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Ponce Financial Group, Inc. Reports First Quarter 2024 Results

April 30, 2024 at 5:11 PM EDT

NEW YORK, April 30, 2024 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the first quarter of 2024.

First Quarter 2024 Highlights (Compared to Prior Periods):

  • Net income of $2.4 million, or $0.11 per diluted share for the three months ended March 31, 2024, as compared to net income of $0.5 million, or $0.02 per diluted share for the three months ended December 31, 2023 and net income of $0.3 million, or $0.01 per diluted share for the three months ended March 31, 2023.
  • Included in the $2.4 million of net income for the first quarter of 2024 results is $39.7 million in interest and dividend income, $1.7 million in non-interest income and $0.2 million in benefit for credit losses, offset by $20.8 million in interest expense and $17.0 million in non-interest expense.
  • Net interest income of $18.8 million for the first quarter of 2024 increased $1.6 million, or 9.46%, from the prior quarter and increased $3.6 million, or 23.47%, from the same quarter last year.
  • Net interest margin was 2.71% for the first quarter of 2024, increased from 2.66% for the prior quarter and decreased from 2.75% for the same quarter last year.
  • Non-interest income for the three months ended March 31, 2024 was $1.7 million, increased $0.4 million, or 32.84%, from $1.3 million for the three months ended December 31, 2023 and decreased $0.1 million, or 6.16%, from $1.8 million for the three months ended March 31, 2023.
  • Non-interest expense for the three months ended March 31, 2024 was $17.0 million, decreased $0.9 million, or 5.29%, compared to $17.9 million for the three months ended December 31, 2023 and increased $0.6 million, or 3.60% compared to $16.4 million for the three months ended March 31, 2023.
  • Cash and equivalents were $134.7 million as of March 31, 2024, decreased $4.5 million, or 3.21%, from December 31, 2023.
  • Securities totaled $569.0 million as of March 31, 2024, decreased $12.7 million, or 2.18%, from December 31, 2023 primarily due to regular principal payments.
  • Net loans receivable were $1.98 billion as of March 31, 2024, increased $85.5 million, or 4.51%, from December 31, 2023.
  • Deposits were $1.59 billion as of March 31, 2024, increased $78.2 million, or 5.18%, from December 31, 2023.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “Despite the challenging operating environment, we continue to make progress: net interest income grew for the fourth quarter in a row, and net interest margin grew for the second quarter in a row. Book value per share is now $11.29 (up $0.39 vs last year) and total equity per share stands at $20.75. We’re also making progress on the expense side and have reduced headcount by 7% year over year. We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 23.33%, well in excess of regulatory requirements. In terms of liquidity, our liquid assets plus borrowing capacity at the Federal Home Loan Bank of New York ("FHLBNY") stands at $724.1 million, approximately 1.7 times of our uninsured deposits of $416.9 million. We remain committed to the communities we serve, our Minority Depository Institution (“MDI”)/Community Development Financial Institutions ("CDFI") status and continuing to invest in our people and in technology to improve our efficiency."

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added “We continue to grow both loans and deposits while maintaining credit quality. While we see resiliency in our client base, our prudent approach might result in lower growth in the coming quarters as we prioritize sound underwriting practices and balance sheet management over loan growth.” 

Selected performance metrics are as follows (refer to “Key Metrics” for additional information):

    At or for the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
Performance Ratios (Annualized):   2024     2023     2023     2023     2023  
Return on average assets (1)     0.33 %     0.08 %     0.39 %     (0.01 %)     0.06 %
Return on average equity (1)     1.97 %     0.42 %     2.11 %     (0.07 %)     0.27 %
Net interest rate spread (1) (2)     1.82 %     1.74 %     1.68 %     1.75 %     1.88 %
Net interest margin (1) (3)     2.71 %     2.66 %     2.58 %     2.65 %     2.75 %
Non-interest expense to average assets (1)     2.35 %     2.66 %     2.58 %     2.65 %     2.79 %
Efficiency ratio (4)     82.56 %     96.83 %     78.11 %     96.15 %     95.88 %
Average interest-earning assets to average interest- bearing liabilities     129.69 %     133.50 %     134.49 %     137.67 %     143.62 %
Average equity to average assets     17.00 %     18.25 %     18.32 %     19.21 %     20.91 %


    At or for the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
Capital Ratios (Annualized):   2024     2023     2023     2023     2023  
Total capital to risk-weighted assets (Bank only)     22.79 %     23.30 %     25.10 %     26.30 %     27.54 %
Tier 1 capital to risk-weighted assets (Bank only)     21.54 %     22.05 %     23.85 %     25.05 %     26.28 %
Common equity Tier 1 capital to risk-weighted assets (Bank only)     21.54 %     22.05 %     23.85 %     25.05 %     26.28 %
Tier 1 capital to average assets (Bank only)     16.26 %     17.49 %     17.51 %     17.95 %     19.51 %


    At or for the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
Asset Quality Ratios (Annualized):   2024     2023     2023     2023     2023  
Allowance for loan losses as a percentage of total loans     1.23 %     1.36 %     1.51 %     1.64 %     1.77 %
Allowance for loan losses as a percentage of nonperforming loans     140.90 %     152.99 %     169.49 %     167.06 %     149.73 %
Net (charge-offs) recoveries to average outstanding loans (1)     (0.25 %)     (0.24 %)     (0.34 %)     (0.41 %)     (0.57 %)
Non-performing loans as a percentage of total gross loans     0.87 %     0.89 %     0.89 %     0.98 %     1.18 %
Non-performing loans as a percentage of total assets     0.62 %     0.62 %     0.62 %     0.63 %     0.76 %
Total non-performing assets as a percentage of total assets     0.62 %     0.62 %     0.62 %     0.63 %     0.76 %
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)     0.79 %     0.81 %     0.82 %     0.83 %     0.93 %
 

(1)  Annualized where appropriate.
(2)  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.
(3)  Net interest margin represents net interest income divided by average total interest-earning assets.
(4)  Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
(5)  Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.

Summary of Results of Operations

Net income for the three months ended March 31, 2024 was $2.4 million compared to net income of $0.5 million for the three months ended December 31, 2023 and net income of $0.3 million for the three months ended March 31, 2023.

The increase of net income for the three months ended March 31, 2024 compared to the three months ended December 31, 2023 was attributed mainly to an increase in net interest income, a decrease in non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes and a decrease in benefit for credit losses.

The increase of net income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was largely due to increases in net interest income, partially offset by increases in provision for income taxes and non-interest expense and a decrease in non-interest income.

Net Interest Income and Net Margin

Net interest income for the three months ended March 31, 2024, increased $1.6 million, or 9.46%, to $18.8 million compared to $17.2 million for the three months ended December 31, 2023 and increased $3.6 million, or 23.47%, compared to $15.2 million for the three months ended March 31, 2023. Included in this increase was a recovery of $1.0 million in interest income from a construction loan that was previously nonperforming.

For the three months ended March 31, 2024, benefit for credit losses amounted to $0.2 million consists of a benefit for credit losses on loans in the amount of $0.3 million and a provision on credit losses on held-to-maturity securities in the amount of $0.1 million. The $0.3 million benefit for credit losses on loans for the three months ended March 31, 2024 resulted from a benefit of $0.8 million related to micro loans originated by Grain and a provision of $0.5 million related to non-micro loans.

Net interest margin was 2.71% for the three months ended March 31, 2024 compared to 2.66% for the prior quarter, an increase of 5bps and 2.75% for the same period last year, a decrease of 4bps. The decrease in net interest margin for the three months ended March 31, 2024 when compared to the same period last year was a result of an increase in the cost of funds driven by higher interest rates.

Non-interest Income

Non-interest income for the three months ended March 31, 2024, was $1.7 million, an increase of $0.4 million, or 32.84%, compared to the three months ended December 31, 2023 and a decrease of $0.1 million, or 6.16%, compared to the three months ended March 31, 2023.

The $0.4 million increase in non-interest income for the three months ended March 31, 2024 compared to the three months ended December 31, 2023 was largely attributable to an increase of $0.8 million in other non-interest income partially offset by a grant of $0.4 million received in the fourth quarter of 2023 from the U.S. Treasury. No grants were received in the first quarter of 2024.

The $0.1 million decrease in non-interest income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was largely attributable to a decrease of $0.4 million in late and prepayment charges, partially offset by increases of $0.2 million in income on sale of mortgage loans and $0.1 million in other non-interest income.

Non-interest Expense

Non-interest expense for the three months ended March 31, 2024, was $17.0 million, a decrease of $0.9 million, or 5.29%, compared to $17.9 million for the three months ended December 31, 2023 and an increase of $0.6 million, or 3.60%, compared to $16.4 million for the three months ended March 31, 2023.

The $0.9 million decrease from the three months ended December 31, 2023 was mainly attributable to decreases of $0.4 million in compensation and benefits, $0.3 million in provision for contingencies, $0.3 million in professional fees and $0.2 million in other operating expense, partially offset by an increase of $0.3 million in direct loan expense.

The $0.6 million increase from the three months ended March 31, 2023 was mainly attributable to a decrease of $0.9 million in Grain recoveries, increases of $0.4 million in compensation and benefits, $0.3 million in direct loan expenses and $0.3 million in professional fees, partially offset by decreases of $0.8 million in provision for contingencies, $0.3 million in other operating expense  and $0.2 million in office supplies, telephone and postage.

Balance Sheet Summary

Total assets increased $68.0 million, or 2.47%, to $2.82 billion as of March 31, 2024 from $2.75 billion as of December 31, 2023.  The increase in total assets is largely attributable to increases of $85.5 million in net loans receivable, $4.5 million in Federal Home Loan Bank of New York stock and $1.3 million in premises and equipment, partially offset by decreases of $8.8 million in held-to-maturity securities, $4.5 million in cash and cash equivalents, $3.9 million in available-for-sale securities. $3.6 million in other assets and $2.1 million in mortgage loans held for sale.

Total liabilities increased $65.7 million, or 2.91%, to $2.33 billion as of March 31, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to increases of $78.2 million in deposits and $2.5 million in advance payments by borrowers for taxes and insurance, partially offset by decreases of $7.7 million in accrued interest payable, $4.0 million in borrowings and $3.0 million in other liabilities.

Total stockholders’ equity increased $2.3 million, or 0.47%, to $493.7 million as of March 31, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders’ equity was largely attributable to $2.4 million in net income, $0.5 million impact to additional paid in capital as a result of share-based compensation and $0.3 million from release of ESOP shares, offset by $0.9 million in other comprehensive loss.

About Ponce Financial Group, Inc. 

Ponce Financial Group, Inc. is the holding company for Ponce Bank. Ponce Bank is 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 alternative funding sources and investing those funds, 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, 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.

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 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 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 Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; anticipated losses with respect to the Company's investment in Grain; changes in the value of securities in the 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 financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. 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 Ponce Financial Group, Inc.’s 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. 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.


Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)

                             
  As of  
  March 31,     December 31,     September 30,     June 30,     March 31,  
  2024     2023     2023     2023     2023  
ASSETS                            
Cash and due from banks:                            
Cash $ 29,972     $ 28,930     $ 26,046     $ 31,162     $ 26,951  
Interest-bearing deposits   104,752       110,260       90,966       212,627       157,736  
Total cash and cash equivalents   134,724       139,190       117,012       243,789       184,687  
Available-for-sale securities, at fair value   116,044       119,902       116,753       123,720       128,320  
Held-to-maturity securities, at amortized cost   452,955       461,748       471,065       481,952       491,649  
Placement with banks   249       249       996       996       1,245  
Mortgage loans held for sale, at fair value   7,860       9,980       14,103       10,070       2,987  
Loans receivable, net   1,981,428       1,895,886       1,787,607       1,695,047       1,614,428  
Accrued interest receivable   18,063       18,010       16,624       16,054       15,435  
Premises and equipment, net   17,396       16,053       16,453       16,856       17,215  
Right of use assets   31,021       31,272       32,110       32,435       33,147  
Federal Home Loan Bank of New York stock (FHLBNY), at cost   23,892       19,377       18,870       19,195       19,209  
Deferred tax assets   13,919       14,332       15,984       15,924       15,413  
Other assets   21,151       24,723       16,286       15,919       15,799  
Total assets $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957     $ 2,539,534  
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Liabilities:                            
Deposits $ 1,585,784     $ 1,507,620     $ 1,401,132     $ 1,442,013     $ 1,336,877  
Operating lease liabilities   32,486       32,684       33,459       33,716       34,308  
Accrued interest payable   4,218       11,965       8,385       4,704       1,767  
Advance payments by borrowers for taxes and insurance   13,245       10,778       13,743       12,402       14,902  
Borrowings   680,421       684,421       675,100       682,100       648,375  
Other liabilities   8,866       11,859       6,986       6,540       7,264  
Total liabilities   2,325,020       2,259,327       2,138,805       2,181,475       2,043,493  
Commitments and contingencies                            
Stockholders' Equity:                            
Preferred stock, $0.01 par value; 100,000,000 shares authorized   225,000       225,000       225,000       225,000       225,000  
Common stock, $0.01 par value; 200,000,000 shares authorized   249       249       249       249       249  
Treasury stock, at cost   (9,702 )     (9,747 )     (10,975 )     (5,202 )     (2 )
Additional paid-in-capital   207,584       207,106       207,626       207,287       206,883  
Retained earnings   99,834       97,420       96,902       94,312       94,399  
Accumulated other comprehensive loss   (16,590 )     (15,649 )     (20,468 )     (17,597 )     (16,629 )
Unearned compensation ─ ESOP   (12,693 )     (12,984 )     (13,276 )     (13,567 )     (13,859 )
Total stockholders' equity   493,682       491,395       485,058       490,482       496,041  
Total liabilities and stockholders' equity $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957     $ 2,539,534  
 


Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations
(Dollars in thousands, except per share data)

   
  Three Months Ended  
  March 31,     December 31,     September 30,     June 30,     March 31,  
  2024     2023     2023     2023     2023  
Interest and dividend income:                            
Interest on loans receivable $ 30,664     $ 27,814     $ 25,276     $ 23,015     $ 19,700  
Interest on deposits due from banks   2,911       990       1,969       1,817       197  
Interest and dividend on securities and FHLBNY stock   6,091       6,146       6,261       6,223       6,459  
Total interest and dividend income   39,666       34,950       33,506       31,055       26,356  
Interest expense:                            
Interest on certificates of deposit   6,380       5,103       4,362       3,881       3,225  
Interest on other deposits   6,540       5,706       5,639       4,413       2,812  
Interest on borrowings   7,923       6,944       6,963       6,479       5,074  
Total interest expense   20,843       17,753       16,964       14,773       11,111  
Net interest income   18,823       17,197       16,542       16,282       15,245  
(Benefit) provision for credit losses   (180 )     (375 )     535       987       (174 )
Net interest income after (benefit) provision for credit losses   19,003       17,572       16,007       15,295       15,419  
Non-interest income:                            
Service charges and fees   473       498       516       481       491  
Brokerage commissions   8       13       17       35       15  
Late and prepayment charges   359       365       899       372       729  
Income on sale of mortgage loans   302       244       173       82       99  
Grant income         438       3,718              
Other   565       (273 )     304       522       485  
Total non-interest income   1,707       1,285       5,627       1,492       1,819  
Non-interest expense:                            
Compensation and benefits   7,844       8,262       7,566       7,425       7,446  
Occupancy and equipment   3,667       3,686       3,588       3,724       3,570  
Data processing expenses   1,127       1,101       1,582       1,208       1,192  
Direct loan expenses   732       497       369       345       412  
Provision for contingencies   164       418       391       517       985  
Insurance and surety bond premiums   253       250       255       248       265  
Office supplies, telephone and postage   249       294       301       489       399  
Professional fees   1,723       2,040       1,693       1,904       1,455  
Grain recoveries   (53 )     (152 )     (69 )     (346 )     (914 )
Marketing and promotional expenses   100       146       248       303       128  
Directors fees and regulatory assessment   179       173       169       160       155  
Other operating expenses   965       1,182       1,223       1,112       1,268  
Total non-interest expense   16,950       17,897       17,316       17,089       16,361  
Income (loss) before income taxes   3,760       960       4,318       (302 )     877  
Provision (benefit) for income taxes   1,346       442       1,728       (215 )     546  
Net income (loss) $ 2,414     $ 518     $ 2,590     $ (87 )   $ 331  
Earnings per common share:                            
Basic $ 0.11     $ 0.02     $ 0.12     $ (0.00 )   $ 0.01  
Diluted $ 0.11     $ 0.02     $ 0.12     $ (0.00 )   $ 0.01  
Weighted average common shares outstanding:                            
Basic   22,353,492       22,224,945       22,272,076       23,208,168       23,293,013  
Diluted   22,366,728       22,406,102       22,349,217       23,208,168       23,324,532  
 


Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

 
    For the Three Months Ended March 31,  
    2024     2023     Variance $     Variance
%
 
Interest and dividend income:                        
Interest on loans receivable   $ 30,664     $ 19,700     $ 10,964       55.65 %
Interest on deposits due from banks     2,911       197       2,714       1,377.66 %
Interest and dividend on securities and FHLBNY stock     6,091       6,459       (368 )     (5.70 %)
Total interest and dividend income     39,666       26,356       13,310       50.50 %
Interest expense:                        
Interest on certificates of deposit     6,380       3,225       3,155       97.83 %
Interest on other deposits     6,540       2,812       3,728       132.57 %
Interest on borrowings     7,923       5,074       2,849       56.15 %
Total interest expense     20,843       11,111       9,732       87.59 %
Net interest income     18,823       15,245       3,578       23.47 %
Benefit for credit losses     (180 )     (174 )     (6 )     3.45 %
Net interest income after benefit for credit losses     19,003       15,419       3,584       23.24 %
Non-interest income:                        
Service charges and fees     473       491       (18 )     (3.67 %)
Brokerage commissions     8       15       (7 )     (46.67 %)
Late and prepayment charges     359       729       (370 )     (50.75 %)
Income on sale of mortgage loans     302       99       203       205.05 %
Other     565       485       80       16.49 %
Total non-interest income     1,707       1,819       (112 )     (6.16 %)
Non-interest expense:                        
Compensation and benefits     7,844       7,446       398       5.35 %
Occupancy and equipment     3,667       3,570       97       2.72 %
Data processing expenses     1,127       1,192       (65 )     (5.45 %)
Direct loan expenses     732       412       320       77.67 %
Provision for contingencies     164       985       (821 )     (83.35 %)
Insurance and surety bond premiums     253       265       (12 )     (4.53 %)
Office supplies, telephone and postage     249       399       (150 )     (37.59 %)
Professional fees     1,723       1,455       268       18.42 %
Grain recoveries     (53 )     (914 )     861       (94.20 %)
Marketing and promotional expenses     100       128       (28 )     (21.88 %)
Directors fees and regulatory assessment     179       155       24       15.48 %
Other operating expenses     965       1,268       (303 )     (23.90 %)
Total non-interest expense     16,950       16,361       589       3.60 %
Income before income taxes     3,760       877       2,883       328.73 %
Provision for income taxes     1,346       546       800       146.52 %
Net income   $ 2,414     $ 331     $ 2,083       629.31 %
Earnings per common share:                        
Basic   $ 0.11     $ 0.01     $ 0.09       659.96 %
Diluted   $ 0.11     $ 0.01     $ 0.09       660.54 %
Weighted average common shares outstanding:                        
Basic     22,353,492       23,293,013       (939,521 )     (4.03 %)
Diluted     22,366,728       23,324,532       (957,804 )     (4.11 %)
 


Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

 
  At or for the Three Months Ended  
  March 31,     December 31,     September 30,     June 30,     March 31,  
  2024     2023     2023     2023     2023  
Performance Ratios:                            
Return on average assets (1)   0.33 %     0.08 %     0.39 %     (0.01 %)     0.06 %
Return on average equity (1)   1.97 %     0.42 %     2.11 %     (0.07 %)     0.27 %
Net interest rate spread (1) (2)   1.82 %     1.74 %     1.68 %     1.75 %     1.88 %
Net interest margin (1) (3)   2.71 %     2.66 %     2.58 %     2.65 %     2.75 %
Non-interest expense to average assets (1)   2.35 %     2.66 %     2.58 %     2.65 %     2.79 %
Efficiency ratio (4)   82.56 %     96.83 %     78.11 %     96.15 %     95.88 %
Average interest-earning assets to average interest- bearing liabilities   129.69 %     133.50 %     134.49 %     137.67 %     143.62 %
Average equity to average assets   17.00 %     18.25 %     18.32 %     19.21 %     20.91 %
Capital Ratios:                            
Total capital to risk-weighted assets (Bank only)   22.79 %     23.30 %     25.10 %     26.30 %     27.54 %
Tier 1 capital to risk-weighted assets (Bank only)   21.54 %     22.05 %     23.85 %     25.05 %     26.28 %
Common equity Tier 1 capital to risk-weighted assets (Bank only)   21.54 %     22.05 %     23.85 %     25.05 %     26.28 %
Tier 1 capital to average assets (Bank only)   16.26 %     17.49 %     17.51 %     17.95 %     19.51 %
Asset Quality Ratios:                            
Allowance for credit losses on loans as a percentage of total loans   1.23 %     1.36 %     1.51 %     1.64 %     1.77 %
Allowance for credit losses on loans as a percentage of nonperforming loans   140.90 %     152.99 %     169.49 %     167.06 %     149.73 %
Net (charge-offs) recoveries to average outstanding loans (1)   (0.25 %)     (0.24 %)     (0.34 %)     (0.41 %)     (0.57 %)
Non-performing loans as a percentage of total gross loans   0.87 %     0.89 %     0.89 %     0.98 %     1.18 %
Non-performing loans as a percentage of total assets   0.62 %     0.62 %     0.62 %     0.63 %     0.76 %
Total non-performing assets as a percentage of total assets   0.62 %     0.62 %     0.62 %     0.63 %     0.76 %
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)   0.79 %     0.81 %     0.82 %     0.83 %     0.93 %
Other:                            
Number of offices   18       18       19       19       19  
Number of full-time equivalent employees   233       237       243       244       251  
                             

(1)  Annualized where appropriate.
(2)  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.
(3)  Net interest margin represents net interest income divided by average total interest-earning assets.
(4)  Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
(5)  Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.


Ponce Financial Group, Inc. and Subsidiaries
Securities Portfolio

    March 31, 2024     December 31, 2023  
          Gross     Gross                 Gross     Gross        
    Amortized     Unrealized     Unrealized           Amortized     Unrealized     Unrealized        
    Cost     Gains     Losses     Fair Value     Cost     Gains     Losses     Fair Value  
    (in thousands)     (in thousands)  
Available-for-Sale Securities:                                                
U.S. Government Bonds   $ 2,991     $     $ (211 )   $ 2,780     $ 2,990     $     $ (206 )   $ 2,784  
Corporate Bonds     25,782             (2,262 )     23,520       25,790             (2,122 )     23,668  
Mortgage-Backed Securities:                                                
Collateralized Mortgage Obligations (1)     38,183             (6,229 )     31,954       39,375             (6,227 )     33,148  
FHLMC Certificates     9,903             (1,424 )     8,479       10,163             (1,482 )     8,681  
FNMA Certificates     60,158             (10,948 )     49,210       61,359             (9,842 )     51,517  
GNMA Certificates     102             (1 )     101       104                   104  
Total available-for-sale securities   $ 137,119     $     $ (21,075 )   $ 116,044     $ 139,781     $     $ (19,879 )   $ 119,902  
                                                 
Held-to-Maturity Securities:                                                
U.S. Agency Bonds   $ 25,000     $     $ (289 )   $ 24,711     $ 25,000     $     $ (181 )   $ 24,819  
Corporate Bonds     82,500             (2,211 )     80,289       82,500             (2,691 )     79,809  
Mortgage-Backed Securities:                                                
Collateralized Mortgage Obligations (1)     207,079             (7,468 )     199,611       212,093       104       (5,170 )     207,027  
FHLMC Certificates     3,819             (253 )     3,566       3,897             (244 )     3,653  
FNMA Certificates     116,085             (5,263 )     110,822       118,944             (4,088 )     114,856  
SBA Certificates     18,945       169             19,114       19,712       166             19,878  
Allowance for Credit Losses     (473 )                       (398 )                  
Total held-to-maturity securities   $ 452,955     $ 169     $ (15,484 )   $ 438,113     $ 461,748     $ 270     $ (12,374 )   $ 450,042  
 

(1)  Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

    For the Three     For the  
    Months Ended     Year Ended  
    March 31, 2024     December 31, 2023  
Allowance for credit losses on securities at beginning of the period   $ 398     $  
CECL adoption           662  
Provision for credit losses     75       (264 )
Allowance for credit losses on securities at end of the period   $ 473     $ 398  
 



Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

    As of  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2024     2023     2023     2023     2023  
    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  
    (Dollars in thousands)  
Mortgage loans:                                                            
1-4 family residential                                                            
Investor Owned   $ 339,331       16.92 %   $ 343,689       17.89 %   $ 347,082       19.13 %   $ 351,754       20.43 %   $ 354,559       21.60 %
Owner-Occupied     150,842       7.52 %     152,311       7.93 %     151,866       8.37 %     154,116       8.94 %     149,481       9.10 %
Multifamily residential     545,825       27.22 %     550,559       28.65 %     553,694       30.52 %     550,033       31.94 %     553,430       33.71 %
Nonresidential properties     327,350       16.32 %     342,343       17.81 %     321,472       17.71 %     317,416       18.43 %     314,560       19.17 %
Construction and land     608,665       30.35 %     503,925       26.22 %     411,383       22.67 %     315,843       18.34 %     235,157       14.33 %
Total mortgage loans     1,972,013       98.33 %     1,892,827       98.50 %     1,785,497       98.40 %     1,689,162       98.08 %     1,607,187       97.91 %
Non-mortgage loans:                                                            
Business loans     26,664       1.33 %     19,779       1.03 %     18,416       1.02 %     21,041       1.22 %     19,890       1.21 %
Consumer loans (1)     6,741       0.34 %     8,966       0.47 %     10,416       0.58 %     11,958       0.70 %     14,227       0.88 %
Total non-mortgage loans     33,405       1.67 %     28,745       1.50 %     28,832       1.60 %     32,999       1.92 %     34,117       2.09 %
Total loans, gross     2,005,418       100.00 %     1,921,572       100.00 %     1,814,329       100.00 %     1,722,161       100.00 %     1,641,304       100.00 %
Net deferred loan origination costs     674             468             692             1,059             2,099        
Allowance for credit losses on loans     (24,664 )           (26,154 )           (27,414 )           (28,173 )           (28,975 )      
Loans, net   $ 1,981,428           $ 1,895,886           $ 1,787,607           $ 1,695,047           $ 1,614,428        
 

(1)  As of March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, consumer loans include $5.7 million, $8.0 million, $9.3 million, $11.2 million and $13.4 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.


Ponce Financial Group, Inc. and Subsidiaries
Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of March 31, 2024  
(in thousands)  
Receivable from Grain      
Microloans originated - put back to Grain (inception-to-March 31, 2024)   $ 24,051  
Write-downs, net of recoveries (inception-to-date as of March 31, 2024)     (15,406 )
Cash receipts from Grain (inception-to-March 31, 2024)     (6,819 )
Grant/reserve     (1,826 )
Net receivable as of March 31, 2024   $  
Microloan receivables from Grain Borrowers      
Grain originated loans receivable as of March 31, 2024   $ 5,731  
Allowance for credit losses on loans as of March 31, 2024 (1)     (4,868 )
Microloans, net of allowance for credit losses on loans as of March 31, 2024   $ 863  
Investments      
Investment in Grain   $ 1,000  
Investment in Grain write-off in Q3 2022     (1,000 )
Investment in Grain as of March 31, 2024      
Total exposure related to Grain as of March 31, 2024 (2)   $ 863  
 

(1) Excludes $1.6 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.
(2) Total remaining exposure to Grain borrowers. These loans are now serviced by the Bank.

On November 1, 2023, Ponce Financial Group, Inc. and Grain signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining Grain loans. In order to facilitate the transfer of the servicing responsibilities to the Bank, Grain granted the Bank a perpetual right and license to use the Grain software, including the source code to service the remaining loans.


Ponce Financial Group, Inc. and Subsidiaries
Allowance for Credit Losses on Loans

    For the Three Months Ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2024     2023     2023     2023     2023  
    (Dollars in thousands)  
Allowance for credit losses on loans at beginning of the period   $ 26,154     $ 27,414     $ 28,173     $ 28,975     $ 34,592  
(Benefit) provision for credit losses on loans     (255 )     (126 )     750       934       (321 )
Adoption of CECL                             (3,090 )
Charge-offs:                              
Mortgage loans:                              
1-4 family residences                              
Investor owned                              
Owner occupied                              
Multifamily residences                              
Nonresidential properties                              
Construction and land                              
Non-mortgage loans:                              
Business     (52 )     (63 )                  
Consumer     (1,302 )     (1,135 )     (1,592 )     (1,931 )     (2,569 )
Total charge-offs     (1,354 )     (1,198 )     (1,592 )     (1,931 )     (2,569 )
Recoveries:                              
Mortgage loans:                              
1-4 family residences                              
Investor owned                              
Owner occupied                              
Multifamily residences                              
Nonresidential properties                              
Construction and land                              
Non-mortgage loans:                              
Business     1             3              
Consumer     118       64       80       195       363  
Total recoveries     119       64       83       195       363  
Net (charge-offs) recoveries     (1,235 )     (1,134 )     (1,509 )     (1,736 )     (2,206 )
Allowance for credit losses on loans at end of the period   $ 24,664     $ 26,154     $ 27,414     $ 28,173     $ 28,975  
 



Ponce Financial Group, Inc. and Subsidiaries
Deposits

    As of  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2024     2023     2023     2023     2023  
    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  
    (Dollars in thousands)  
Demand (1)   $ 191,541       12.07 %   $ 185,151       12.28 %   $ 214,326       15.30 %   $ 225,106       15.61 %   $ 236,120       17.67 %
Interest-bearing deposits:                                                            
NOW/IOLA accounts (1)     73,202       4.62 %     77,909       5.17 %     74,055       5.29 %     64,193       4.45 %     68,356       5.11 %
Money market accounts (2)     482,344       30.42 %     432,735       28.70 %     370,500       26.44 %     387,970       26.91 %     293,140       21.93 %
Reciprocal deposits     97,718       6.16 %     96,860       6.42 %     82,670       5.90 %     100,919       7.00 %     109,649       8.20 %
Savings accounts     112,713       7.11 %     114,139       7.57 %     117,870       8.41 %     119,635       8.30 %     127,731       9.55 %
Total NOW, money market, reciprocal and savings accounts     765,977       48.31 %     721,643       47.86 %     645,095       46.04 %     672,717       46.66 %     598,876       44.79 %
Certificates of deposit of $250K or more (2)     146,296       9.23 %     132,153       8.77 %     122,353       8.73 %     120,043       8.32 %     113,955       8.52 %
Brokered certificates of deposit (3)     94,689       5.97 %     98,729       6.55 %     98,729       7.05 %     98,729       6.85 %     98,754       7.39 %
Listing service deposits (3)     12,688       0.80 %     14,433       0.96 %     15,180       1.08 %     20,258       1.40 %     28,417       2.13 %
All other certificates of deposit less than $250K (2)     374,593       23.62 %     355,511       23.58 %     305,449       21.80 %     305,160       21.16 %     260,755       19.50 %
Total certificates of deposit     628,266       39.62 %     600,826       39.86 %     541,711       38.66 %     544,190       37.73 %     501,881       37.54 %
Total interest-bearing deposits     1,394,243       87.93 %     1,322,469       87.72 %     1,186,806       84.70 %     1,216,907       84.39 %     1,100,757       82.33 %
Total deposits   $ 1,585,784       100.00 %   $ 1,507,620       100.00 %   $ 1,401,132       100.00 %   $ 1,442,013       100.00 %   $ 1,336,877       100.00 %
 

(1)  As of December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, $58.2 million, $51.5 million, $41.4 million and $46.6 million, respectively, were reclassified from demand to NOW/IOLA accounts.
(2)  As of June 30, 2023 and March 31, 2023, $150.6 million and $115.3 million, respectively, of SaveBetter deposits were reclassified from money market accounts to certificates of deposits. $36.4 million and $37.1 million, respectively, were reclassified to Certificates of deposits of $250K or more and $114.2 million and $78.2 million, respectively, were reclassified to certificates of deposit less than $250K.
(3)  As of March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, there were $1.5 million, $0.3 million, $0.3 million, $3.3 million and $9.5 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.


Ponce Financial Group, Inc. and Subsidiaries
Borrowings

  March 31,     December 31,  
  2024     2023  
  Scheduled
Maturity
    Redeemable
at Call Date
    Weighted
Average
Rate
    Scheduled
Maturity
    Redeemable
at Call Date
    Weighted
Average
Rate
 
  (Dollars in thousands)  
Term advances ending:                                  
2024 $ 109,321     $ 109,321       5.15 %   $ 363,321     $ 363,321       4.55 %
2025   250,000       250,000       4.69       50,000       50,000       4.41  
2026   50,000       50,000       4.83                    
2027   212,000       212,000       3.44       212,000       212,000       3.44  
2028   9,100       9,100       3.84       9,100       9,100       3.84  
Thereafter   50,000       50,000       3.35       50,000       50,000       3.35  
  $ 680,421     $ 680,421       4.28 %   $ 684,421     $ 684,421       4.10 %
 


Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

  As of Three Months Ended  
  March 31,     December 31,     September 30,     June 30,     March 31,  
  2024     2023     2023     2023     2023  
  (Dollars in thousands)  
Non-accrual loans:                            
Mortgage loans:                            
1-4 family residential                            
Investor owned $ 399     $ 793     $ 396     $ 296     $ 2,836  
Owner occupied   1,426       1,682       1,685       2,363       2,245  
Multifamily residential   4,098       2,979       1,444       1,435        
Nonresidential properties   441                          
Construction and land   10,277       10,759       11,721       11,721       11,906  
Non-mortgage loans:                            
Business   146       165       209             40  
Consumer                            
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) (1) $ 16,787     $ 16,378     $ 15,455     $ 15,815     $ 17,027  
                             
Non-accruing modifications to borrowers experiencing financial difficulty (1):                            
Mortgage loans:                            
1-4 family residential                            
Investor owned $ 270     $ 270     $ 270     $ 209     $ 213  
Owner occupied   447       447       449       840       2,020  
Multifamily residential                            
Nonresidential properties                           91  
Construction and land                            
Non-mortgage loans:                            
Business                            
Consumer                            
Total non-accruing modifications to borrowers experiencing financial difficulty (1)   717       717       719       1,049       2,324  
Total non-accrual loans (2) $ 17,504     $ 17,095     $ 16,174     $ 16,864     $ 19,351  
                             
Accruing modifications to borrowers experiencing financial difficulty (1):                            
Mortgage loans:                            
1-4 family residential                            
Investor owned $ 1,850     $ 2,112     $ 2,131     $ 2,161     $ 2,185  
Owner occupied   2,288       2,313       2,335       2,353       1,310  
Multifamily residential                            
Nonresidential properties   748       757       765       783       701  
Construction and land                            
Non-mortgage loans:                            
Business                            
Consumer                            
Total accruing modifications to borrowers experiencing financial difficulty (1) $ 4,886     $ 5,182     $ 5,231     $ 5,297     $ 4,196  
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty (1) $ 22,390     $ 22,277     $ 21,405     $ 22,161     $ 23,547  
Total non-performing loans to total gross loans   0.87 %     0.89 %     0.89 %     0.98 %     1.18 %
Total non-performing assets to total assets   0.62 %     0.62 %     0.62 %     0.63 %     0.76 %
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (1)   0.79 %     0.81 %     0.82 %     0.83 %     0.93 %

(1) Balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings.
(2) Includes nonperforming mortgage loans held for sale.


Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

  For the Three Months Ended March 31,
  2024
  2023
  Average               Average            
  Outstanding           Average   Outstanding           Average
  Balance     Interest     Yield/Rate (1)   Balance     Interest     Yield/Rate (1)
  (Dollars in thousands)
Interest-earning assets:                              
Loans (2) $ 1,979,263     $ 30,664     6.23 %   $ 1,572,148     $ 19,700     5.08 %
Securities (3)   576,235       5,619     3.92 %     631,138       6,075     3.90 %
Other (4) (5)   238,432       3,383     5.71 %     48,473       581     4.86 %
Total interest-earning assets   2,793,930       39,666     5.71 %     2,251,759       26,356     4.75 %
Non-interest-earning assets (5)   106,566                 123,007            
Total assets $ 2,900,496               $ 2,374,766            
Interest-bearing liabilities:                              
NOW/IOLA (6) (7) $ 82,849     $ 218     1.06 %   $ 71,765     $ 688     3.89 %
Money market (7) (8)   544,563       6,292     4.65 %     314,241       2,091     2.70 %
Savings   113,501       28     0.10 %     128,876       30     0.09 %
Certificates of deposit (8)   629,528       6,380     4.08 %     516,327       3,225     2.53 %
Total deposits   1,370,441       12,918     3.79 %     1,031,209       6,034     2.37 %
Advance payments by borrowers   12,886       2     0.06 %     12,919       3     0.09 %
Borrowings   771,070       7,923     4.13 %     523,705       5,074     3.93 %
Total interest-bearing liabilities   2,154,397       20,843     3.89 %     1,567,833       11,111     2.87 %
Non-interest-bearing liabilities:                              
Non-interest-bearing demand (6)   198,862                 268,372            
Other non-interest-bearing liabilities   54,061                 42,038            
Total non-interest-bearing liabilities   252,923                 310,410            
Total liabilities   2,407,320       20,843           1,878,243       11,111      
Total equity   493,176                 496,523            
Total liabilities and total equity $ 2,900,496           3.89 %   $ 2,374,766           2.87 %
Net interest income       $ 18,823               $ 15,245      
Net interest rate spread (9)             1.82 %               1.88 %
Net interest-earning assets (10) $ 639,533               $ 683,926            
Net interest margin (11)             2.71 %               2.75 %
Average interest-earning assets to interest-bearing liabilities             129.69 %               143.62 %

(1)  Annualized where appropriate.
(2)  Loans include loans and mortgage loans held for sale, at fair value.
(3)  Securities include available-for-sale securities and held-to-maturity securities.
(4)  Includes FHLBNY demand account, FHLBNY stock dividends and FRB demand deposits.
(5)  FRB demand deposits for prior period have been reclassified for consistency.
(6)  Includes reclassification of $48.4 million average outstanding balances from non-interest bearing demand to NOW/IOLA for the three months ended March 31, 2023.
(7)  Include $0.7 million of interest expense reclassified from money market to NOW/IOLA for the three months ended March 31, 2023.
(8)  Includes reclassification of $135.0 million average outstanding balances and $1.4 million of interest expenses from money market to certificates of deposit for the three months ended March 31, 2023.
(9)  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.
(10)  Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(11)  Net interest margin represents net interest income divided by average total interest-earning assets.


Ponce Financial Group, Inc. and Subsidiaries
Other Data

  As of  
  March 31,     December 31,     September 30,     June 30,     March 31,  
  2024     2023     2023     2023     2023  
Other Data                            
Common shares issued   24,886,711       24,886,711       24,886,711       24,886,711       24,865,476  
Less treasury shares   1,096,214       1,101,191       1,233,111       617,924       1,976  
Common shares outstanding at end of period   23,790,497       23,785,520       23,653,600       24,268,787       24,863,500  
                             
Book value per common share $ 11.29     $ 11.20     $ 10.99     $ 10.94     $ 10.90  
Tangible book value per common share $ 11.29     $ 11.20     $ 10.99     $ 10.94     $ 10.90  
 

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


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Source: Ponce Financial Group, Inc.

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