PCSB Bank has set up a holding company and is preparing to sell up to $231.4 million in stock.
PCSB, based in Yorktown Heights, incorporated a Maryland holding company, PCSB Financial Corp., in December. It has applied to state and federal regulatory agencies for authority to convert from a mutual bank to a stock savings bank.
The primary reason for the conversion, according to a Feb. 10 prospectus filed with the U.S. Securities and Exchange Commission, is to enhance its capital base to support growth.
PCSB wants to use the proceeds from the stock offering to invest in securities, fund new loans, buy shares of its own stock, pay cash dividends, loan money to the employee stock ownership plan, contribute to its charitable foundation and potentially acquire other financial institutions.
The stock offering will range from 14.9 million shares to 23.1 million shares, and at $10 per share would net from $145.7 million to $227.7 million.
PCSB has operated in the Lower Hudson Valley since 1871. It has 15 branch offices in Dutchess, Putnam, Rockland and Westchester counties. Joseph D. Roberto has served as president, CEO and chairman of the board since 2012.
The bank sees Westchester as its primary area of growth, according to the prospectus, because rising real estate values and the lack of available commercial space in Manhattan and Brooklyn have caused businesses to migrate to central and lower Westchester.
PCSB describes Westchester as a good market for commercial lending and deposits.
At the end of 2016 it had more than $1.2 billion in deposits and $112.8 million in equity.
It faces stiff competition for deposits and loans. JP Morgan Chase, Morgan Stanley Private Bank and Citibank dominate the Lower Hudson Valley. PCSB does well in Putnam County, with 22.9 percent of the market, but only 2.2 percent in Dutchess and less than 1 percent in Rockland and Westchester.
PCSB’s primary focus is on small to middle-market businesses. Commercial real estate loans, totaling $375.9 million, account for 49 percent of its loan portfolio. Residential mortgages make up 29 percent of the portfolio, followed by commercial business loans, 10.8 percent; multifamily real estate loans, 9.2 percent; home equity lines of credit, 5.3 percent; construction loans, 3.8 percent; and installment loans, 2.1 percent.
PCSB has scheduled a March 31 meeting for depositors, from whom it needs approval for the conversion by a majority which also holds at least 75 percent of the bank’s deposit liabilities.
Sandler O’Neill & Partners is managing the offering.