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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

PIONEER BANCORP, INC.

(Exact Name of Company as Specified in its Charter)

​

Maryland

001-38991

83-4274253

(State of Other Jurisdiction of Incorporation)

(Commission File No.)

(I.R.S. Employer Identification No.)

​

652 Albany Shaker Road, Albany, New York 12211

(Address of Principal Executive Office) (Zip Code)

(518) 730-3025

(Issuer’s Telephone Number including area code)

Securities registered pursuant to Section 12(b) of the Act:

​

​

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01

 

PBFS

 

The Nasdaq Stock Market, LLC

​

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.

YES ☒         NO   ☐

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 (Section 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒        NO   ☐

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 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

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

​

​

Emerging growth company

☒

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new 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   ☒

As of February 7, 2023, there were 25,977,679 shares outstanding of the registrant’s common stock.

​

​

​

PIONEER BANCORP, INC.

INDEX

​

​

PART I - FINANCIAL INFORMATION

3

Item 1 – Consolidated Financial Statements-unaudited

3

Consolidated Statements of Condition

3

Consolidated Statements of Operations

4

Consolidated Statements of Comprehensive Income

5

Consolidated Statements of Changes in Shareholders’ Equity

6

Consolidated Statements of Cash Flows

7

Notes to Unaudited Consolidated Financial Statements

8

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

40

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

60

Item 4 – Controls and Procedures

60

PART II – OTHER INFORMATION

61

Item 1 – Legal Proceedings

61

Item 1A – Risk Factors

61

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

61

Item 3 – Defaults Upon Senior Securities

61

Item 4 – Mine Safety Disclosures

61

Item 5 – Other Information

61

Item 6 – Exhibits

62

​

​

​

​

2

​

PART I - FINANCIAL INFORMATION

Item 1 – Consolidated Financial Statements

PIONEER BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION (unaudited)

(in thousands, except share and per share amounts)

​

​

​

​

​

​

​

​

​

    

December 31, 

    

June 30, 

​

​

2022

​

2022

Assets

 

​

  

 

​

  

Cash and due from banks

​

$

33,513

​

$

29,831

Federal funds sold

​

 

6,064

​

 

3,466

Interest-earning deposits with banks

​

 

107,741

​

 

342,763

Cash and cash equivalents

​

 

147,318

​

 

376,060

​

​

​

​

​

​

​

Securities available for sale, at fair value

​

 

507,611

​

 

481,790

Securities held to maturity (fair value of $22,236 at December 31, 2022; and $22,467 at June 30, 2022)

​

 

24,296

​

 

23,952

Equity securities, at fair value

​

​

2,267

​

​

2,039

Federal Home Loan Bank of New York stock

​

 

1,051

​

 

1,091

Net loans receivable

​

 

1,048,110

​

 

982,566

Accrued interest receivable

​

 

7,520

​

 

4,623

Premises and equipment, net

​

 

42,646

​

 

38,018

Bank-owned life insurance

​

 

16,428

​

 

17,165

Goodwill

​

 

8,799

​

 

8,799

Other intangible assets, net

​

 

2,291

​

 

2,494

Other assets

​

 

26,182

​

 

25,632

Total assets

​

$

1,834,519

​

$

1,964,229

​

​

​

​

​

​

​

Liabilities and Shareholders' Equity

​

 

  

​

 

  

Liabilities

​

 

  

​

 

  

Deposits:

​

 

  

​

 

  

Non-interest bearing deposits

​

$

579,689

​

$

593,461

Interest bearing deposits

​

 

958,693

​

 

1,086,822

Total deposits

​

 

1,538,382

​

 

1,680,283

Mortgagors’ escrow deposits

​

 

5,398

​

 

5,586

Other liabilities

​

 

41,009

​

 

35,733

Total liabilities

​

 

1,584,789

​

 

1,721,602

​

​

​

​

​

​

​

Commitments and contingent liabilities - See Note 10

​

​

​

​

​

​

​

​

​

​

​

​

​

Shareholders' Equity

​

 

  

​

 

  

Preferred stock ($0.01 par value, 5,000,000 shares authorized, no shares issued or outstanding as of December 31, 2022 and June 30, 2022)

​

​

—

​

​

—

Common stock ($0.01 par value, 75,000,000 shares authorized, 25,977,679 shares issued and outstanding as of December 31, 2022 and June 30, 2022)

​

​

260

​

​

260

Additional paid in capital

​

​

113,633

​

​

113,713

Retained earnings

​

 

162,507

​

 

151,090

Unallocated common stock of Employee Stock Ownership Plan ("ESOP")

​

 

(10,915)

​

 

(11,256)

Accumulated other comprehensive loss

​

 

(15,755)

​

 

(11,180)

Total shareholders' equity

​

 

249,730

​

 

242,627

Total liabilities and shareholders' equity

​

$

1,834,519

​

$

1,964,229

​

​

​

See accompanying notes to unaudited consolidated financial statements.

3

PIONEER BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share and per share amounts)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended

​

For the Six Months Ended

​

​

​

December 31, 

​

December 31, 

​

​

    

2022

    

2021

    

2022

    

2021

    

Interest and dividend income:

 

​

  

 

​

  

 

​

  

 

​

  

 

Loans

​

$

13,506

​

$

10,094

​

$

25,018

​

$

20,128

​

Securities

​

 

2,523

​

 

605

​

 

4,457

​

 

1,036

​

Interest-earning deposits with banks and other

​

 

1,950

​

 

152

​

 

3,695

​

 

304

​

Total interest and dividend income

​

 

17,979

​

 

10,851

​

 

33,170

​

 

21,468

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest expense:

​

 

  

​

 

  

​

 

  

​

 

  

​

Deposits

​

 

632

​

 

343

​

 

1,038

​

 

701

​

Borrowings and other

​

 

212

​

 

17

​

 

324

​

 

40

​

Total interest expense

​

 

844

​

 

360

​

 

1,362

​

 

741

​

Net interest income

​

 

17,135

​

 

10,491

​

 

31,808

​

 

20,727

​

Provision for loan losses

​

 

(400)

​

 

—

​

 

(280)

​

 

250

​

Net interest income after provision for loan losses

​

 

17,535

​

 

10,491

​

 

32,088

​

 

20,477

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest income:

​

 

  

​

 

  

​

 

  

​

 

  

​

Bank fees and service charges

​

 

1,469

​

 

1,655

​

 

3,039

​

 

3,260

​

Insurance and wealth management services

​

 

2,187

​

 

2,001

​

 

3,921

​

 

3,562

​

Net gain on equity securities

​

 

268

​

 

160

​

 

228

​

 

118

​

Net gain on securities transactions

​

​

—

​

​

—

​

​

—

​

​

4

​

Net gain on disposal of assets

​

 

—

​

 

62

​

 

—

​

 

62

​

Other

​

 

22

​

 

71

​

 

563

​

 

142

​

Total noninterest income

​

 

3,946

​

 

3,949

​

 

7,751

​

 

7,148

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Noninterest expense:

​

 

  

​

 

  

​

 

  

​

 

  

​

Salaries and employee benefits

​

 

7,220

​

 

6,238

​

 

13,812

​

 

12,463

​

Net occupancy and equipment

​

 

1,841

​

 

1,725

​

 

3,552

​

 

3,437

​

Data processing

​

 

1,076

​

 

1,040

​

 

2,113

​

 

2,079

​

Advertising and marketing

​

 

294

​

 

163

​

 

435

​

 

237

​

Insurance premiums

​

​

226

​

​

203

​

​

457

​

​

402

​

Federal Deposit Insurance Corporation insurance premiums

​

 

153

​

 

225

​

 

324

​

 

416

​

Professional fees

​

​

1,098

​

​

699

​

​

1,871

​

​

1,546

​

Employee retention credit

​

​

—

​

​

(5,029)

​

​

—

​

​

(5,029)

​

Other

​

 

1,598

​

 

1,115

​

 

2,810

​

 

2,242

​

Total noninterest expense

​

 

13,506

​

 

6,379

​

 

25,374

​

 

17,793

​

Income before income taxes

​

 

7,975

​

 

8,061

​

 

14,465

​

 

9,832

​

Income tax expense

​

 

1,792

​

 

1,804

​

 

3,048

​

 

2,218

​

Net income

​

$

6,183

​

$

6,257

​

$

11,417

​

$

7,614

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net earnings per common share:

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

0.25

​

$

0.25

​

$

0.45

​

$

0.30

​

Diluted

​

$

0.25

​

$

0.25

​

$

0.45

​

$

0.30

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average shares outstanding - basic and diluted

​

​

25,156,653

​

​

25,105,737

​

​

25,150,289

​

​

25,099,373

​

​

​

​

​

See accompanying notes to unaudited consolidated financial statements.

4

PIONEER BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the Three Months Ended

​

For the Six Months Ended

​

​

​

December 31, 

​

December 31, 

​

​

    

2022

    

2021

    

2022

    

2021

    

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

6,183

​

$

6,257

​

$

11,417

​

$

7,614

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other comprehensive income (loss):

​

 

  

​

 

  

​

 

  

​

 

  

​

Unrealized gains (losses) on securities:

​

 

  

​

 

  

​

 

  

​

 

  

​

Unrealized holding gains (losses) arising during the period

​

 

2,300

​

 

(2,099)

​

 

(6,196)

​

 

(2,349)

​

Reclassification adjustment for gains included in net income

​

 

—

​

 

—

​

 

—

​

 

(4)

​

​

​

 

2,300

​

 

(2,099)

​

 

(6,196)

​

 

(2,353)

​

Tax expense (benefit)

​

 

601

​

 

(548)

​

 

(1,621)

​

 

(615)

​

​

​

 

1,699

​

 

(1,551)

​

 

(4,575)

​

 

(1,738)

​

Defined benefit plan:

​

 

  

​

 

  

​

 

  

​

 

  

​

Change in funded status of defined benefit plans

​

 

—

​

 

—

​

 

—

​

 

—

​

Reclassification adjustment for amortization of net actuarial loss

​

 

—

​

 

—

​

 

—

​

 

—

​

​

​

 

—

​

 

—

​

 

—

​

 

—

​

Tax expense

​

 

—

​

 

—

​

 

—

​

 

—

​

​

​

 

—

​

 

—

​

 

—

​

 

—

​

Total other comprehensive income (loss)

​

 

1,699

​

 

(1,551)

​

 

(4,575)

​

 

(1,738)

​

Comprehensive income

​

$

7,882

​

$

4,706

​

$

6,842

​

$

5,876

​

​

​

​

See accompanying notes to unaudited consolidated financial statements.

5

PIONEER BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(in thousands, except share amounts)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Unallocated

​

Accumulated Other

​

Total

​

​

Common Stock

​

Paid-in

​

Retained

​

Common

​

Comprehensive

​

Shareholders'

​

    

Shares

​

Amount

    

Capital

    

Earnings

    

Stock of ESOP

    

Loss

    

Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of July 1, 2021

​

​

25,977,679

​

$

260

​

$

113,815

​

$

140,811

​

$

(11,939)

​

$

(5,125)

​

$

237,822

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

​

—

​

​

—

​

​

—

​

​

1,357

​

​

—

​

​

—

​

​

1,357

Other comprehensive loss

​

​

—

​

​

—

​

​

—

​

​

—

​

 

—

​

 

(187)

​

 

(187)

ESOP shares committed to be released (12,729 shares)

​

 

—

​

​

—

​

 

(17)

​

​

—

​

​

171

​

​

—

​

​

154

Balance as of September 30, 2021

​

​

25,977,679

​

$

260

​

$

113,798

​

$

142,168

​

$

(11,768)

​

$

(5,312)

​

$

239,146

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

​

—

​

​

—

​

​

—

​

​

6,257

​

​

—

​

​

—

​

​

6,257

Other comprehensive loss

​

​

—

​

​

—

​

​

—

​

 

—

​

 

—

​

 

(1,551)

​

 

(1,551)

ESOP shares committed to be released (12,729 shares)

​

​

—

​

​

—

​

​

(13)

​

​

—

​

​

171

​

​

—

​

​

158

Balance as of December 31, 2021

​

​

25,977,679

​

$

260

​

$

113,785

​

$

148,425

​

$

(11,597)

​

$

(6,863)

​

$

244,010

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Additional

​

​

​

Unallocated

​

Accumulated Other

​

Total

​

​

Common Stock

​

Paid-in

​

Retained

​

Common

​

Comprehensive

​

Shareholders'

​

​

Shares

​

Amount

    

Capital

    

Earnings

    

Stock of ESOP

    

Loss

    

Equity

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of July 1, 2022

​

​

25,977,679

​

$

260

​

$

113,713

​

$

151,090

​

$

(11,256)

​

$

(11,180)

​

$

242,627

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

​

—

​

​

—

​

​

—

​

​

5,234

​

​

—

​

​

—

​

​

5,234

Other comprehensive loss

​

​

—

​

​

—

​

​

—

​

 

—

​

 

—

​

 

(6,274)

​

 

(6,274)

ESOP shares committed to be released (12,729 shares)

​

​

—

​

​

—

​

​

(48)

​

​

—

​

​

170

​

​

—

​

​

122

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of September 30, 2022

​

​

25,977,679

​

$

260

​

$

113,665

​

$

156,324

​

$

(11,086)

​

$

(17,454)

​

$

241,709

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

​

—

​

​

—

​

​

—

​

​

6,183

​

​

—

​

​

—

​

​

6,183

Other comprehensive income

​

​

—

​

​

—

​

​

—

​

 

—

​

 

—

​

 

1,699

​

 

1,699

ESOP shares committed to be released (12,729 shares)

​

​

—

​

​

—

​

​

(32)

​

​

—

​

​

171

​

​

—

​

​

139

Balance as of December 31, 2022

​

​

25,977,679

​

$

260

​

$

113,633

​

$

162,507

​

$

(10,915)

​

$

(15,755)

​

$

249,730

​

​

See accompanying notes to unaudited consolidated financial statements.

6

PIONEER BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)

​

​

​

​

​

​

​

​

​

​

For the Six Months Ended

​

​

December 31, 

​

    

2022

    

2021

​

​

​

​

​

​

Cash flows from operating activities:

 

​

  

 

​

  

Net income

​

$

11,417

​

$

7,614

Adjustments to reconcile net income to net cash provided by operating activities:

​

 

  

​

 

  

Depreciation and amortization

​

 

1,383

​

 

1,359

Provision for loan losses

​

 

(280)

​

 

250

Net amortization on securities

​

 

333

​

 

662

ESOP compensation

​

​

261

​

​

312

(Earnings) loss on bank-owned life insurance

​

 

(406)

​

 

5

Net gain on the sale or disposal of premises and equipment and other real estate owned

​

 

—

​

 

(62)

Proceeds from sale of loans

​

 

100

​

 

108

Net gain on sale of loans

​

 

—

​

 

(3)

Net gain on equity securities

​

 

(228)

​

 

(118)

Net gain on securities transactions

​

​

—

​

​

(4)

Deferred tax expense

​

 

765

​

 

1,002

Increase in accrued interest receivable

​

 

(2,897)

​

 

(63)

Decrease in other assets

​

 

403

​

 

1,663

Decrease in other liabilities

​

 

(550)

​

 

(6,933)

Net cash provided by operating activities

​

 

10,301

​

 

5,792

​

​

​

​

​

​

​

Cash flows from investing activities:

​

 

  

​

 

  

Proceeds from maturities, paydowns and calls of securities available for sale

​

 

68,787

​

 

38,999

Proceeds from sales of securities available for sale

​

 

—

​

 

5,267

Purchases of securities available for sale

​

 

(101,137)

​

 

(148,313)

Proceeds from maturities and paydowns of securities held to maturity

​

 

5,694

​

 

2,396

Purchases of securities held to maturity

​

 

(6,038)

​

 

(13,327)

Proceeds from sales of equity securities

​

​

—

​

​

803

Net redemptions of FHLBNY stock

​

 

40

​

 

136

Net (increase) decrease in loans receivable

​

 

(65,365)

​

 

87,219

Purchases of premises and equipment

​

 

(78)

​

 

(520)

Proceeds from bank-owned life insurance death benefit

​

​

1,143

​

​

—

Proceeds from sale of premises and equipment, and other real estate owned

​

 

—

​

 

266

Cash paid for acquisitions

​

​

—

​

​

(1,492)

Net cash used in investing activities

​

 

(96,954)

​

 

(28,566)

​

​

​

​

​

​

​

Cash flows from financing activities:

​

 

  

​

 

  

Net (decrease) increase in deposits

​

 

(141,901)

​

 

48,019

Net decrease in mortgagors’ escrow deposits

​

 

(188)

​

 

(1,066)

Net cash (used in) provided by financing activities

​

 

(142,089)

​

 

46,953

​

​

​

​

​

​

​

Net (decrease) increase in cash and cash equivalents

​

 

(228,742)

​

 

24,179

Cash and cash equivalents at beginning of period

​

 

376,060

​

 

324,963

Cash and cash equivalents at end of period

​

$

147,318

​

$

349,142

​

​

​

​

​

​

​

Supplemental disclosure of cash flow information:

​

 

  

​

 

  

Cash paid during the period for:

​

 

  

​

 

  

Interest

​

$

1,349

​

$

743

Income taxes

​

$

2,050

​

$

1,000

Non-cash investing and financing activity:

​

 

  

​

 

  

Loans transferred to other real estate owned

​

$

—

​

$

550

Acquisition contingent consideration payable

​

$

—

​

$

728

Adoption of lease accounting standard:

​

​

​

​

​

​

Right of use assets

​

$

6,535

​

$

—

Lease liabilities

​

$

6,883

​

$

—

​

​

​

See accompanying notes to unaudited consolidated financial statements.

7

​

PIONEER BANCORP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022

1.NATURE OF OPERATIONS

Pioneer Bancorp, Inc. (the “Company”) is a mid-tier stock holding company whose wholly owned subsidiary is Pioneer Bank (the “Bank”). The Bank is a New York State chartered savings bank whose wholly owned subsidiaries are Pioneer Commercial Bank, Anchor Agency, Inc. and Pioneer Financial Services, Inc. On July 17, 2019, the Company became the holding company of the Bank when it closed its stock offering in connection with the completion of the reorganization of the Bank into the two-tier mutual holding company form of organization.

The Company provides diversified financial services through the Bank and its subsidiaries, with 22 offices in the Capital Region of New York State. The Company, through its subsidiaries, offers a broad array of deposit, lending, and other financial services to individuals, businesses, and municipalities.  

The interim financial data as of December 31, 2022 and for the three and six months ended December 31, 2022 and 2021, respectively, is unaudited and reflects all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented in conformance with accounting principles generally accepted in the United States of America (“GAAP”). The results of operations for the three and six months ended December 31, 2022 are not necessarily indicative of the results to be achieved for the remainder of fiscal 2023 or any other period.

These unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, for the year ended June 30, 2022.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, the Bank, and the Bank’s wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ substantially from those estimates. The allowance for loan losses, valuation of securities and other financial instruments, the funded status and expense of employee benefit plans, legal proceedings and other contingent liabilities, and the realizability of deferred tax assets are particularly subject to change.

Reclassifications

Amounts in the prior period’s consolidated financial statements are reclassified whenever necessary to conform to the current period’s presentation.

​

8

Adoption of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02 to its guidance on “Leases (Topic 842)”. This ASU requires substantially all leases to be recognized by lessees on their balance sheet as a right-of-use asset and a corresponding lease liability, including leases historically accounted for as operating leases. In July 2018, the FASB issued ASU 2018-11 which allows for an optional transition method to adopt the lease standard by recognizing a cumulative-effect adjustment to the opening balance sheet of retained earnings in the period of adoption, with no adjustment to prior comparative periods. ASU 2016-02 and all subsequent amendments (collectively, “ASC 842”) requires adoption by the Company for years beginning after December 15, 2021, though early adoption is permitted. The Company adopted ASC 842 during the first quarter of the fiscal year ended June 30, 2023 and elected to apply the cumulative-effect adjustment to the opening balance sheet and optional transition method to not present comparable prior year periods as allowed under ASU 2018-11. The Company made the following practical expedient elections: (1) elected the short-term lease exception, (2) did not elect hindsight, and (3) elected to not separate nonlease components from lease components for classes of underlying assets. The Company adopted the transitional practical expedients which did not require reassessment of whether existing arrangements contained a lease, reassessment of the historical lease classification, or reassessment of initial direct costs. The adoption of ASC 842 as of July 1, 2022 resulted in the recording of approximately $5.8 million of right-of-use (“ROU”) operating lease assets and approximately $6.1 million of operating lease liabilities, and approximately $706,000 of ROU finance lease assets and approximately $810,000 of finance lease liabilities.  There were no adjustments to retained earnings.

In December 2019, the FASB issued ASU 2019-12, Income Taxes Topic 740.  This update simplifies and improves accounting for income taxes by eliminating certain exceptions to the general rules and clarifying or amending other current guidance. The scope of FASB ASC Subtopic 740-10, Income Taxes -Overall, has been amended to require that, if a franchise (or similar tax) is partially based on income, (1) deferred tax assets and liabilities should be recognized and accounted for pursuant to FASB ASC 740, as should the amount of current tax expense that is based on income, and (2) any incremental amount incurred should be recorded as a non-income-based tax. Note that under the amended guidance, the effect of potentially paying a non-income-based tax in future years need not be considered in evaluating the realizability of deferred tax assets. The amendments in this ASU are effective for the Company for the fiscal year beginning July 1, 2022. The adoption of this ASU had no impact on our consolidated financial statements.

Impact of Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13 to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis. The amendments in this ASU are effective for the Company for the fiscal year beginning July 1, 2023. An entity will apply the amendments in this ASU through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU 2016-13. In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. ASU 2019-04 clarifies or addresses stakeholders’ specific issues about certain aspects of the amendments in ASU 2016-13 related to

9

measuring the allowance for loan losses under the new guidance. The effective dates and transition requirements for the amendments related to this ASU are the same as the effective dates and transition requirements in ASU 2016-13. In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses clarifying certain amendments to various provisions of ASU 2016-13 relating to (1) purchased financial assets with credit deterioration, (2) financial assets secured by collateral maintenance agreements, (3) transition relief for troubled debt restructurings, and (4) disclosure relief when the practical expedient for accrued interest receivables is applied. The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated statements of operations, but it is expected to have an impact on our consolidated statements of condition at the date of adoption of this ASU. At this time, we have not calculated the estimated impact that this ASU will have on our allowance for loan losses, however, we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance. Alternative methodologies are currently being considered. Data requirements and integrity are being reviewed and enhancements incorporated into standard processes. In March 2022, the FASB issued ASU 2022-02, amendments related to Troubled Debt Restructurings (TDRs) for all entities after they adopt 2016-13 and amendments related to vintage disclosures that affect public business entities with investments in financing receivables, under Financial Instruments-Credit Losses (Topic 326). The amendments in the accounting guidance for TDRs by creditors eliminates the recognition and measurement guidance for TDRs in Subtopic 310-40. The effective dates for the amendments in this Update are the same as the effective dates in ASU 2016-13. The amendments in this Update should be applied prospectively, except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the potential impact of adoption of this ASU on our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).  The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments (1) apply to contract modifications that replace a reference rate affected by reference rate reform, (2) provide exceptions to existing guidance related to changes to the critical terms of a hedging relationship due to reference rate reform (3) provide optional expedients for fair value hedging relationships, cash flow hedging relationships, and net investment hedging relationships, and (4) provide a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments for contract modifications can be elected to be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020. The amendments for existing hedging relationships can be elected to be applied as of the beginning of the interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the sunset (or expiration) date of ASC Topic 848, Reference Rate Reform, from December 31, 2022, to December 31, 2024. The Company is currently evaluating the potential impact of adoption of this guidance on our consolidated financial statements.

​

10

​

3.ACQUISITIONS

On December 10, 2021 and December 22, 2021, the Company, through its subsidiary, Pioneer Financial Services, Inc., completed the acquisition of certain assets of two practices engaged in the wealth management services business in the Capital Region of New York. The Company paid an aggregate of $1.5 million in cash and recorded $728,000 in contingent consideration payable to acquire the assets and recorded an $890,000 customer list intangible asset and goodwill in the amount of $1.3 million in conjunction with the acquisitions. During the six months ended December 31, 2022, contingent consideration of $124,000 was paid. The effects of the acquired assets have been included in the consolidated financial statements since the respective acquisition dates.  The above referenced acquisitions were made to expand the Company’s wealth management services activities. 

On March 16, 2022, the Company, through its subsidiary, Pioneer Financial Services, Inc., completed the acquisition of certain assets of a practice engaged in the wealth management services business in the Capital Region of New York. The Company paid $165,000 in cash and recorded $130,000 in contingent consideration payable to acquire the assets and recorded a $118,000 customer list intangible asset and goodwill in the amount of $177,000 in conjunction with the acquisition. During the six months ended December 31, 2022, contingent consideration of $130,000 was paid. The effects of the acquired assets have been included in the consolidated financial statements since the acquisition date.  The above referenced acquisition was made to expand the Company’s wealth management services activities. 

4.EMPLOYEE RETENTION CREDIT

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) provided numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. As expanded, the ERC is equal to 70% of qualified wages paid to employees (including employer qualified health plan expenses) and is capped at $10,000 of qualified wages for each employee, such that the maximum ERC that can be claimed is $7,000 per employee per applicable calendar quarter in 2021. As a result of the Company averaging fewer than 500 full-time employees, all wages paid to employees were eligible for the ERC.

The Company evaluated its eligibility for the ERC in the second fiscal quarter of 2022. The Company determined it qualified for the ERC for the first quarter of calendar 2021, using the alternative quarter election, because the Company’s gross receipts decreased more than 20% for the fourth quarter of 2020 from the respective quarter in 2019, and for the second and third quarters of calendar 2021 because the Company’s gross receipts decreased more than 20% for each quarter in 2021 from each of the respective quarters of 2019, the relevant criteria for the ERC. The Company has amended certain payroll tax filings to apply for a refund for each of the first three quarters of calendar 2021.

Since there is not any GAAP guidance for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, the Company accounted for the employee retention credit by analogy to FASB ASC Subtopic 958-605, Not-for-Profit Entities: Revenue Recognition (“ASC 958-605”). Under ASC 958-605, government grants are recognized when the conditions or conditions on which they depend are substantially met. The conditions for recognition of the ERC include meeting the rules as an eligible employer (meeting the rules for a decline in gross receipts) and incurring qualifying expenses (payroll costs).

During the three and six months ended December 31, 2021, the Company recorded an ERC benefit of $5.0 million in noninterest expenses in the consolidated statements of operations. The Company has recorded an ERC grant receivable of $5.0 million in other assets in the consolidated statements of condition at December 31, 2022. The Internal Revenue Service has a significant backlog of ERC refunds to process. Taxpayers have reported waiting anywhere from ten to twelve months and in some cases longer for their ERC refunds. The Company currently estimates that it will receive the refunds in the third fiscal quarter of 2023.

​

11

5.INVESTMENT SECURITIES

The amortized cost and estimated fair value of securities are as follows (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2022

​

​

​

​

​

Gross

​

Gross

​

​

​

​

​

Amortized

​

Unrealized

​

Unrealized