UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: (Date of earliest event reported): August 2, 2019

 

PDL Community Bancorp

(Exact name of Registrant as Specified in Its Charter)

 

 

Registrant’s Telephone Number, Including Area Code: (718) 931-9000

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

 

 

  

 

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Item 2.02Results of Operations and Financial Condition

On August 2, 2019, PDL Community Bancorp (the “Company”), the holding company for Ponce Bank, issued a press release announcing its financial results for the three and six months ended June 30, 2019.  The Company’s press release is included as Exhibit 99.1 to this report.

The information set forth in this Item 2.02 and in the attached Exhibit 99.1 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended ( the “Exchange Act”), or otherwise subject to the liabilities of that Section.

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Exhibit 99.1

PDL Community Bancorp Announces 2019 Second Quarter Results

New York (August 2, 2019): PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), reported net income of $950,000, or $0.05 per basic and diluted share, for the second quarter of 2019, compared to $668,000, or $0.04 per basic and diluted share, for the prior quarter and net income of $699,000, or $0.04 per basic and diluted share, for the second quarter of 2018. For each of the six months ended June 30, 2019 and 2018, net income was $1.6 million, or $0.09 per basic and diluted share.

Carlos P. Naudon, President and CEO remarked that, “although the rise in interest rates and the growth of the construction and land portfolio has helped in maintaining the yield we receive on our earning assets, the rates we pay on interest-bearing liabilities has increased more rapidly due to increased competition for deposits in our market place combined with an increase in the costs of alternative funding sources to support our growth.” He also remarked that “in order to alleviate the use of alternative funding sources, we deployed a core deposit and customer acquisition strategic initiative at the beginning of 2019. As of the end of the quarter, we have opened 1,732 new accounts with a corresponding aggregate balance of $34.7 million in core deposits.”

Net Income

The increase in net income from the prior quarter reflects a $32,000, or 0.3%, increase in interest and dividend income, a $149,000 decrease in provision for loan losses, and a $384,000, or 4.2%, decrease in noninterest expense, offset by a $67,000, or 8.9%, decrease in noninterest income, a $150,000, or 5.1%, increase in interest expense and $66,000, or 21.5%, increase in provision for income tax.

The increase in net income from the same quarter last year reflects a $1.0 million, or 9.1%, increase in interest and dividend income, a $337,000 decrease in provision for loan losses, and a $162,000, or 30.9%, increase in noninterest income, offset by an $820,000, or 36.4%, increase in interest expense, a $252,000, or 3.0%, increase in noninterest expense and a $207,000, or 124.7%, increase in provision for income tax.

Net income for the six months ended June 30, 2019 and 2018 was $1.6 million. For the six months ended June 30, 2019, net income reflects an increase of $2.7 million, or 12.2%, in interest and dividend income, a $282,000, or 65.4%, decrease in provision for loan losses, a $30,000, or 2.1%, increase in noninterest income, offset by a $1.7 million, or 39.9%, increase in interest expense, a $1.1 million, or 6.5%, increase in noninterest expense and $246,000, or 56.7%, increase in provision for income tax.

Net Interest Margin

The net interest margin decreased by 11 basis points to 3.75% for the three months ended June 30, 2019 from 3.86% for the three months ended March 31, 2019, while the net interest rate spread decreased by 12 basis points to 3.34% from 3.46% for the same periods. Average interest-earning assets increased by $6.0 million, or 0.6%, to $999.4 million for the three months ended June 30, 2019 from $993.4 million for the three months ended March 31, 2019. The average yield on interest-earning assets decreased by 8 basis points to 4.98% from 5.06% for the same periods. Average interest-bearing liabilities increased by $8.6 million, or 1.2%, to $750.3 million for the three months ended June 30, 2019 from $741.7 million for the three months ended March 31, 2019. The average rate on interest-bearing liabilities increased by 4 basis points to 1.64% from 1.60% for the same periods.  

 

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The net interest margin decreased by 21 basis points to 3.75% for the three months ended June 30, 2019 from 3.96% for the three months ended June 30, 2018, while the net interest rate spread decreased by 30 basis points to 3.34% from 3.64% for the same periods. Average interest-earning assets increased by $74.6 million, or 8.1%, to $999.4 million for the three months ended June 30, 2019 from $924.9 million for the three months ended June 30, 2018. The average yield on interest-earning assets increased by 4 basis points to 4.98% from 4.94% for the same periods. Average interest-bearing liabilities increased by $54.3 million, or 7.8%, to $750.3 million for the three months ended June 30, 2019 from $696.0 million for the three months ended June 30, 2018. The average rate on interest-bearing liabilities increased by 34 basis points to 1.64% from 1.30% for the same periods.

Noninterest Income

Noninterest income decreased to $686,000 for the three months ended June 30, 2019, down $67,000, or 8.9%, from $753,000 for the three months ended March 31, 2019. The decreased was attributable to decreases of $85,000, or 78.0%, in brokerage commissions and $103,000, or 37.5%, in other noninterest income, offset by an increase of $123,000, or 88.5%, in late fees and prepayment charges related to mortgage loans.

Noninterest income increased to $686,000 for the three months ended June 30, 2019, up $162,000, or 30.9%, from $524,000 for the three months ended June 30, 2018. The increase was mainly attributable to an increase of $210,000, or 403.9%, in late fees and prepayment charges related to mortgage loans.

Noninterest Expense

Noninterest expense was $8.7 million for the quarter ended June 30, 2019, down $384,000, or 4.2%, from $9.1 million for the quarter ended March 31, 2019. The decrease was mainly attributable to a decrease in compensation and benefits expense of $538,000 as a result of lower group life and health insurance expense related to claims, nonrecurring first quarter 2019 bonus payments resulting in lower payroll tax expense in the second quarter, lower brokerage commissions and a net decrease of compensation associated with organizational changes relating to branch and back office personnel; occupancy expense of $179,000 as a result of seasonal trends and prior quarter project completion expenses; and office supplies, telephone and postage expenses of $46,000. The decrease in noninterest expense was partially offset by increases in data processing expenses of $78,000; professional fees of $223,000; marketing and promotional expenses of $21,000 and other operating expenses of $52,000.

Noninterest expense increased $252,000, or 3.0%, to $8.7 million for the quarter ended June 30, 2019 from $8.5 million for the quarter ended June 30, 2018. The increase was largely due to increases in professional fees of $204,000 as a result of increased expenses associated with business and media development combined with increased expenses associated with the annual stockholders meeting and public reporting; data processing expenses of $131,000 as a result of system enhancements and implementation charges related to software upgrades and additional products being used; other operating expenses of $72,000 as a result of loss on loans sold; and direct loan expenses of $30,000. The increase in noninterest expense was partially offset by decreases in compensation and benefits expense of $87,000 and office supplies, telephone and postage expenses of $81,000.

Asset Quality

Nonperforming assets increased to $10.1 million, or 0.96% of total assets, at June 30, 2019, from $8.0 million, or 0.77% of total assets, at March 31, 2019 and $6.7 million, or 0.69% of total assets, at June 30, 2018. The increase from March 31, 2019 is mainly attributable to an increase in nonaccrual, nonresidential loans of $2.8 million.

There was no provision for loan losses for the quarter ended June 30, 2019, compared to $149,000 for the quarter ended March 31, 2019 and $337,000 for the quarter ended June 30, 2018. The allowance for loan losses was $12.5 million, or 1.32% of total loans, at June 30, 2019, compared to $12.4 million, or 1.33% of total loans, at March 31, 2019 and $11.8 million, or 1.36% of total loans, at June 30, 2018. Net recoveries totaled $11,000 for the quarter ended June 30, 2019, compared to net charge-offs totaling $359,000 for the quarter ended March 31, 2019 and net recoveries totaling $5,000 for the quarter ended June 30, 2018.

Balance Sheet

Total assets decreased $3.8 million, or 0.4%, to $1,056.1 million at June 30, 2019 from $1,059.9 million at December 31, 2018. Net loans increased $15.7 million, or 1.7%, to $934.2 million at June 30, 2019 from $918.5 million at December 31, 2018. The increase in net loans was primarily due to increases of $13.4 million, or 15.3%, in construction and land loans and $6.5 million, or 2.8%, in multifamily residential loans, offset by a decrease of $4.3 million, or 27.6%, in business loans.

Steven A. Tsavaris, Executive Chairman remarked that, “while we remain optimistic about our loan production for the second half of 2019, we are experiencing tough competition for nonresidential property loans from both small and large banks, as well as from nonbank lenders." He also remarked that "we are willing to walk away from competing for certain loans as a result of what other lenders are willing to offer on rate and terms, including duration."

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Total deposits decreased $7.4 million, or 0.9%, to $802.4 million at June 30, 2019 from $809.8 million at December 31, 2018. The decrease in deposits was mainly attributable to a decrease of $45.0 million, or 10.6 %, in certificates of deposit offset by an increase of $42.1 million, or 36.3%, in money market accounts.

Total stockholders’ equity was $165.2 million at June 30, 2019, compared to $169.2 million at December 31, 2018. The Company and the Bank exceeded all regulatory capital requirements to be deemed well-capitalized at June 30, 2019. The Bank’s total capital to risk-weighted assets ratio was 19.54%, the tier 1 capital to risk-weighted assets ratio and the common equity tier 1 capital ratio were both 18.29%, and the tier 1 capital to total assets ratio was 13.64% at June 30, 2019, compared to 19.39%, 18.14%, and 13.66%, respectively at December 31, 2018.

On March 22, 2019, the Board of Directors adopted a share repurchase program effective March 25, 2019. Under the repurchase program, the Company may repurchase up to 923,151 shares of its common stock, or approximately 5% of the outstanding shares, which will be used to fund the grants of restricted stock units and stock options made under the Company’s 2018 Long-Term Incentive Plan. Repurchased shares will be held by the Company as Treasury shares until used to fund the restricted stock units and option grants. The repurchase program may be suspended or terminated at any time without prior notice, and it will expire on September 24, 2019. During the quarter ended June 30, 2019, the Company repurchased 463,112 shares of the Company’s common stock. As of June 30, 2019, 446,173 shares could still be repurchased under the repurchase program.

 

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 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.

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PDL Community Bancorp and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except for share data)

 

 

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PDL Community Bancorp and Subsidiaries

Consolidated Statements of Income

(Dollars in thousands, except per share data)

 

 

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PDL Community Bancorp and Subsidiaries

Consolidated Statements of Income

(Dollars in thousands, except per share data)

 

 

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PDL Community Bancorp and Subsidiaries

Key Metrics

 

 

 

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

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PDL Community Bancorp and Subsidiaries

Loan Portfolio

 

 

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PDL Community Bancorp and Subsidiaries

Nonperforming Assets

 

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PDL Community Bancorp and Subsidiaries

Average Balance Sheets

 

 

 

 

 

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PDL Community Bancorp and Subsidiaries

Average Balance Sheets

 

 

 

 

 

 

 

 

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