PDL Community Bancorp Announces 2017 Third Quarter Results

(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

Source: PDL Community Bancorp