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PDL Community Bancorp Announces Results for the Year Ended December 31, 2017

NEW YORK, April 02, 2018 (GLOBE NEWSWIRE) -- PDL Community Bancorp, (the “Company”) (NASDAQ:PDLB), the holding company for Ponce Bank (the “Bank”), reported a net loss of $4.4 million for the year ended December 31, 2017 compared to net income of $1.4 million for the same period in 2016. 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. The Company’s results of operations for 2017 include a one-time pre-tax contribution by the Company of 609,279 shares of common stock, valued at $6.1 million, and $200,000 in cash, to establish the Ponce De Leon Foundation (the “Foundation”).

The Company reported a net loss of $2.9 million for the quarter ended December 31, 2017 compared to net income of $239,000 for the same period in 2016. Earnings (loss) per share, for the period of September 29, 2017 to December 31, 2017, was ($0.16). The Company’s results for the quarter ended December 31, 2017 includes a one-time tax expense of $2.1 million due to the enactment of federal tax reform.

“The quarter ended December 31, 2017 was our first full quarter as a public company; it has been a rewarding and challenging period as we embark on deploying and growing into our capital,” said Steven A. Tsavaris, Executive Chairman. Carlos P. Naudon, President and CEO, noted that “we are delighted with our operating results, particularly with our organic loan growth, and its effects, in the face of headwinds from increasing interest rates.”

Net Interest Income

Net interest income was $32.2 million for the year ended December 31, 2017, up $4.4 million, or 15.8% from $27.8 million for the year ended December 31, 2016. The increase in net interest income for the year ended December 31, 2017 compared to the same period in 2016 reflects a $5.2 million, or 15.6%, increase in total interest and dividend income offset by an increase of $847,000, or 14.3% in total interest expense. The increase in interest and dividend income is primarily due to the mortgage loan growth that provided an increase in average outstanding loans of $129.7 million or 21.4%, for the year ended December 31, 2017 compared to the same period in 2016. The net interest rate spread and net interest margin was 3.76% and 4.02%, respectively, for the year ended December 31, 2017 compared to 3.82% and 4.02%, respectively, for the same period in 2016. The yield on loans decreased to 5.19% for the year ended December 31, 2017 from 5.39% for the same period in 2016. The increase in interest expense is due to an increase in average interest-bearing liabilities of $56.7 million, or 10.2%, for the year ended December 31, 2017 compared to the same period in 2016. The cost of interest-bearing liabilities increased to 1.11% for the year ended December 31, 2017 from 1.06% for the same period in 2016.

Net interest income was $8.5 million for the quarter ended December 31, 2017, up $1.5 million, or 21.4%, from $7.0 million for the quarter ended December 31, 2016. The increase in net interest income for the quarter ended December 31, 2017 compared to the same period in 2016 reflects a $1.8 million, or 21.2%, increase in total interest and dividend income offset by an increase of $378,000, or 24.8%, in total interest expense. 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 $174.0 million or 27.4%, for the quarter ended December 31, 2017 compared to the same period in 2016. The net interest rate spread and net interest margin was 3.58% and 3.88%, respectively, for the quarter ended December 31, 2017 compared to 3.74% and 3.95%, respectively, for the same period in 2016. The yield on loans decreased to 4.96% for the quarter ended December 31, 2017 from 5.23% for the same period in 2016. The increase in interest expense is due to an increase in average interest-bearing liabilities of $70.7 million or 12.5%, for the quarter ended December 31, 2017 compared to the same period in 2016. The cost of interest-bearing liabilities increased to 1.15% for the quarter ended December 31, 2017 from 1.07% for the same period in 2016.

Noninterest Income

Noninterest income was $688,000 for the quarter ended December 31, 2017, up $106,000, or 18.2%, from $582,000 for the same period in 2016. The increase is mainly attributed to an increase of $161,000 in late fees and prepayment charges related to mortgage loans.

Noninterest income was $3.1 million for the year ended December 31, 2017, up $673,000, or 27.7%, from $2.4 million for the same period in 2016. The increase is mainly attributed to an increase of $508,000 in late fees and prepayment charges related to mortgage loans.

Noninterest Expense

Noninterest expenses were $36.6 million for the year ended December 31, 2017, up $8.7 million, or 31.2%, from $27.9 million for the same period in 2016. The increase is mainly attributed to a one-time pre-tax contribution by the Company of 609,279 shares of common stock, valued at of $6.1 million, and $200,000 in cash, in connection with the establishment of the Foundation, combined with an increase of $2.1 million in total compensation and benefits expense which included an increase of $921,000 related to salaries and an expense of $735,000 related to the newly created Employee Stock Ownership Plan.

Noninterest expenses were $8.7 million for the quarter ended December 31, 2017, up $1.6 million, or 22.5%, from $7.1 million for the same period in 2016. The increase is mainly attributed to an increase of $1.1 million in total compensation and benefits expense which included an expense of $735,000 related to the newly created Employee Stock Ownership Plan as part of the reorganization.

Asset Quality

Nonperforming assets increased to $11.4 million or 1.23% of total assets at December 31, 2017 from $7.7 million or 1.04% of total assets at December 31, 2016. The increase is mainly attributed to an increase in nonaccruals of $3.2 million in owner-occupied one-to-four family residences.

Provision for loan losses was $1.2 million for the quarter ended December 31, 2017, compared to $139,000 for the same period in 2016. Provision for loan losses was $1.7 million for the year ended December 31, 2017, compared to a recovery of $57,000 for the same period in 2016. The allowance for loan losses was $11.1 million, or 1.37%, of total loans at December 31, 2017, compared to $10.2 million, or 1.57%, of total loans at December 31, 2016. Net charge-offs totaled $1.3 million for the quarter ended December 31, 2017, or 0.16% of average loans outstanding, compared to a recovery of $102,000 for the same period in 2016. Net charge-offs totaled $850,000 for the year ended December 31, 2017, or 0.12% of average loans outstanding, compared to a recovery of $778,000 for the year ended December 31, 2016.

Balance Sheet

Total assets increased $180.5 million, or 24.2%, to $925.5 million at December 31, 2017 from $745.0 million at December 31, 2016. Net loans increased $156.6 million, or 24.4%, to $798.7 million at December 31, 2017 from $642.1 million at December 31, 2016. The increase in net loans was primarily attributed to increases of $96.9 million in multifamily, nonresidential, construction and land loans and $59.8 million in investor-owned one-to-four family residences.

Total deposits increased $70.9 million, or 11.0%, to $714.0 million at December 31, 2017 from $643.1 million at December 31, 2016. The increase in deposits was primarily attributed to increases in certificates of deposits of $41.3 million and an increase of $24.2 million in demand deposits.

Total stockholders’ equity was $164.8 million at December 31, 2017 compared to $93.0 million at December 31, 2016. The Company and the Bank exceeded all regulatory capital requirements to be deemed well-capitalized at December 31, 2017. The Bank’s total capital to risk-weighted asset ratio was 20.73%, the tier 1 capital to risk-weighted assets ratio and the common equity tier 1 capital ratio was 19.48%, the tier 1 capital to total assets ratio was 14.67% at December 31, 2017 compared to 19.21%, 17.96%, and 13.32% at December 31, 2016.

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
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
ASSETS
Cash and due from banks:
Cash $24,746 $4,716 $4,096 $4,557 $4,796
Interest-bearing deposits in banks 34,978 51,629 5,400 11,947 6,920
Total cash and cash equivalents 59,724 56,345 9,496 16,504 11,716
Available-for-sale securities, at fair value 28,897 29,312 29,668 51,937 52,690
Loans held for sale 2,143 2,143 2,143
Loans receivable, net of allowance for loan losses 798,703 767,721 732,520 677,525 642,148
Accrued interest receivable 3,335 3,132 2,917 2,749 2,707
Premises and equipment, net 27,172 25,729 25,599 25,687 26,028
Federal Home Loan Bank Stock (FHLB), at cost 1,511 1,448 1,288 2,089 964
Deferred tax assets 3,909 5,563 3,378 3,378 3,379
Other assets 2,271 3,013 5,987 4,241 3,208
Total assets $925,522 $892,263 $812,996 $786,253 $744,983
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $713,985 $698,655 $702,406 $655,882 $643,078
Accrued interest payable 42 32 31 26 28
Advance payments by borrowers for taxes and insurance 5,025 5,967 4,661 5,670 3,882
Advances and borrowings 36,400 15,000 8,000 28,000 3,000
Other liabilities 5,285 4,101 3,224 3,201 2,003
Total liabilities 760,737 723,755 718,322 692,779 651,991
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 December 31, 2017
185 185
Additional paid-in-capital 84,351 84,099
Retained earnings 94,855 97,719 100,929 99,805 99,242
Accumulated other comprehensive loss (7,851) (6,257) (6,255) (6,331) (6,250)
Unearned Employee Stock Ownership Plan (ESOP) shares; 675,501 shares at December 31, 2017 (6,755) (7,238)
Total stockholders' equity 164,785 168,508 94,674 93,474 92,992
Total liabilities and stockholders' equity $925,522 $892,263 $812,996 $786,253 $744,983


PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income (Loss)
(Dollars in thousands, except per share data)
For the Quarters Ended
December 31, September 30, June 30, March 31, December 31,
2017 2017 2017 2017 2016
Interest and dividend income:
Interest on loans receivable $10,106 $9,893 $9,581 $8,592 $8,331
Interest and dividends on investment securities and FHLB stock 221 271 123 202 211
Total interest and dividend income 10,327 10,164 9,704 8,794 8,542
Interest expense:
Interest on certificates of deposit 1,599 1,574 1,428 1,316 1,385
Interest on other deposits 168 176 161 151 140
Interest on borrowings 83 66 32 29 1
Total interest expense 1,850 1,816 1,621 1,496 1,526
Net interest income 8,477 8,348 8,083 7,298 7,016
Provision for loan losses 1,219 238 207 52 139
Net interest income after provision for loan losses 7,258 8,110 7,876 7,246 6,877
Noninterest income:
Service charges and fees 224 231 225 229 234
Brokerage commissions 94 167 168 118 133
Late and prepayment charges 207 157 235 211 46
Other 169 213 256 200 169
Total noninterest income 694 768 884 758 582
Noninterest expense:
Compensation and benefits 5,104 4,220 3,956 3,829 3,992
Occupancy expense 1,588 1,412 1,400 1,425 1,471
Data processing expenses 293 316 413 448 329
Direct loan expenses 171 189 184 195 173
Insurance and surety bond premiums 64 44 79 82 95
Office supplies, telephone and postage 317 250 282 254 252
FDIC deposit insurance assessment 4 122 58 66 (8)
Charitable foundation contributions 6,293
Other operating expenses 1,195 884 623 797 757
Total noninterest expense 8,736 13,730 6,995 7,096 7,061
Income (loss) before income taxes (784) (4,852) 1,765 908 398
Provision for income taxes (benefit) 2,081 (1,643) 641 345 159
Net income (loss) $(2,865) $(3,209) $1,124 $563 $239
Earnings per share for the period September 29, 2017 to December 31, 2017:
Basic $(0.16) N/A N/A N/A N/A
Diluted $(0.16) N/A N/A N/A N/A


PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income (Loss)
For the Years Ended December 31, 2017 and 2016
(Dollars in thousands, except per share data)
For the Years Ended December 31,
2017 2016 $ Variance % Variance
Interest and dividend income:
Interest on loans receivable $38,172 $32,660 $5,512 16.88%
Interest and dividends on investment securities and FHLB stock 817 1,081 (264) (24.42%)
Total interest and dividend income 38,989 33,741 5,248 15.55%
Interest expense:
Interest on certificates of deposit 5,917 5,502 415 7.54%
Interest on other deposits 656 427 229 53.63%
Interest on borrowings 210 7 203 2,900.00%
Total interest expense 6,783 5,936 847 14.27%
Net interest income 32,206 27,805 4,401 15.83%
Provision for loan losses (recovery) 1,716 (57) 1,773 (3,110.53%)
Net interest income after provision for loan losses (recovery) 30,490 27,862 2,628 9.43%
Noninterest income:
Service charges and fees 909 938 (29) (3.09%)
Brokerage commissions 547 515 32 6.21%
Late and prepayment charges 810 302 508 168.21%
Other 838 676 162 23.96%
Total noninterest income 3,104 2,431 673 27.68%
Noninterest expense:
Compensation and benefits 17,109 14,979 2,130 14.22%
Occupancy expense 5,825 5,651 174 3.08%
Data processing expenses 1,470 1,617 (147) (9.09%)
Direct loan expenses 739 860 (121) (14.07%)
Insurance and surety bond premiums 269 464 (195) (42.03%)
Office supplies, telephone and postage 1,103 1,071 32 2.99%
FDIC deposit insurance assessment 250 538 (288) (53.53%)
Charitable foundation contributions 6,293 6,293 100.00%
Other operating expenses 3,499 2,683 816 30.41%
Total noninterest expense 36,557 27,863 8,694 31.20%
Income (loss) before income taxes (2,963) 2,430 (5,393) (221.93%)
Provision for income taxes 1,424 1,005 419 41.69%
Net income (loss) $(4,387) $1,425 $(5,812) (407.86%)
Earnings per share for the period September 29, 2017 to December 31, 2017:
Basic $(0.16) N/A N/A N/A
Diluted $(0.16) N/A N/A N/A


PDL Community Bancorp and Subsidiaries
Key Metrics
At or For the Years Ended December 31,
2017 2016 2015 2014 2013
Performance Ratios:
Return on average assets (0.51%) 0.20% 0.35% 0.35% 0.33%
Return on average equity (3.52%) 1.53% 2.76% 2.80% 2.79%
Net interest rate spread (1) 3.76% 3.82% 3.96% 4.26% 3.99%
Net interest margin (2) 4.02% 4.02% 4.14% 4.42% 4.18%
Noninterest expense to average assets 4.28% 3.84% 3.67% 3.59% 3.30%
Efficiency ratio (3) 103.53% 92.15% 86.23% 79.34% 75.75%
Average interest-earning assets to average interest- bearing liabilities 130.35% 123.84% 121.66% 119.27% 117.72%
Average equity to average assets 14.58% 12.81% 12.78% 12.58% 11.79%
Capital Ratios:
Total capital to risk weighted assets (bank only) 20.73% 19.21% 20.72% 20.32% 18.85%
Tier 1 capital to risk weighted assets (bank only) 19.48% 17.96% 19.46% 19.06% 17.59%
Common equity Tier 1 capital to risk-weighted assets (bank only) 19.48% 17.96% 19.46% N/A N/A
Tier 1 capital to average assets (bank only) 14.67% 13.32% 13.67% 13.46% 12.65%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans 1.37% 1.57% 1.64% 1.71% 1.74%
Allowance for loan losses as a percentage of nonperforming loans 97.05% 132.15% 99.78% 58.79% 21.80%
Net (charge-offs) recoveries to average outstanding loans during the year (0.12%) 0.13% (0.06%) (0.30%) (0.61%)
Non-performing loans as a percentage of total loans 1.41% 1.19% 1.65% 2.91% 7.98%
Non-performing loans as a percentage of total assets 1.23% 1.04% 1.35% 2.28% 6.29%
Total non-performing assets as a percentage of total assets 1.23% 1.04% 1.36% 2.30% 6.24%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets 2.72% 3.50% 4.19% 5.33% 7.50%
Other:
Number of offices 14 14 14 14 14
Number of full-time equivalent employees 177 174 175 164 168

(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.

PDL Community Bancorp and Subsidiaries
Loan Portfolio
At December 31,
2017 2016 2015 2014 2013
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned $287,158 35.51% $227,409 34.90% $203,239 35.25% $190,726 34.54% $195,762 34.27%
Owner-Occupied 100,854 12.47% 97,631 14.98% 106,053 18.39% 105,222 19.05% 111,252 19.47%
Multifamily residences 188,550 23.31% 158,200 24.28% 122,836 21.30% 110,978 20.10% 107,541 18.82%
Nonresidential properties 151,193 18.70% 121,500 18.64% 106,462 18.46% 111,806 20.24% 109,603 19.19%
Construction and land 67,240 8.31% 30,340 4.66% 22,883 3.97% 18,707 3.39% 25,567 4.48%
Total mortgage loans 794,995 98.30% 635,080 97.46% 561,473 97.37% 537,439 97.32% 549,725 96.23%
Nonmortgage loans:
Business loans 12,873 1.59% 15,719 2.41% 14,350 2.49% 14,206 2.57% 20,349 3.56%
Consumer loans 886 0.11% 843 0.13% 788 0.14% 614 0.11% 1,210 0.21%
Total nonmortgage loans 13,759 1.70% 16,562 2.54% 15,138 2.63% 14,820 2.68% 21,559 3.77%
808,754 100.00% 651,642 100.00% 576,611 100.00% 552,259 100.00% 571,284 100.00%
Net deferred loan origination costs 1,020 711 535 479 279
Allowance for losses on loans (11,071) (10,205) (9,484) (9,449) (9,940)
Loans, net $798,703 $642,148 $567,662 $543,289 $561,623

PDL Community Bancorp and Subsidiaries
Nonperforming Assets
At December 31,
2017 2016 2015 2014 2013
(Dollars in thousands)
Nonaccrual loans:
Mortgage loans:
1-4 family residential
Investor-owned $1,034 $809 $1,635 $2,721 $7,365
Owner-occupied 2,624 1,463 1,078 1,036 4,983
Multifamily residential 521 2,957 4,040
Nonresidential properties 1,387 1,614 1,660 72 1,579
Construction and land 1,075 1,145 637 259 3,019
Nonmortgage loans:
Business 147 22 13 14 236
Consumer 29
Total nonaccrual loans (not including non-accruing troubled debt restructured loans) $6,788 $5,053 $5,023 $7,059 $21,251
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor-owned $1,144 $1,240 $2,599 $4,585 $10,059
Owner-occupied 2,693 646 1,055 1,923 7,471
Multifamily residential 396
Nonresidential properties 783 783 828 2,427 5,658
Construction and land
Nonmortgage loans:
Business 79 751
Consumer
Total non-accruing troubled debt restructured loans 4,620 2,669 4,482 9,014 24,335
Total nonaccrual loans $11,408 $7,722 $9,505 $16,073 $45,586
Real estate owned:
Mortgage loans:
1-4 family residential
Investor-owned $ $ $ $ $
Owner-occupied
Multifamily residential
Nonresidential properties
Construction and land 76 162 1,059
Nonmortgage loans:
Business
Consumer
Total real estate owned 76 162 1,059
Total nonperforming assets $11,408 $7,722 $9,581 $16,235 $46,645
Accruing loans past due 90 days or more:
Mortgage loans:
1-4 family residential
Investor-owned $7 $ $ $ $
Owner-occupied
Multifamily residential
Nonresidential properties 126 127
Construction and land 1,257 894
Nonmortgage loans:
Business 600
Consumer
Total accruing loans past due 90 days or more $7 $ $ $1,983 $1,021
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor-owned $6,559 $6,422 $6,579 $5,179 $2,371
Owner-occupied 4,756 7,271 8,326 9,661 2,476
Multifamily residential
Nonresidential properties 1,958 4,066 4,186 3,590 2,262
Construction and land
Nonmortgage loans:
Business 477 593 814 970
Consumer
Total accruing troubled debt restructured loans $13,750 $18,352 $19,905 $19,400 $7,109
Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans $25,165 $26,074 $29,486 $37,618 $54,775
Total nonperforming loans to total loans 1.41% 1.19% 1.65% 2.91% 7.98%
Total nonperforming assets to total assets 1.23% 1.04% 1.35% 2.28% 6.24%
Total nonperforming assets, accruing loans past due 90 days or more and accruing troubled debt restructured loans to total assets 2.72% 3.50% 4.19% 5.33% 7.50%

Contact:

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

Source:PDL Community Bancorp