PDL Community Bancorp Announces 2018 First Quarter Results

NEW YORK, May 09, 2018 (GLOBE NEWSWIRE) -- PDL Community Bancorp, (the “Company”) (NASDAQ:PDLB), the holding company for Ponce Bank (the “Bank”), reported net income of $941,000, or $0.05 per basic and diluted share for the quarter ended March 31, 2018 compared to net income of $563,000 for the same period in 2017. The Company was formed on September 29, 2017 in conjunction with the reorganization of Ponce De Leon Federal Bank, Ponce Bank’s predecessor, into Ponce Bank Mutual Holding Company, a mutual holding company. Accordingly, the Company’s financial results of prior periods are solely those of Ponce Bank.

“As we head into our first full calendar year as a public company, we are heartened that the key initiatives we have focused on are delivering expected results, and more,” said Steven A. Tsavaris, Executive Chairman. Carlos P. Naudon, President and CEO, noted that “we are pleased to report $24.3 million in internal loan growth during the first quarter of 2018, or a 12.3% annualized rate of growth.”

Net Interest Income

Net interest income was $8.7 million for the quarter ended March 31, 2018, up $1.4 million, or 19.2%, from $7.3 million for the quarter ended March 31, 2017. The increase in net interest income for the quarter ended March 31, 2018 compared to the same period in 2017 reflects a $1.9 million, or 21.8%, increase in total interest and dividend income offset by an increase of $537,000, or 35.9%, in total interest expense. The net interest rate spread and net interest margin were 3.61% and 3.95%, respectively, for the quarter ended March 31, 2018 compared to 3.88% and 4.09%, respectively, for the same period in 2017. The increase in interest and dividend income is primarily due to growth in the investor-owned one-to-four family, multifamily, nonresidential, and construction and land loans, that provided an increase in average outstanding loans of $154.3 million or 23.3%, for the quarter ended March 31, 2018 compared to the same period in 2017. The yield on loans decreased to 5.16% for the quarter ended March 31, 2018 from 5.26% for the same period in 2017. The increase in interest expense is primarily due to an increase in average certificates of deposits of $67.8 million or 18.7% for the quarter ended March 31, 2018 compared to the same period in 2017. The cost on certificates of deposits increased to 1.65% for the quarter ended March 31, 2018 from 1.47% for the same period in 2017. The cost of all interest-bearing liabilities increased to 1.26% for the quarter ended March 31, 2018 from 1.05% for the same period in 2017.

Noninterest Income

Noninterest income was $885,000 for the quarter ended March 31, 2018, up $127,000, or 16.8%, from $758,000 for the same period in 2017. The increase is mainly attributed to gains of $176,000 on loans sold combined with an increase of $28,000 in prepayment charges related to mortgage loans offset by decreases in late charges on loans of $23,000, brokerage commission income of $21,000, and line of credit fees $16,000.

Noninterest Expense

Noninterest expenses were $8.3 million for the quarter ended March 31, 2018, up $1.2 million, or 16.9%, from $7.1 million for the same period in 2017. The increase is mainly attributed to an increase of $629,000 in total compensation and benefits expense which included $189,000 in Employee Stock Ownership Plan expense and an increase of $425,000 in professional services.

Asset Quality

Nonperforming assets decreased to $9.3 million or 0.98% of total assets at March 31, 2018 from $11.4 million or 1.23% of total assets at December 31, 2017. The decrease is mainly attributed to decrease in nonaccruals of $847,000 in investor-owned one-to-four family residential, a decrease of $383,000 in owner-occupied one-to-four family residential, a decrease of $521,000 in multifamily residential properties, a decrease of $272,000 in nonresidential properties and a decrease of $117,000 in business loans. Additionally, 3 non-accruing loans totaling $1.8 million were sold for a net gain of $142,000 during the quarter. One of the loans sold included a recovery of $170,000.

Provision for loan losses was $94,000 for the quarter ended March 31, 2018, compared to $52,000 for the same period in 2017. The allowance for loan losses was $11.4 million, or 1.37%, of total loans at March 31, 2018, compared to $11.1 million, or 1.37%, of total loans at December 31, 2017. Net charge-offs totaled $5,000 for the quarter ended March 31, 2018, compared to $10,000 for the same period in 2017.

Balance Sheet

Total assets increased $24.1 million, or 2.6%, to $949.6 million at March 31, 2018 from $925.5 million at December 31, 2017. Net loans increased $24.3 million, or 3.0%, to $823.0 million at March 31, 2018 from $798.7 million at December 31, 2017. The increase in net loans was primarily attributed to increases of $15.9 million in multifamily residential and $7.3 million in nonresidential properties.

Total deposits increased $38.3 million, or 5.4%, to $752.3 million at March 31, 2018 from $714.0 million at December 31, 2017. The increase in deposits was primarily attributed to increases in certificates of deposits of $26.9 million and an increase of $7.0 million in demand deposits.

Total stockholders’ equity was $165.7 million at March 31, 2018 compared to $164.8 million at December 31, 2017. The Company and the Bank exceeded all regulatory capital requirements to be deemed well-capitalized at March 31, 2018. The Bank’s total capital to risk-weighted assets ratio was 20.55%, the tier 1 capital to risk-weighted assets ratio and the common equity tier 1 capital ratio was 19.29%, the tier 1 capital to total assets ratio was 14.27% at March 31, 2018 compared to 20.73%, 19.48%, and 14.67% at December 31, 2017 respectively.

The Annual Meeting of Stockholders of PDL Community Bancorp will be held at our administrative office located at 2244 Westchester Avenue, Bronx, New York 10462 on May 10, 2018, at 10:00 am, local time.

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.

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 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 Balance Sheets
(Dollars in thousands, except for share data)

	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
ASSETS
Cash and due from banks:
Cash	$	6,570		$	24,746		$	4,716		$	4,096		$	4,557
Interest-bearing deposits in banks		52,409			34,978			51,629			5,400			11,947
Total cash and cash equivalents		58,979			59,724			56,345			9,496			16,504
Available-for-sale securities, at fair value		28,422			28,897			29,312			29,668			51,937
Loans held for sale		—			—			—			2,143			2,143
Loans receivable, net		823,014			798,703			767,721			732,520			677,525
Accrued interest receivable		3,202			3,335			3,132			2,917			2,749
Premises and equipment, net		27,684			27,172			25,729			25,599			25,687
Federal Home Loan Bank Stock (FHLB), at cost		1,673			1,511			1,448			1,288			2,089
Deferred tax assets		3,801			3,909			5,563			3,378			3,378
Other assets		2,848			2,271			3,013			5,987			4,241
Total assets	$	949,623		$	925,522		$	892,263		$	812,996		$	786,253
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	752,267		$	713,985		$	698,655		$	702,406		$	655,882
Accrued interest payable		61			42			32			31			26
Advance payments by borrowers for taxes and insurance		6,999			5,025			5,967			4,661			5,670
Advances from the Federal Home Loan Bank and others		20,000			36,400			15,000			8,000			28,000
Other liabilities		4,582			5,285			4,101			3,224			3,201
Total liabilities		783,909			760,737			723,755			718,322			692,779
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		185			185			185			—			—
Additional paid-in-capital		84,419			84,351			84,099			—			—
Retained earnings		95,796			94,855			97,719			100,929			99,805
Accumulated other comprehensive loss		(8,052	)		(7,851	)		(6,257	)		(6,255	)		(6,331	)
Unearned compensation - ESOP		(6,634	)		(6,755	)		(7,238	)		—			—
Total stockholders' equity		165,714			164,785			168,508			94,674			93,474
Total liabilities and stockholders' equity	$	949,623		$	925,522		$	892,263		$	812,996		$	786,253

PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income (Loss)
(Dollars in thousands, except per share data)

	For the Quarters Ended
	March 31,		December 31,			September 30,			June 30,		March 31,
	2018		2017			2017			2017		2017
Interest and dividend income:
Interest on loans receivable	$	10,386	$	10,106		$	9,893		$	9,581	$	8,592
Interest and dividends on investment securities and FHLB stock		324		221			271			123		202
Total interest and dividend income		10,710		10,327			10,164			9,704		8,794
Interest expense:
Interest on certificates of deposit		1,750		1,599			1,574			1,428		1,316
Interest on other deposits		185		168			176			161		151
Interest on borrowings		98		83			66			32		29
Total interest expense		2,033		1,850			1,816			1,621		1,496
Net interest income		8,677		8,477			8,348			8,083		7,298
Provision for loan losses		94		1,219			238			207		52
Net interest income after provision for loan losses		8,583		7,258			8,110			7,876		7,246
Noninterest income:
Service charges and fees		223		224			231			225		229
Brokerage commissions		96		94			167			168		118
Late and prepayment charges		211		207			157			235		211
Other		355		169			213			256		200
Total noninterest income		885		694			768			884		758
Noninterest expense:
Compensation and benefits		4,458		5,104			4,220			3,956		3,829
Occupancy expense		1,491		1,588			1,412			1,400		1,425
Data processing expenses		408		293			316			413		448
Direct loan expenses		155		171			189			184		195
Insurance and surety bond premiums		89		64			44			79		82
Office supplies, telephone and postage		300		317			250			282		254
FDIC deposit insurance assessment		68		4			122			58		66
Charitable foundation contributions		—		—			6,293			—		—
Other operating expenses		1,290		1,195			884			623		797
Total noninterest expense		8,259		8,736			13,730			6,995		7,096
Income (loss) before income taxes		1,209		(784	)		(4,852	)		1,765		908
Provision for income taxes (benefit)		268		2,081			(1,643	)		641		345
Net income (loss)	$	941	$	(2,865	)	$	(3,209	)	$	1,124	$	563
Earnings per share for the period:
Basic	$	0.05	$	(0.16	)	N/A			N/A		N/A
Diluted	$	0.05	$	(0.16	)	N/A			N/A		N/A

PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share data)

	For the Three Months Ended March 31,
	2018		2017		$			%
Interest and dividend income:
Interest on loans receivable	$	10,386	$	8,592	$	1,794			20.88	%
Interest and dividends on investment securities and FHLB stock		324		202		122			60.40	%
Total interest and dividend income		10,710		8,794		1,916			21.79	%
Interest expense:
Interest on certificates of deposit		1,750		1,316		434			32.98	%
Interest on other deposits		185		151		34			22.52	%
Interest on borrowings		98		29		69			237.93	%
Total interest expense		2,033		1,496		537			35.90	%
Net interest income		8,677		7,298		1,379			18.90	%
Provision for loan losses		94		52		42			80.77	%
Net interest income after provision for loan losses		8,583		7,246		1,337			18.45	%
Noninterest income:
Service charges and fees		223		229		(6	)		(2.62	%)
Brokerage commissions		96		118		(22	)		(18.64	%)
Late and prepayment charges		211		211		-			0.00	%
Other		355		200		155			77.50	%
Total noninterest income		885		758		127			16.75	%
Noninterest expense:
Compensation and benefits		4,458		3,829		629			16.43	%
Occupancy expense		1,491		1,425		66			4.63	%
Data processing expenses		408		448		(40	)		(8.93	%)
Direct loan expenses		155		195		(40	)		(20.51	%)
Insurance and surety bond premiums		89		82		7			8.54	%
Office supplies, telephone and postage		300		254		46			18.11	%
FDIC deposit insurance assessment		68		66		2			3.03	%
Other operating expenses		1,290		797		493			61.86	%
Total noninterest expense		8,259		7,096		1,163			16.39	%
Income before income taxes		1,209		908		301			33.15	%
Provision for income taxes		268		345		(77	)		(22.32	%)
Net income	$	941	$	563	$	378			67.14	%
Earnings per share for the period:
Basic	$	0.05	N/A		N/A			N/A
Diluted	$	0.05	N/A		N/A			N/A

PDL Community Bancorp and Subsidiaries
Key Metrics

	At or for the Quarters Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
Performance Ratios:
Return on average assets		0.41	%		(1.27	%)		(1.43	%)		0.57	%		0.30	%
Return on average equity		2.30	%		(6.74	%)		(12.93	%)		4.75	%		2.43	%
Net interest rate spread (1)		3.61	%		3.54	%		3.58	%		4.07	%		3.88	%
Net interest margin (2)		3.95	%		3.88	%		3.86	%		4.29	%		4.09	%
Noninterest expense to average assets		3.61	%		3.86	%		6.11	%		3.56	%		3.80	%
Efficiency ratio (3)		86.37	%		95.26	%		150.61	%		78.02	%		88.08	%
Average interest-earning assets to average interest- bearing liabilities		135.79	%		139.76	%		133.72	%		125.73	%		124.86	%
Average equity to average assets		17.91	%		18.77	%		11.05	%		12.03	%		12.38	%
Capital Ratios:
Total capital to risk weighted assets (bank only)		20.52	%		20.73	%		21.41	%		17.34	%		18.16	%
Tier 1 capital to risk weighted assets (bank only)		19.26	%		19.48	%		20.15	%		16.09	%		16.91	%
Common equity Tier 1 capital to risk-weighted assets ( bank only)		19.26	%		19.48	%		20.15	%		16.09	%		16.91	%
Tier 1 capital to average assets (bank only)		14.25	%		14.67	%		14.91	%		12.70	%		13.08	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		1.37	%		1.37	%		1.43	%		1.43	%		1.51	%
Allowance for loan losses as a percentage of nonperforming loans		122.81	%		97.05	%		118.32	%		138.27	%		134.92	%
Net (charge-offs) recoveries to average outstanding loans during the year		0.12	%		(0.64	%)		0.13	%		0.04	%		0.07	%
Non-performing loans as a percentage of total loans		1.11	%		1.41	%		1.21	%		1.04	%		1.12	%
Non-performing loans as a percentage of total assets		0.98	%		1.23	%		1.06	%		0.95	%		0.98	%
Total non-performing assets as a percentage of total assets		0.98	%		1.23	%		1.06	%		0.95	%		0.98	%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets		2.25	%		2.72	%		2.61	%		3.05	%		3.29	%
Other:
Number of offices	14			14			14			14			14
Number of full-time equivalent employees	192			177			171			178			177

(1)	Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of average interest-bearing liabilities.
(2)	Net interest margin represents net interest income divided by average total interest-earning assets.
(3)	Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

Key metrics calculated on income statement items were annualized where appropriate.

PDL Community Bancorp and Subsidiaries
Loan Portfolio

	For the Quarters Ended
	March 31,						December 31,						September 30,						June 30,						March 31,
	2018						2017						2017						2017						2017
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	290,509			34.86	%	$	287,158			35.51	%	$	279,275			35.90	%	$	256,989			34.62	%	$	237,904			34.62	%
Owner-Occupied		96,943			11.63	%		100,854			12.47	%		99,661			12.81	%		99,901			13.46	%		96,085			13.98	%
Multifamily residential		204,474			24.54	%		188,550			23.31	%		177,181			22.78	%		172,167			23.19	%		161,833			23.55	%
Nonresidential properties		158,525			19.03	%		151,193			18.69	%		152,692			19.63	%		155,670			20.97	%		140,501			20.45	%
Construction and land		67,971			8.16	%		67,240			8.31	%		52,483			6.75	%		42,116			5.67	%		37,610			5.47	%
Total mortgage loans		818,422			98.21	%		794,995			98.30	%		761,292			97.87	%		726,843			97.91	%		673,933			98.07	%
Nonmortgage loans:
Business loans		13,925			1.67	%		12,873			1.59	%		15,600			2.01	%		14,654			1.97	%		12,434			1.81	%
Consumer loans		975			0.12	%		886			0.11	%		943			0.12	%		850			0.11	%		796			0.12	%
Total nonmortgage loans		14,900			1.79	%		13,759			1.70	%		16,543			2.13	%		15,504			2.09	%		13,230			1.93	%
		833,322			100.00	%		808,754			100.00	%		777,835			100.00	%		742,347			100.00	%		687,163			100.00	%

Net deferred loan origination costs		1,101						1,020						1,033						828						732
Allowance for losses on loans		(11,409	)					(11,071	)					(11,147	)					(10,655	)					(10,370	)

Loans, net	$	823,014					$	798,703					$	767,721					$	732,520					$	677,525

PDL Community Bancorp and Subsidiaries
Nonperforming Assets

	For the Quarters Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017

	(Dollars in thousands)
Nonaccrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	209		$	1,034		$	402		$	571		$	573
Owner occupied		1,951			2,624			2,630			2,463			1,723
Multifamily residential		—			521			—			—			—
Nonresidential properties		633			1,387			653			867			1,606
Construction and land		1,097			1,075			1,075			1,008			1,142
Nonmortgage loans:
Business		30			147			12			12			12
Consumer		—			—			—			—			—
Total nonaccrual loans (not including non-accruing troubled debt restructured loans)	$	3,920		$	6,788		$	4,772		$	4,921		$	5,056

Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	1,122		$	1,144		$	1,168		$	1,190		$	1,214
Owner occupied		2,983			2,693			2,698			810			636
Multifamily residential		—			—			—			—			—
Nonresidential properties		1,265			783			783			785			780
Construction and land		—			—			—			—			—
Nonmortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing troubled debt restructured loans		5,370			4,620			4,649			2,785			2,630
Total nonaccrual loans	$	9,290		$	11,408		$	9,421		$	7,706		$	7,686

Real estate owned:
Mortgage loans:
1-4 family residential
Investor owned	$	—		$	—		$	—		$	—		$	—
Owner occupied
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Nonmortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total real estate owned		—			—			—			—			—
Total nonpeforming assets	$	9,290		$	11,408		$	9,421		$	7,706		$	7,686

Accruing loans past due 90 days or more:
Mortgage loans:
1-4 family residential
Investor owned	$	—		$	7		$	—		$	—		$	—
Owner occupied		—			—			—			—			—
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Nonmortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total accruing loans past due 90 days or more	$	—		$	7		$	—		$	—		$	—
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	5,738		$	6,559		$	6,594		$	7,108		$	6,385
Owner occupied		4,424			4,756			4,784			5,439			7,232
Multifamily residential		—			—			—			—			—
Nonresidential properties		1,468			1,958			1,968			4,009			4,036
Construction and land		—			—			—			—			—
Nonmortgage loans:
Business		454			477			501			516			546
Consumer		—			—			—			—			—
Total accruing troubled debt restructured loans	$	12,084		$	13,750		$	13,847		$	17,072		$	18,199
Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans	$	21,374		$	25,165		$	23,268		$	24,778		$	25,885
Total nonperforming loans to total loans		1.11	%		1.41	%		1.21	%		1.04	%		1.12	%
Total nonperforming assets to total assets		0.98	%		1.23	%		1.06	%		0.95	%		0.98	%
Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans to total assets		2.25	%		2.72	%		2.61	%		3.05	%		3.29	%