PDL Community Bancorp Announces 2020 Third Quarter Results

BRONX, New York, UNITED STATES


NEW YORK, Nov. 02, 2020 (GLOBE NEWSWIRE) -- 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 $4.0 million, or $0.24 per basic and diluted share, for the third quarter of 2020, compared to a net loss of ($571,000), or ($0.03) per basic and diluted share, for the prior quarter and net income of $709,000, or $0.04 per basic and diluted share, for the third quarter of 2019.

Ponce Bank is a federal stock savings association with 13 branches in the New York City metropolitan area, including one in Union City, New Jersey. The Bank is designated a Minority Depository Institution, a Community Development Financial Institution and a certified U.S. Small Business Administration lender. Mortgage World is a licensed mortgage lender in five states. As a Federal Housing Administration (“FHA”) approved Title II lender, Mortgage World originates and sells to investors single family loans that are guaranteed by the FHA, as well as conventional mortgages.

The Company’s net income for the nine months ended September 30, 2020 was $2.2 million, or $0.13 per basic and diluted share, compared to net income of $2.3 million, or $0.13 per basic and diluted share, for the nine months ended September 30, 2019. This represented a decrease in net income of (4.4%).

Carlos P. Naudon, the Company’s President and CEO, noted “2020 continues to be a year of investing – in the safety of our people and the future of our organization and our communities – with the clear goal of enhancing stakeholder values. Much of this investment consists of one-time, non-recurring expenditures. Although COVID-19 pandemic constrained us, we were able to grow our Company to $1.3 billion in assets, and continue our key investments: the implementation of GPS, our Salesforce based CRM, spending $1.3 million in one-time costs; meeting the needs of Ponce Bankers by incurring non-recurring costs of $852,000 to maintain their jobs, temporarily enhance their benefits and protect them from COVID-19 pandemic; advancing our ability to operate electronically, without paper, by investing $982,000 in electronic imaging; and, in addition to the foregoing non-recurring expenses, protecting our asset quality by increasing ALLL by $2.0 million in response to plausible COVID-19 pandemic repercussions. We were able to offset the combined one-time expenses and the increase in ALLL of $5.1 million with the $4.4 million gain recognized from the sale of the real property associated with a former branch, as we further unlock the hidden values in our assets.”

Steven A. Tsavaris, the Company’s Executive Chairman, added “the closing of the Company’s $1.8 million acquisition of Mortgage World in July and its contribution to our earnings of $599,000 in third quarter of 2020 reflects the Company’s potential quick payback, although the results do not reflect the expected integration of the Bank’s and Mortgage World’s operations and sales capabilities. We are pleased to continue to build shareholders’ value by repurchasing shares. As of October 28, 2020 a total of 360,184 shares have been repurchased in 2020.”

Net Income (Loss)

Net income for the three months ended September 30, 2020 was $4.0 million, compared to $571,000 net loss for the three months ended June 30, 2020. The increase in net income reflects a $6.7 million increase in non-interest income, mainly as a result of a $4.4 million gain recognized from the sale of real property, a $1.2 million, or 9.8%, increase in interest and dividend income, a $120,000, or 4.2%, decrease in interest expense, offset by a $1.9 million, or 18.1%, increase in non-interest expense, a $1.2 million increase in provision for income taxes and a $349,000, increase in provision for loan losses.

Net income for the quarter ended September 30, 2020 was $4.0 million, compared to $709,000 in net income for the third quarter of 2019. The increase in net income reflects a $6.7 million increase in non-interest income, mainly as a result of a $4.4 million gain recognized from the sale of real property, a $650,000, or 5.0%, increase in interest and dividend income and a $436,000, or 13.7%, decrease in interest expense, offset by a $3.0 million, or 32.1%, increase in non-interest expense, a $860,000, increase in provision for income taxes and a $606,000 increase in provision for loan losses.

Net income for the nine months ended September 30, 2020 was $2.2 million, compared to $2.3 million in net income for the nine months ended September 30, 2019. The change in net income reflects a $6.4 million, or 318.6%, increase in non-interest income, mainly as a result of a $4.4 million gain on the sale of real property, a $1.3 million, or 3.4%, increase in interest and dividend income, a $448,000, or 4.9%, decrease in interest expense and a $69,000, decrease in provision for income taxes, offset by a $6.5 million, or 23.8%, increase in non-interest expense and a $1.9 million increase in provision for loan losses in response to the COVID-19 pandemic.

Net Interest Margin

Net interest margin increased by 20 basis points to 3.65% for the three months ended September 30, 2020 from 3.45% for the three months ended June 30, 2020, while the net interest rate spread increased by 20 basis points to 3.33% from 3.13% for the same periods. Average interest-earning assets increased by $73.9 million, or 6.7%, mainly as a result of $85.1 million in average outstanding PPP loans, to $1.2 billion for the three months ended September 30, 2020 from $1.1billion for the three months ended June 30, 2020. The average yield on interest-earning assets increased by 8 basis points to 4.57% from 4.49%, for the same periods. Average interest-bearing liabilities increased by $32.1 million, or 3.8%, to $881.0 million for the three months ended September 30, 2020 from $848.9 million for the three months ended June 30, 2020. The average rate on interest-bearing liabilities decreased by 12 basis points to 1.24% from 1.36% for the same periods.

Net interest margin decreased by 18 basis points to 3.65% for the three months ended September 30, 2020 from 3.83% for the three months ended September 30, 2019, while the net interest rate spread decreased by 11 basis points to 3.33% from 3.44% for the same periods. Average interest-earning assets increased by $172.7 million, or 17.1%, mainly as a result of $85.1 million in average outstanding PPP loans, to $1.2 billion, for the three months ended September 30, 2020 from $1.0 billion for the three months ended September 30, 2019. The average yield on interest-earning assets decreased by 51 basis points to 4.57% from 5.08%, for the same periods. Average interest-bearing liabilities increased by $111.5 million, or 14.5%, to $881.0 million, for the three months ended September 30, 2020 from $769.4 million for the three months ended September 30, 2019. The average rate on interest-bearing liabilities decreased by 40 basis points to 1.24% from 1.64% for the same periods.

Non-interest Income

Total non-interest income increased $6.7 million to $7.3 million for the three months ended September 30, 2020 from $574,000 for the three months ended June 30, 2020. The increase in non-interest income for the three months ended September 30, 2020 compared to the three months ended June 30, 2020 was due to a $4.4 million gain on the sale of real property, combined with $2.2 million in gain on sale of mortgage loans, loan origination fees, brokerage commissions and other non-interest income attributable to Mortgage World. Other increases in non-interest income were $132,000 in late and prepayment charges related to mortgage loans and $91,000 in service charges and fees. The increase in non-interest income was offset by a decrease of $23,000 in other non-interest income.

Total non-interest income increased $6.7 million to $7.3 million for the three months ended September 30, 2020 from $579,000 for the three months ended September 30, 2019. The increase in non-interest income for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was due to a $4.4 million gain on the sale of real property, combined with $2.2 million in gain on sale of mortgage loans, loan origination fees, brokerage commissions and other non-interest income attributable to Mortgage World. The increase in non-interest income was slightly offset by a decrease of $16,000 in late and prepayment charges related to mortgage loans, service charges and fees.

Non-interest Expense

Total non-interest expense increased $1.9 million, or 18.1%, to $12.3 million for the three months ended September 30, 2020, compared to $10.4 million for the three months ended June 30, 2020. The increase in non-interest expense was primarily attributable to an increase of $909,000 in compensation and benefits expense, of which $817,000 was attributable to Mortgage World. Other increases in non-interest expense were $307,000 in occupancy and equipment expense due to new software licenses and security services, $238,000 in direct loan expenses, $217,000 in professional fees, $100,000 in data processing expenses as a result of system enhancements and implementation charges related to new software upgrades, $74,000 in office supplies, telephone and postage, $62,000 in other operating expenses mainly due to employment agency fees and $10,000 in insurance and surety bond premiums. The increase in non-interest expense was offset by decreases of $18,000 in marketing and promotional expenses and $7,000 in regulatory dues. The increase of $217,000 in professional fees was mainly attributable to an increase in consulting fees of $288,000 and an increase in legal fees of $81,000, offset by a decrease in professional services of $134,000 related to the document imaging project adopted in late 2019. Included in non-interest expense for the three months ended September 30, 2020 is $330,000 of additional expenses incurred as a result of the COVID-19 pandemic.

Total non-interest expense increased $3.0 million, or 32.1%, to $12.3 million for the three months ended September 30, 2020, compared to $9.3 million for the three months ended September 30, 2019. The increase in non-interest expense was primarily attributable to an increase of $887,000 in compensation and benefits expense, of which $817,000 was attributable to Mortgage World. Other increases in non-interest expenses were $641,000 in occupancy and equipment expense due to new software licenses and security services, $597,000 in professional fees, $259,000 in other operating expenses mainly due to employment agency fees, $254,000 in direct loan expenses, $198,000 in data processing expenses as a result of system enhancements and implementation charges related to new software upgrades, $105,000 in office supplies, telephone and postage and $81,000 in marketing and promotional expenses, offset by decreases of $21,000 in regulatory dues and $8,000 in insurance and surety bond premiums. The increase of $597,000 in professional fees was mainly attributable to increases in consulting fees of $434,000 and professional services of $50,000 related to the document imaging project adopted in late 2019. Included in non-interest expense for the three months ended September 30, 2020 is $330,000 of additional expenses incurred as a result of the COVID-19 pandemic. Excluding $1.6 million in non-interest expense related to Mortgage World, total non-interest expense increased $1.4 million, or 15.4%, to $10.8 million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Asset Quality

Total non-performing assets were $11.0 million, or 0.86% of total assets, at September 30, 2020, a decrease of $597,000 from $11.6 million, or 0.95% of total assets, at June 30, 2020 and a decrease of $620,000 from $11.6 million, or 1.10% of total assets, at December 31, 2019. Comparing non-performing assets at September 30, 2020 to June 30, 2020, total non-accruals inclusive of troubled debt restructured (“TDR”) loans related to nonresidential loans decreased by $526,000 and 1-4 family residential loans decreased by $281,000. Comparing nonperforming assets at September 30, 2020 to December 31, 2019, total non-accruals inclusive of TDR loans related to nonresidential loans increased by $284,000, offset by a decrease in construction and land loans of $1.1 million.

The Company continues to assess the economic impact of the COVID-19 pandemic on borrowers and believes that it is likely that the pandemic will be a detriment to their ability to repay in the short-term and that the likelihood of long-term detrimental effects will depend significantly on the resumption of normalized economic activities, a factor not yet determinable. The allowance for loan losses was $14.4 million, or 1.28% of total loans (total loans include $86.2 million of PPP loans) at September 30, 2020, compared to $13.8 million, or 1.27% of total loans, at June 30, 2020 and $12.3 million, or 1.28% of total loans, at December 31, 2019. Excluding PPP loans, the allowance for loan losses was 1.39% of total loans at September 30, 2020 and 1.38% of total loans at June 30, 2020. Net recoveries totaled $1,000 for the quarter ended September 30, 2020, $6,000 for the quarter ended June 30, 2020 and $74,000 for the quarter ended December 31, 2019.

Through October 20, 2020, 419 loans aggregating $381.7 million had requested forbearance primarily consisting of the deferral of principal, interest, and escrow payments for a period of three months. Of those 419 loans, 323 loans aggregating $290.7 million are no longer in deferment and are now performing. Of the 419 loans, 96 in the amount of $91.0 million remained in deferment. Of the 96 loans in deferment, 92 loans in the amount of $87.1 million are in renewed forbearance and four loans in the amount of $3.9 million are in their original forbearance. All of these loans had been performing in accordance with their contractual obligations prior to the granting of the initial forbearance. Forbearance periods currently do not extend into 2021. 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 initial and 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.

Balance Sheet

Total assets increased $223.6 million, or 21.2%, to $1.3 billion at September 30, 2020 from $1.1 billion at December 31, 2019. The increase in total assets is mainly attributable to increases in net loans receivable and mortgage loans held for sale at fair value of $165.3 million, of which $86.2 million related to PPP loans, cash and cash equivalents of $48.4 million, other assets of $8.2 million, accrued interest receivable of $6.0 million, investments in other banks of $2.7 million and FHLBNY stock of $679,000, offset by decreases in available-for-sale securities of $7.0 million, $633,000 in net premises and equipment and deferred taxes of $138,000.

Cash and cash equivalents increased $48.4 million, or 174.9%, to $76.1 million at September 30, 2020, compared to $27.7 million at December 31, 2019. The increase in cash and cash equivalents was primarily the result of increases of $191.2 million in net deposits, of which $41.9 million is related to net PPP funding, $17.3 million from maturities and calls of available-for-sale securities, $12.9 million in net advances from FHLBNY and $4.7 million proceeds from the sale of real property. The increase in cash and cash equivalents was offset by increases of $165.3 million in net loans receivable and mortgage loans held for sale at fair value, of which $86.2 million related to PPP loans, $10.1 million in purchases of available-for-sale securities and the $1.8 million purchase price related to the acquisition of Mortgage World.

Net loans receivable at September 30, 2020 increased $153.2 million, or 16.0%, to $1.1 billion from $ 955.7 million at December 31, 2019. The increase was primarily due to increases of $85.8 million, or 789.0%, in business loans, of which $86.2 million related to PPP loans, $34.5 million, or 13.8%, in multifamily residential loans, $16.6 million, or 4.2%, in 1-4 family residential loans, $10.5 million, or 5.1%, in nonresidential properties loans, $8.6 million, or 696.6%, in consumer loans and $412,000, or 0.4%, in construction and land loans. The increase in net loans receivable was offset by a decrease of $1.2 million, or 60.1%, in net deferred loan origination costs. The increase in the allowance for losses on loans of $2.1 million, substantially related to the COVID-19 pandemic, also decreased net loans receivable.

Total deposits increased $191.2 million, or 24.4%, to $973.2 million at September 30, 2020 from $782.0 million at December 31, 2019. The increase in deposits was mainly attributable to increases of $124.7 million, or 44.1%, in NOW, money market, reciprocal deposits and savings accounts, $76.8 million, or 70.1%, in demand deposits, of which $41.9 million is related to net PPP funding, offset by a decrease of $10.3 million, or 2.7%, in total certificates of deposit, which includes brokered certificates of deposit and listing service deposits. The $124.7 million increase in NOW, money market, reciprocal deposits and savings accounts was mainly attributable to increases of $62.2 million, or 71.7%, in money market accounts, $60.7 million, or 127.4%, in reciprocal deposits and a $5.1 million, or 4.4%, in savings accounts, offset by a decrease of $3.2 million, or 9.9%, in NOW/IOLA accounts.

Net advances from the FHLBNY increased $12.9 million, or 12.3%, to $117.3 million at September 30, 2020 from $104.4 million at December 31, 2019. The net increase in FHLBNY advances has a weighted average rate of 0.9%.

Total stockholders’ equity remained substantially the same, $158.4 million at September 30, 2020 and December 31, 2019. The $28,000 decrease in stockholders’ equity was mainly attributable to $3.8 million in stock repurchases, offset by increases of $2.2 million in net income, $1.0 million related to restricted stock units and stock options, $353,000 related to the Company’s Employee Stock Ownership Plan and $148,000 related to unrealized gains on available-for-sale securities.

The Company adopted a share repurchase program effective March 25, 2019 which expired on September 24, 2019. Under the repurchase program, the Company was permitted to repurchase up to 923,151 shares of the Company’s 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 second program, the Company was permitted to repurchase up to 878,835 shares of the Company’s stock, or approximately 5% of the Company’s then current issued and outstanding shares. The Company’s share second repurchase program was terminated on March 27, 2020. On June 1, 2020, the Company adopted a third share repurchase program. Under this third program, the Company is permitted to repurchase up to 864,987 shares of the Company’s 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 November 30, 2020.

As of September 30, 2020, the Company had repurchased a total of 1,436,814 shares under the repurchase programs at a weighted average price of $13.62 per share, of which 1,346,679 are reported as treasury stock. Of the 1,436,814 shares repurchased, 90,135 shares have been granted to directors and executive officers under the Company’s 2018 Long-Term Incentive Plan pursuant to restricted stock units which vested on December 4, 2019.

About PDL Community Bancorp

PDL Community Bancorp is the financial holding company for Ponce Bank and Mortgage World Bankers, Inc. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. The Bank’s business primarily consists of taking deposits from the general public and to a lesser extent 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. The 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 licensed mortgage lender in five states. 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 novel coronavirus 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 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.

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

PDL Community Bancorp and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)

                    
 As of 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2020  2020  2020  2019  2019 
ASSETS                   
Cash and due from banks:                   
Cash$14,302  $15,875  $13,165  $6,762  $6,425 
Interest-bearing deposits in banks 61,790   60,756   90,795   20,915   40,965 
Total cash and cash equivalents 76,092   76,631   103,960   27,677   47,390 
Available-for-sale securities, at fair value 14,512   13,800   19,140   21,504   51,966 
Investments in other banks 2,739             
Mortgage loans held for sale, at fair value 13,100   1,030   1,030   1,030    
Loans receivable, net 1,108,956   1,072,417   972,979   955,737   948,548 
Accrued interest receivable 9,995   7,677   4,198   3,982   3,893 
Premises and equipment, net 32,113   32,102   32,480   32,746   32,805 
Federal Home Loan Bank of New York stock (FHLBNY), at cost 6,414   6,422   7,889   5,735   8,659 
Deferred tax assets 3,586   4,328   4,140   3,724   3,925 
Other assets 9,844   5,824   5,127   1,621   2,802 
Total assets$1,277,351  $1,220,231  $1,150,943  $1,053,756  $1,099,988 
LIABILITIES AND STOCKHOLDERS' EQUITY                   
Liabilities:                   
Deposits$973,244  $936,219  $829,741  $782,043  $757,845 
Accrued interest payable 58   48   86   97   81 
Advance payments by borrowers for taxes and insurance 7,739   6,007   8,295   6,348   7,780 
Advances from the Federal Home Loan Bank of New York and others 117,283   117,284   152,284   104,404   169,404 
Warehouse lines of credit 9,065             
Mortgage loan fundings payable 1,457             
Other liabilities 10,131   5,674   4,794   2,462   4,324 
Total liabilities 1,118,977   1,065,232   995,200   895,354   939,434 
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   185   185   185   185 
Treasury stock, at cost (18,281)  (17,172)  (16,490)  (14,478)  (12,663)
Additional paid-in-capital 85,817   85,481   85,132   84,777   85,750 
Retained earnings 95,913   91,904   92,475   93,688   101,140 
Accumulated other comprehensive income (loss) 168   150   110   20   (7,947)
Unearned compensation ─ ESOP (5,428)  (5,549)  (5,669)  (5,790)  (5,911)
Total stockholders' equity 158,374   154,999   155,743   158,402   160,554 
Total liabilities and stockholders' equity$1,277,351  $1,220,231  $1,150,943  $1,053,756  $1,099,988 


PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share data)

 For the Quarters Ended 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2020  2020  2020  2019  2019 
Interest and dividend income:                   
Interest on loans receivable$13,375  $12,162  $12,782  $12,488  $12,663 
Interest on deposits due from banks 5   3   66   73   117 
Interest and dividend on available-for-sale securities and FHLBNY stock 223   228   182   181   173 
Total interest and dividend income 13,603   12,393   13,030   12,742   12,953 
Interest expense:                   
Interest on certificates of deposit 1,597   1,730   1,827   1,921   1,896 
Interest on other deposits 500   534   692   616   759 
Interest on borrowings 655   608   587   643   533 
Total interest expense 2,752   2,872   3,106   3,180   3,188 
Net interest income 10,851   9,521   9,924   9,562   9,765 
Provision for loan losses 620   271   1,146   95   14 
Net interest income after provision for loan losses 10,231   9,250   8,778   9,467   9,751 
Non-interest income:                   
Service charges and fees 236   145   248   266   247 
Brokerage commissions 447   22   50   43   36 
Late and prepayment charges 145   13   119   204   150 
Gain on sale of mortgage loans 1,372             
Loan origination 269             
Gain on sale of real property 4,412             
Other 371   394   205   152   146 
Total non-interest income 7,252   574   622   665   579 
Non-interest expense:                   
Compensation and benefits 5,554   4,645   5,008   4,726   4,667 
Loss on termination of pension plan          9,930    
Occupancy and equipment 2,584   2,277   2,017   2,026   1,943 
Data processing expenses 596   496   467   394   398 
Direct loan expenses 437   199   212   171   183 
Insurance and surety bond premiums 138   128   121   102   146 
Office supplies, telephone and postage 386   312   316   316   281 
Professional fees 1,553   1,336   1,627   1,038   956 
Marketing and promotional expenses 127   145   234   39   46 
Directors fees 69   69   69   69   69 
Regulatory dues 49   56   46   58   70 
Other operating expenses 834   772   705   606   575 
Total non-interest expense 12,327   10,435   10,822   19,475   9,334 
Income (loss) before income taxes 5,156   (611)  (1,422)  (9,343)  996 
Provision (benefit) for income taxes 1,147   (40)  (209)  (1,891)  287 
Net income (loss)$4,009  $(571) $(1,213) $(7,452) $709 
Earnings (loss) per share:                   
Basic$0.24  $(0.03) $(0.07) $(0.43) $0.04 
Diluted$0.24  $(0.03) $(0.07) $(0.43) $0.04 


PDL Community Bancorp and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share data)

  For the Nine Months Ended September 30, 
  2020  2019  Variance $  Variance % 
Interest and dividend income:                
Interest on loans receivable $38,319  $36,818  $1,501   4.08%
Interest on deposits due from banks  74   498   (424)  (85.14%)
Interest and dividend on available-for-sale securities and FHLBNY stock  633   433   200   46.19%
Total interest and dividend income  39,026   37,749   1,277   3.38%
Interest expense:                
Interest on certificates of deposit  5,154   5,756   (602)  (10.46%)
Interest on other deposits  1,726   2,211   (485)  (21.94%)
Interest on borrowings  1,850   1,211   639   52.77%
Total interest expense  8,730   9,178   (448)  (4.88%)
Net interest income  30,296   28,571   1,725   6.04%
Provision for loan losses  2,037   163   1,874  * 
Net interest income after provision for loan losses  28,259   28,408   (149)  (0.52%)
Non-interest income:                
Service charges and fees  629   705   (76)  (10.78%)
Brokerage commissions  519   169   350   207.10%
Late and prepayment charges  277   551   (274)  (49.73%)
Gain on sale of mortgage loans  1,372      1,372   %
Loan origination  269      269   %
Gain on sale of real property  4,412      4,412   %
Other  970   593   377   63.58%
Total non-interest income  8,448   2,018   6,430   318.63%
Non-interest expense:                
Compensation and benefits  15,207   14,157   1,050   7.42%
Occupancy and equipment  6,878   5,586   1,292   23.13%
Data processing expenses  1,559   1,182   377   31.90%
Direct loan expenses  848   521   327   62.76%
Insurance and surety bond premiums  387   312   75   24.04%
Office supplies, telephone and postage  1,014   869   145   16.69%
Professional fees  4,516   2,199   2,317   105.37%
Marketing and promotional expenses  506   119   387   325.21%
Directors fees  207   225   (18)  (8.00%)
Regulatory dues  151   173   (22)  (12.72%)
Other operating expenses  2,311   1,789   522   29.18%
Total non-interest expense  33,584   27,132   6,452   23.78%
Income before income taxes  3,123   3,294   (171)  (5.19%)
Provision for income taxes  898   967   (69)  (7.14%)
Net income $2,225  $2,327  $(102)  (4.38%)
Earnings per share:                
Basic $0.13  $0.13  $   %
Diluted $0.13  $0.13  $   %

*Indicates more than 500%.

PDL Community Bancorp and Subsidiaries
Key Metrics

 At or for the Quarters Ended 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2020  2020  2020  2019  2019 
Performance Ratios:                   
Return on average assets 1.28%  (0.20%)  (0.46%)  (2.79%)  0.27%
Return on average equity 9.95%  (1.47%)  (3.07%)  (18.24%)  1.71%
Net interest rate spread (1) 3.33%  3.13%  3.51%  3.34%  3.44%
Net interest margin (2) 3.65%  3.45%  3.87%  3.71%  3.83%
Non-interest expense to average assets 3.95%  3.57%  4.07%  7.30%  3.54%
Efficiency ratio (3) 68.09%  103.37%  102.62%  190.43%  90.24%
Average interest-earning assets to average interest- bearing liabilities 134.35%  130.72%  129.16%  130.64%  131.38%
Average equity to average assets 12.90%  13.30%  14.85%  15.32%  15.71%
Capital Ratios:                   
Total capital to risk weighted assets (bank only) 16.93%  17.52%  17.84%  18.62%  19.29%
Tier 1 capital to risk weighted assets (bank only) 15.68%  16.26%  16.59%  17.36%  18.03%
Common equity Tier 1 capital to risk-weighted assets (bank only) 15.68%  16.26%  16.59%  17.36%  18.03%
Tier 1 capital to average assets (bank only) 11.46%  11.63%  12.76%  12.92%  13.62%
Asset Quality Ratios:                   
Allowance for loan losses as a percentage of total loans 1.28%  1.27%  1.37%  1.28%  1.27%
Allowance for loan losses as a percentage of nonperforming loans 131.00%  118.89%  138.47%  106.30%  117.72%
Net (charge-offs) recoveries to average outstanding loans 0.00%  0.01%  0.00%  0.03%  (0.15%)
Non-performing loans as a percentage of total loans 0.98%  1.08%  1.00%  1.20%  1.09%
Non-performing loans as a percentage of total assets 0.86%  0.95%  0.85%  1.10%  0.94%
Total non-performing assets as a percentage of total assets 0.86%  0.95%  0.85%  1.10%  0.94%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets 1.36%  1.51%  1.49%  1.92%  1.73%
Other:                   
Number of offices (4)20  14  14  14  14 
Number of full-time equivalent employees (5)230  179  184  183  187 
                    

(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.
(4) Number of offices at September 30, 2020 included 6 offices due to acquisition of Mortgage World.
(5) Number of full-time equivalent employees at September 30, 2020 included 44 employees due to acquisition of Mortgage World.

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

PDL Community Bancorp and Subsidiaries
Loan Portfolio

  As of 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2020  2020  2020  2019  2019 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
    
  (Dollars in thousands) 
Mortgage loans:                                        
1-4 family residential                                        
Investor Owned $320,438   28.55% $317,055   29.25% $308,206   31.31% $305,272   31.60% $309,065   32.23%
Owner-Occupied  93,340   8.31%  91,345   8.43%  93,887   9.54%  91,943   9.52%  90,843   9.47%
Multifamily residential  284,775   25.37%  274,641   25.34%  259,326   26.35%  250,239   25.90%  244,644   25.51%
Nonresidential properties  217,771   19.40%  209,068   19.29%  210,225   21.36%  207,225   21.45%  195,952   20.43%
Construction and land  99,721   8.89%  96,841   8.93%  100,202   10.18%  99,309   10.28%  106,124   11.07%
Total mortgage loans  1,016,045   90.52%  988,950   91.24%  971,846   98.74%  953,988   98.75%  946,628   98.72%
Non-mortgage loans:                                        
Business loans (1)  96,700   8.61%  93,394   8.62%  11,183   1.13%  10,877   1.12%  11,040   1.15%
Consumer loans  9,806   0.87%  1,578   0.14%  1,288   0.13%  1,231   0.13%  1,252   0.13%
Total non-mortgage loans  106,506   9.48%  94,972   8.76%  12,471   1.26%  12,108   1.25%  12,292   1.28%
Total loans, gross  1,122,551   100.00%  1,083,922   100.00%  984,317   100.00%  966,096   100.00%  958,920   100.00%
                                         
Net deferred loan origination costs  786       2,256       2,146       1,970       1,788     
Allowance for losses on loans  (14,381)      (13,761)      (13,484)      (12,329)      (12,160)    
                                         
Loans, net $1,108,956      $1,072,417      $972,979      $955,737      $948,548     

      (1)   As of September 30, 2020, business loans include $86.2 million of PPP loans.

PDL Community Bancorp and Subsidiaries
Deposits

  As of 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2020  2020  2020  2019  2019 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
    
  (Dollars in thousands) 
Demand $186,328   19.15% $192,429   20.55% $110,801   13.35% $109,548   14.01% $104,181   13.75%
Interest-bearing deposits:                                        
NOW/IOLA accounts  29,618   3.04%  26,477   2.83%  31,586   3.81%  32,866   4.20%  28,600   3.77%
Money market accounts  148,877   15.30%  125,631   13.42%  121,629   14.66%  86,721   11.09%  98,707   13.02%
Reciprocal deposits  108,367   11.13%  96,915   10.35%  62,384   7.52%  47,659   6.09%  42,292   5.58%
Savings accounts  120,883   12.42%  119,277   12.74%  112,318   13.53%  115,751   14.80%  115,402   15.23%
Total NOW, money market, reciprocal and savings accounts  407,745   41.89%  368,300   39.34%  327,917   39.52%  282,997   36.18%  285,001   37.60%
Certificates of deposit of $250K or more  80,403   8.26%  81,786   8.74%  81,486   9.82%  84,263   10.77%  86,498   11.41%
Brokered certificates of deposit  55,878   5.74%  55,878   5.97%  51,661   6.23%  76,797   9.82%  58,570   7.73%
Listing service deposits  49,342   5.07%  54,370   5.81%  55,842   6.73%  32,400   4.14%  22,458   2.96%
Certificates of deposit less than $250K  193,548   19.89%  183,456   19.59%  202,034   24.35%  196,038   25.08%  201,137   26.55%
Total certificates of deposit  379,171   38.96%  375,490   40.11%  391,023   47.13%  389,498   49.81%  368,663   48.65%
Total interest-bearing deposits  786,916   80.85%  743,790   79.45%  718,940   86.65%  672,495   85.99%  653,664   86.25%
Total deposits $973,244   100.00% $936,219   100.00% $829,741   100.00% $782,043   100.00% $757,845   100.00%

      (1)   As of September 30, 2020, included in demand deposits are $41.9 million related to net PPP funding.


PDL Community Bancorp and Subsidiaries
Nonperforming Assets

 For the Quarters Ended 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2020  2020  2020  2019  2019 
   
 (Dollars in thousands) 
Non-accrual loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$2,750  $2,767  $2,327  $2,312  $1,281 
Owner occupied 1,075   1,327   1,069   1,009   1,052 
Multifamily residential 210              
Nonresidential properties 3,830   4,355   3,228   3,555   3,099 
Construction and land          1,118   1,292 
Non-mortgage loans:                   
Business              
Consumer              
Total non-accrual loans (not including non-accruing troubled debt restructured loans)$7,865  $8,449  $6,624  $7,994  $6,724 
                    
Non-accruing troubled debt restructured loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$267  $272  $276  $467  $471 
Owner occupied 2,191   2,198   2,185   2,491   2,488 
Multifamily residential              
Nonresidential properties 655   656   653   646   647 
Construction and land              
Non-mortgage loans:                   
Business              
Consumer              
Total non-accruing troubled debt restructured loans 3,113   3,126   3,114   3,604   3,606 
Total non-accrual loans$10,978  $11,575  $9,738  $11,598  $10,330 
Total non-performing assets$10,978  $11,575  $9,738  $11,598  $10,330 
                    
Accruing troubled debt restructured loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$3,396  $3,730  $3,730  $5,191  $5,226 
Owner occupied 2,177   2,348   2,359   2,090   2,114 
Multifamily residential              
Nonresidential properties 759   762   1,300   1,306   1,317 
Construction and land              
Non-mortgage loans:                   
Business          14   35 
Consumer              
Total accruing troubled debt restructured loans$6,332  $6,840  $7,389  $8,601  $8,692 
Total non-performing assets and accruing troubled debt restructured loans$17,310  $18,415  $17,127  $20,199  $19,022 
Total non-performing loans to total loans 0.98%  1.08%  1.00%  1.20%  1.09%
Total non-performing assets to total assets 0.86%  0.95%  0.85%  1.10%  0.94%
Total non-performing assets and accruing troubled debt restructured loans to total assets 1.36%  1.51%  1.49%  1.92%  1.73%

PDL Community Bancorp and Subsidiaries
Average Balance Sheets

 For the Three Months Ended September 30, 
 2020   2019
 
 Average          Average         
 Outstanding      Average  Outstanding      Average 
 Balance  Interest  Yield/Rate (1)  Balance  Interest  Yield/Rate (1) 
   
 (Dollars in thousands) 
Interest-earning assets:                       
Loans (2)$1,109,799  $13,375  4.79%  $957,987  $12,663  5.24% 
Available-for-sale securities 13,741   132  3.81%   22,415   81  1.43% 
Other (3) 60,068   96  0.64%   30,460   209  2.72% 
Total interest-earning assets 1,183,608   13,603  4.57%   1,010,862   12,953  5.08% 
Non-interest-earning assets 58,493           35,840         
Total assets$1,242,101          $1,046,702         
Interest-bearing liabilities:                       
NOW/IOLA$29,687  $40  0.54%  $28,183  $35  0.49% 
Money market 224,339   422  0.75%   144,666   685  1.88% 
Savings 121,355   37  0.12%   118,308   38  0.13% 
Certificates of deposit 371,094   1,597  1.71%   379,915   1,896  1.98% 
Total deposits 746,475   2,096  1.12%   671,072   2,654  1.57% 
Advance payments by borrowers 7,756   1  0.05%   7,991   1  0.05% 
Borrowings 126,729   655  2.06%   90,361   533  2.34% 
Total interest-bearing liabilities 880,960   2,752  1.24%   769,424   3,188  1.64% 
Non-interest-bearing liabilities:                       
Non-interest-bearing demand 191,269          109,491        
Other non-interest-bearing liabilities 9,607          3,402        
Total non-interest-bearing liabilities 200,876          112,893        
Total liabilities 1,081,836   2,752       882,317   3,188     
Total equity 160,265           164,385         
Total liabilities and total equity$1,242,101      1.24%  $1,046,702      1.64% 
Net interest income    $10,851          $9,765     
Net interest rate spread (4)        3.33%          3.44% 
Net interest-earning assets (5)$302,648          $241,438         
Net interest margin (6)        3.65%          3.83% 
Average interest-earning assets to interest-bearing liabilities        134.35%          131.38% 

(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 Nine Months Ended September 30, 
 2020  2019 
 Average          Average         
 Outstanding      Average  Outstanding      Average 
 Balance  Interest  Yield/Rate (1)  Balance  Interest  Yield/Rate 
   
 (Dollars in thousands) 
Interest-earning assets:                       
Loans (2)$1,036,706  $38,319   4.94% $940,971  $36,818   5.23%
Available-for-sale securities 16,227   361   2.97%  22,772   244   1.43%
Other (3) 55,746   346   0.83%  37,551   687   2.45%
Total interest-earning assets 1,108,679   39,026   4.70%  1,001,294   37,749   5.04%
Non-interest-earning assets 53,945           35,142         
Total assets$1,162,624          $1,036,436         
Interest-bearing liabilities:                       
NOW/IOLA$29,469  $117   0.53% $27,298  $86   0.42%
Money market 193,951   1,497   1.03%  124,263   2,004   2.16%
Savings 117,424   109   0.12%  120,748   118   0.13%
Certificates of deposit 375,303   5,154   1.83%  408,241   5,756   1.89%
Total deposits 716,147   6,877   1.28%  680,550   7,964   1.56%
Advance payments by borrowers 8,226   3   0.05%  8,423   3   0.05%
Borrowings 118,701   1,850   2.08%  64,947   1,211   2.49%
Total interest-bearing liabilities 843,074   8,730   1.38%  753,920   9,178   1.63%
Non-interest-bearing liabilities:                       
Non-interest-bearing demand 155,158          110,730        
Other non-interest-bearing liabilities 5,927          4,087        
Total non-interest-bearing liabilities 161,085          114,817        
Total liabilities 1,004,159   8,730       868,737   9,178     
Total equity 158,465           167,699         
Total liabilities and total equity$1,162,624       1.38% $1,036,436       1.63%
Net interest income    $30,296          $28,571     
Net interest rate spread (4)         3.32%          3.41%
Net interest-earning assets (5)$265,605          $247,374         
Net interest margin (6)         3.65%          3.81%
Average interest-earning assets to                       
interest-bearing liabilities         131.50%          132.81%

(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.