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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): November 2, 2021

 

PDL Community Bancorp

(Exact name of Registrant as Specified in Its Charter)

 

 

Federal	001-38224	82-2857928
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
2244 Westchester Avenue Bronx, NY		10462
(Address of Principal Executive Offices)		(Zip Code)

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):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		PDLB		The NASDAQ Stock Market, LLC

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. ☐

 

  

 

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Item 2.02Results of Operations and Financial Condition

On November 2, 2021, PDL Community Bancorp (the “Company”), the holding company for Ponce Bank and Mortgage World Bankers, Inc., issued a press release announcing its financial results with respect to its third quarter ended September 30, 2021. 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.

 

Exhibit Number		Description
99.1		Press release dated November 2, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL)

 

 

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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.

 

		PDL Community Bancorp
Date:  November 2, 2021		By:	/s/ Carlos P. Naudon
			Carlos P. Naudon
			President Chief Executive Officer

 

 

Exhibit 99.1

PDL Community Bancorp Announces 2021 Third Quarter Results

New York (November 2, 2021): PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the financial holding company for Ponce Bank (the “Bank”) and Mortgage World Bankers, Inc. (“Mortgage World”), reported net income of $2.1 million, or $0.12 per basic and diluted share, for the third quarter of 2021, compared to net income of $5.9 million, or $0.35 per basic and diluted share, for the prior quarter and net income of $4.0 million, or $0.24 per basic and diluted share, for the third quarter of 2020.

Third Quarter Highlights

President and Chief Executive Officer’s Comments

Carlos P. Naudon, the Company’s President and CEO, noted “The numbers are substantiating the success of our strategy. We continue increasing customer relationships, growing both our deposits and loans while continuing to increase our net interest margin and building our demand deposit base. We focus on net operating expenses, maintaining net operating expenses stable as we add resources that deliver revenue producing services to customers, allowing us to further grow into our overhead while increasing profitability. As our PPP loans are being forgiven by the SBA, we are heartened in the retention of large segments of these borrowers and in the continued acknowledgement of the positive impact we are having on our communities. Our demonstrated success as an MDI and CDFI has positioned us well to lead in remediating the disparate effects of the pandemic, and the wealth and financial gaps present in our communities.”

Executive Chairman’s Comments

Steven A. Tsavaris, the Company’s Executive Chairman, added “Strengthening our capital position is a cornerstone of our strategy of being impactful to both our communities and our other stakeholders. As we move forward to seek approval of our mutual-to-stock conversion and await a favorable outcome of the recently applied for $225 million in capital from the U.S. Department of the Treasury under the Emergency Capital Investment Program, we are humbled and inspired by the trust and hopes being placed in our Company.”

Loan Payment Deferrals

As of September 30, 2021, five loans in the amount of $9.9 million remained in forbearance as a result of renewed forbearance for a period of three months. Of the five loans receiving renewed forbearance, one loan in the amount of $6.6 million is related to construction real estate, three loans, totaling $2.9 million are related to one-to-four family residential real estate and one loan in the amount of $388,000 is related to non-residential properties. All of these loans had been performing in accordance with their contractual obligations prior to the granting of the initial forbearance. The Company actively monitors the business activities of borrowers in forbearance and seeks to determine their capacity to resume payments as contractually obligated upon the termination of the forbearance period. The extended forbearances are short-term modifications made on a good faith basis in response to the COVID-19 pandemic and in furtherance of governmental policies.

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Results of Operations Summary

Net income for the three months ended September 30, 2021 was $2.1 million, compared to $5.9 million of net income for the three months ended June 30, 2021 and $4.0 million of net income for the three months ended September 30, 2020.

The $3.9 million decrease in net income for the three months ended September 30, 2021 compared to the three months ended June 30, 2021 was due substantially to a decrease of $5.1 million in non-interest income primarily resulting from a decrease of $4.2 million in gain, net of expenses, on sale of real property. The decrease in net income was also attributable to an increase of $1.1 million in non-interest expense, offset by an increase of $1.7 million in net interest income and a decrease of $596,000 in provision for income taxes.

The $2.0 million decrease in net income for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was due substantially to a decrease of $4.0 million in non-interest income primarily resulting from a decrease of $4.4 million in gain, net of expenses, on sale of real property. The decrease in net income was also attributable to an increase of $2.4 million in non-interest expense and an increase of $171,000 in provision for income taxes, offset by an increase of $4.6 million in net interest income.

Net income for the nine months ended September 30, 2021 was $10.4 million, compared to $2.2 million of net income for the nine months ended September 30, 2020. The change from the nine months ended September 30, 2020 is primarily due to a $7.0 million increase in non-interest income primarily due to increases of $2.6 million in sale of mortgage loans, $1.9 million in loan originations attributable to Mortgage World and $2.5 million in the aggregate related to service charges and fees, brokerage commissions, late and prepayment charges, gain, net of expenses, on sale of real property and other non-interest income. The increase in net income was also attributable to an $11.8 million increase in net interest income and a $193,000 decrease in provision for loan losses, partially offset by increases of $7.7 million in non-interest expense and $3.1 million in provision for income taxes.

Net interest income for the three months ended September 30, 2021 was $15.4 million, an increase of $1.7 million, or 12.4%, compared to the three months ended June 30, 2021 and an increase of $4.6 million, or 42.3%, compared to the three months ended September 30, 2020. The increase of $1.7 million in net interest income for the three months ended September 30, 2021 compared to the three months ended June 30, 2021 was attributable to an increase of $1.6 million in interest and dividend income and a decrease of $127,000 in interest expense. The increase of $4.6 million in net interest income for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was attributable to an increase of $3.8 million in interest and dividend income and a decrease of $767,000 in interest expense.

Net interest income for the nine months ended September 30, 2021 was $42.1 million, an increase of $11.8 million, or 38.8%, compared to the nine months ended September 30, 2020. The increase in net interest income was attributable to an increase of $9.4 million in interest and dividend income and a decrease of $2.3 million in interest expense.

Net interest margin was 4.13% for the three months ended September 30, 2021, an increase of 29 basis points from 3.84% for the three months ended June 30, 2021 and an increase of 48 basis points from 3.65% for the three months ended September 30, 2020. 

Net interest rate spread increased by 32 basis points to 3.92% for the three months ended September 30, 2021 from 3.60% for the three months ended June 30, 2021 and increased by 59 basis points from 3.33% for the three months ended September 30, 2020. The increase in the net interest rate spread for the three months ended September 30, 2021 compared to the three months ended June 30, 2021 was primarily due to an increase in the average yields on interest-earning assets of 23 basis points to 4.66% for the three months ended September 30, 2021 from 4.43% for the three months ended June 30, 2021, and by a decrease on the average rates on interest-bearing liabilities of 9 basis points to 0.74% for the three months ended September 30, 2021 from 0.83% for the three months ended June 30, 2021. The increase in the net interest rate spread for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to a decrease on the average rates on interest-bearing liabilities of 50 basis points to 0.74% for the three months ended September 30, 2021 from 1.24% for the three months ended September 30, 2020, and by a slight increase in the average yields on interest-earning assets of 9 basis points to 4.66% for the three months ended September 30, 2021 from 4.57% for the three months ended September 30, 2020.

Non-interest income decreased $5.1 million to $3.2 million for the three months ended September 30, 2021 from $8.3 million for the three months ended June 30, 2021 and decreased $4.0 million from $7.3 million for the three months ended September 30, 2020.

The decrease in non-interest income for the three months ended September 30, 2021 compared to the three months ended June 30, 2021 was primarily due to decreases of $4.2 million in gain, net of expenses, from the sale of real property recognized in the second quarter of 2021, $471,000 in other non-interest income, $346,000 in loan origination fees, $160,000 in brokerage commissions and $113,000 in income on sale of mortgage loans attributable to Mortgage World, offset by increases of $128,000 in service charges and fees and $31,000 in late and prepayment charges.

The decrease in non-interest income for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to decreases of $4.4 million in gain, net of expenses, from the sale of real property recognized in the third quarter of 2020, $197,000 in income on sale of mortgage loans attributable to Mortgage World, $177,000 in brokerage

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commissions and $30,000 in other non-interest income, offset by increases of $356,000 in loan origination fees attributable to Mortgage World, $258,000 service charges and fees and $184,000 in late and prepayment charges.

Non-interest income increased $7.0 million to $15.5 million for the nine months ended September 30, 2021 from $8.5 million for the nine months ended September 30, 2020. The increase in non-interest income for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to increases of $2.6 million in sale of mortgage loans and $1.9 million in loan originations attributable to Mortgage World. Other increases include $597,000 in other non-interest income, $594,000 in late and prepayment charges, $560,000 in service charges and fees, $404,000 in brokerage commissions and $400,000 in gain, net of expenses, from the sale of real property.

Non-interest expense increased $1.1 million, or 8.0%, to $14.7 million for the three months ended September 30, 2021, from $13.6 million for the three months ended June 30, 2021 and increased $2.4 million from $12.3 million for the three months ended September 30, 2020.

The increase in non-interest expense for the three months ended September 30, 2021, compared to the three months ended June 30, 2021 was primarily attributable to an increase of $2.2 million in compensation and benefits, which was specifically related to the allocable portion of employee expenses related to the origination of Paycheck Protection Program (“PPP”) loans, netted against PPP loan origination fees received from the SBA in the second quarter of 2021. Other increases in non-interest expense were $184,000 in data processing expenses, $159,000 in office supplies, telephone and postage and $155,000 in other operating expenses, offset by decreases of $1.1 million in professional fees as a result of $1.2 million of additional consultant fees recognized in the second quarter of 2021 and $455,000 in direct loan expenses.

The increase in non-interest expense for the three months ended September 30, 2021, compared to the three months ended September 30, 2020 primarily reflects increases of $873,000 in compensation and benefits, which was specifically related to the allocable portion of employee expenses related to the origination of PPP loans, netted against PPP loan origination fees received from the SBA recognized in the third quarter of 2020. Other increases in non-interest expense include $321,000 in data processing expenses, $279,000 in other operating expenses, $265,000 in occupancy and equipment, $259,000 in direct loan expenses, $240,000 in office supplies, telephone and postage and $212,000 in professional fees.

Non-interest expense increased $7.7 million, or 22.9%, to $41.3 million for the nine months ended September 30, 2021, compared to $33.6 million for the nine months ended September 30, 2020. The increase in non-interest expense for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020 was attributable to increases of $2.0 million in direct loan expenses, $1.4 million in occupancy and equipment, $1.4 million in professional fees, primarily due to an increase in consulting expenses related to a third-party service provider that provided loan origination services related to PPP loans and $1.1 million in compensation and benefits. Other increases in non-interest expense include $790,000 in other operating expenses, $685,000 in data processing expenses and $103,000 in regulatory dues, offset by a decrease of $369,000 in marketing and promotional expenses.  

Balance Sheet Summary

Total assets increased $205.3 million, or 15.2%, to $1.56 billion at September 30, 2021 from $1.36 billion at December 31, 2020. The increase in total assets is attributable to increases of $143.6 million in net loans receivable, including $110.6 million net increase in PPP loans, $86.9 million in available-for-sale securities, $2.2 million in other assets, $2.0 million, net, in premises and equipment, $2.0 million in accrued interest receivable, and $170,000 in deferred tax assets. The increase in total assets was reduced by decreases of $21.5 million in mortgage loans held for sale, at fair value, $9.0 million in cash and cash equivalents, $425,000 in FHLBNY stock, $306,000 in held-to-maturity securities and $249,000 in placement with banks.

Total liabilities increased $191.0 million, or 16.0%, to $1.39 billion at September 30, 2021 from $1.20 billion at December 31, 2020. The increase in total liabilities was mainly attributable to increases of $219.7 million in deposits, $2.1 million in advance payments by borrowers for taxes and insurance and $178,000 in accrued interest payable, offset by decreases of $18.7 million in warehouse lines of credit, $11.0 million in advances from FHLBNY and $934,000 in other liabilities.

Total stockholders’ equity increased $14.3 million, or 9.0%, to $173.9 million at September 30, 2021 from $159.5 million at December 31, 2020. The $14.3 million increase in stockholders’ equity was mainly attributable to $10.4 million in net income, $3.1 million in net treasury stock activity, $1.1 million related to share-based compensation and $472,000 related to the Company’s Employee Stock Ownership Plan, offset by $756,000 related to unrealized loss on available-for-sale securities.   

As of September 30, 2021, the Company had repurchased a total of 1,670,619 shares under prior repurchase programs at a weighted average price of $13.22 per share, of which 1,132,086 were reported as treasury stock. The Company suspended its repurchase program as of May 3, 2021. Of the 1,670,619 shares repurchased, 189,960 shares have been used for grants awarded to directors, executive officers and non-executive officers under the Company’s 2018 Long-Term Incentive Plan pursuant to restricted stock units which vested on December 4, 2020 and 2019 and July 23, 2021. Of these 189,960 shares, 166 shares were retained to satisfy a

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recipient’s taxes and other withholding obligations and these shares remain as part of treasury stock. In addition, on April 22, 2021, 348,739 shares were sold to Banc of America Strategic Investments Corporation in a privately negotiated transaction.

About PDL Community Bancorp

PDL Community Bancorp is the financial holding company for Ponce Bank and Mortgage World Bankers, Inc. Ponce Bank is a federally chartered stock savings association. Ponce Bank is designated a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank’s business primarily consists of taking deposits from the general public and to a lesser extent from alternative funding sources 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. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises as well as mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock. Mortgage World Bankers, Inc. is a mortgage lender operating in five states and is subject to the regulation and examination of the New York State Department of Financial Services. As a Federal Housing Administration (“FHA”)-approved Title II lender, Mortgage World Bankers, Inc. originates and sells to investors single family mortgage loans guaranteed by the FHA, as well as conventional mortgages.

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; the anticipated impact of the COVID-19 pandemic and the Company’s attempts at mitigation; 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 Annual Report on Form 10-K 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 Statements of Financial Condition

(Dollars in thousands, except for share data)

 

 

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PDL Community Bancorp and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

 

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PDL Community Bancorp and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

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PDL Community Bancorp and Subsidiaries

Key Metrics

 

 

 

 

 

 

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PDL Community Bancorp and Subsidiaries

Loan Portfolio

 

 

 

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PDL Community Bancorp and Subsidiaries

Deposits

 

 

 

 

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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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PDL Community Bancorp and Subsidiaries

Other Data

 

 

 

 

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