 |
|
|
|
517 |
|
|
|
56 |
|
|
|
10.8 |
% |
|
|
1,626 |
|
|
|
1,539 |
|
|
|
87 |
|
|
|
5.7 |
% |
Professional fees |
|
|
543 |
|
|
|
382 |
|
|
|
161 |
|
|
|
42.1 |
% |
|
|
1,356 |
|
|
|
1,285 |
|
|
|
71 |
|
|
|
5.5 |
% |
Postage, printing, stationery and supplies |
|
|
153 |
|
|
|
146 |
|
|
|
7 |
|
|
|
4.8 |
% |
|
|
478 |
|
|
|
452 |
|
|
|
26 |
|
|
|
5.8 |
% |
FDIC assessment |
|
|
125 |
|
|
|
115 |
|
|
|
10 |
|
|
|
8.7 |
% |
|
|
371 |
|
|
|
350 |
|
|
|
21 |
|
|
|
6.0 |
% |
Advertising |
|
|
100 |
|
|
|
100 |
|
|
|
- |
|
|
|
0.0 |
% |
|
|
300 |
|
|
|
300 |
|
|
|
- |
|
|
|
0.0 |
% |
Amortization of intangible assets |
|
|
17 |
|
|
|
21 |
|
|
|
(4 |
) |
|
|
-19.0 |
% |
|
|
49 |
|
|
|
61 |
|
|
|
(12 |
) |
|
|
-19.7 |
% |
Other operating expenses |
|
|
294 |
|
|
|
337 |
|
|
|
(43 |
) |
|
|
-12.8 |
% |
|
|
737 |
|
|
|
1,127 |
|
|
|
(390 |
) |
|
|
-34.6 |
% |
Total noninterest expense |
|
$ |
8,956 |
|
|
$ |
8,572 |
|
|
$ |
384 |
|
|
|
4.5 |
% |
|
$ |
26,385 |
|
|
$ |
25,887 |
|
|
$ |
498 |
|
|
|
1.9 |
% |
The increase in professional fees in the current quarter ended March 31, 2022 compared to the same period last year is primarily due to higher legal and consulting fees. The decrease in other operating expenses for the nine months ended March 31, 2022 compared to the same period last year is primarily due to lower pension costs in the current year.
Income Tax Expense. The effective income tax rate was 21.0% and 20.4% for the three and nine months ended March 31, 2022 as compared to 21.1% and 21.5% for the same periods last year, with the decrease largely driven by an increase in tax-exempt interest income on municipal investments and bank-owned life insurance income.
Management of Market Risk
General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage our exposure to changes in market interest rates. Accordingly, we have established a management-level Asset/Liability Management Committee, which takes initial responsibility for developing an asset/liability management process and related procedures, establishing and monitoring reporting systems and developing asset/liability strategies. On at least a quarterly basis, the Asset/Liability Management Committee reviews asset/liability management with the Investment Asset/Liability Committee of the Board of Directors. This Committee also reviews any changes in strategies as well as the performance of any specific asset/liability management actions that have been implemented previously. On a quarterly basis, an outside consulting firm provides us with detailed information and analysis as to asset/liability management, including our interest rate risk profile. Ultimate responsibility for effective asset/liability management rests with our Board of Directors.
We have sought to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies to manage our interest rate risk: originating loans with adjustable interest rates; utilizing interest rate swaps, promoting core deposit products; and adjusting the interest rates and maturities of funding sources, as necessary. By following these strategies, we believe that we are better positioned to react to changes in market interest rates.
Net Portfolio Value Simulation. We analyze our sensitivity to changes in interest rates through a net portfolio value of equity (“NPV”) model. NPV represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities. The NPV ratio represents the dollar amount of our NPV divided by the present value of our total assets for a given interest rate scenario. NPV attempts to quantify our economic value using a discounted cash flow methodology while the NPV ratio reflects that value as a form of equity ratio. We estimate what our NPV would be at a specific date. We then calculate what the NPV would be at the same date throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve. We currently calculate NPV under the assumptions that interest rates increase 100 and 200 basis points from current market rates and that interest rates decrease 50 and 100 basis points from current market rates.
40
The following table presents the estimated changes in our NPV that would result from changes in market interest rates at March 31, 2022 and June 30, 2021 (Dollars in thousands). All estimated changes presented in the table are within the policy limits approved by our Board of Directors.
|
|
NPV |
|
|
NPV as Percent of Portfolio |
|
||||||||||||||
Basis Point Change in Interest Rates |
|
Dollar |
|
|
Dollar |
|
|
Percent |
|
|
NPV |
|
|
Change |
|
|||||
March 31, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 |
|
$ |
271,985 |
|
|
$ |
(59,081 |
) |
|
|
(17.8 |
) |
% |
|
15.06 |
% |
|
|
(222 |
) |
100 |
|
|
305,840 |
|
|
|
(25,226 |
) |
|
|
(7.6 |
) |
|
|
16.43 |
|
|
|
(85 |
) |
- |
|
|
331,066 |
|
|
- |
|
|
|
- |
|
|
|
17.28 |
|
|
|
- |
|
|
(50) |
|
|
355,547 |
|
|
|
24,481 |
|
|
|
7.4 |
|
|
|
18.20 |
|
|
|
92 |
|
(100) |
|
|
373,059 |
|
|
|
41,993 |
|
|
|
12.7 |
|
|
|
18.87 |
|
|
|
159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
June 30, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 |
|
$ |
270,679 |
|
|
$ |
(37,814 |
) |
|
|
(12.3 |
) |
% |
|
15.21 |
% |
|
|
(122 |
) |
100 |
|
|
291,715 |
|
|
|
(16,778 |
) |
|
|
(5.4 |
) |
|
|
15.95 |
|
|
|
(48 |
) |
- |
|
|
308,493 |
|
|
|
- |
|
|
|
- |
|
|
|
16.43 |
|
|
|
- |
|
(50) |
|
|
324,999 |
|
|
|
16,506 |
|
|
|
5.4 |
|
|
|
17.06 |
|
|
|
63 |
|
(100) |
|
|
346,539 |
|
|
|
38,046 |
|
|
|
12.3 |
|
|
|
17.94 |
|
|
|
151 |
|
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The above table assumes that the composition of our interest-sensitive assets and liabilities existing at the date indicated remains constant uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results.
Liquidity and Capital Resources
Liquidity. Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments and maturities and sales of securities. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.
We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term securities.
Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At March 31, 2022, cash and cash equivalents totaled $158.9 million, a decrease from $159.3 million as of June 30, 2021. Unpledged securities classified as available for sale, which provide an additional source of liquidity, totaled $19.5 million at March 31, 2022, a decrease from $28.9 million as of June 30, 2021.
We had the ability to borrow up to $319.4 million from the FHLB of New York, at March 31, 2022 of which $48.4 million was outstanding as of March 31, 2022. Additionally, as of March 31, 2022, we had an available line of credit with the FRB of New York’s discount window program of $96.1 million, and $25.0 million of fed funds lines of credit, neither of which had outstanding balances as of March 31, 2022.
We have no material commitments or demands that are likely to affect our liquidity other than as set forth below. If loan demand was to increase faster than expected, or any unforeseen demand or commitment was to occur, we could access our borrowing sources detailed above.
We had $83.2 million of loan commitments outstanding as of March 31, 2022 and $155.2 million of approved, but unadvanced, funds to borrowers. We also had $2.9 million in outstanding letters of credit at March 31, 2022.
41
Time deposits due within one year of March 31, 2022 totaled $219.5 million. If these deposits do not remain with us, we will be required to seek other sources of funds, including other time deposits and FHLB of New York advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the time deposits at March 31, 2022. We believe, however, based on past experience that a significant portion of our time deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.
The Holding Company is a separate legal entity from the Bank and must provide for its own liquidity to pay any dividends to its shareholders, to repurchase shares of its common stock and for other corporate purposes. The Holding Company’s primary source of liquidity is dividend payments it may receive from the Bank. The Bank’s ability to pay dividends to the Holding Company is governed by applicable law and regulations. At March 31, 2022, the Holding Company (on an unconsolidated, stand-alone basis) had liquid assets of $19.7 million.
Capital Resources. The Bank is subject to various regulatory capital requirements administered by the NYSDFS and the FDIC. At March 31, 2022, the Bank exceeded all applicable regulatory capital requirements, and the Bank was considered “well capitalized” under applicable regulatory guidelines. See Note 8 to the accompanying unaudited consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is included in Part I, Item 2 of this report under "Management of Market Risk."
Item 4. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2022. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
During the quarter ended March 31, 2022, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
42
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
At March 31, 2022, the Company was not involved in any legal proceedings the outcome of which it believes would be material to its consolidated financial condition or results of operations.
Item 1A. Risk Factors
For information regarding the Company’s risk factors, see Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, filed with the Securities and Exchange Commission. As of March 31, 2022, the risk factors of the Company have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended June 30, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities
The following table presents information regarding stock repurchases by the Company during the quarter ended March 31, 2022.
|
|
Total |
|
|
Average |
|
|
Total number of shares purchased as part of publicly announced plans or programs |
|
|
Maximum number of shares that may yet be purchased under the plans or programs |
|
||||
January 1, 2022 through January 31, 2022 |
|
|
3,122 |
|
|
$ |
19.02 |
|
|
|
3,122 |
|
|
|
119,295 |
|
February 1, 2022 through February 28, 2022 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
119,295 |
|
March 1, 2022 through March 31, 2022 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
119,295 |
|
Total |
|
|
3,122 |
|
|
$ |
19.02 |
|
|
|
3,122 |
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
43
Item 6. Exhibits
Exhibit Number |
|
Description |
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
Amended and Restated Bylaws of PCSB Financial Corporation (2) |
|
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
|
|
|
|
|
32 |
|
|
|
|
|
101 |
|
The following materials for the quarter ended March 31, 2022, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements |
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101. |
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
PCSB FINANCIAL CORPORATION |
|
|
|
Date: May 6, 2022 |
|
/s/ Joseph D. Roberto |
|
|
Joseph D. Roberto |
|
|
Chairman, President and Chief Executive Officer |
|
|
|
Date: May 6, 2022 |
|
/s/ Jeffrey M. Helf |
|
|
Jeffrey M. Helf |
|
|
Senior Vice President and Chief Financial Officer |
45