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Albany, N.Y. – November 9, 2022 – Pioneer Bancorp, Inc. (“Pioneer”) (NASDAQ: PBFS), the parent company of Pioneer Bank (the “Bank”) today reported the results for the quarter ended September 30, 2022, which is the first quarter of Pioneer’s fiscal year ended June 30, 2023.  Net income for the three months ended September 30, 2022 was $5.2 million, or $0.21 per basic and diluted share, as compared to $1.4 million, or $0.05 per basic and diluted share for the three months ended September 30, 2021.

Total consolidated assets for Pioneer were $2.07 billion at September 30, 2022, primarily consisting of $1.02 billion of net loans, $513.9 million of securities available for sale and $402.9 million of cash and cash equivalents. Consolidated deposits totaled $1.78 billion at September 30, 2022, consisting of retail, commercial and municipal customer relationships. 

First Quarter of 2023 (Quarter Ended September 30, 2022) Highlights

·       Net income for the quarter ended September 30, 2022 was $5.2 million, or $0.21 per basic and diluted share.

·       Total assets top $2 billion at September 30, 2022 for the first time in Pioneer’s history.

·       Net interest margin increased 81 basis points to 3.23% for the quarter ended September 30, 2022 from the quarter ended September 30, 2021.

·       Net interest income increased $4.4 million, or 43.4%, to $14.7 million for the quarter ended September 30, 2022 from the quarter ended September 30, 2021.

·       Net loans receivable increased $37.1 million, or 3.8%, to $1.02 billion at September 30, 2022 from $982.6 million at June 30, 2022.

Thomas Amell, President and CEO stated “First quarter results were solid and up from the corresponding quarter in the prior year.  Pioneer is well positioned to benefit from the rising interest rate environment as can be seen from the growth in our net interest income and our net interest margin expansion during the quarter.  We continue to execute on our strategy of becoming “More Than a Bank” and understand that the future of financial services relies heavily on fulfilling our customers’ needs by providing an unparalleled level of personal service and a comprehensive approach to their finances.”

Selected highlights at and for the three months ended September 30, 2022 are as follows:

Net Interest Income and Margin

Net interest income increased $4.4 million, or 43.4%, to $14.7 million for the three months ended September 30, 2022 compared to $10.2 million for the three months ended September 30, 2021. The increase was a result of a 79 basis points increase in the net interest rate spread to 3.15% for the three months ended September 30, 2022 from 2.36% for the three months ended September 30, 2021. Net interest margin increased 81 basis points to 3.23% for the three months ended September 30, 2022 from 2.42% for the three months ended September 30, 2021. Net interest-earning assets increased by $87.8 million to $745.9 million for the three months ended September 30, 2022 from $658.1 million for the three months ended September 30, 2021.

Interest and dividend income increased $4.6 million, or 43.1%, to $15.2 million for the three months ended September 30, 2022, from $10.6 million for the three months ended September 30, 2021 due to increases in interest income on loans, securities and interest-earning deposits with banks. The increase was the result of an 83 basis points increase in the average yield on interest-earning assets to 3.34% for the three months ended September 30, 2022, from 2.51% for the three months ended September 30, 2021. The increase in the average yield on interest-earning assets was driven by a significant increase in variable rate loan yields and yields on interest-earning deposits with banks due to rising market interest rates, as well as due to market related increases in interest rates on new loans and securities.  Average interest-earning assets also increased by $132.7 million from $1.69 billion for the three months ended September 30, 2021 to $1.83 billion for the three months ended September 30, 2022.

Interest expense increased $137,000, or 36.0%, to $518,000 for the three months ended September 30, 2022 from $381,000 for the three months ended September 30, 2021 as a result of an increase in interest expense on borrowings and other, as well as, on deposits. The increase was primarily due to a four basis points increase in the average cost of interest-bearing liabilities to 0.19% for the three months ended September 30, 2022 from 0.15% for the three months ended September 30, 2021, as well as, a $44.9 million increase in the average balance of interest-bearing liabilities.

Asset Quality and Loan Loss Provision

Provision for loan losses was $120,000 for the three months ended September 30, 2022, as compared to $250,000 for the three months ended September 30, 2021. The decrease in provision was primarily due to improved credit quality and lower net charge-offs.

Net charge-offs decreased to $75,000 for the three months ended September 30, 2022, compared to $438,000 for the three months ended September 30, 2021. 

Nonperforming assets decreased to $12.1 million, or 0.58% of total assets, at September 30, 2022, compared to $20.6 million, or 1.05% of total assets, at September 30, 2021. The allowance for loan losses was $22.6 million, or 2.17% of total loans outstanding, at September 30, 2022 and $23.1 million, or 2.15% of total loans outstanding, at September 30, 2021.  

Noninterest Income and Noninterest Expense

Noninterest income increased $605,000, or 18.9%, to $3.8 million for the three months ended September 30, 2022 from $3.2 million for the three months ended September 30, 2021. The increase was primarily due to an increase in bank-owned life insurance income of $460,000 and an increase in insurance and wealth management services of $173,000. The increase in bank-owned life insurance income was due to a gain recognized from a death benefit. The increase in insurance and wealth management revenue was primarily due to the recent wealth management acquisitions.

Noninterest expense increased $454,000, or 4.0%, to $11.9 million for the three months ended September 30, 2022 as compared to $11.4 million for the three months ended September 30, 2021. The increase in non-interest expense was primarily due to an increase in salaries and employee benefits expense of $367,000. Salaries and employee benefits expense primarily increased due to compensation expense from annual merit increases.

Income Taxes

Income tax expense increased $843,000 to $1.3 million for the three months ended September 30, 2022 from $414,000 for the three months ended September 30, 2021, due to an increase in income before income taxes. Our effective tax rate was 19.4% for the three months ended September 30, 2022 compared to 23.4% for the three months ended September 30, 2021. The decrease in our effective tax rate was primarily due to the increase in tax-exempt income for the three months ended September 30, 2022 as compared to the prior year period.

Balance Sheet Summary

Total assets increased $105.4 million, or 5.4%, to $2.07 billion at September 30, 2022 from $1.96 billion at June 30, 2022. The increase was due primarily to an increase of $37.1 million, or 3.8%, in net loans receivable, an increase of $32.1 million, or 6.7% in securities available for sale and an increase of $26.8 million, or 7.1% in cash and cash equivalents.

Net loans receivable of $1.02 billion at September 30, 2022 increased $37.1 million, or 3.8%, from $982.6 million at June 30, 2022. By loan category, one-to four-family residential real estate loans increased by $32.3 million, or 12.0%, to $302.6 million at September 30, 2022 from $270.3 million at June 30, 2022, commercial real estate loans increased $6.5 million, or 1.4%, to $460.0 million at September 30, 2022 from $453.5 million at June 30, 2022, commercial construction loans increased by $5.1 million, or 7.1%, to $76.2 million at September 30, 2022 from $71.1 million at June 30, 2022 and home equity loans and lines of credit increased by $755,000, or 0.9%, to $82.0 million at September 30, 2022 from $81.2 million at June 30, 2022. These increases were partially offset by a decrease in commercial and industrial loans of $5.7 million, or 5.5%, to $97.5 million at September 30, 2022 from $103.2 million at June 30, 2022 and a decrease in consumer loans by $2.2 million, or 10.0%, to $20.1 million at September 30, 2022 from $22.3 million at June 30, 2022. 

The increase in one-to four-family residential real estate loans and commercial real estate loans were both related to loan funding outpacing loan payoffs. The increase in commercial construction loans was related to the funding of loan commitments which outpaced payoffs and conversion of loans to permanent financing. The decrease in commercial and industrial loans was primarily related to reduced line of credit utilization during the three months ended September 30, 2022, as well as, forgiveness of PPP loans which declined $1.6 million from $1.8 million at June 30, 2022 to $191,000 at September 30, 2022. The decrease in consumer loans was primarily related to reduced line of credit utilization during the three months ended September 30, 2022.

Securities available-for-sale increased $32.1 million, or 6.7%, to $513.9 million at September 30, 2022 from $481.8 million at June 30, 2022. The increase was primarily due to purchases of U.S Government and agency obligations during the three months ended September 30, 2022.

Deposits increased $98.7 million, or 5.9%, to $1.78 billion at September 30, 2022 from $1.68 billion at June 30, 2022. The increase in deposits was primarily related to an increase in non-interest bearing demand accounts of $114.8 million, or 19.3%, to $708.3 million at September 30, 2022 from $593.5 million at June 30, 2022 and an increase in demand accounts of $40.1 million, or 21.9%, to $222.9 million at September 30, 2022 from $182.8 million at June 30, 2022. These increases were partially offset by a decrease in money market accounts of $42.5 million, or 8.5%, to $454.7 million at September 30, 2022 from $497.2 million at June 30, 2022, a decrease in savings accounts of $2.3 million, or 0.7%, to $324.0 million at September 30, 2022 from $326.3 million at June 30, 2022 and a decrease in certificates of deposit of $11.4 million, or 14.2%, to $69.2 million at September 30, 2022 from $80.6 million at June 30, 2022.

The increase in non-interest-bearing demand accounts and interest-bearing demand accounts was primarily related to growth in municipal deposits due to seasonality. The decrease in money market accounts was principally related to outflows in municipal depositor accounts. The decrease in certificates of deposit was primarily due to the maturity of various accounts.

Shareholders’ equity decreased $918,000, or 0.4%, to $241.7 million at September 30, 2022 from $242.6 million at June 30, 2022 primarily as a result of an increase in unrealized holding losses on securities available for sale of $6.3 million due to the increase in interest rates, largely offset by net income of $5.2 million for the three month period ended September 30, 2022.