PDL Community Bancorp Announces 2019 Fourth Quarter Results

Ponce Bank Feb 28, 2020 12:00:00 AM

(GLOBE NEWSWIRE) -- PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), reported a net loss of ($7.5 million), or ($0.43) per basic and diluted share, for the fourth quarter of 2019, compared to net income of $709,000, or $0.04 per basic and diluted share, for the prior quarter and net income of $635,000, or $0.04 per basic and diluted share, for the fourth quarter of 2018. For the year ended December 31, 2019, the net loss was ($5.1 million), or ($0.29) per basic and diluted share, compared to net income of $2.7 million, or $0.15 per basic and diluted share for the year ended December 31, 2018.

The reduction in net income during the fourth quarter of 2019 was due primarily to a one-time charge of $9.9 million ($7.8 million net of tax effect) related to the termination of the Company’s Defined Benefit Plan. Excluding the one-time charge, the Company would have reported net income of $393,000, or $0.02 per basic and diluted share, for the three months ended December 31, 2019 and net income of $2.7 million, or $0.16 per basic and diluted share, for the year ended December 31, 2019. See the Non-GAAP Reconciliation at the end of this earnings release.

Carlos P. Naudon, President and CEO remarked that, “the Company’s focus in the fourth quarter of 2019 was to increase stakeholder value by ending continuing expenses and unpredictable liabilities associated with the terminated Defined Benefit Plan, and deploying capital by repurchasing common shares through another share repurchase program.”

Net Income

The $8.2 million decrease in net income from the prior quarter reflects a $10.1 million, or 108.6%, increase in noninterest expense mainly the result of the one-time charge of $9.9 million related to the termination of the Company’s Defined Benefit Plan, of which $7.8 million was previously being recognized in accumulated other comprehensive income (loss), a $2.1 million charge-off related to the deferred tax asset associated with the Defined Benefit Plan, a $211,000, or 1.6%, decrease in interest and dividend income, and a $81,000 increase in provision for loan losses, offset by a $2.2 million decrease in provision for income taxes, an $86,000, or 14.9%, increase in noninterest income and a $8,000, or 0.3%, decrease in interest expense.

The $8.1 million decrease in net income from the fourth quarter of 2018 reflects a $10.4 million, or 114.6%, increase in noninterest expense, mainly the result of the one-time charge related to the termination of the Company’s Defined Benefit Plan and charge-off related to deferred tax asset previously discussed, a $461,000, or 17.0%, increase in interest expense and a $150,000, or 18.4%, decrease in noninterest income offset by a $2.4 million decrease in provision for income taxes, a $416,000, or 3.4%, increase in interest and dividend income and a $120,000, or 55.8%, decrease in provision for loan losses.

The net loss for the year ended December 31, 2019 was ($5.1 million) compared to net income of $2.7 million for the year ended December 31, 2018. The net loss reflects a $12.1 million, or 34.9%, increase in noninterest expense mainly driven by the one-time charge related to the termination of the Company’s Defined Benefit Plan previously discussed, a $2.9 million, or 30.2%, increase in interest expense and a $255,000, or 8.7%, decrease in noninterest income, offset by an increase of $4.3 million, or 9.4%, in interest and dividend income, a $2.0 million, or 182.4%, decrease in provision for income taxes and a $991,000, or 79.3%, decrease in provision for loan losses.

Net Interest Margin

The net interest margin decreased by 12 basis points to 3.71% for the three months ended December 31, 2019 from 3.83% for the three months ended September 30, 2019, while the net interest rate spread decreased by 10 basis points to 3.34% from 3.44% for the same periods. Average interest-earning assets increased by $10.9 million, or 1.1%, to $1,021.8 million for the three months ended December 31, 2019 from $1,010.9 million for the three months ended September 30, 2019. The average yield on interest-earning assets decreased by 13 basis points to 4.95% from 5.08%, for the same periods. Average interest-bearing liabilities increased by $12.7 million, or 1.7%, to $782.1 million for the three months ended December 31, 2019 from $769.4 million for the three months ended September 30, 2019. The average rate on interest-bearing liabilities decreased by 3 basis points to 1.61% from 1.64% for the same periods.

The net interest margin decreased by 19 basis points to 3.71% for the three months ended December 31, 2019 from 3.90% for the three months ended December 31, 2018, while the net interest rate spread decreased by 18 basis points to 3.34% from 3.52% for the same periods. Average interest-earning assets increased by $45.2 million, or 4.6%, to $1,021.8 million for the three months ended December 31, 2019 from $976.6 million for the three months ended December 31, 2018. The average yield on interest-earning assets decreased by 6 basis points to 4.95% from 5.01% for the same periods. Average interest-bearing liabilities increased by $55.0 million, or 7.6%, to $782.1 million for the three months ended December 31, 2019 from $727.1 million for the three months ended December 31, 2018. The average rate on interest-bearing liabilities increased by 13 basis points to 1.61% from 1.48% for the same periods.

Noninterest Income

Noninterest income increased to $665,000 for the three months ended December 31, 2019, up $86,000, or 14.9%, from $579,000 for the three months ended September 30, 2019. The increase was attributable to increases of $54,000, or 36.0%, in late and prepayment charges related to mortgage loans, $19,000, or 7.7%, in service charges and fees, $7,000, or 19.4%, in brokerage commissions and $6,000, or 4.1%, in other noninterest income.

Noninterest income decreased to $665,000 for the three months ended December 31, 2019, down $150,000, or 18.4%, from $815,000 for the three months ended December 31, 2018. The decrease was mainly attributable to decreases of $74,000, or 26.6%, in late and prepayment charges related to mortgage loans, $65,000, or 60.2%, in brokerage commissions and $60,000, or 28.3%, in other noninterest income offset by an increase of $49,000, or 22.6%, in service charges and fees.

Noninterest Expense

Noninterest expense was $19.5 million for the three months ended December 31, 2019, up $10.1 million, or 108.6%, from $9.3 million for the three months ended September 30, 2019. The increase was mainly the result of the one-time charge related to the termination of the Company’s Defined Benefit Plan and charge-off related to deferred tax asset previously discussed. The increase was also the result of increases in occupancy and equipment expenses of $83,000 as a result of rebranding and branch renovation initiatives; professional fees of $82,000; compensation and benefits expense of $59,000 as a result of expenses related to new hires; office supplies, telephone and postage expenses of $35,000 and in other operating expenses of $31,000 mainly due to a credit from the Federal Deposit Insurance Corporation in the amount of $205,000 related to our FDIC deposit insurance assessment that occurred during the previous quarter. The increase in noninterest expense was partially offset by decreases in insurance and surety bond premiums of $44,000; regulatory dues of $12,000; direct loan expenses of $12,000, marketing and promotional expenses of $7,000; and, data processing expenses of $4,000.

Noninterest expense increased $10.4 million, or 114.6%, to $19.5 million for the three months ended December 31, 2019 from $9.1 million for the three months ended December 31, 2018. The increase was mainly the result of the one-time charge related to the termination of the Company’s Defined Benefit Plan and charge-off related to deferred tax asset previously discussed. The increase was also the result of increases in compensation and benefits expense of $355,000 as a result of expenses related to restricted stock and stock options; occupancy and equipment of $147,000 as a result of rebranding and branch renovation initiatives; data processing expenses of $37,000 as a result of system enhancements and implementation charges related to software upgrades and additional products; other operating expenses of $21,000; professional fees of $13,000 and insurance and surety bond premiums of $8,000. The increase in noninterest expense was partially offset by decreases in direct loan expenses of $46,000; office supplies, telephone and postage expenses of $33,000; and, marketing and promotional expenses of $29,000.

Asset Quality

Nonperforming assets increased to $11.6 million, or 1.10% of total assets, at December 31, 2019, from $10.3 million, or 0.94% of total assets, at September 30, 2019 and $6.8 million, or 0.64% of total assets, at December 31, 2018. The increase from September 30, 2019 is mainly attributable to increases of nonaccrual in 1-4 family residential loans of $987,000 and nonresidential loans of $455,000. The increase from December 31, 2018 is mainly attributable to increases of nonaccrual in 1-4 family residential loans of $1.9 million and nonresidential loans of $2.9 million.

There was a $95,000 provision for loan losses for the quarter ended December 31, 2019, compared to $14,000 for the quarter ended September 30, 2019 and $215,000 for the quarter ended December 31, 2018. The allowance for loan losses was $12.3 million, or 1.27% of total loans, at December 31, 2019, compared to $12.2 million, or 1.27% of total loans, at September 30, 2019 and $12.7 million, or 1.36% of total loans, at December 31, 2018. Net recoveries totaled $74,000 for the quarter ended December 31, 2019, compared to net charge-offs of $372,000 for the quarter ended September 30, 2019 and net recoveries totaled $78,000 for the quarter ended December 31, 2018.

Balance Sheet

Total assets decreased $6.1 million, or 0.6%, to $1,053.8 million at December 31, 2019 from $1,059.9 million at December 31, 2018. The decrease in total assets is mainly attributable to decreases in cash and cash equivalents of $42.1 million and available-for-sale securities of $5.6 million offset by increases in net loans receivable of $37.2 million. The increase in net loans receivable was primarily due to increases of $17.7 million, or 7.6%, in multifamily residential loans, $11.7 million, or 13.4%, in construction and land loans, $10.3 million, or 5.2%, in nonresidential properties loans, $1.2 million, or 0.3%, in 1-4 family residential loans and $163,000, or 15.3%, in consumer loans offset by a decrease of $4.8 million, or 30.8%, in business loans.

Total deposits decreased $27.7 million, or 3.4%, to $782.0 million at December 31, 2019 from $809.8 million at December 31, 2018. The decrease in deposits was mainly attributable to decreases of $34.6 million, or 8.2 %, in certificates of deposit and $6.4 million, or 5.5% in demand deposits offset by an increase of $13.3 million, or 4.9%, in savings, NOW, reciprocal deposits (certificates of deposits and money market) and money market accounts. The $13.3 million increase in savings, NOW, reciprocal deposits and money market accounts was mainly attributable to increases of $22.5 million, or 34.9%, in money market accounts, and $2.1 million, or 6.8%, in NOW/IOLA accounts, offset by decreases of $7.0 million, or 5.7%, in savings accounts and $4.3 million, or 8.2%, in reciprocal deposits.

Total stockholders’ equity was $158.4 million at December 31, 2019, compared to $169.2 million at December 31, 2018. The decrease in stockholders’ equity was mainly attributable to $15.8 million of stock repurchases, a net loss of $5.1 million offset by a net $7.8 million adjustment to accumulated other comprehensive loss related to the termination of Defined Benefit Plan, $1.2 million of expenses related to restricted stock units, $707,000 of expenses related to the Company’s Employee Stock Ownership Plan, $311,000 related to unrealized gain on available-for-sale securities and $101,000 of expenses related to stock options.

Steven A. Tsavaris, Executive Chairman, remarked that, “on May 20, 2019 we announced that the Company had entered into a definitive agreement whereby the Company would acquire all of the capital stock of Mortgage World Bankers and we had anticipated regulatory approval in 2019. However, approval is taking longer than anticipated. We are looking forward to receiving regulatory approval as we anticipate that this transaction will enhance our mortgage origination capacity and provide us a path to the secondary markets."

On February 7, 2019, the Bank announced that it had entered into an Agreement of Sale to sell real estate (related to a relocated branch office) located at 30 East 170th Street, Bronx, New York. The purchase price for the real estate is $4.9 million. The Bank’s carrying value of the property as of December 31, 2019 was $0. The Bank has and will incur expenses related to the sale of the property which will impact the accounting for the sale. The consummation of the sale is now anticipated to be completed during the first half of 2020.

The Company and the Bank exceeded all regulatory capital requirements to be deemed well-capitalized at December 31, 2019. The Bank’s total capital to risk-weighted assets ratio was 18.62%, the tier 1 capital to risk-weighted assets ratio and the common equity tier 1 capital ratio were both 17.36%, and the tier 1 capital to total assets ratio was 12.92% at December 31, 2019, compared to 19.39%, 18.14%, and 13.66%, at December 31, 2018, respectively.

The Company adopted a share repurchase program effective March 25, 2019 which expired on September 24, 2019. Under that program, the Company was permitted to repurchase up to 923,151 shares of the Company’s common stock, or approximately 5% of the Company’s then current issued and outstanding shares. On November 13, 2019, the Company adopted a second share repurchase program. Under this program, the Company may repurchase up to 878,835 shares of the Company’s common stock, or approximately 5% of the Company’s then current issued and outstanding shares. The repurchase program may be suspended or terminated at any time without prior notice, and it will expire no later than May 12, 2020.

As of December 31, 2019, the Company had repurchased an aggregate of 1,102,029 shares under the repurchase programs at a weighted average price of $14.30, which are reported as treasury stock in the consolidated statement of financial condition. Of the 1,102,029 shares of treasury stock, 90,135 shares were reissued as a result of restricted stock units that vested on December 4, 2019.

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 1-4 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 government-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 Statements of Financial Condition

(Dollars in thousands, except for share data)

As of

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2018

ASSETS

Cash and due from banks:

Cash

6,762

6,425

6,003

5,690

45,225

Interest-bearing deposits in banks

20,915

40,965

47,007

35,877

24,553

Total cash and cash equivalents

27,677

47,390

53,010

41,567

69,778

Available-for-sale securities, at fair value

21,504

51,966

22,154

22,166

27,144

Loans held for sale

1,030

—

Loans receivable, net of allowance for losses

955,737

948,548

934,236

925,099

918,509

Accrued interest receivable

3,982

3,893

3,773

3,735

3,795

Premises and equipment, net

32,746

32,805

32,205

31,777

31,135

Other real estate owned

—

Federal Home Loan Bank of New York stock (FHLBNY), at cost

5,735

8,659

4,609

2,915

Deferred tax assets

3,724

3,925

3,913

3,852

3,811

Other assets

1,621

2,802

2,158

2,485

2,814

Total assets

1,053,756

1,099,988

1,056,116

1,033,596

1,059,901

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits

782,043

757,845

802,408

806,781

809,758

Accrued interest payable

Advance payments by borrowers for taxes and insurance

6,348

7,780

6,059

8,099

6,037

Advances from the Federal Home Loan Bank of New York and others

104,404

169,404

79,404

44,404

69,404

Other liabilities

2,462

4,324

2,954

3,975

5,467

Total liabilities

895,354

939,434

890,913

863,334

890,729

Commitments and contingencies

Stockholders' Equity:

Preferred stock, $0.01 par value; 10,000,000 shares authorized

—

Common stock, $0.01 par value; 50,000,000 shares authorized

185

Treasury stock, at cost

(14,478

)

(12,663

)

(6,798

)

(193

)

—

Additional paid-in-capital

84,777

85,749

85,357

84,976

84,581

Retained earnings

93,688

101,140

100,431

99,481

98,813

Accumulated other comprehensive income (loss)

(7,947

)

(7,941

)

(8,035

)

(8,135

)

Unearned compensation - ESOP

(5,790

)

(5,910

)

(6,031

)

(6,152

)

(6,272

)

Total stockholders' equity

158,402

160,554

165,203

170,262

169,172

Total liabilities and stockholders' equity

1,053,756

1,099,988

1,056,116

1,033,596

1,059,901

PDL Community Bancorp and Subsidiaries

Consolidated Statements of Income

(Dollars in thousands, except per share data)

For the Quarters Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2018

Interest and dividend income:

Interest on loans receivable

12,488

12,663

12,060

12,095

12,026

Interest on deposits due from banks

117

278

149

170

Interest and dividend on available-for-sale securities and FHLBNY stock

181

173

138

130

Total interest and dividend income

12,742

12,953

12,414

12,382

12,326

Interest expense:

Interest on certificates of deposit

1,921

1,896

1,904

1,956

2,078

Interest on other deposits

616

759

821

631

320

Interest on borrowings

643

533

345

333

321

Total interest expense

3,180

3,188

3,070

2,920

2,719

Net interest income

9,562

9,765

9,344

9,462

9,607

Provision for loan losses

—

149

215

Net interest income after provision for loan losses

9,467

9,751

9,344

9,313

9,392

Noninterest income:

Service charges and fees

266

247

228

230

217

Brokerage commissions

109

108

Late and prepayment charges

204

150

262

139

278

Other

152

146

172

275

212

Total noninterest income

665

579

686

753

815

Noninterest expense:

Compensation and benefits

4,726

4,667

4,476

5,014

4,371

Loss on termination of pension plan

9,930

—

Occupancy and equipment

2,026

1,943

1,732

1,911

1,879

Data processing expenses

394

398

431

353

357

Direct loan expenses

171

183

182

156

217

Insurance and surety bond premiums

102

146

Office supplies, telephone and postage

316

281

271

317

349

Professional fees

1,038

956

733

510

1,025

Marketing and promotional expenses

Directors fees

Regulatory dues

Other operating expenses

606

575

632

582

585

Total noninterest expense

19,475

9,334

8,707

9,091

9,074

Income (loss) before income taxes

(9,343

)

996

1,323

975

1,133

Provision (benefit) for income taxes

(1,891

)

287

373

307

498

Net income (loss)

(7,452

)

709

950

668

635

Earnings (loss) per share:

Basic

(0.43

)

0.04

0.05

0.04

Diluted

(0.43

)

0.04

0.05

0.04

PDL Community Bancorp and Subsidiaries

Consolidated Statements of Income

(Dollars in thousands, except per share data)

For the Years Ended December 31,

2019

2018

Variance $

Variance %

Interest and dividend income:

Interest on loans receivable

49,306

44,948

4,358

9.70

Interest on deposits due from banks

617

679

(62

)

(9.13

Interest and dividend on available-for-sale securities and FHLBNY stock

568

529

7.37

Total interest and dividend income

50,491

46,156

4,335

9.39

Interest expense:

Interest on certificates of deposit

7,677

7,617

0.79

Interest on other deposits

2,827

974

1,853

190.25

Interest on borrowings

1,854

899

955

106.23

Total interest expense

12,358

9,490

2,868

30.22

Net interest income

38,133

36,666

1,467

4.00

Provision for loan losses

258

1,249

(991

)

(79.34

Net interest income after provision for loan losses

37,875

35,417

2,458

6.94

Noninterest income:

Service charges and fees

971

845

126

14.91

Brokerage commissions

212

533

(321

)

(60.23

Late and prepayment charges

755

606

149

24.59

Other

745

954

(209

)

(21.91

Total noninterest income

2,683

2,938

(255

)

(8.68

Noninterest expense:

Compensation and benefits

18,883

17,939

944

5.26

Loss on termination of pension plan

9,930

—

9,930

—

Occupancy and equipment

7,612

6,673

939

14.07

Data processing expenses

1,576

1,408

168

11.93

Direct loan expenses

692

788

(96

)

(12.18

Insurance and surety bond premiums

414

369

12.20

Office supplies, telephone and postage

1,185

1,309

(124

)

(9.47

Professional fees

3,237

3,154

2.63

Marketing and promotional expenses

158

215

(57

)

(26.51

Directors fees

294

277

6.14

Regulatory dues

231

238

)

(2.94

Other operating expenses

2,395

2,187

208

9.51

Total noninterest expense

46,607

34,557

12,050

34.87

Income (loss) before income taxes

(6,049

)

3,798

(9,847

)

(259.27

Provision (benefit) for income taxes

(924

)

1,121

(2,045

)

(182.43

Net income (loss)

(5,125

)

2,677

(7,802

)

(291.45

Earnings (loss) per share:

Basic

(0.29

)

0.15

N/A

Diluted

(0.29

)

0.15

N/A

PDL Community Bancorp and Subsidiaries

Key Metrics

At or for the Quarters Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2018

Performance Ratios:

Return on average assets

(2.79

0.27

0.37

0.26

0.25

Return on average equity

(18.24

1.71

2.26

1.59

1.49

Net interest rate spread (1)

3.34

3.44

3.34

3.46

3.52

Net interest margin (2)

3.71

3.83

3.75

3.86

3.90

Noninterest expense to average assets

7.30

3.54

3.38

3.59

3.57

Efficiency ratio (3)

190.43

90.24

86.81

89.00

87.07

Average interest-earning assets to average interest- bearing liabilities

130.64

131.38

133.20

133.93

134.30

Average equity to average assets

15.32

15.71

16.27

16.58

16.69

Capital Ratios:

Total capital to risk weighted assets (bank only)

18.62

19.29

19.54

19.32

19.39

Tier 1 capital to risk weighted assets (bank only)

17.36

18.03

18.29

18.06

18.14

Common equity Tier 1 capital to risk-weighted assets (bank only)

17.36

18.03

18.29

18.06

18.14

Tier 1 capital to average assets (bank only)

12.92

13.62

13.64

13.56

13.66

Asset Quality Ratios:

Allowance for loan losses as a percentage of total loans

1.28

1.27

1.32

1.33

1.36

Allowance for loan losses as a percentage of nonperforming loans

106.30

117.72

123.50

155.87

186.77

Net (charge-offs) recoveries to average outstanding loans

0.03

(0.15

0.00

(0.16

0.03

Non-performing loans as a percentage of total loans

1.20

1.09

1.08

0.86

0.73

Non-performing loans as a percentage of total assets

1.10

0.94

0.96

0.77

0.64

Total non-performing assets as a percentage of total assets

1.10

0.94

0.96

0.77

0.64

Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets

1.92

1.73

1.82

1.74

1.63

Other:

Number of offices

Number of full-time equivalent employees

183

187

183

185

181

(1) 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.

(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

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2018

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Mortgage loans:

1-4 family residential

Investor Owned

305,272

31.60

309,065

32.23

302,428

32.00

304,650

32.55

303,197

32.61

Owner-Occupied

91,943

9.52

90,843

9.47

92,904

9.83

95,449

10.20

92,788

9.98

Multifamily residential

250,239

25.90

244,644

25.51

238,974

25.28

234,749

25.09

232,509

25.01

Nonresidential properties

207,225

21.45

195,952

20.44

197,367

20.88

199,903

21.36

196,917

21.18

Construction and land

99,309

10.28

106,124

11.07

100,995

10.69

84,844

9.07

87,572

9.41

Total mortgage loans

953,988

98.75

946,628

98.72

932,668

98.68

919,595

98.27

912,983

98.20

Nonmortgage loans:

Business loans

10,877

1.12

11,040

1.15

11,373

1.20

15,101

1.61

15,710

1.69

Consumer loans

1,231

0.13

1,252

0.13

1,151

0.12

1,125

0.12

1,068

0.11

Total nonmortgage loans

12,108

1.25

12,292

1.28

12,524

1.32

16,226

1.73

16,778

1.80

Total loans, gross

966,096

100.00

958,920

100.00

945,192

100.00

935,821

100.00

929,761

100.00

Net deferred loan origination costs

1,970

1,788

1,562

1,727

1,407

Allowance for losses on loans

(12,329

)

(12,160

)

(12,518

)

(12,449

)

(12,659

)

Loans, net

955,737

948,548

934,236

925,099

918,509

PDL Community Bancorp and Subsidiaries

Nonperforming Assets

For the Quarters Ended

December 31,

September 30,

June 30,

March 31,

December 31,

2019

2018

(Dollars in thousands)

Nonaccrual loans:

Mortgage loans:

1-4 family residential

Investor owned

2,312

1,281

1,299

1,284

205

Owner occupied

1,009

1,052

479

933

1,092

Multifamily residential

—

Nonresidential properties

3,555

3,099

3,288

531

706

Construction and land

1,118

1,292

1,327

1,341

1,115

Nonmortgage loans:

Business

—

275

—

Consumer

—

Total nonaccrual loans (not including non-accruing troubled debt restructured loans)

7,994

6,724

6,402

4,381

3,134

Non-accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

467

471

493

1,023

1,053

Owner occupied

2,491

2,488

2,499

1,972

1,987

Multifamily residential

—

Nonresidential properties

646

647

742

611

604

Construction and land

—

Nonmortgage loans:

Business

—

Consumer

—

Total non-accruing troubled debt restructured loans

3,604

3,606

3,734

3,606

3,644

Total nonaccrual loans

11,598

10,330

10,136

7,987

6,778

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 nonperforming assets

11,598

10,330

10,136

7,987

6,778

Accruing loans past due 90 days or more:

Mortgage loans:

1-4 family residential

Investor owned

—

Owner occupied

—

Multifamily residential

—

Nonresidential properties

—

Construction and land

—

Nonmortgage loans:

Business

—

Consumer

—

Total accruing loans past due 90 days or more

—

Accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

5,191

5,226

5,267

5,157

5,192

Owner occupied

2,090

2,114

2,493

3,415

3,456

Multifamily residential

—

Nonresidential properties

1,306

1,317

1,330

1,428

1,438

Construction and land

—

Nonmortgage loans:

Business

374

Consumer

—

Total accruing troubled debt restructured loans

8,601

8,692

9,127

10,040

10,460

Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans

20,199

19,022

19,263

18,027

17,238

Total nonperforming loans to total loans

1.20

1.09

1.08

0.86

0.73

Total nonperforming assets to total assets

1.10

0.94

0.96

0.77

0.64

Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans to total assets

1.92

1.73

1.82

1.74

1.63

PDL Community Bancorp and Subsidiaries

Average Balance Sheets

For the Three Months Ended December 31,

2019

2018

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

(Dollars in thousands)

Interest-earning assets:

Loans (2)

961,555

12,488

5.15

916,625

12,026

5.21

Available-for-sale securities

30,729

118

1.52

23,477

1.39

Other (3)

29,484

136

1.83

36,481

218

2.37

Total interest-earning assets

1,021,768

12,742

4.95

976,583

12,326

5.01

Non-interest-earning assets

36,579

33,003

Total assets

1,058,347

1,009,586

Interest-bearing liabilities:

NOW/IOLA

28,254

0.52

29,010

0.37

Money market

126,111

543

1.71

70,105

250

1.41

Savings

115,881

0.12

124,786

0.13

Certificates of deposit

387,490

1,921

1.97

444,950

2,078

1.85

Total deposits

657,736

2,536

1.53

668,851

2,396

1.42

Advance payments by borrowers

9,156

0.04

8,999

0.04

Borrowings

115,231

643

2.21

49,296

321

2.58

Total interest-bearing liabilities

782,123

3,180

1.61

727,146

2,718

1.48

Non-interest-bearing liabilities:

Non-interest-bearing demand

110,790

—

107,145

—

Other non-interest-bearing liabilities

3,343

—

6,763

—

Total non-interest-bearing liabilities

114,133

—

113,908

—

Total liabilities

896,256

3,180

841,054

2,718

Total equity

162,091

168,532

Total liabilities and total equity

1,058,347

1.61

1,009,586

1.48

Net interest income

9,562

9,608

Net interest rate spread (4)

3.34

3.52

Net interest-earning assets (5)

239,645

249,437

Net interest margin (6)

3.71

3.90

Average interest-earning assets to interest-bearing liabilities

130.64

134.30

(1) Annualized where appropriate.

(2) Loans include loans and loans held for sale.

(3) Includes FHLBNY demand account and FHLBNY stock dividends.

(4) 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.

(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6) Net interest margin represents net interest income divided by average total interest-earning assets.

PDL Community Bancorp and Subsidiaries

Average Balance Sheets

For the Years Ended December 31,

2019

2018

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate

Balance

Interest

Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans (1)

946,159

49,306

5.21

867,030

44,948

5.18

Available-for-sale securities

24,778

362

1.46

26,424

381

1.44

Other (2)

35,517

823

2.32

42,937

828

1.93

Total interest-earning assets

1,006,454

50,491

5.02

936,391

46,157

4.93

Non-interest-earning assets

35,504

33,610

Total assets

1,041,958

970,001

Interest-bearing liabilities:

NOW/IOLA

27,539

122

0.44

28,182

102

0.36

Money market

124,729

2,548

2.04

60,113

702

1.17

Savings

119,521

153

0.13

125,395

167

0.13

Certificates of deposit

403,010

7,677

1.90

439,737

7,617

1.73

Total deposits

674,799

10,500

1.56

653,427

8,588

1.31

Advance payments by borrowers

8,608

0.05

7,762

0.05

Borrowings

77,621

1,854

2.39

34,886

899

2.58

Total interest-bearing liabilities

761,028

12,358

1.62

696,075

9,491

1.36

Non-interest-bearing liabilities:

Non-interest-bearing demand

110,745

—

100,628

—

Other non-interest-bearing liabilities

3,900

—

5,859

—

Total non-interest-bearing liabilities

114,645

—

106,487

—

Total liabilities

875,673

12,358

802,562

9,491

Total equity

166,285

167,439

Total liabilities and total equity

1,041,958

1.62

970,001

1.36

Net interest income

38,133

36,666

Net interest rate spread (3)

3.40

3.57

Net interest-earning assets (4)

245,426

240,316

Net interest margin (5)

3.79

3.92

Average interest-earning assets to

interest-bearing liabilities

132.25

134.52

(1) Loans include loans and loans held for sale.

(2) Includes FHLBNY demand account and FHLBNY 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.

Non-GAAP Financial Measure

The Company is presenting this non-GAAP financial measures as part of this earnings release. The non-GAAP financial measures presented in this earnings release should not be considered as alternative measures for the most directly comparable GAAP financial measures. The non-GAAP net income and EPS referred to in this earnings release reflect adjustments related to non-recurring charges associated with the termination of the Company’s Defined Benefit Plan. Management believes that presentation of this adjusted (non-GAAP) net income and EPS information is useful to investors as it will improve comparability of core operations year over year and in future periods. A reconciliation of the GAAP information to non-GAAP net income and EPS is presented below.

Non-GAAP Reconciliation – Net Income Before Loss on Termination of Defined Benefit Plan (Unaudited)

Quarter Ended

Earnings Per

Year Ended

Earnings Per

December 31,

2019

Common Share

(1)

December 31,

2019

Common Share

(2)

(Dollars in thousands, except per share data)

Net loss - GAAP

(7,452

)

(0.43

)

(5,125

)

(0.29

)

Loss on termination of pension plan

9,930

Income tax benefit

(2,086

)

(2,086

)

Net income before loss on termination of pension plan - non-GAAP

392

0.02

2,719

0.16

(1) Basic earnings per share were computed (for the GAAP and non-GAAP basis) based on the weighted average number of shares outstanding during the three months ending December 31, 2019 (17,145,970 shares). The assumed exercise of outstanding stock options and vesting of restricted stock units were included in computing the non-GAAP diluted earnings per share and do not result in material dilution.

(2) Basic earnings per share were computed (for the GAAP and non-GAAP basis) based on the weighted average number of shares outstanding during the year ended December 31, 2019 (17,432,318 shares). The assumed exercise of outstanding stock options and vesting of restricted stock units were included in computing the non-GAAP diluted earnings per share and do not result in material dilution.

Contact:

Frank Perez

frank.perez@poncebank.net

718-931-9000

Source: PDL Community Bancorp

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