(Former name, former address and former fiscal year, if changed since last report)

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 (§ 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒

~~17,715,339~~16,417,737 shares of the Registrant’s common stock, par value $0.01 per share, were outstanding as of November ~~6, 2019~~4, 2020.

	September 30,			June 30,			September 30,			June 30,
	2019			2019			2020			2020
ASSETS
Cash and due from banks	$	36,544		$	58,756		$	161,387		$	135,045
Federal funds sold		1,253			1,273			1,352			1,257
Total cash and cash equivalents		37,797			60,029			162,739			136,302
Investment securities:
Held to maturity debt securities, at amortized cost (fair value of $315,901, and $346,243, respectively)		314,165			345,545
Held to maturity debt securities, at amortized cost (fair value of $293,810, and $281,497, respectively)								287,370			275,772
Available for sale debt securities, at fair value		64,842			72,228			31,139			37,426
Total investment securities		379,007			417,773			318,509			313,198
Loans receivable, net of allowance for loan losses of $5,993 and $5,664, respectively		1,163,254			1,093,121
Loans receivable, net of allowance for loan losses of $8,672 and $8,639, respectively								1,227,913			1,260,947
Accrued interest receivable		5,494			4,797			6,729			6,880
FHLB stock		6,254			6,255			6,307			6,308
Premises and equipment, net		23,946			11,802			20,195			20,853
Deferred tax asset, net		2,291			2,478			3,400			3,129
Foreclosed real estate		856			1,158
Bank-owned life insurance		24,428			24,291			25,151			25,019
Goodwill		6,106			6,106			6,106			6,106
Other intangible assets		298			323			209			229
Other assets		8,877			9,446			13,817			12,958
Total assets	$	1,658,608		$	1,637,579		$	1,791,075		$	1,791,929
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing deposits	$	1,092,338		$	1,084,442		$	1,193,168		$	1,181,357
Non-interest bearing deposits		141,567			141,379			183,844			191,898
Total deposits		1,233,905			1,225,821			1,377,012			1,373,255
Mortgage escrow funds		7,553			9,355			6,420			10,123
Advances from FHLB		111,185			111,216			106,056			106,089
Other liabilities		24,443			9,880			27,908			28,749
Total liabilities		1,377,086			1,356,272			1,517,396			1,518,216
Commitments and contingencies		-			-			-			-
Shareholders' equity:
Preferred stock ($0.01 par value, 10,000,000 shares authorized, no shares issued or outstanding as of September 30, 2019 and June 30, 2019)		-			-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 shares issued as of September 30, 2019 and June 30, 2019, respectively, and 17,624,239 and 17,804,039 shares outstanding as of September 30, 2019 and June 30, 2019, respectively)		187			187
Preferred stock ($0.01 par value, 10,000,000 shares authorized, 0 shares issued or outstanding as of September 30, 2020 and June 30, 2020)								-			-
Common stock ($0.01 par value, 200,000,000 shares authorized, 18,712,295 shares issued as of September 30, 2020 and June 30, 2020, respectively, and 16,634,237 and 16,898,137 shares outstanding as of September 30, 2020 and June 30, 2020, respectively)								187			187
Additional paid in capital		183,198			182,129			187,026			186,200
Retained earnings		136,670			134,500			143,386			141,288
Unearned compensation - ESOP		(11,870	)		(12,114	)		(10,901	)		(11,145	)
Accumulated other comprehensive loss, net of income taxes		(4,834	)		(5,090	)		(6,216	)		(6,403	)
Treasury stock, at cost (1,088,056 and 908,256 shares as of September 30, 2019 and June 30, 2019, respectively)		(21,829	)		(18,305	)
Treasury stock, at cost (2,078,058 and 1,814,158 shares as of September 30, 2020 and June 30, 2020, respectively)								(39,803	)		(36,414	)
Total shareholders' equity		281,522			281,307			273,679			273,713
Total liabilities and shareholders' equity	$	1,658,608		$	1,637,579		$	1,791,075		$	1,791,929

	Three Months Ended September 30,				Three Months Ended September 30,
	2019		2018		2020		2019
Interest and dividend income
Loans receivable	$	13,036	$	9,898	$	12,547	$	13,036
Investment securities		2,692		2,366		1,856		2,692
Federal funds and other		298		345		125		298
Total interest and dividend income		16,026		12,609		14,528		16,026
Interest expense
Deposits and escrow interest		3,301		2,056		2,432		3,301
FHLB advances		727		89		519		727
Total interest expense		4,028		2,145		2,951		4,028
Net interest income		11,998		10,464		11,577		11,998
Provision for loan losses		335		58		109		335
Net interest income after provision for loan losses		11,663		10,406		11,468		11,663
Noninterest income
Fees and service charges		402		418		322		402
Bank-owned life insurance		137		140		132		137
Swap income		170		71		129		170
Other		56		12		11		56
Total noninterest income		765		641		594		765
Noninterest expense
Salaries and employee benefits		5,764		5,140		5,607		5,764
Occupancy and equipment		1,315		1,241		1,318		1,315
Communication and data processing		531		472		576		531
Professional fees		404		369		400		404
Postage, printing, stationary and supplies		140		138		139		140
FDIC assessment		-		93		113		-
Advertising		100		87		100		100
Amortization of intangible assets		24		28		20		24
Other operating expenses		509		440		351		509
Total noninterest expense		8,787		8,008		8,624		8,787
Net income before income tax expense		3,641		3,039		3,438		3,641
Income tax expense		812		710		710		812
Net income	$	2,829	$	2,329	$	2,728	$	2,829
Earnings per common share:
Basic	$	0.18	$	0.14	$	0.18	$	0.18
Diluted	$	0.18	$	0.14	$	0.18	$	0.18
Weighted average common shares outstanding:
Basic		15,979,762		16,869,100		15,302,838		15,979,762
Diluted		16,082,276		16,869,100		15,302,949		16,082,276

	Three Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2020			2019
Net income	$	2,829		$	2,329		$	2,728		$	2,829

Other comprehensive income (loss):
Unrealized gains (losses) on available for sale debt securities:
Other comprehensive income :
Unrealized (losses) gains on available for sale debt securities:
Net change in unrealized gains/losses before reclassification adjustment		181			(153	)		(16	)		181
Reclassification adjustment for gains realized in net income		-			-			-			-
Net change in unrealized gains/losses		181			(153	)		(16	)		181
Tax effect		(38	)		32			3			(38	)
Net of tax		143			(121	)		(13	)		143

Defined benefit pension plan:
Net gain (loss) arising during the period		-			-			-			-
Reclassification adjustment for amortization of prior service cost and net gain included in net periodic pension cost		133			145			240			133
Tax effect		(29	)		(30	)		(51	)		(29	)
Net of tax		104			115			189			104

Supplemental retirement plans:
Net gain (loss) arising during the period								-			-
Reclassification adjustment for amortization of prior service cost and net gain included in net periodic pension cost		11			9			14			11
Tax effect		(2	)		(2	)		(3	)		(2	)
Net of tax		9			7			11			9

Total other comprehensive income		256			1			187			256

Comprehensive income	$	3,085		$	2,330		$	2,915		$	3,085

																	Accumulated																							Accumulated
						Additional					Unallocated			Treasury			Other						Number of					Additional						Unallocated			Treasury			Other
	Number of			Common		Paid-In		Retained			Common Stock			Stock,			Comprehensive			Total			Common			Common		Paid-In			Retained			Common Stock			Stock,			Comprehensive			Total
																							Shares			Stock		Capital			Earnings			of ESOP			at cost			Loss			Equity
Balance at July 1, 2020																								16,898,137		$	187	$	186,200		$	141,288		$	(11,145	)	$	(36,414	)	$	(6,403	)	$	273,713
Net income																								-			-		-			2,728			-			-						2,728
Other comprehensive income																								-			-		-			-			-			-			187			187
Common stock dividends declared ($0.04 per share)																								-			-		-			(630	)		-			-			-			(630	)
Repurchase of common stock																								(266,900	)		-		-			-			-			(3,449	)		-			(3,449	)
Restricted stock awards granted																								3,000			-		(60	)		-			-			60						-
Stock-based compensation																								-			-		829			-			-			-			-			829
ESOP shares committed to be released (24,419 shares)																								-			-		57			-			244			-			-			301
Balance at September 30, 2020																								16,634,237		$	187	$	187,026		$	143,386		$	(10,901	)	$	(39,803	)	$	(6,216	)	$	273,679
	Shares			Stock		Capital		Earnings			of ESOP			at cost			Loss			Equity
Balance at July 1, 2019		17,804,039		$	187	$	182,129	$	134,500		$	(12,114	)	$	(18,305	)	$	(5,090	)	$	281,307			17,804,039		$	187	$	182,129		$	134,500		$	(12,114	)	$	(18,305	)	$	(5,090	)	$	281,307
Net income		-			-		-		2,829			-			-			-			2,829			-			-		-			2,829			-			-			-			2,829
Other comprehensive income		-			-		-		-			-			-			256			256			-			-		-			-			-			-			256			256
Common stock dividends declared ($0.04 per share)		-			-		-		(659	)		-			-			-			(659	)		-			-		-			(659	)		-			-			-			(659	)
Repurchase of common stock		(179,800	)		-		-		-			-			(3,524	)		-			(3,524	)		(179,800	)		-		-			-			-			(3,524	)		-			(3,524	)
Stock-based compensation		-			-		830		-			-			-			-			830			-			-		830			-			-			-			-			830
ESOP shares committed to be released (24,419 shares)		-			-		239		-			244			-			-			483			-			-		239			-			244			-			-			483
Balance at September 30, 2019		17,624,239		$	187	$	183,198	$	136,670		$	(11,870	)	$	(21,829	)	$	(4,834	)	$	281,522			17,624,239		$	187	$	183,198		$	136,670		$	(11,870	)	$	(21,829	)	$	(4,834	)	$	281,522

Balance at July 1, 2018		18,165,110		$	182	$	179,045	$	128,365		$	(13,083	)	$	-		$	(6,950	)	$	287,559
Net income		-			-		-		2,329			-			-			-			2,329
Other comprehensive loss		-			-		-		-			-			-			1			1
Common stock dividends declared ($0.03 per share)		-			-		-		(505	)		-			-			-			(505	)
ESOP shares committed to be released (24,419 shares)		-			-		249		-			244			-			-			493
Balance at September 30, 2018		18,165,110		$	182	$	179,294	$	130,189		$	(12,839	)	$	-		$	(6,949	)	$	289,877

	Three Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2020			2019
OPERATING ACTIVITIES
Net income	$	2,829		$	2,329		$	2,728		$	2,829
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan loss		335			58			109			335
Depreciation and amortization		311			299			748			695
Amortization of net premiums on securities and net deferred loan origination costs		494			482			206			494
Net increase in accrued interest receivable		(697	)		(389	)
Net gain on sales of foreclosed real estate		(47	)		-
Net decrease (increase) in accrued interest receivable								151			(697	)
Net gains on sales of foreclosed real estate								-			(47	)
Stock-based compensation		830			-			829			830
ESOP compensation		483			493			301			483
Earnings from cash surrender value of BOLI		(137	)		(140	)		(132	)		(137	)
Net accretion of purchase account adjustments		(198	)		(96	)
Net accretion of purchase accounting adjustments								(75	)		(198	)
Other adjustments, principally net changes in other assets and liabilities		1,064			(1,205	)		(2,986	)		680
Net cash provided by operating activities		5,267			1,831			1,879			5,267
INVESTING ACTIVITIES
Purchases of investment securities:
Held to maturity		-			(1,169	)		(27,894	)		-
Maturities and calls of investment securities:
Maturities, calls and amortization of investment securities:
Held to maturity		33,185			13,984			17,289			33,185
Available for sale		7,492			3,710			6,202			7,492
Loan principal disbursement, net		(26,762	)		(3,266	)
Loan principal repayments (disbursements), net								33,088			(26,762	)
Purchase of loans		(44,065	)		-			-			(44,065	)
Net redemption of FHLB stock		1			1			1			1
Purchase of bank premises and equipment, net of sales		(127	)		(219	)		(70	)		(127	)
Proceeds from sales of foreclosed real estate		709			-			-			709
Net cash (used in) provided by investing activities		(29,567	)		13,041
Net cash provided by (used in) investing activities								28,616			(29,567	)
FINANCING ACTIVITIES
Net increase (decrease) in deposits		8,084			(4,336	)
Net increase in deposits								3,757			8,084
Repayment of long-term FHLB advances		(31	)		(31	)		(33	)		(31	)
Net decrease in mortgage escrow funds		(1,802	)		(3,822	)		(3,703	)		(1,802	)
Common stock dividends paid		(659	)		(505	)		(630	)		(659	)
Repurchase of common stock		(3,524	)		-			(3,449	)		(3,524	)
Net cash provided by (used in) financing activities		2,068			(8,694	)
Net (decrease) increase in cash and cash equivalents		(22,232	)		6,178
Net cash (used in) provided by financing activities								(4,058	)		2,068
Net increase (decrease) in cash and cash equivalents								26,437			(22,232	)
Cash and cash equivalents at beginning of period		60,029			62,145			136,302			60,029
Cash and cash equivalents at end of period	$	37,797		$	68,323		$	162,739		$	37,797

Supplemental information:
Cash paid for:
Interest	$	3,883		$	2,122		$	2,908		$	3,883
Income taxes (net of refunds)		821			830			2,625			821
Loans transferred to foreclosed real estate and other assets		360			294			-			360
Establishment of right to use lease asset (ASU 2016-13)		12,687			-			-			12,687

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 September 30, ~~2019,~~2020, 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 ~~two~~2 subsidiaries – PCSB Funding Corp. and UpCounty Realty Corp. (formerly PCSB Realty Ltd.). PCSB Funding Corp. is a real estate investment trust that holds certain mortgage assets. UpCounty Realty Corp. is a corporation that holds certain properties foreclosed upon by the Bank. All intercompany transactions and balances have been eliminated in consolidation.

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, ~~2019,~~2020, 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.

The COVID-19 pandemic has created extensive disruptions to the global and U.S. economies and to the lives of individuals throughout the world. The New York City Metropolitan area and environs have had the highest incidence of COVID-19 in the nation, and the neighboring Tri-State area of New Jersey and Connecticut also has been particularly affected by COVID-19. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including 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 are rapidly evolving and 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.

The ultimate financial impact is unknown at this time. However, if these actions are sustained, it may adversely impact 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 all or a combination of valuation impairments of the Company’s intangible assets, investments, loans, or deferred tax assets.

Use of Estimates: To prepare financial statements in conformity with GAAP management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

The pronouncements discussed below are not intended to be an all-inclusive list, but rather only those pronouncements that could potentially have a material impact on our financial position, results of operations or disclosures.

~~Accounting Standards Adopted~~There were no accounting standards adopted in the ~~Period~~

In February 2016, the FASB issued ASU 2016-02 “Leases.” ASU 2016-02 affects any entity that enters into a lease and is intended to increase the transparency and comparability of financial statements among organizations. The ASU requires, among other changes, a lessee to recognize on its balance sheet a lease asset and a lease liability for those leases longer than 12 months previously classified as operating leases. The lease asset would represent the right to use the underlying asset for the lease term and the lease liability would represent the discounted value of the required lease payments to the lessor. The ASU also requires entities to disclose key information about leasing arrangements. The Company currently leases eleven branches and two administrative offices. The Company adopted this standard and the related amendments (collectively "ASC 842") on July 1, 2019 and utilized the modified

~~retrospective approach provided by ASU 2018-11, "Leases (Topic 842): Targeted Improvements," that allowed for a cumulative effect adjustment in the~~current period of adoption. Under this method of adoption, the comparative information in the consolidated financial statements has not been revised and continues to be reported under the previously applicable lease accounting guidance (ASC 840). We also utilized the package of practical expedients permitted under the transition guidance which included the carry-forward of historical lease classification. The Company recorded a right to use asset totaling $11.9 million and lease liability totaling $12.0 million on the balance sheet for Company’s outstanding lease obligations on July 1, 2019. The right to use asset is disclosed within premises and equipment and the lease liability is disclosed within other liabilities on the balance sheet.

In January 2017, the FASB issued ASU 2017-04 “Intangibles – Goodwill and Other (Topic 350).” ASU 2017-04 simplifies the test for goodwill impairment, which eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The adoption of ASU 2017-04 on July 1, 2019 did not have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08 "Receivables - Non-Refundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The ASU requires premiums on callable debt securities to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The adoption of ASU 2017-08 on July 1, 2019 did not have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 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. Management is currently evaluating the impact that ASU 2016-13 will have on the Company’s consolidated financial position, results of operations and disclosures.

The amortized cost, gross unrealized/unrecognized gains and losses and fair value of available for sale and held to maturity debt securities at September 30, ~~2019~~2020 and June 30, ~~2019~~2020 were as follows:

	September 30, 2019									September 30, 2020
	Amortized		Gross Unrealized/Unrecognized					Fair		Amortized		Gross Unrealized/Unrecognized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
			(in thousands)									(in thousands)
Available for sale:
U.S. Government and agency obligations	$	31,017	$	5	$	(60	)	$	30,962	$	7,000	$	17	$	-		$	7,017
Corporate and other debt securities		8,335		57		-			8,392		5,031		90		-			5,121
Mortgage-backed securities – residential		25,572		42		(126	)		25,488		18,582		432		(13	)		19,001
Total available for sale	$	64,924	$	104	$	(186	)	$	64,842	$	30,613	$	539	$	(13	)	$	31,139
Held to maturity:
U.S. Government and agency obligations	$	79,550	$	198	$	(132	)	$	79,616	$	38,001	$	391	$	(1	)	$	38,391
Corporate and other debt securities		34,032		371		(597	)		33,806		73,994		798		(1,266	)		73,526
Mortgage-backed securities – residential		127,859		1,225		(251	)		128,833		112,035		4,316		(10	)		116,341
Mortgage-backed securities – collateralized mortgage obligations		50,382		562		(92	)		50,852		44,621		1,488		(9	)		46,100
Mortgage-backed securities – commercial		22,342		472		(20	)		22,794		18,719		733		-			19,452
Total held to maturity	$	314,165	$	2,828	$	(1,092	)	$	315,901	$	287,370	$	7,726	$	(1,286	)	$	293,810

	June 30, 2019									June 30, 2020
	Amortized		Gross Unrealized/Unrecognized					Fair		Amortized		Gross Unrealized/Unrecognized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
			(in thousands)									(in thousands)
Available for sale:
U.S. Government and agency obligations	$	37,027	$	5	$	(121	)	$	36,911	$	11,002	$	47	$	-		$	11,049
Corporate and other debt securities		8,349		20		(9	)		8,360		5,038		82		-			5,120
Mortgage-backed securities – residential		27,115		23		(181	)		26,957		20,844		428		(15	)		21,257
Total available for sale	$	72,491	$	48	$	(311	)	$	72,228	$	36,884	$	557	$	(15	)	$	37,426
Held to maturity:
U.S. Government and agency obligations	$	96,545	$	192	$	(246	)	$	96,491	$	42,001	$	454	$	(5	)	$	42,450
Corporate and other debt securities		34,033		133		(413	)		33,753		52,790		332		(1,510	)		51,612
Mortgage-backed securities – residential		133,602		818		(372	)		134,048		117,160		4,291		(17	)		121,434
Mortgage-backed securities – collateralized mortgage obligations		52,940		311		(147	)		53,104		45,047		1,487		(31	)		46,503
Mortgage-backed securities – commercial		28,425		451		(29	)		28,847		18,774		724		-			19,498
Total held to maturity	$	345,545	$	1,905	$	(1,207	)	$	346,243	$	275,772	$	7,288	$	(1,563	)	$	281,497

NoNaN securities were sold during the three months ended September 30, ~~2019~~2020 or ~~2018.~~2019.

The following table presents the fair value and carrying amount of debt securities at September 30, ~~2019,~~2020, by contractual ~~maturity.~~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				Held to maturity				Available for sale
	Carrying		Fair		Amortized		Fair		Carrying		Fair		Amortized		Fair
	Amount		Value		Cost		Value		Amount		Value		Cost		Value
1 year or less	$	34,551	$	34,483	$	23,018	$	22,988	$	11,037	$	11,089	$	7,000	$	7,018
1 to 5 years		49,999		50,089		16,334		16,366		32,165		32,266		5,031		5,120
5 to 10 years		25,032		24,675		-		-		38,716		38,487		-		-
over 10 years										26,121		25,894
Mortgage-backed securities and other		204,583		206,654		25,572		25,488		179,331		186,074		18,582		19,001
Total	$	314,165	$	315,901	$	64,924	$	64,842	$	287,370	$	293,810	$	30,613	$	31,139

~~Pledged securities~~Securities pledged had carrying amounts of ~~$198.4~~$164.1 million and ~~$166.4~~$182.2 million at September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, respectively, and were pledged principally to secure FHLB advances and public deposits.

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 September 30, ~~2019~~2020 and June 30, ~~2019~~2020:

September 30, 2019

Less than 12 months

12 months or greater

Total

Unrealized/

Unrealized/

Unrealized/

Fair

Unrecognized

Fair

Unrecognized

Fair

Unrecognized

Value

Loss

Value

Loss

Value

Loss

(in thousands)

Available for sale:

U.S. Government and agency obligations

$
2,995

$
(3
)

$
23,971

$
(57
)

$
26,966

$
(60
)
Corporate and other debt securities

-

-

-

-

-

-

Mortgage-backed securities – residential

2,258

(2
)

15,399

(124
)

17,657

(126
)
Total available for sale

$
5,253

$
(5
)

$
39,370

$
(181
)

$
44,623

$
(186
)
Held to maturity:

U.S. Government and agency obligations

$
6,994

$
(6
)

$
42,426

$
(126
)

$
49,420

$
(132
)
Corporate and other debt securities

19,403

(597
)

-

-

19,403

(597
)
Mortgage-backed securities – residential

23,546

(76
)

15,716

(175
)

39,262

(251
)
Mortgage-backed securities – collateralized
mortgage obligations

5,643

(15
)

9,027

(77
)

14,670

(92
)
Mortgage-backed securities – commercial

-

-

3,451

(20
)

3,451

(20
)
Total held to maturity

$
55,586

$
(694
)

$
70,620

$
(398
)

$
126,206

$
(1,092
)

	June 30, 2019															September 30, 2020
	Less than 12 months					12 months or greater					Total					Less than 12 months					12 months or greater					Total
			Unrealized/					Unrealized/					Unrealized/					Unrealized/					Unrealized/					Unrealized/
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
	Value		Loss			Value		Loss			Value		Loss			Value		Loss			Value		Loss			Value		Loss
	(in thousands)															(in thousands)
Available for sale
U.S. Government and agency obligations	$	-	$	-		$	32,919	$	(121	)	$	32,919	$	(121	)
Corporate and other debt securities		-		-			3,269		(9	)		3,269		(9	)
Available for sale:
Mortgage-backed securities – residential		-		-			24,000		(181	)		24,000		(181	)	$	662	$	(9	)	$	760	$	(4	)	$	1,422	$	(13	)
Total available for sale	$	-	$	-		$	60,188	$	(311	)	$	60,188	$	(311	)	$	662	$	(9	)	$	760	$	(4	)	$	1,422	$	(13	)
Held to maturity
Held to maturity:
U.S. Government and agency obligations	$	-	$	-		$	59,306	$	(246	)	$	59,306	$	(246	)	$	2,500	$	(1	)	$	-	$	-		$	2,500	$	(1	)
Corporate and other debt securities		17,087		(413	)		-		-			17,087		(413	)		30,144		(738	)		16,972		(528	)		47,116		(1,266	)
Mortgage-backed securities – residential		1,666		(26	)		54,648		(346	)		56,314		(372	)		2,062		(10	)		-		-			2,062		(10	)
Mortgage-backed securities – collateralized mortgage obligations		-		-			29,372		(147	)		29,372		(147	)		5,302		(9	)		-		-			5,302		(9	)
Mortgage-backed securities – commercial		-		-			6,972		(29	)		6,972		(29	)
Total held to maturity	$	18,753	$	(439	)	$	150,298	$	(768	)	$	169,051	$	(1,207	)	$	40,008	$	(758	)	$	16,972	$	(528	)	$	56,980	$	(1,286	)

	June 30, 2020
	Less than 12 months					12 months or greater					Total
			Unrealized/					Unrealized/					Unrealized/
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
	Value		Loss			Value		Loss			Value		Loss
	(in thousands)
Available for sale
Mortgage-backed securities – residential	$	1,450	$	(15	)	$	-	$	-		$	1,450	$	(15	)
Total available for sale	$	1,450	$	(15	)	$	-	$	-		$	1,450	$	(15	)
Held to maturity
U.S. Government and agency obligations	$	11,995	$	(5	)	$	-	$	-		$	11,995	$	(5	)
Corporate and other debt securities		30,751		(1,055	)		12,045		(455	)		42,796		(1,510	)
Mortgage-backed securities – residential		5,130		(17	)		-		-			5,130		(17	)
Mortgage-backed securities – collateralized mortgage obligations		2,627		(31	)		-		-			2,627		(31	)
Total held to maturity	$	50,503	$	(1,108	)	$	12,045	$	(455	)	$	62,548	$	(1,563	)

As of September 30, ~~2019,~~2020, the Company’s securities portfolio consisted of ~~$379.0~~$318.5 million in securities, of which ~~105~~24 securities with a fair value of ~~$170.8~~$58.4 million were in an unrealized loss position. The majority of unrealized losses are related to the Company’s corporate and other debt securities, mortgage-backed securities and U.S. Government and agency ~~obligations~~obligations. Corporate and ~~mortgage-backed securities.~~other debt securities are internally pass rated and are subject to quarterly credit monitoring.

At September 30, 2020 and June 30, ~~2019, the Company’s securities portfolio consisted~~2020 there were 0 holdings of ~~$417.8 million in~~ securities of ~~which 135 securities with a fair value of $229.2 million were~~ any one issuer, other than the U.S. government and its agencies, in an ~~unrealized loss~~ ~~position. The majority~~amount greater than 10% of ~~unrealized losses are related to the Company’s U.S. Government and agency obligations and mortgage-backed securities.~~shareholders’ equity.

There were no0 securities as of September 30, ~~2019~~2020 or June 30, ~~2019~~2020 for which the Company believes it is not probable that it will collect all amounts due according to the contractual terms of the security. Management believes the unrealized losses are primarily a result of changes in interest ~~rates.~~rates and credit spreads. The Company has determined that it does not intend to sell, or it is not more likely than not that it will be required to sell, its securities that are in an unrealized loss position prior to the recovery of its amortized cost basis. Therefore, the Company did not consider any securities to be other-than-temporarily impaired as of September 30, ~~2019~~2020 or June 30, ~~2019.~~2020.

	September 30,			June 30,			September 30,			June 30,
	2019			2019			2020			2020
Mortgage loans:
Residential	$	264,251		$	265,167		$	245,008		$	255,382
Commercial		726,315			651,396			794,248			807,106
Construction		18,830			13,231			11,512			11,053
Net deferred loan origination costs		1,202			1,031			666			739
Total mortgage loans		1,010,598			930,825			1,051,434			1,074,280
Commercial and consumer loans:
Commercial loans		125,926			133,614			155,569			164,257
Home equity lines of credit		31,503			33,204			29,249			29,838
Consumer and overdrafts		437			365			308			481
Net deferred loan origination costs		783			777			25			730
Total commercial and consumer loans		158,649			167,960			185,151			195,306
Total loans receivable		1,169,247			1,098,785			1,236,585			1,269,586
Allowance for loan losses		(5,993	)		(5,664	)		(8,672	)		(8,639	)
Loans receivable, net	$	1,163,254		$	1,093,121		$	1,227,913		$	1,260,947

In 2015, the Company completed a merger with CMS Bancorp and its wholly owned subsidiary, CMS Bank. References to acquired loans in this note pertain only to those loans acquired as part of the merger.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended September 30, 2019												Three Months Ended September 30, 2020
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance		Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	363	$	(23	)	$	-		$	3	$	343	$	373	$	(33	)	$	-		$	2	$	342
Commercial		3,853		461			-			-		4,314		6,913		53			-			-		6,966
Construction		159		63			-			-		222		165		8			-			-		173
Commercial loans		1,130		(89	)		-			-		1,041		1,124		71			(105	)		31		1,121
Home equity lines of credit		65		(9	)		-			5		61		60		1		-				2		63
Consumer and overdrafts		11		15			(18	)		4		12		4		9			(8	)		2		7
Acquired:
Residential		83		(83	)		-			-		-
Total	$	5,664	$	335		$	(18	)	$	12	$	5,993	$	8,639	$	109		$	(113	)	$	37	$	8,672

	Three Months Ended September 30, 2018												Three Months Ended September 30, 2019
	Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance		Beginning Allowance		Provision (credit)			Charge-offs			Recoveries		Ending Allowance
Originated:
Residential	$	386	$	(29	)	$	-		$	2	$	359	$	446	$	(106	)	$	-		$	3	$	343
Commercial		3,073		57			-			-		3,130		3,853		461			-			-		4,314
Construction		505		(12	)		-			-		493		159		63			-			-		222
Commercial loans		780		45			-			-		825		1,130		(89	)		-			-		1,041
Home equity lines of credit		80		(11	)		-			-		69		65		(9	)		-			5		61
Consumer and overdrafts		7		8			(7	)		2		10		11		15			(18	)		4		12
Acquired:
Residential		73		-			-			-		73
Total	$	4,904	$	58		$	(7	)	$	4	$	4,959	$	5,664	$	335		$	(18	)	$	12	$	5,993

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 September 30, ~~2019~~2020 and June 30, ~~2019~~2020 (in thousands):

	September 30, 2019																September 30, 2020
	Loans								Allowance for Loan Losses								Loans								Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total
Residential	$	2,469	$	261,025	$	757	$	264,251	$	124	$	219	$	-	$	343	$	2,440	$	241,837	$	731	$	245,008	$	115	$	227	$	0	$	342
Commercial		1,408		724,021		886		726,315		-		4,314		-		4,314		-		793,362		886		794,248		-		6,966		0		6,966
Construction		-		18,830		-		18,830		-		222		-		222		-		11,512		-		11,512		-		173		0		173
Commercial loans		2,001		123,925		-		125,926		39		1,002		-		1,041		1,804		153,765		-		155,569		-		1,121		0		1,121
Home equity lines of credit		689		30,660		154		31,503		4		57		-		61		365		28,749		135		29,249		8		55		0		63
Consumer and overdrafts		-		437		-		437		-		12		-		12		-		308		-		308		-		7		-		7
Total	$	6,567	$	1,158,898	$	1,797	$	1,167,262	$	167	$	5,826	$	-	$	5,993	$	4,609	$	1,229,533	$	1,752	$	1,235,894	$	123	$	8,549	$	0	$	8,672

	June 30, 2019																June 30, 2020
	Loans								Allowance for Loan Losses								Loans								Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired With Deteriorated Credit Quality		Total
Residential	$	1,774	$	262,124	$	1,269	$	265,167	$	130	$	233	$	83	$	446	$	2,448	$	252,195	$	739	$	255,382	$	118	$	255	$	-	$	373
Commercial		1,418		649,088		890		651,396		-		3,853		-		3,853		-		806,224		882		807,106		-		6,913		0		6,913
Construction		-		13,231		-		13,231		-		159		-		159		-		11,053		-		11,053		-		165		0		165
Commercial loans		2,016		131,598		-		133,614		39		1,091		-		1,130		1,921		162,336		-		164,257		1		1,123		0		1,124
Home equity lines of credit		689		32,359		156		33,204		4		61		-		65		350		29,349		139		29,838		4		56		0		60
Consumer and overdrafts		-		365		-		365		-		11		-		11		-		481		-		481		-		4		-		4
Total	$	5,897	$	1,088,765	$	2,315	$	1,096,977	$	173	$	5,408	$	83	$	5,664	$	4,719	$	1,261,638	$	1,760	$	1,268,117	$	123	$	8,516	$	-	$	8,639

The following tables present information related to loans individually evaluated for impairment (excluding loans acquired with deteriorated credit quality) by portfolio segment as of September 30, ~~2019~~2020 and June 30, ~~2019~~2020 (in thousands):


	June 30, 2019						September 30, 2020						June 30, 2020
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses
With no related allowance recorded:
Residential	$	1,061	$	1,028	$	-	$	2,114	$	2,007	$	-	$	2,123	$	2,013	$	-
Commercial		1,471		1,418		-
Commercial loans		2,007		1,836		-		1,960		1,789		-		2,067		1,897		-
Home equity lines of credit		750		678		-		326		338		-		326		339		-
With an allowance recorded:
Residential		723		746		130		370		433		115		372		435		118
Commercial loans		180		180		39		15		15		-		24		24		1
Home equity lines of credit		11		11		4		27		27		8		11		11		4
Total	$	6,203	$	5,897	$	173	$	4,812	$	4,609	$	123	$	4,923	$	4,719	$	123

The tables below present the average recorded investment and interest income recognized on loans individually evaluated for impairment, by portfolio segment, for the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three months ended				Three months ended				Three months ended				Three months ended
	September 30, 2019				September 30, 2018				September 30, 2020				September 30, 2019
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Residential	$	1,735	$	6	$	1,845	$	28	$	2,015	$	8	$	1,735	$	6
Commercial		1,411		12		1,621		39		-		-		1,411		12
Commercial loans		1,825		50		2,377		143		1,809		49		1,825		50
Home equity lines of credit		680		-		326		6		339		-		680		-
With an allowance recorded:
Residential		738		3		450		11		434		3		738		3
Construction		-		-		2,260		-
Commercial loans		180		1		64		2		15		-		180		1
Home equity lines of credit		11		-		11		-		16		-		11		-
Total	$	6,580	$	72	$	8,954	$	229	$	4,628	$	60	$	6,580	$	72

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 September 30, ~~2019~~2020 and June 30, ~~2019~~2020 (in thousands):

					Loans Past Due Over 90 Days								Loans Past Due Over 90 Days
	Nonaccrual				and Still Accruing				Nonaccrual				and Still Accruing
	September 30,		June 30,		September 30,		June 30,		September 30,		June 30,		September 30,		June 30,
	2019		2019		2019		2019		2020		2020		2020		2020
Originated:
Residential	$	1,241	$	536	$	-	$	-	$	1,454	$	1,457	$	-	$	-
Commercial loans		150		150		-		-		247		-		-		-
Home equity lines of credit		381		383		-		-		383		338		-		-
Consumer and overdrafts		-		-		-		1
Acquired:
Residential		789		795		-		-
Commercial		568		568		-		-
Home equity lines of credit		296		294		-		-
Total	$	3,425	$	2,726	$	-	$	1	$	2,084	$	1,795	$	-	$	-

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 ~~$418,000~~$383,000 and ~~$501,000~~$392,000 as of September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, respectively. Such loans are excluded because the loans are in pools that are considered performing. The discounts arising from recording these loans at fair value upon acquisition were due in part to credit quality and the accretable yield is being recognized as interest income over the life of the loans based on expected cash flows.

The following tables present the aging of the recorded investment in past due loans by portfolio segment as of September 30, ~~2019~~2020 and June 30, ~~2019~~2020 (in thousands):

	September 30, 2019												September 30, 2020
	30-59		60-89		90 Days or								30-59		60-89		90 Days or
	Days Past		Days Past		More Past		Total Past						Days Past		Days Past		More Past		Total Past
	Due		Due		Due		Due		Current		Total		Due		Due		Due		Due		Current ⁽¹⁾		Total
Originated:
Residential	$	-	$	397	$	796	$	1,193	$	218,646	$	219,839	$	-	$	286	$	813	$	1,099	$	243,909	$	245,008
Commercial		-		-		-		-		678,403		678,403		-		-		-		-		794,248		794,248
Construction		-		-		-		-		18,830		18,830		-		-		-		-		11,512		11,512
Commercial loans		-		-		150		150		125,596		125,746		83		226		247		556		155,013		155,569
Home equity lines of credit		-		-		313		313		27,455		27,768		-		-		383		383		28,866		29,249
Consumer and overdrafts		-		-		-		-		422		422		-		-		-		-		308		308
Total originated		-		397		1,259		1,656		1,069,352		1,071,008
Acquired:
Residential		-		217		213		430		43,982		44,412
Commercial		-		-		568		568		47,344		47,912
Commercial loans		-		-		-		-		180		180
Home equity lines of credit		21		-		363		384		3,351		3,735
Consumer and overdrafts		-		-		-		-		15		15
Total acquired		21		217		1,144		1,382		94,872		96,254
Total	$	21	$	614	$	2,403	$	3,038	$	1,164,224	$	1,167,262	$	83	$	512	$	1,443	$	2,038	$	1,233,856	$	1,235,894

	June 30, 2019												June 30, 2020
	30-59		60-89		90 Days or								30-59		60-89		90 Days or
	Days Past		Days Past		More Past		Total Past						Days Past		Days Past		More Past		Total Past
	Due		Due		Due		Due		Current		Total		Due		Due		Due		Due		Current ⁽¹⁾		Total
Originated:
Residential	$	-	$	-	$	86	$	86	$	217,970	$	218,056	$	495	$	10	$	806	$	1,311	$	254,071	$	255,382
Commercial		-		-		-		-		600,675		600,675		-		-		-		-		807,106		807,106
Construction		-		-		-		-		13,231		13,231		-		-		-		-		11,053		11,053
Commercial loans		-		150		-		150		133,286		133,436		76		-		-		76		164,181		164,257
Home equity lines of credit		344		-		312		656		28,767		29,423		44		-		338		382		29,456		29,838
Consumer and overdrafts		-		-		1		1		348		349		-		-		-		-		481		481
Total originated		344		150		399		893		994,277		995,170
Acquired:
Residential		220		116		709		1,045		46,066		47,111
Commercial		-		-		568		568		50,153		50,721
Commercial loans		-		-		-		-		178		178
Home equity lines of credit		-		67		296		363		3,418		3,781
Consumer and overdrafts		-		-		-		-		16		16
Total acquired		220		183		1,573		1,976		99,831		101,807
Total	$	564	$	333	$	1,972	$	2,869	$	1,094,108	$	1,096,977	$	615	$	10	$	1,144	$	1,769	$	1,266,348	$	1,268,117

The terms of certain loans ~~were~~have been modified as troubled debt ~~restructurings.~~restructurings (“TDR”). 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 both September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, the Company had 14 loans, classified as ~~troubled debt restructurings~~TDRs totaling ~~$4.1~~$3.2 million and $3.3 million, including ~~$3.1~~$2.8 million and ~~$3.2~~$2.9 million, respectively, of loans still ~~accruing.~~accruing interest. The Company has allocated ~~$129,000~~$124,000 and ~~$135,000, respectively,~~$123,000, of specific reserves to customers whose loan terms have been modified in ~~troubled debt restructurings~~TDRs as of September 30, ~~2019~~2020 and June 30, ~~2019. The~~2020, respectively. As of September 30, 2020, the Company has ~~not~~ committed to lend an additional ~~amounts~~$10,000 to customers with outstanding loans that are classified as ~~troubled debt restructurings.~~TDRs.

The Company did ~~not~~0t modify any loans induring the three months ended September 30, 2020 or 2019 that were classified as TDRs.

There were 0 defaults of troubled debt restructurings ~~during~~ occurring in the three months ended September 30, ~~2019. The Company~~2020 that were modified ~~two loans with a total carrying amount of $428,000, one residential mortgage and one home equity line of credit,~~ in ~~troubled debt restructurings during~~ the ~~three~~twelve months ~~ended September 30, 2018.~~

prior to default. The Company had ~~one troubled debt restructuring,~~1 TDR, a residential mortgage with a carrying amount of $370,000 as of September 30, 2019, default in the three months ended September 30, 2019 that

was modified in the twelve months prior to default. This default ~~resulted~~did 0t result in noa charge-off nor an increase to the allowance for loan losses. ~~The Company had no troubled debt restructurings for which there was a payment default in the three months ended September 30, 2018, that were modified in the twelve months prior to default.~~

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. 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 September 30, 2020, the Company granted or extended loan payment deferrals for 21 residential mortgage loans and home equity lines of credit totaling $7.4 million, as well as 20 commercial mortgage and commercial loans totaling $26.0 million. In accordance with either the CARES Act or Interagency Statement, these modifications are not considered troubled debt restructurings. The Company had 28 and 320 loans totaling $21.8 million and $216.2 million on loan payment deferral as of September 30, 2020 and June 30, 2020, respectively.

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 ~~utilized~~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.

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. Based on the most recent analysis performed, the risk category of loans by portfolio segment is as follows (in thousands):

	September 30, 2019								September 30, 2020
	Pass		Special Mention		Substandard		Total		Pass		Special Mention		Substandard		Total
Originated:
Residential	$	218,193	$	396	$	1,250	$	219,839	$	242,366	$	563	$	2,079	$	245,008
Commercial		674,956		337		3,110		678,403		780,620		12,742		886		794,248
Construction		18,830		-		-		18,830		11,512		-		-		11,512
Commercial loans		118,113		4,070		3,563		125,746		151,189		463		3,917		155,569
Home equity lines of credit		27,344		72		352		27,768		28,357		449		443		29,249
Consumer and overdrafts		422		-		-		422		308		-		-		308
Total originated		1,057,858		4,875		8,275		1,071,008
Acquired:
Residential		43,056		206		1,150		44,412
Commercial		42,962		3,496		1,454		47,912
Commercial loans		180		-		-		180
Home equity lines of credit		3,285		67		383		3,735
Consumer and overdrafts		15		-		-		15
Total acquired		89,498		3,769		2,987		96,254
Total	$	1,147,356	$	8,644	$	11,262	$	1,167,262	$	1,214,352	$	14,217	$	7,325	$	1,235,894

	June 30, 2019								June 30, 2020
	Pass		Special Mention		Substandard		Total		Pass		Special Mention		Substandard		Total
Originated:
Residential	$	216,438	$	1,071	$	547	$	218,056	$	252,604	$	687	$	2,091	$	255,382
Commercial		600,216		339		120		600,675		803,048		3,176		882		807,106
Construction		13,231		-		-		13,231		11,053		-		-		11,053
Commercial loans		123,361		6,423		3,652		133,436		160,137		201		3,919		164,257
Home equity lines of credit		28,996		67		360		29,423		28,894		498		446		29,838
Consumer and overdrafts		349		-		-		349		481		-		-		481
Total originated		982,591		7,900		4,679		995,170
Acquired:
Residential		44,959		211		1,941		47,111
Commercial		45,726		3,537		1,458		50,721
Commercial loans		178		-		-		178
Home equity lines of credit		3,331		68		382		3,781
Consumer and overdrafts		16		-		-		16
Total acquired		94,210		3,816		3,781		101,807
Total	$	1,076,801	$	11,716	$	8,460	$	1,096,977	$	1,256,217	$	4,562	$	7,338	$	1,268,117

As of September 30, 2020, of the $21.8 million in loans granted COVID-19 related payment deferrals, $11.9 million were pass-rated, with $9.6 million and $221,000 rated special mention and substandard, respectively. As of June 30, 2020, of the $216.2 million in loans granted COVID-19 related payment deferrals, $211.0 million were pass-rated, with $198,000 and $4.9 million rated special mention and substandard, respectively.

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. The carrying amount of those loans as of September 30, ~~2019~~2020 and June 30, ~~2019~~2020 is as follows (in thousands):

	September 30,		June 30,		September 30,		June 30,
	2019		2019		2020		2020
Residential	$	757	$	1,186	$	731	$	739
Commercial		886		890		886		882
Home equity lines of credit		154		156		135		139
Carrying amount, net of allowance of $0 and $83, respectively	$	1,797	$	2,232
Carrying amount, net of allowance of $0					$	1,752	$	1,760

The allowance for loan losses on purchased credit impaired loans decreased $0 and $83,000 during the three months ended September 30, ~~2019.~~2020 and 2019, respectively.

Accretable yield, or income expected to be collected, for acquired loans is as follows (in thousands):

	Three Months Ended September 30,						Three Months Ended September 30,
	2019			2018			2020			2019
Beginning balance	$	192		$	245		$	156		$	192
New loans acquired		-			-			-			-
Accretion income		(10	)		(13	)		(5	)		(10	)
Reclassification from non-accretable difference		-			-			-			-
Disposals		-			-			-			-
Ending balance	$	182		$	232		$	151		$	182

The following is a summary of the accumulated other comprehensive income (loss) balances, net of tax (in thousands):

													Net unrealized gain (loss) on available for sale securities			Unrealized loss on pension benefits			Unrealized loss on SERP benefits			Total
Balance at July 1, 2020													$	428		$	(6,605	)	$	(226	)	$	(6,403	)
Other comprehensive (loss) income before reclassifications														(16	)		-			-			(16	)
Amounts reclassified from accumulated other comprehensive income														-			240			14			254
Less tax effect														3			(51	)		(3	)		(51	)
Net other comprehensive (loss) income														(13	)		189			11			187
Balance at September 30, 2020													$	415		$	(6,416	)	$	(215	)	$	(6,216	)

	Net unrealized gain (loss) on available for sale securities			Unrealized loss on pension benefits			Unrealized loss on SERP benefits			Total			Net unrealized gain (loss) on available for sale securities			Unrealized loss on pension benefits			Unrealized loss on SERP benefits			Total
Balance at July 1, 2019	$	(209	)	$	(4,631	)	$	(250	)	$	(5,090	)	$	(209	)	$	(4,631	)	$	(250	)	$	(5,090	)
Other comprehensive income before reclassifications		181			-			-			181			181			-			-			181
Amounts reclassified from accumulated other comprehensive income		-			133			11			144			-			133			11			144
Less tax effect		(38	)		(29	)		(2	)		(69	)		(38	)		(29	)		(2	)		(69	)
Net other comprehensive income		143			104			9			256			143			104			9			256
Balance at September 30, 2019	$	(66	)	$	(4,527	)	$	(241	)	$	(4,834	)	$	(66	)	$	(4,527	)	$	(241	)	$	(4,834	)

	Net unrealized gain (loss) on available for sale securities			Unrealized loss on pension benefits			Unrealized loss on SERP benefits			Total
Balance at July 1, 2018	$	(1,536	)	$	(5,150	)	$	(264	)	$	(6,950	)
Other comprehensive loss before reclassifications		(153	)		-			-			(153	)
Amounts reclassified from accumulated other comprehensive income		-			145			9			154
Less tax effect		32			(30	)		(2	)		-
Net other comprehensive (loss) income		(121	)		115			7			1
Balance at September 30, 2018	$	(1,657	)	$	(5,035	)	$	(257	)	$	(6,949	)

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 May 1, 2017.

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 months ended September 30, ~~2019~~2020 and ~~2018~~2019 (in thousands):

	Three Months Ended					Three Months Ended					Three Months Ended					Three Months Ended
	September 30, 2019					September 30, 2018					September 30, 2020					September 30, 2019
	Defined Benefit Plan			Supplemental Retirement Plans		Defined Benefit Plan			Supplemental Retirement Plans		Defined Benefit Plan			Supplemental Retirement Plans		Defined Benefit Plan			Supplemental Retirement Plans
Service cost	$	-		$	79	$	-		$	148	$	-		$	90	$	-		$	79
Interest cost		180			31		250			26		136			24		180			31
Expected return on plan assets		(479	)		-		(513	)		-		(456	)		-		(479	)		-
Amortization of prior net loss		133			11		145			9		240			14		133			11
Settlement charges		-			-		-			-
Net periodic (benefit) cost	$	(166	)	$	121	$	(118	)	$	183
Net periodic cost (benefit)											$	(80	)	$	128	$	(166	)	$	121

The Company made no0 contributions to the defined benefit plan during the three months ended September 30, ~~2019.~~2020.

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 Company granted a loan to the ESOP for the purchase of 1,453,209 shares of the Company’s common stock at a price of $10.00 per share. The loan obtained by the ESOP from the Company to purchase the common stock is payable annually over 15 years at a rate per annum equal to the Prime Rate, reset annually on January 1st ~~(5.50%~~(4.75% for ~~2019)~~2020). Loan payments are principally funded by cash contributions from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. The balance of the ESOP loan at September 30, ~~2019~~2020 was ~~$12.6~~$11.6 million. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares committed to be released annually is 96,881 through 2032. Dividends on allocated shares increase participant accounts and are used to purchase additional shares of stock. Participants receive the shares at the end of employment.

	September 30, 2019		June 30, 2019		September 30, 2020		June 30, 2020
Allocated to participants		258,852		234,059		352,463		327,206
Unearned		1,186,991		1,211,410		1,090,110		1,114,529
Total ESOP shares		1,445,843		1,445,469		1,442,573		1,441,735

Fair value of unearned shares	$	23,728	$	24,531	$	13,158	$	14,132

Total compensation expense recognized in connection with the ESOP for the three months ended September 30, 2020 and 2019 was $301,000 and ~~2018 was~~ $483,000, ~~and $493,000,~~ respectively.

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.

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 10% and 20% should be applied to properties with appraisals performed.

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 eachderivative. 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								Fair Value Measurements
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
September 30, 2019
September 30, 2020

Measured on a recurring basis:
Available for sale securities:
U.S. Government and agency obligations	$	-	$	30,962	$	-	$	30,962	$	-	$	7,017	$	-	$	7,017
Corporate and other debt securities		-		8,392		-		8,392		-		5,121		-		5,121
Mortgage-backed securities – residential		-		25,488		-		25,488		-		19,001		-		19,001
Derivatives – interest rate contracts		-		3,222		-		3,222		-		8,094		-		8,094
Total assets at fair value	$	-	$	68,064	$	-	$	68,064	$	-	$	39,233	$	-	$	39,233

Derivatives – interest rate contracts	$	-	$	3,222	$	-	$	3,222	$	-	$	8,094	$	-	$	8,094
Total liabilities at fair value	$	-	$	3,222	$	-	$	3,222	$	-	$	8,094	$	-	$	8,094

Measured on a non-recurring basis:
Impaired loans:
Residential mortgages	$	-	$	-	$	614	$	614	$	-	$	-	$	318	$	318
Commercial loans		-		-		141		141		-		-		15		15
Home equity lines of credit		-		-		7		7		-		-		18		18
Foreclosed real estate		-		-		856		856
Total assets at fair value	$	-	$	-	$	1,618	$	1,618	$	-	$	-	$	351	$	351

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total		Fair Value Measurements
June 30, 2019
									Level 1		Level 2		Level 3		Total
June 30, 2020
Measured on a recurring basis:
Available for sale securities:
U.S. Government and agency obligations	$	-	$	36,911	$	-	$	36,911	$	-	$	11,049	$	-	$	11,049
Corporate and other debt securities		-		8,360		-		8,360		-		5,120		-		5,120
Mortgage-backed securities – residential		-		26,957		-		26,957		-		21,257		-		21,257
Derivatives – interest rate contracts		-		1,339		-		1,339		-		8,305		-		8,305
Total assets at fair value	$	-	$	73,567	$	-	$	73,567	$	-	$	45,731	$	-	$	45,731

Derivatives – interest rate contracts	$	-	$	1,339	$	-	$	1,339	$	-	$	8,305	$	-	$	8,305
Total liabilities at fair value	$	-	$	1,339	$	-	$	1,339	$	-	$	8,305	$	-	$	8,305

Measured on a non-recurring basis:
Impaired loans:
Residential mortgages	$	-	$	-	$	616	$	616	$	-	$	-	$	316	$	316
Commercial loans		-		-		141		141		-		-		100		100
Home equity lines of credit		-		-		7		7		-		-		8		8
Foreclosed real estate		-		-		653		653
Total assets at fair value	$	-	$	-	$	1,417	$	1,417	$	-	$	-	$	424	$	424

There were no0 transfers between levels within the fair value hierarchy during the three months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

Impaired loans in the preceding table had a carrying amount of ~~$928,000,~~$475,000 and a remaining valuation allowance of ~~$167,000~~$124,000, at September 30, ~~2019,~~2020, as compared to ~~$937,000~~$547,000 and ~~$173,000,~~123,000, respectively, as of June 30, ~~2019.~~2020. Impaired loans measured at fair value incurred nonet recoveries of $4,000 and resulted in a credit for loan losses of $3,000 during the three months ended September 30, 2020. Impaired loans measured at fair value as of September 30, 2019 incurred 0 net charge-offs and resulted in aan additional credit for loan losses of $6,000 during the three months ended September 30, 2019. ~~Impaired loans measured at fair value as of September 30, 2018 incurred no net charge-offs and resulted in a credit for loan losses of $5,000 during the three months ended September 30, 2018.~~

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 September 30, ~~2019~~2020 and June 30, ~~2019~~2020 (dollars in thousands):

Valuation

Unobservable

Range or

Fair Value

Technique(s)

Input(s)

Rate Used

Valuation

Unobservable

Range or

September 30, 2019

Fair Value

Technique(s)

Input(s)

Rate Used

September 30, 2020

Impaired loans - residential mortgages

614

Discounted cash flow

Discount rate

5.4% to 6.3%

318

Discounted cash flow

Discount rate

5.4% to 6.3%

Impaired loans - home equity lines of credit

Discounted cash flow

Discount rate

3.3% to 6.3%

Impaired loans - commercial loans

141

Discounted cash flow

Discount rate

6.0% to 7.0%

Discounted cash flow

Discount rate

7.0%

June 30, 2020

Impaired loans - residential mortgages

316

Discounted cash flow

Discount rate

5.4% to 6.3%

Impaired loans - home equity lines of credit

Discounted cash flow

Discount rate

6.3%

Discounted cash flow

Discount rate

6.3%

Foreclosed real estate

856

Sales comparison

Adjustments for

differences in sales

comparables

-8.0% to 5.9%

June 30, 2019

Impaired loans - residential mortgages

616

Discounted cash flow

Discount rate

5.4% to 6.3%

Impaired loans - commercial loans

141

Discounted cash flow

Discount rate

6.0% to 7.0%

100

Discounted cash flow

Discount rate

6.8% to 7.5%

Impaired loans - home equity lines of credit

Discounted cash flow

Discount rate

6.2%

Foreclosed real estate

653

Sales comparison

Adjustments for

differences in sales

comparables

-8.0% to 45.0%

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								Carrying		Fair Value Measurements
	Amount		Level 1		Level 2		Level 3		Total		Amount		Level 1		Level 2		Level 3		Total
September 30, 2019
September 30, 2020
Financial assets:
Cash and cash equivalents	$	37,797	$	37,797	$	-	$	-	$	37,797	$	162,739	$	162,739	$	-	$	-	$	162,739
Investment securities held to maturity		314,165		-		315,901		-		315,901		287,370		-		289,010		4,800		293,810
Investment securities available for sale		64,842		-		64,842		-		64,842		31,139		-		31,139		-		31,139
Loans receivable, net		1,163,254		-		-		1,162,995		1,162,995		1,227,913		-		-		1,207,943		1,207,943
Accrued interest receivable		5,494		-		1,545		3,949		5,494		6,729		-		1,310		5,419		6,729
FHLB stock		6,254	N/A		N/A		N/A		N/A			6,307	N/A		N/A		N/A		N/A
Derivative assets - interest rate contracts		3,222		-		3,222		-		3,222		8,094		-		8,094		-		8,094
Financial liabilities:
Demand, NOW, money market deposits and savings accounts		767,531		767,531		-		-		767,531		935,001		935,001		-		-		935,001
Time deposits		466,374		-		472,330		-		472,330		442,011		-		451,034		-		451,034
Mortgage escrow funds		7,553		7,553		-		-		7,553		6,420		6,420		-		-		6,420
Accrued interest payable		354		2		352		-		354		252		2		250		-		252
FHLB advances		111,185		-		112,043		-		112,043		106,056		-		110,762		-		110,762
Derivative liabilities - interest rate contracts		3,222		-		3,222		-		3,222		8,094		-		8,094		-		8,094

June 30, 2019
Financial assets:
Cash and cash equivalents	$	60,029	$	60,029	$	-	$	-	$	60,029
Investment securities held to maturity		345,545		-		346,243		-		346,243
Investment securities available for sale		72,228		-		72,228		-		72,228
Loans receivable, net		1,093,121		-		-		1,092,878		1,092,878
Accrued interest receivable		4,797		-		1,330		3,467		4,797
FHLB stock		6,255	N/A		N/A		N/A		N/A
Derivative assets - interest rate contracts		1,339		-		1,339		-		1,339
Financial liabilities:
Demand, NOW, money market deposits and savings accounts		770,426		770,426		-		-		770,426
Time deposits		455,395		-		460,554		-		460,554
Mortgage escrow funds		9,355		9,355		-		-		9,355
Accrued interest payable		209		16		193				209
FHLB advances		111,216		-		111,818		-		111,818
Derivative liabilities - interest rate contracts		1,339		-		1,339		-		1,339

	Carrying		Fair Value Measurements
	Amount		Level 1		Level 2		Level 3		Total
June 30, 2020
Financial assets:
Cash and cash equivalents	$	136,302	$	136,302	$	-	$	-	$	136,302
Investment securities held to maturity		275,772		-		276,847		4,650		281,497
Investment securities available for sale		37,426		-		37,426		-		37,426
Loans receivable, net		1,260,947		-		-		1,240,440		1,240,440
Accrued interest receivable		6,880		-		997		5,883		6,880
FHLB stock		6,308	N/A		N/A		N/A		N/A
Derivative assets - interest rate contracts		8,305		-		8,305		-		8,305
Financial liabilities:
Demand, NOW, money market deposits and savings accounts		926,989		926,989		-		-		926,989
Time deposits		446,246		-		456,109		-		456,109
Mortgage escrow funds		10,123		10,123		-		-		10,123
Accrued interest payable		246		1		245				246
FHLB advances		106,089		-		110,937		-		110,937
Derivative liabilities - interest rate contracts		8,305		-		8,305		-		8,305

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.

The following is a summary of the Bank’s actual capital amounts and ratios as of September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, compared to the required ratios for minimum capital adequacy and for classification as well capitalized (dollars in thousands). As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act passed by Congress in 2018, the Company is no longer subject to consolidated capital requirements, as the Company’s total consolidated assets do not exceed $3 billion.

											To Be Well Capitalized															To Be Well Capitalized
						For Capital					Under Prompt										For Capital					Under Prompt
						Adequacy					Corrective Action										Adequacy					Corrective Action
	Bank Actual					Purposes					Provisions					Bank Actual					Purposes					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
September 30, 2019
September 30, 2020
PCSB Bank
Leverage (Tier 1)	$	212,970		12.9	%	$	66,066		4.0	%	$	82,583		5.0	%	$	223,304		12.4	%	$	72,002		4.0	%	$	90,003		5.0	%
Risk-based:
Common Tier 1		212,970		17.2			55,863		4.5			80,691		6.5			223,304		17.6			57,228		4.5			82,662		6.5
Tier 1		212,970		17.2			74,484		6.0			99,312		8.0			223,304		17.6			76,304		6.0			101,738		8.0
Total		218,963		17.6			99,312		8.0			124,140		10.0			231,976		18.2			101,738		8.0			127,173		10.0

June 30, 2019
June 30, 2020
PCSB Bank
Leverage (Tier 1)	$	209,885		13.8	%	$	60,774		4.0	%	$	75,968		5.0	%	$	220,310		12.5	%	$	70,432		4.0	%	$	88,040		5.0	%
Risk-based:
Common Tier 1		209,885		18.0			52,579		4.5			75,948		6.5			220,310		17.0			58,389		4.5			84,339		6.5
Tier 1		209,885		18.0			70,105		6.0			93,474		8.0			220,310		17.0			77,852		6.0			103,802		8.0
Total		215,549		18.4			93,474		8.0			116,842		10.0			228,949		17.0			103,802		8.0			129,753		10.0

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 2.5% of total risk-weighted assets to avoid being subject to limitations on capital distributions and discretionary bonus payments to executive officers.

Management believes that as of September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, the Bank met all capital adequacy requirements to which it was subject, including the capital conservation buffer of 2.5%, as of September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, respectively. Further, the most recent FDIC notification categorized the Bank as a well-capitalized institution under the prompt corrective action regulations. There have been no conditions or events since that notification that management believes have changed the Bank’s capital classification.

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.

The following table provides factors used in the earnings per share computation for the three months ended September 30 ~~2019 and 2018.~~^th.

	Three Months Ended September 30,
	2019			2018			2020			2019
	(amounts in thousands, except share and per share data)						(amounts in thousands, except share and per share data)
Net income applicable to common stock	$	2,829		$	2,329		$	2,728		$	2,829

Average number of common shares outstanding		17,178,824			18,165,110			16,404,886			17,178,824
Less: Average unallocated ESOP shares		(1,199,062	)		(1,296,010	)		(1,102,048	)		(1,199,062	)
Average number of common shares outstanding used to calculate basic earnings per common share		15,979,762			16,869,100			15,302,838			15,979,762

Effect of equity-based awards		102,514			-			111			102,514
Average number of common shares outstanding used to calculate diluted earnings per common share		16,082,276			16,869,100			15,302,949			16,082,276

Earnings per common share:
Basic	$	0.18		$	0.14		$	0.18		$	0.18
Diluted	$	0.18		$	0.14		$	0.18		$	0.18

Stock options for 1,345,293 and 1,339,293 shares of common stock were not considered in computing diluted earnings per common share for the three months ended September 30, 2020 and 2019, respectively because they were antidilutive. ~~There were no potentially dilutive common stock equivalents outstanding during the three months ended September 30, 2018.~~

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. 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 September 30, ~~2019~~2020 and June 30, ~~2019.~~2020.

	September 30,			June 30,			September 30,			June 30,
	2019			2019			2020			2020
	(dollars in thousands)						(dollars in thousands)
Notional amounts	$	96,288		$	68,535		$	168,462		$	159,242
Weighted average pay rates		3.65	%		3.89	%		2.53	%		2.54	%
Weighted average receive rates		3.65	%		3.89	%		2.53	%		2.54	%
Weighted average maturity	9.68 years			9.84 years			9.10 years			9.31 years
Fair value of combined interest rate swaps	$	-		$	-		$	-		$	-

In accordance with ~~ASU 2014-09,~~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 ~~Company’s~~following table presents summary information about sources of revenue ~~streams that are within the scope~~from contracts with customers as of the accounting standard are: (1) fees and service charges on deposit accounts (including interchange fees), which, are included on the Consolidated Statements of Operations as “Fees and service charges” and (2) gains on the sale of foreclosed real estate. For the three months ended September 30 2019 and 2018, fees and services charges totaled $402,000 and $418,000, respectively, of which and $372,000 and $392,000, respectively, were revenue streams within the scope of the accounting standard.^th.

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. ~~For the September 30, 2019 and 2018, fees and service charges on deposit accounts were $255,000 and $287,000, respectively.~~

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. ~~For the three months ended September 30, 2019 and 2018, interchange income was $117,000 and $105,000, respectively.~~

~~Gain/Losses~~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. ~~For the three months ended September 30, 2019, the Company recorded~~ ~~$47,000~~ ~~gain on sale of foreclosed real estate, compared to no gain on sale of foreclosed real estate recorded in the prior year.~~

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 2,543,115, of which 1,816,511 shares may be granted as stock options and 726,604 shares may be granted as restricted stock and restricted stock units. Total compensation cost that has been charged against income for the Plan was $829,000 and $830,000 for the three months ended September 30, ~~2019. No compensation cost was incurred for the three months ended September 30, 2018.~~2020 and 2019, respectively.

RSAs provide for the issuance of shares to both employees and non-employee directors. These awards generally vest over a 5-year period, with 20% vesting each year on the anniversary of the award. All awards were made at the fair value of common stock on the grant date. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at grant date. The fair value of the stock was determined to be the closing price of the stock on the NASDAQ exchange. Total shares available for grant under the Plan are 726,604, of which ~~547,185~~550,185 shares were ~~issued~~granted as of September 30, ~~2019.~~2020.

The following table presents a summary of RSA activity during the period ended September 30, ~~2019.~~2020.

	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Grant Date Fair Value
Unvested granted shares outstanding at July 1, 2019		547,185	$	19.02
Unvested granted shares outstanding at July 1, 2020						437,737	$	19.02
Shares granted		-		-		3,000		12.34
Shares vested		-		-		-		-
Shares forfeited		-		-		-		-
Unvested granted shares at September 30, 2019		547,185	$	19.02
Unvested granted shares at September 30, 2020						440,737	$	18.97

As of September 30, ~~2019,~~2020, there was ~~$8.5~~$6.5 million of total unrecognized compensation cost related to ~~nonvested~~non-vested shares granted under the Plan. The cost is expected to be recognized over a weighted-average period of ~~4.1~~3.2 years.

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 20% vesting each year on the anniversary of the award, however, may not vest more rapidly than over a three-year period, and have a contractual term of 10 years. The Company has a policy of using shares held as a treasury stock to satisfy share option exercises. Currently, the Company has a sufficient number of treasury shares to satisfy the current level of exercisable share options.

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~~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.

The fair value of options granted during the three months ended September 30, 2020, was determined using the following weighted-average assumptions as of grant date.

As of September 30, ~~2019,~~2020, there was ~~$5.1~~$3.8 million of total unrecognized compensation cost related to non-vested stock options granted under the Plan. The cost is expected to be recognized over a weighted-average period of ~~4.1~~3.2 years.

Total shares available for grant under the Plan are 1,816,511, of which ~~1,339,293~~1,345,293 shares were ~~issued~~granted as of September 30, ~~2019.~~2020. The following table presents a summary of activity related to stock options granted under the Plan, and changes during the period then ended:

	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Years		Aggregate Intrinsic Value		Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Years		Aggregate Intrinsic Value
	(dollars in thousands, except share and per share data)								(dollars in thousands, except share and per share data)
Options outstanding at July 1, 2019		1,339,293	$	19.04
Options outstanding at July 1, 2020										1,339,293	$	19.04			$	-
Options granted		-		-						6,000		12.34
Options expired		-		-						-		-
Options exercised		-		-						-		-
Options outstanding at September 30, 2019		1,339,293	$	19.04		9.1	$	1,277
Options outstanding at September 30, 2020										1,345,293	$	19.01		8.1	$	-

Exercisable at September 30, 2019		-	$	-		-	$	-
Exercisable at September 30, 2020										267,859	$	19.04		8.1	$	-

~~Effective July 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842).~~ As of September 30, ~~2019,~~2020, the Company leases real estate for ~~eleven~~11 branch offices and ~~two~~1 administrative ~~offices,~~office, including its corporate headquarters, under various operating lease agreements. The Company’s leases have maturities which range from ~~2020~~2021 to 2041, some of which include lessee options to extend the lease term. The weighted average remaining life of the lease ~~term~~terms for these leases was ~~10.1~~9.9 years as of September 30, ~~2019.~~2020.

The operating lease asset and lease liability are determined at the commencement date of the lease based on the present value of the lease payments. As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at the lease commencement date. The Company utilized a weighted average discount rate of ~~2.37%~~2.43% in determining the lease liability as of September 30, ~~2019.~~2020.

The Company made a policy election to exclude the recognition requirements of ~~ASU 2016-02~~ASC 842 to short-term leases, those leases with original terms of 12 months or less. Short-term lease payments are recognized in the income statement on a straight-line basis over the lease term. The Company had no0 short-term lease cost for the three months ended September 30, 2020 or 2019. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally

accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. The Company does not sublease any of its leased properties. There were no0 sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three months ended September 30, 2020 or 2019.

~~Total operating lease costs were $473,000 for~~For the three months ended September 30, ~~2019.~~2020 and 2019, total operating lease cost was $504,000 and $497,000, respectively, and is included in occupancy and equipment expense. The right-of-use asset, included in premises and equipment, net, was ~~$12.3~~$10.6 million ~~as of September 30, 2019~~ and the corresponding lease liability, included in other liabilities was ~~$12.6~~$10.8 million as of September 30, ~~2019.~~2020.

Future minimum lease payments for the fiscal years ending June 30^th and a reconciliation of undiscounted lease cash flows and the lease liability recognized in the consolidated balance sheet as of September 30, ~~2019~~2020 is shown below:

(dollars in thousands)
2020	$	1,609
2021		1,960		$	1,486
2022		1,937			1,937
2023		1,850			1,850
2024		1,479			1,479
2025					1,186
Thereafter		5,661			4,475
Total future minimum lease payments (undiscounted)		14,496			12,413
Discounting effect on cash flows		(1,904	)		(1,622	)
Lease liability (discounted)	$	12,592		$	10,791

Subsequent to September 30, ~~2019,~~2020, and through November ~~6, 2019,~~4, 2020, the Company repurchased ~~91,100~~216,500 shares of common stock, at an average cost of ~~$19.97~~$13.18 per share.

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

Management’s discussion and analysis of financial condition at September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, and results of operations for the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 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, ~~2019.~~2020.

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:

Additional factors that may affect our results are discussed in the annual report on Form 10-K for the fiscal year ended June 30, ~~2019,~~2020, under the heading “Risk Factors.”

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~~forward-looking statements except as may be required by applicable law or regulation.

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 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, ~~2019~~2020 Form 10-K. There have been no significant changes in our application of critical accounting policies for the three months ended September 30, ~~2019.~~2020.

Comparison of Financial Condition at September 30, ~~2019~~2020 and June 30, ~~2019~~2020

Total Assets.Total assets ~~increased $21.0 million, or 1.3%, to $1.66~~were unchanged at $1.79 billion at September 30, ~~2019 from $1.64 billion at June 30, 2019. The increase is primarily~~2020. However, the ~~result~~mix of ~~increases~~assets changed due to a decrease of ~~$70.1~~$33.0 million in net loans receivable, ~~and $12.1 million in premises and equipment,~~ partially offset by ~~decreases~~increases of ~~$31.4 million in held to maturity securities, $22.2~~$26.4 million in cash and cash equivalents and ~~$7.4~~$5.3 million in ~~securities available for sale.~~total investment securities.

Cash and Cash ~~Equivalents.~~Equivalents. Cash and cash equivalents ~~decreased $22.2~~increased $26.4 million, or ~~37.0%~~19.4%, to ~~$37.8~~$162.7 million at September 30, ~~2019~~2020 from ~~$60.0~~$136.3 million at June 30, ~~2019.~~2020. The increase is primarily due to a $33.0 million decrease ~~is due primarily to utilization of~~in loans receivable and a $3.8 million increase in deposits, partially offset by a $5.3 million increase in total investment securities and a $3.7 million decrease in mortgage escrow funds. The increase in cash and cash equivalents ~~to partially fund the $70.1 million~~is a result of an increase in ~~loans receivable.~~ deposits and reduced loan originations experienced during the quarter, most likely due to reduced economic activity resulting from the COVID-19 pandemic.

Securities Held to Maturity. Total securities held to maturity ~~decreased $31.3~~increased $11.6 million, or ~~9.1%~~4.2%, to ~~$314.2~~$287.4 million at September 30, ~~2019~~2020 from ~~$345.5~~$275.8 million at June 30, ~~2019.~~2020. This ~~decrease~~increase was caused primarily by ~~$17.0~~purchases of $21.3 million in corporate and other bonds and $7.8 million in mortgage-backed securities, partially offset by $4.0 million of ~~calls and~~ maturities of U.S. government and agency obligations and ~~$14.3~~$5.6 million of amortization of mortgage-backed securities.

Securities Available for Sale. Total securities available for sale decreased ~~$7.4~~$6.3 million, or ~~10.2%~~16.8%, to ~~$64.8~~$31.1 million at September 30, ~~2019~~2020 from ~~$72.2~~$37.4 million at June 30, ~~2019.~~2020. This ~~decline~~decrease was primarily due ~~primarily~~ to ~~$6.0~~$4.0 million in maturities of U.S. government and agency obligations, and ~~$1.5 million~~amortization, net of ~~amortization~~purchases, of ~~mortgage backed~~mortgage-backed securities ~~partially offset by a $181,000 increase in net unrealized gains~~.of $2.3 million.

Net Loans Receivable. Net loans receivable ~~increased $70.1~~decreased $33.0 million, or ~~6.4%, to $1.16 billion at September 30, 2019 from $1.09 billion at June 30, 2019.~~ ~~The increase in loans receivable was the result of $64.9 million of originations and $44.1 million of loan purchases, partially offset by $38.9 million of net amortization and repayments.~~ The increase is due primarily to increases of $74.9 million in commercial mortgage loans and $5.6 million in construction loans, partially offset by decreases of $7.7 million in commercial loans and $1.7 million in home equity credit lines.

~~Premises and Equipment.~~ ~~Premises and equipment, net, increased $12.1 million, to $23.9 million at September 30, 2019 from $11.8 million at June 30, 2019. This increase is primarily the~~ ~~result of recording an $11.9 million lease asset (a related lease liability of $12.0 million was also recorded as part of other liabilities) associated with the adoption of ASU 2016-02~~.

~~Deposits.~~ ~~Total deposits increased $8.1 million, or 0.7%~~2.6%, to $1.23 billion at September 30, ~~2019~~2020 from $1.26 billion at June 30, 2020. The decrease was the result of decreases in commercial mortgages of

$12.9 million, residential mortgages of $10.4 million and commercial loans of $8.7 million, which included a decrease in PPP loans of $13.9 million.

Deposits. Total deposits increased $3.8 million, or 0.3%, to $1.38 billion at September 30, 2020 as compared to $1.37 billion at June 30, ~~2019.~~2020. This increase primarily reflects increases of ~~$11.0 million in time deposits, $3.5~~$13.2 million in money market accounts and ~~$1.2~~$6.5 million in savings accounts, partially offset by decreases of $8.0 million in demand deposits, $4.3 million in time deposits and $3.6 million in NOW ~~accounts~~accounts. The Company continued to experience deposit inflows in the current quarter, likely the result of numerous economic trends associated with COVID-19, including reduced consumer and ~~demand deposits, partially offset by a decrease~~commercial spending, and various forms of ~~$7.6 million in savings accounts.~~government stimulus.

Federal Home Loan Bank Advances. FHLB advances decreased ~~$31,000,~~$33,000 to ~~$111.2~~$106.1 million at September 30, ~~2019~~2020 as compared to June 30, ~~2019,~~2020. This decrease is due ~~primarily~~ to ~~the repayment~~repayments of long-term amortizing advances.

Total Shareholder’s Equity.Total shareholders’ equity ~~increased $215,000, or 0.1%,~~decreased $34,000 to ~~$281.5~~$273.7 million at September 30, ~~2019 from $281.3~~2020. This decrease was primarily due to the repurchase of $3.4 million ~~at June 30, 2019.~~ ~~This increase was due primarily to~~of common stock and $630,000 of cash dividends declared and paid, partially offset by net income of ~~$2.8~~$2.7 million ~~as well as $1.3~~and $1.1 million ~~increase~~ of stock-based compensation and reduction in unearned ESOP shares for plan shares earned during the ~~period, partially offset by~~period. During the ~~repurchase of $3.5 million (179,800 shares)~~quarter-ended September 30, 2020, the Company repurchased 266,900 shares of common stock ~~and $659,000~~at an average price of ~~cash dividends declared and paid. As of~~$12.92 per share. At September 30, ~~2019, there were 710,221 shares available to be repurchased under~~2020, the ~~current stock repurchase plan. T~~he Company’s book value per share was ~~$15.97 and $15.80 as of September 30, 2019 and~~$16.45 compared to $16.20 at June 30, ~~2019, respectively.~~2020. At September 30, ~~2019,~~2020, the Bank was considered “well capitalized” under applicable regulatory guidelines.

Comparison of Operating Results for the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

General. Net income ~~increased $500,000,~~decreased $101,000, or ~~21.5%~~3.6%, to $2.7 million for the three months ended September 30, 2020 compared to $2.8 million for the three months ended September 30, ~~2019 compared~~2019. The decrease was primarily due to ~~$2.3~~decreases of $421,000 in net interest income and $171,000 in noninterest income, partially offset by decreases of $226,000 million in the provision for loan losses, $163,000 in noninterest expenses and $102,000 in income tax expense.

Net Interest Income. Net interest income decreased $421,000, or 3.5%, to $11.6 million for the three months ended September 30, 2018. The increase was due primarily to a $1.5 million increase in net interest income and a $124,000 increase in noninterest income, partially offset by a $779,000 increase in noninterest expense, a $277,000 increase in the provision for loan losses and a $102,000 increase in income tax expense.

~~Net Interest Income.~~ ~~Net interest income increased $1.5 million, or 14.7%,~~2020 compared to $12.0 million for the three months ended September 30, ~~2019~~2019. The decrease primarily reflects a 34 basis point decrease in net interest margin to 2.69% compared to ~~$10.5~~3.03% for the same period last year, partially offset by an increase in average interest-earning assets of $138.8 million, or 8.7%. The increase in average interest-earning assets reflects a $112.1 million increase in average other interest earning assets and a $110.6 million increase in average loans receivable, partially offset by a $83.9 million decrease in average investment securities. Despite continued asset growth along with a decrease in funding costs, margin compression has resulted from significant decreases in market interest rates over the past year, stemming from decreases in Fed Funds rates throughout the last year, which has disproportionally reduced asset yields compared to funding costs. The reduction in funding costs has continued in the current quarter, however, the significant increase in cash and cash equivalents, driven by the significant increase in deposits experienced in the prior quarter, has resulted in a less profitable asset mix and continued pressure on net interest margin.

Interest and Dividend Income. Interest and dividend income decreased $1.5 million, or 9.3%, to $14.5 million for the three months ended September 30, 2018. The increase primarily reflects a $4.5 million increase in average net interest-earning assets and 9 basis point increase in net interest margin to 3.03% for the three months ended September 30, 20192020 compared ~~to 2.94% for the three months ended September 30, 2018~~. The increase in average net interest-earning assets reflects a $163.2 million increase in average interest-earning assets, mostly offset by a $158.7 million increase in average interest-bearing liabilities. Despite continued asset growth and a higher yielding asset mix, which resulted in a 50 basis point increase in the yield on interest earning assets, the interest rate spread has been impacted by rising funding costs due to higher short-term interest rates along with competitive pricing, which caused a 51 basis point increase in the average cost of interest-bearing liabilities.

~~Interest and Dividend Income.~~ ~~Interest and dividend income increased $3.4 million, or 27.1%,~~ to $16.0 million for the three months ended September 30, ~~2019 compared~~2019. The decrease primarily reflects a 68 basis point decrease in the yield on total interest-earning assets, partially offset by a $138.8 million increase in total average interest-earning assets.

Interest income on loans receivable decreased $489,000, or 3.8%, primarily due to ~~$12.6 million~~a 56 basis point decrease in the average yield on loans to 4.00% for the three months ended September 30, ~~2018. The increase primarily reflects~~2020 from 4.56% for the same period last year, partially offset by a ~~$163.2 million increase in total average interest-earning assets and a 50 basis point increase in the yield on total interest-earning assets.~~

~~Interest income on loans receivable increased $3.1 million, or 31.7%, due primarily to a $239.0~~$110.6 million increase in the average balance of loans receivable to ~~$1.14~~$1.25 billion for the three months ended September 30, ~~2019~~2020 from ~~$903.0~~$1.14 billion for the same period last year. Decreases in market interest rates driven most significantly by the Fed Funds rate cuts throughout the last year, as well as the origination of lower yielding PPP loans, has resulted in a decreased yield on loans.

Interest income on investment securities decreased $836,000, or 31.1%, primarily due to a 35 basis point decrease in the average yield on investment securities to 2.35% for the three months ended September 30, 2020 from 2.70% for

the same period last year and a $83.9 million decrease in the average balance of investment securities to $315.3 million for the three months ended September 30, 2020 from $399.2 million for the same period last year ~~and an 18 basis point increase in the average yield on loans to 4.56% for the three months ended September 30, 2019 from 4.38% for the same period last year.~~and. The ~~increase in yield is due primarily to growth in higher yielding commercial real estate loans.~~

Interest income on securities increased $326,000, or 13.8%, due primarily to a 61 basis point increase in the average yield on securities to 2.70% for the three months ended September 30, 2019 from 2.09% for the same period last year, partially offset by a $54.5 million decrease ~~in the average balance of securities. The increase~~ in yield is a result of ~~increases in~~lower market rates, as well as prepayment income ~~of $310,000~~ earned in the ~~current~~prior year quarter. ~~Excluding this nonrecurring prepayment income, the yield on investment securities would have been 2.39% in the current quarter, a 30 basis points increase compared to the same period of last year.~~ The decrease in the average balance of investment securities is the result of the ~~company~~Company utilizing securities portfolio runoff to fund loan growth.

Interest income on other interest-earning assets, primarily consisting of cash balances at correspondent banks including the Federal Reserve, decreased ~~$47,000~~$173,000, or ~~13.6%~~58.1%, primarily due ~~primarily~~ to a ~~$21.3 million~~227 basis point decrease in the average

yield on other interest-earning assets to 0.31% for the three months ended September 30, 2020, from 2.58% for the same period last year, partially offset by a $112.1 million increase in the average balance of other interest-earning assets to $158.0 million for the three months ended September 30, 2020 compared to $45.9 million for the three months ended September 30, ~~2019 compared~~2019. The decrease in the yield on other interest-earning assets was primarily due to ~~$67.2~~a decrease in market interest rates, specifically Fed Funds.

Interest Expense. Interest expense decreased $1.0 million, or 26.7%, to $3.0 million for the three months ended September 30, 2018, partially offset by a 55 basis point increase in the average yield on other interest-earning assets. The increase in the yield on other interest-earning assets was due primarily to an increase in short-term market interest rates.

~~Interest Expense.~~ ~~Interest expense increased $1.9 million, or 87.8%,~~2020 compared to $4.0 million for the three months ended September 30, ~~2019 compared~~2019. The decrease primarily reflects a 43 basis point decrease in the average cost of interest-bearing liabilities to ~~$2.1 million~~0.89% for the three months ended September 30, ~~2018. The increase primarily reflects~~2020 from 1.32% for the same period last year, partially offset by a ~~$158.7~~$95.9 million increase in the average balance of interest-bearing liabilities to ~~$1.21~~$1.31 billion for the three months ended September 30, ~~2019~~2020 from ~~$1.05~~$1.21 billion for the same period last ~~year, and a 51 basis point increase in the average yield on interest-bearing liabilities to 1.32% for the three months ended September 30, 2019 from 0.81% for the same period last~~ year.

Interest expense on interest-bearing deposits ~~increased $1.2 million,~~decreased $869,000, or ~~60.6%~~26.3%, primarily due ~~primarily~~ to a 4140 basis point ~~increase~~decrease in the average cost of interest-bearing deposits to ~~1.20%~~0.80% for the three months ended September 30, ~~2019~~2020 from ~~0.79%~~1.20% for the same period last year, ~~and~~partially offset by a ~~$55.7~~$111.7 million increase in the average balance to $1.20 billion for the three months ended September 30, 2020 from a $1.09 billion for the three months ended September 30, ~~2019 from a $1.04 billion for the three months ended September 30, 2018.~~2019. The ~~increase~~decrease in the average rate paid on interest-bearing deposits was primarily caused by ~~rising funding costs due to higher short-term interest rates along with competitive pricing. The Company has experienced~~ a shift in deposit mix as customers in lower costing saving products moved funds to higher rate time deposits and money market accounts. The average interest rate paid on time deposits and money market accounts increased 61 and 34 basis points, respectively, as the Bank offered increased rates on these deposits due to the increasedecrease in market interest rates, primarily decrease in the Fed Funds rate. At September 30, 2020, the weighted average cost of interest-bearing deposits was 0.66%.

Interest expense on FHLB advances ~~increased $638,000,~~decreased $208,000, or 28.6%, primarily due ~~primarily~~ to a ~~$103.1~~43 basis point decrease in the average cost to 1.94% for the three months ended September 30, 2020 from 2.37% for the same period last year, and due to a $15.8 million ~~increase~~decrease in the average balance to $106.1 million for the three months ended September 30, 2020 from a $121.9 million for the three months ended September 30, ~~2019 from $18.8 million for the same period last year, and a 48 basis point increase~~2019. The decrease in the cost of FHLB funds is primarily due to a decrease in the Fed Funds interest rate.

Over the remainder of the current fiscal year, the Company has $77.5 million of wholesale funding maturing, including FHLB advances and brokered time deposits, with a weighted average cost ~~to 2.37%~~of 2.29%.

Provision for Loan Losses. The provision for loan losses was $109,000 for the three months ended September 30, ~~2019 from 1.89% for the same period last year. The increase in the average cost is due primarily to an increase in market interest rates.~~

~~Provision for Loan Losses.~~ ~~The provision for loan losses increased by $277,000~~2020, compared to $335,000 for the three months ended September 30, ~~2019, compared~~2019. The decrease is primarily due to ~~$58,000 for the three months ended September 30, 2018, due primarily to~~ ~~loan~~a decrease in loan portfolio growth. ~~Charge-offs, net of recoveries, were $6,000 and $3,000 for the three months ended September 30, 2019 and 2018, respectively.~~ Loans classified as substandard or doubtful ~~increased $2.8~~totaled $7.3 million, a decrease of $3.9 million, or ~~33.1%~~35.0%, ~~to $11.3 million at~~from September 30, ~~2019 from $8.5 million at June 30, 2019 and decreased $1.7 million, or 13.7%, from $13.0 million at September 30, 2018.~~2019. Non-performing loans as a percent of total loans receivable was 0.17% as of September 30, 2020, a decrease from 0.29% as of September 30, ~~2019, an increase from 0.25% as~~2019. Charge-offs, net of ~~June 30, 2019~~recoveries, were $76,000 and ~~a decrease from 0.62% as of~~$6,000 for the three months ended September 30, ~~2018.~~2020 and 2019, respectively.

Noninterest Income. Noninterest income ~~increased $124,000,~~decreased $171,000, or ~~19.3%~~22.4%, to $594,000 for the three months ended September 30, 2020 compared to $765,000 for the three months ended September 30, ~~2019~~2019. The decrease was caused primarily due to decreases of $80,000 in fees and service charges, $41,000 in swap income and $47,000 in gains on the sale of foreclosed real estate. The reduction in fees and service charge income compared to ~~$641,000~~the prior year quarter was due to the combined effects of reduced customer transaction activity since the start of the COVID-19 pandemic and our waiver of certain overdraft fees, ATM usage fees, wire and CD early withdrawal fees in response to COVID-19, as required by emergency regulations promulgated by the New York State Department of Financial Services. The Company began waiving such fees in accordance with these regulations on or about March 20, 2020 and reinstituted these fees on July 15, 2020, however, we expect to continue to be subject to some level of reduced customer activity and waivers based on customer-specific circumstances.

Noninterest Expense. Noninterest expense decreased $163,000, or 1.9%, to $8.6 million for the three months ended September 30, ~~2018. The increase was caused primarily by increases of $99,000 in swap income and $23,000 in gains on sale of foreclosed real estate.~~

~~Noninterest Expense.~~ ~~Noninterest expense increased $779,000, or 9.7%,~~2020 compared to $8.8 million for the three months ended September 30, 2019. The

decrease compared to ~~$8.0 million for~~ the ~~three months ended September 30, 2018. The increase~~prior year quarter was caused primarily by ~~a $624,000 increase~~decreases of $256,000 in ~~salaries~~retirement costs and ~~employee benefits and a $248,000 increase~~$65,000 in all other ~~noninterest~~ expenses, partially offset by ~~$93,000 decrease~~increases in FDIC ~~assessment.~~insurance premiums of $113,000 and communications and data processing fees of $45,000. The increase in salaries and employee benefits was due primarily to $830,000 of stock-based compensation expense recorded in the current quarter compared to no such expense in the prior year period, partially offset by lower benefit costs. The decrease in FDIC assessment was due primarily to the Company applyingBank applied small bank assessment credits of $98,000 which fully offset ~~the Company’s~~its FDIC assessment for the ~~current~~prior year quarter. ~~The remaining~~All available credits ~~available are $239,000.~~were applied as of June 30, 2020.

Income Tax Expense. Income tax expense ~~increased~~decreased $102,000, or ~~14.4%~~12.6%, ~~to $812,000~~ for the three months ended September 30, ~~2019 from $710,000~~2020 in comparison to the three months ended September 30, 2019. The decrease was caused by lower pre-tax income, as well as a lower effective tax rate. The effective income tax rate was 20.7% for the three months ended September 30, ~~2018. The increase was caused primarily by higher pre-tax income, partially offset by a lower effective tax rate in the current year. The effective income tax rate was~~2020 as compared to 22.3% for the three months ended September 30, ~~2019 as compared to 23.4%~~2019. The Company expects an effective tax rate of approximately 22.0% for the ~~three months ended September~~year ending June 30, ~~2018.~~2021.

The following table presents 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 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.

	Three Months Ended September 30,																Three Months Ended September 30,
	2019								2018								2020								2019
	Average Balance			Interest/ Dividends		Average Rate			Average Balance			Interest/ Dividends		Average Rate			Average Balance			Interest/ Dividends		Average Rate			Average Balance			Interest/ Dividends		Average Rate
	(dollars in thousands)																(dollars in thousands)
Assets:
Loans receivable	$	1,142,025		$	13,036		4.56	%	$	903,021		$	9,898		4.38	%	$	1,252,595		$	12,547		4.00	%	$	1,142,025		$	13,036		4.56	%
Investment securities		399,190			2,692		2.70			453,671			2,366		2.09			315,292			1,856		2.35			399,190			2,692		2.70
Other interest-earning assets		45,914			298		2.58			67,222			345		2.03			158,038			125		0.31			45,914			298		2.58
Total interest-earning assets		1,587,129			16,026		4.04			1,423,914			12,609		3.54			1,725,925			14,528		3.36			1,587,129			16,026		4.04
Non-interest-earning assets		70,266								55,251								71,926								70,266
Total assets	$	1,657,395							$	1,479,165							$	1,797,851							$	1,657,395

Liabilities and equity:
NOW accounts	$	119,852			57		0.19		$	119,404			53		0.18		$	149,466			89		0.24		$	119,852			57		0.19
Money market accounts		149,880			463		1.23			61,679			139		0.89			250,297			238		0.38			149,880			463		1.23
Savings accounts and escrow		362,569			232		0.25			462,542			289		0.25			360,091			202		0.22			362,569			232		0.25
Time deposits		459,348			2,549		2.20			392,336			1,575		1.59			443,487			1,903		1.70			459,348			2,549		2.20
Total interest-bearing deposits		1,091,649			3,301		1.20			1,035,961			2,056		0.79			1,203,341			2,432		0.80			1,091,649			3,301		1.20
FHLB advances		121,855			727		2.37			18,821			89		1.89			106,067			519		1.94			121,855			727		2.37
Total interest-bearing liabilities		1,213,504			4,028		1.32			1,054,782			2,145		0.81			1,309,408			2,951		0.89			1,213,504			4,028		1.32
Non-interest-bearing deposits		140,627								127,762								184,085								140,627
Other non-interest-bearing liabilities		21,211								7,282								28,958								21,210
Total liabilities		1,375,342								1,189,826								1,522,451								1,375,341
Total equity		282,053								289,339								275,400								282,054
Total liabilities and equity	$	1,657,395							$	1,479,165							$	1,797,851							$	1,657,395

Net interest income				$	11,998							$	10,464							$	11,577							$	11,998
Interest rate spread ⁽¹⁾							2.72								2.73								2.47								2.72
Net interest margin ⁽²⁾							3.03								2.94								2.69								3.03
Average interest-earning assets to interest-bearing liabilities		130.79	%							135.00	%							131.81	%							130.79	%

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.

	Three Months Ended September 30,								Three Months Ended September 30,
	2019 versus 2018								2020 versus 2019
	Rate		Volume			Net			Rate			Volume			Net
	(in thousands)								(in thousands)
Interest income:
Loans receivable	$	399	$	2,739		$	3,138		$	(1,568	)	$	1,079		$	(489	)
Investment securities		422		(96	)		326			(525	)		(311	)		(836	)
Other interest-earning assets		78		(125	)		(47	)		(427	)		254			(173	)
Total interest-earning assets		899		2,518			3,417			(2,520	)		1,022			(1,498	)

Interest expense:
NOW accounts		4		-			4			16			16			32
Money market accounts		67		257			324			(430	)		205			(225	)
Savings and escrow accounts		21		(78	)		(57	)		(21	)		(9	)		(30	)
Time deposits		673		301			974			(561	)		(85	)		(646	)
FHLB advances		28		610			638			(120	)		(88	)		(208	)
Total interest-bearing liabilities		793		1,090			1,883			(1,116	)		39			(1,077	)

Net increase in net interest income	$	106	$	1,428		$	1,534
Net (decrease) increase in net interest income									$	(1,404	)	$	983		$	(421	)

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 ~~100~~50 and ~~200~~100 basis points from current market rates.

The following table presents the estimated changes in our NPV that would result from changes in market interest rates at September 30, ~~2019~~2020 and June 30, ~~2019.~~2020. All estimated changes presented in the table are within the policy limits approved by our Board of Directors.

	NPV									NPV as Percent of Portfolio Value of Assets						NPV									NPV as Percent of Portfolio Value of Assets
	(dollars in thousands)															(dollars in thousands)
Basis Point Change in Interest Rates	Dollar Amount		Dollar Change			Percent Change				NPV Ratio			Change (in bps)			Dollar Amount		Dollar Change			Percent Change				NPV Ratio			Change (in bps)
September 30, 2019:
September 30, 2020:
200	$	289,920	$	(38,093	)		(11.6	)	%		18.39	%		(134	)	$	272,110	$	(20,318	)		(6.9	)	%		15.74	%		(43	)
100		312,528		(15,485	)		(4.7	)			19.27			(46	)		289,991		(2,437	)		(0.8	)			16.37			20
-		328,013	-			-					19.73		-				292,428	-				-				16.17			-
(50)																	299,184		6,756			2.3				16.38			21
(100)		331,713		3,700			1.1				19.54			(19	)		298,595		6,167			2.1				16.32			15
(200)		330,534		2,521			0.8				19.14			(59	)

June 30, 2019:
June 30, 2020:
200	$	286,711	$	(39,593	)		(12.1	)	%		18.52	%		(143	)	$	285,720	$	(20,631	)		(6.7	)	%		16.42	%		(40	)
100		309,974		(16,330	)		(5.0	)			19.45			(50	)		304,004		(2,347	)		0.8				17.03			21
-		326,304		-			-				19.95			-			306,351		-			-				16.82			-
(50)																	312,596		6,245			2.0				16.99			17
(100)		330,749		4,445			1.4				19.79			(16	)		323,494		17,143			5.6				17.44			62
(200)		329,929		3,625			1.1				19.39			(56	)

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. 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 September 30, ~~2019,~~2020, cash and cash equivalents totaled ~~$37.8~~$162.7 million, ~~a decrease~~ an increase from $~~60.0~~136.3 million as of June 30, ~~2019.~~2020. Securities classified as available for sale that are not pledged to support borrowings, which provide an additional source of liquidity, totaled ~~$64.8~~ $12.9million at September 30, ~~2019~~2020, a decrease from ~~$72.2~~$13.9 million as of June 30, ~~2019.~~ 2020.

We had the ability to borrow up to ~~$264.2~~$209.3 million and ~~$291.2~~$218.4 million from the FHLB of New York, at September 30, ~~2019~~2020 and June 30, ~~2019,~~2020, respectively, of which ~~$111.2~~$106.1 million was outstanding as of both September 30, ~~2019~~2020 and June 30, ~~2019. We also~~2020. Additionally, as of September 30, 2020, we had an available line of credit with the Federal Reserve Bank of New York’s discount window program of ~~$116.5~~$103.0 million, ~~and $118.0~~as well as $25.0 million of fed funds lines of credit, neither of which had outstanding balances as of September 30, ~~2019 and June 30, 2019, respectively, none of which was outstanding at either date.~~2020.

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 capacity with the FHLB of New York or ~~the~~ Federal Reserve Bank of New York.

We had ~~$113.9 million and $136.8~~ $54.1 million of loan commitments outstanding as of September 30, ~~2019~~2020 and ~~June 30, 2019, respectively, and $44.4~~$147.7 million ~~and $52.6 million as of September 30, 2019 and June 30, 2019, respectively,~~ of approved, but unadvanced, funds to borrowers. We also had $1.6 million ~~and $1.7 million~~ in outstanding letters of credit at September 30, ~~2019 and June 30, 2019, respectively.~~2020.

Time deposits due within one year of September 30, ~~2019~~2020 totaled ~~$248.6~~ $276.6 million, an increase of ~~$26.8~~$6.1 million from ~~$221.8~~$270.5 million as of June 30, ~~2019.~~2020. 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 September 30, ~~2019.~~2020. 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 September 30, ~~2019,~~2020, the Holding Company (on an unconsolidated, stand-alone basis) had liquid assets of ~~$52.4~~$37.9 million.

Capital Resources. The Bank is subject to various regulatory capital requirements administered by the NYSDFS and the FDIC. At September 30, ~~2019,~~2020, 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.

The information required by this item is included in Part I, Item 2 of this report under "Management of Market Risk."

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 September 30, ~~2019.~~2020. 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 September 30, ~~2019,~~2020, 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.

The Company is not involved in any pending legal proceedings as a plaintiff or a defendant other than routine legal proceedings occurring in the ordinary course of business. At September 30, ~~2019,~~2020, 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.

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, ~~2019,~~2020, filed with the Securities and Exchange Commission. As of September 30, ~~2019,~~2020, 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, ~~2019.~~2020.

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 September 30, ~~2019.~~2020.

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.

Maryland	81-4710738
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2651 Strang Blvd, Suite 100 Yorktown Heights, NY	10598
(Address of principal executive offices)	(Zip Code)

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	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	3430
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4138
Item 4.	Controls and Procedures	4138
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	4239
Item 1A.	Risk Factors	4239
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4239
Item 3.	Defaults Upon Senior Securities	4239
Item 4.	Mine Safety Disclosures	4239
Item 5.	Other Information	4239
Item 6.	Exhibits	4340
Signatures		4441

Risk-free interest rate		0.39	%
Expected term (in years)		6.25
Expected stock price volatility		35.75	%
Dividend yield		1.30	%
Weighted average fair value of options granted	$	3.72

	Total number of shares purchased		Average price paid per share		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
July 1, 2019 through July 31, 2019		-	$	-		-		890,021
August 1, 2019 through August 31, 2019		135,100		19.52		135,100		754,921
September 1, 2019 through September 30, 2019		44,700		19.84		44,700		710,221
Total		179,800	$	19.60		179,800

	Total number of shares purchased		Average price paid per share		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
July 1, 2020 through July 31, 2020		-	$	-		-		844,907
August 1, 2020 through August 31, 2020		60,000		13.01		60,000		784,907
September 1, 2020 through September 30, 2020		206,900		12.90		206,900		578,007
Total		266,900	$	12.92		266,900

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Small reporting company	☒

		Emerging growth company	☒

Exhibit Number		Description

3.1		Articles of Incorporation of PCSB Financial Corporation ⁽¹⁾

3.2		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		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following materials for the quarter ended September 30, ~~2019,~~2020, 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.

		PCSB FINANCIAL CORPORATION

Date: November ~~8, 2019~~6, 2020		/s/ Joseph D. Roberto
		Joseph D. Roberto
		Chairman, President and Chief Executive Officer

Date: November ~~8, 2019~~6, 2020		/s/ Jeffrey M. Helf
		Jeffrey M. Helf
		Senior Vice President and Chief Financial Officer