PDL Community Bancorp Announces 2017 Third Quarter Results

NEW YORK, Nov. 13, 2017 (GLOBE NEWSWIRE) — PDL Community Bancorp, (the “Company”) (NASDAQ:PDLB), the holding company for Ponce Bank (the “Bank”), reported a net loss of $3.2 million for the quarter ended September 30, 2017 compared to net income of $282,000 for the same period in 2016. The Company reported a net loss of $1.5 million for the nine months ended September 30, 2017 compared to net income of $1.2 million for the same period in 2016. The Company’s results for the quarter ended September 30, 2017 include a one-time pre-tax contribution of $6.3 million in connection with the funding of the Ponce De Leon Foundation (the “Foundation”), a charitable organization established in connection with the recent reorganization and dedicated to providing financial support to charitable organizations in the communities in which the Bank operates now and in the future. Excluding this non-recurring expense, net income would have been $953,000 for the quarter ended September 30, 2017 and $2.8 million for the nine months ended September 30, 2017. 

“The current quarter marks our beginning quarter as a public company, for which we thank our depositors for their faith in our reorganization and our investors for their confidence in our future,” said Steven A. Tsavaris, Executive Chairman. Carlos P. Naudon, President and CEO, noted that “we were able to fund the Foundation and are starting with otherwise excellent results in our metrics, as we have reported today.”

Net Interest Income

Net interest income was $8.3 million for the quarter ended September 30, 2017, up $1.4 million, or 20.3%, from $6.9 million for the quarter ended September 30, 2016. The interest rate spread and net interest margin was 3.58% and 3.86%, respectively, for the quarter ended September 30, 2017 compared to 3.73% and 3.94%, respectively, for the quarter ended September 30, 2016. The increase in net interest income for the quarter ended September 30, 2017 compared to the  same period in 2016 reflects a $1.8 million, or 21.4%, increase in total interest and dividend income offset by an increase of $325,000, or 21.8%, in total interest expense. The increase in interest and dividend income is primarily due to the commercial loan growth that provided an increase in average outstanding loans of $148.3 million or 24.2%, for the quarter ended September 30, 2017 compared to the same period in 2016. The yield on loans decreased to 5.15% for the quarter ended September 30, 2017 from 5.27% for the same period in 2016. The increase in interest expense is due to an increase in average interest-bearing liabilities of $82.5 million or 14.8%, for the quarter ended September 30, 2017 compared to the same period in 2016. The cost of interest-bearing liabilities increased to 1.12% for the quarter ended September 30, 2017 from 1.06% for the same period in 2016.

Net interest income was $23.7 million for the nine months ended September 30, 2017, up $2.9 million, or 13.9% from $20.8 million for the nine months ended September 30, 2016. The interest rate spread and net interest margin was 3.83% and 4.07%, respectively, for the nine months ended September 30, 2017 compared to 3.84% and 4.04%, respectively, for the nine months ended September 30, 2016. The increase in net interest income for the nine months ended September 30, 2017 compared to the same period in 2016 reflects a $3.5 million, or 13.7%, increase in total interest and dividend income offset by an increase of $520,000, or 11.8% in total interest expense. The increase in interest and dividend income is primarily due to the commercial loan growth that provided an increase in average outstanding loans of $114.0 million or 19.1%, for the quarter ended September 30, 2017 compared to the same period in 2016. The yield on loans decreased to 5.28% for the nine months ended September 30, 2017 from 5.44% for the same period in 2016. The increase in interest expense is due to an increase in average interest-bearing liabilities of $51.8 million, or 9.3%, for the nine months ended September 30, 2017 compared to the same period in 2016. The cost of interest-bearing liabilities increased to 1.09% for the nine months ended September 30, 2017 from 1.06% for the same period in 2016.

Total borrowings also contributed to the increase in interest expense as the average balance of borrowings increased $20.8 million to $21.3 million for the three months ended September 30, 2017 from $500,000 for the same period in 2016. The cost of borrowings increased to 1.23% for the quarter ended September 30, 2017 from a de minimis amount for the same period in 2016. The average balance of borrowings increased $13.1 million to $14.6 million for the nine months ended September 30, 2017 from $1.5 million for the same period in 2016. The cost of borrowings increased to 1.16% for the nine months ended September 30, 2017 from 0.62% for the same period in 2016.

Noninterest Income

Noninterest income was $768,000 for the quarter ended September 30, 2017, up $130,000, or 20.4%, from $638,000 for the same period in 2016. The increase is mainly attributed to increases in miscellaneous non-recurring income of $41,000, brokerage commission fees of $34,000, other mortgage fees of $27,000, debit card fees of $11,000, and line of credit and letter of credit fees of $12,000.

Noninterest income was $2.4 million for the nine months ended September 30, 2017, up $567,000, or 30.7%, from $1.8 million for the same period in 2016. The increase is mainly attributed to increases in mortgage loan fees of $327,000, letter of credit fees of $81,000, brokerage commissions of $71,000, and debit card fees of $54,000.

Noninterest Expenses

Noninterest expenses were $13.7 million for the quarter ended September 30, 2017, up $6.8 million, or 99.5%, from $6.9 million for the same period in 2016. The increase is mainly attributed to a one-time pre-tax contribution of $6.3 million in connection with the establishment of the Foundation.

Noninterest expenses were $27.8 million for the nine months ended September 30, 2017, up $7.0 million, or 33.6%, from $20.8 million for the same period in 2016. The increase is mainly attributed to a one-time pre-tax contribution of $6.3 million in connection with the establishment of the Foundation.

Asset Quality

Provision for loan losses was $238,000 for the quarter ended September 30, 2017, up $122,000, or 105.2%, from $116,000 for the same period in 2016. Provision for loan losses was $497,000 for the nine months ended September 30, 2017, up $693,000, or 353.6%, from a recovery of $196,000 for the nine months ended September 30, 2016. The increases in the provision for loan losses for both periods are mainly reflections of the commercial loan growth. The increases in the provision for loan losses were based on management’s assessment of the loan portfolio growth and composition changes, improving historical charge-off trends, and ongoing evaluation of credit quality and current economic conditions. The allowance for loan losses was $11.1 million, or 1.43%, of total loans at September 30, 2017, compared to $10.2 million, or 1.59%, of total loans at September 30, 2016. Net charge-offs totaled $6,000 for the quarter ended September 30, 2017, or 0.003% of average loans outstanding on an annualized basis, compared to $13,000 for the quarter ended September 30, 2016, or 0.008% of average loans outstanding on an annualized basis.

Balance Sheet

Total assets increased $147.3 million, or 19.8%, to $892.3 million at September 30, 2017 from $745.0 million at December 31, 2016. Net loans increased $125.6 million, or 19.6%, to $767.7 million at September 30, 2017 from $642.1 million at December 31, 2016. The increase in net loans was primarily attributed to increases of $72.3 million in commercial real estate loans and $51.9 million in investor-owned one-four family residences.

Total deposits increased $55.6 million, or 8.6%, to $698.7 million at September 30, 2017 from $643.1 million at December 31, 2016. The increase in deposits was primarily attributed to increases in certificates of deposits of $31.9 million, demand deposits of $14.2 million and money market accounts of $7.7 million.

Total stockholders’ equity was $168.5 million at September 30, 2017 compared to $93.0 million at December 31, 2016. The Company and the Bank exceed all regulatory capital requirements to be deemed well-capitalized at September 30, 2017.

Attached hereto are selected financial tables.   

About PDL Community Bancorp

PDL Community Bancorp is the holding company for Ponce Bank. The Bank’s business primarily consists of taking deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in mortgage loans, consisting of one-to-four family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties and construction and land, and, to a lesser extent, in business and consumer loans. The Bank also invests in securities, which have historically consisted of U.S. Government and federal agency securities and securities issued by government-sponsored or -owned enterprises, as well as, mortgage-backed securities and Federal Home Loan Bank stock. The Bank offers a variety of deposit accounts, including demand, savings, money market and certificates of deposit.  

Attached hereto are selected financial tables.   

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in the value of securities in the Company’s investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; demand for loans in the Company’s market area; the Company’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in the prospectus and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, PDL Community Bancorp’s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

PDL Community Bancorp and Subsidiaries

Consolidated Statements of Financial Condition
September 30, 2017 (Unaudited) and December 31, 2016

(Dollars in thousands, except for share data)
             
    September 30,     December 31,  
    2017     2016  
    (Unaudited)          
ASSETS                
Cash and due from banks:                
Cash   $ 4,716     $ 4,796  
Interest-bearing deposits in banks     51,629       6,920  
Total cash and cash equivalents     56,345       11,716  
Available-for-sale securities, at fair value     29,312       52,690  
Loans held for sale           2,143  
Loans receivable, net of allowance for loan losses – 2017 $11,147; 2016 $10,205     767,721       642,148  
Accrued interest receivable     3,132       2,707  
Other real estate owned            
Premises and equipment, net     25,729       26,028  
Federal Home Loan Bank Stock (FHLB), at cost     1,448       964  
Deferred tax assets     5,563       3,379  
Other assets     3,013       3,208  
Total assets   $ 892,263     $ 744,983  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Liabilities:                
Deposits   $ 698,655     $ 643,078  
Accrued interest payable     32       28  
Advance payments by borrowers for taxes and insurance     5,967       3,882  
Advances from the Federal Home Loan Bank     15,000       3,000  
Other liabilities     4,101       2,003  
Total liabilities     723,755       651,991  
Commitments and contingencies            
Stockholders’ Equity:                
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued            
Common stock, $0.01 par value; 50,000,000  shares authorized; 18,463,028 shares issued and                
outstanding at September 30, 2017     185        
Additional paid-in-capital     84,099        
Retained earnings     97,719       99,242  
Accumulated other comprehensive loss     (6,257 )     (6,250 )
Unearned compensation – ESOP; 723,751 shares     (7,238 )      
Total stockholders’ equity     168,508       92,992  
                 
Total liabilities and stockholders’ equity   $ 892,263     $ 744,983  
                 

PDL Community Bancorp and Subsidiaries

Consolidated Statements of Operations
September 30, 2017 (Unaudited) and December 31, 2016

(Dollars in thousands)
 
    For the Three Months Ended September 30,     For the Nine Months Ended September 30,  
    2017     2016     2017     2016  
    (Unaudited)     (Unaudited)  
Interest and dividend income:                                
Interest on loans receivable   $ 9,893     $ 8,128     $ 28,065     $ 24,330  
Interest and dividends on investment securities and FHLB stock     271       243       596       870  
Total interest and dividend income     10,164       8,371       28,661       25,200  
Interest expense:                                
Interest on certificates of deposit     1,574       1,386       4,318       4,117  
Interest on other deposits     176       104       487       287  
Interest on borrowings     66       1       126       7  
Total interest expense     1,816       1,491       4,931       4,411  
Net interest income     8,348       6,880       23,730       20,789  
Provision for loan losses (recovery)     238       116       497       (196 )
Net interest income after provision for loan losses (recovery)     8,110       6,764       23,233       20,985  
Noninterest income:                                
Service charges and fees     231       238       684       704  
Brokerage commissions     167       133       453       382  
Late and prepayment charges     157       111       603       257  
Other     213       156       676       506  
Total noninterest income     768       638       2,416       1,849  
Noninterest expense:                                
Compensation and benefits     4,220       3,635       12,005       10,986  
Occupancy expense     1,412       1,410       4,235       4,181  
Data processing expenses     316       490       1,181       1,240  
Direct loan expenses     189       214       558       678  
Insurance and surety bond premiums     44       97       205       369  
Office supplies, telephone and postage     250       279       786       819  
FDIC deposit insurance assessment     122       102       246       546  
Charitable foundation contributions     6,293             6,293        
Other operating expenses     884       654       2,320       1,983  
Total noninterest expense     13,730       6,881       27,829       20,802  
Income (loss) before income taxes     (4,852 )     521       (2,180 )     2,032  
Provision (benefit) for income taxes     (1,643 )     239       (657 )     846  
Net income (loss)   $ (3,209 )   $ 282     $ (1,523 )   $ 1,186  
                                 


PDL Community Bancorp and Subsidiaries

Average Balances / Yields / Rates
(Unaudited)

(Dollars in thousands)
 
   
    For the Three Months Ended September 30,  
    2017     2016  
    Average                     Average                  
    Outstanding             Average     Outstanding             Average  
    Balance     Interest     Yield/Rate (1)     Balance     Interest     Yield/Rate (1)  
    (Dollars in thousands)  
Interest-earning assets:                                                
Loans   $ 762,048     $ 9,893       5.15 %   $ 613,759     $ 8,128       5.27 %
Available-for-sale securities     29,543       104       1.40 %     64,987       227       1.39 %
Other (2)     65,468       167       1.01 %     15,498       16       0.41 %
Total interest-earning assets     857,059       10,164       4.70 %     694,244       8,371       4.80 %
Non-interest-earning assets     33,946                       33,661                  
Total assets   $ 891,005                     $ 727,905                  
Interest-bearing liabilities:                                                
Savings accounts   $ 130,855     $ 131       0.40 %   $ 128,355     $ 78       0.24 %
Interest-bearing demand     78,373       44       0.22 %     53,750       26       0.19 %
Certificates of deposit     404,365       1,574       1.54 %     371,330       1,386       1.48 %
Total deposits     613,593       1,749       1.13 %     553,435       1,490       1.07 %
Advance payments by borrowers     6,060       1       0.07 %     4,514       1       0.09 %
Borrowings     21,267       66       1.23 %     500             0.00 %
Total interest-bearing liabilities     640,920       1,816       1.12 %     558,449       1,491       1.06 %
Non-interest-bearing liabilities:                                                
Non-interest-bearing demand     148,251                     72,909                
Other non-interest-bearing liabilities     3,391                     3,427                
Total non-interest-bearing liabilities     151,642                     76,336                
Total liabilities     792,562       1,816               634,785       1,491          
Total equity     98,443                       93,120                  
Total liabilities and total equity   $ 891,005               1.12 %   $ 727,905               1.06 %
Net interest income           $ 8,348                     $ 6,880          
Net interest rate spread (3)                     3.58 %                     3.73 %
Net interest-earning assets (4)   $ 216,139                     $ 135,795                  
Net interest margin (5)                     3.86 %                     3.94 %
Average interest-earning assets to
  interest-bearing liabilities
                    133.72 %                     124.32 %
                                                 

(1)   Annualized where appropriate.
(2)   Includes FHLB demand accounts and FHLB stock dividends.
(3)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(4)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5)   Net interest margin represents net interest income divided by average total interest-earning assets.
     

  

PDL Community Bancorp and Subsidiaries

Average Balances / Yields / Rates
(Unaudited)

(Dollars in thousands)
 
    For the Nine Months Ended September 30,  
    2017     2016  
    Average                     Average                  
    Outstanding             Average     Outstanding             Average  
    Balance     Interest     Yield/Rate (1)     Balance     Interest     Yield/Rate (1)  
    (Dollars in thousands)  
Interest-earning assets:                                                
Loans   $ 711,179     $ 28,065       5.28 %   $ 597,228     $ 24,330       5.44 %
Available-for-sale securities     38,628       376       1.30 %     74,859       820       1.46 %
Other (2)     29,264       220       1.01 %     14,919       50       0.45 %
Total interest-earning assets     779,071       28,661       4.92 %     687,006       25,200       4.90 %
Non-interest-earning assets     33,553                       34,457                  
Total assets   $ 812,624                     $ 721,463                  
Interest-bearing liabilities:                                                
Savings accounts   $ 129,673     $ 375       0.39 %   $ 126,028     $ 213       0.23 %
Interest-bearing demand     74,506       108       0.19 %     51,777       71       0.18 %
Certificates of deposit     382,653       4,318       1.51 %     371,721       4,117       1.48 %
Total deposits     586,832       4,801       1.09 %     549,526       4,401       1.07 %
Advance payments by borrowers     5,865       3       0.07 %     4,475       3       0.09 %
Borrowings     14,616       127       1.16 %     1,518       7       0.62 %
Total interest-bearing liabilities     607,313       4,931       1.09 %     555,519       4,411       1.06 %
Non-interest-bearing liabilities:                                                
Non-interest-bearing demand     106,222                     69,867                
Other non-interest-bearing liabilities     3,346                     3,287                
Total non-interest-bearing liabilities     109,568                     73,154                
Total liabilities     716,881       4,931               628,673       4,411          
Total equity     95,743                       92,790                  
Total liabilities and total equity   $ 812,624               1.09 %   $ 721,463               1.06 %
Net interest income           $ 23,730                     $ 20,789          
Net interest rate spread (3)                     3.83 %                     3.84 %
Net interest-earning assets (4)   $ 171,758                     $ 131,487                  
Net interest margin (5)                     4.07 %                     4.04 %
Average interest-earning assets to                                                
   interest-bearing liabilities                     128.28 %                     123.67 %
                                                 

(1)   Annualized where appropriate.
(2)   Includes FHLB demand accounts and FHLB stock dividends.
(3)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(4)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5)   Net interest margin represents net interest income divided by average total interest-earning assets.
     

Contact:

Frank Perez
frank.perez@poncebank.net 
718-931-9000