false 0001874071 0001874071 2022-03-02 2022-03-02

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

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

Date of Report: (Date of earliest event reported): March 2, 2022

 

Ponce Financial Group, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Maryland	001-41255	87-1893965
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
2244 Westchester Avenue Bronx, NY		10462
(Address of Principal Executive Offices)		(Zip Code)

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

 

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

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

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

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

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

 

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

 

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

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

Emerging growth company ☒

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

 

  

 

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Item 2.02Results of Operations and Financial Condition

On March 2, 2022, Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the “Company”), the holding company for Ponce Bank, issued a press release announcing its financial results with respect to its fourth quarter ended December 31, 2021. The Company’s press release is included as Exhibit 99.1 to this report.

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

Item 9.01Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press release dated March 2, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL)

 

 

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SIGNATURES

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

 

		Ponce Financial Group, Inc.
Date:  March 2, 2022		By:	/s/ Carlos P. Naudon
			Carlos P. Naudon
			President Chief Executive Officer

 

 

Exhibit 99.1

Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, Announces 2021 Fourth Quarter Results

New York (March 2, 2022): Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, (the “Company”) (NASDAQ: PDLB), the financial holding company for Ponce Bank (the “Bank”), reported net income of $15.0 million, or $0.90 per basic share and $0.89 per diluted share, for the fourth quarter of 2021, compared to net income of $2.1 million, or $0.12 per basic and diluted share, for the prior quarter and net income of $1.6 million, or $0.10 per basic and diluted share, for the fourth quarter of 2020.

Fourth Quarter Highlights

President and Chief Executive Officer’s Comments

Carlos P. Naudon, President & CEO, stated that “2021 was truly a transformational year, thanks to the efforts of our people and the leadership of our Board of Directors: we raised over $132.0 million in additional capital through our conversion and reorganization; we realized approximately $20.0 million in net gain while freeing up approximately $40.0 million in investable funds through our sale-and-leaseback initiative; we provided $261.6 million in PPP loans to over 5,000 small businesses in our hard-hit communities; and we had record earnings. Now, as we consider additional capital from ECIP funding, we are poised to deliver further and farther on our core mission: using our resources to provide impactful financial services to underserved but deserving communities while building value for our stakeholders.”

Executive Chairman’s Comments

Steven A. Tsavaris, Executive Chairman, noted that “from our humble beginnings in the turbulent South Bronx over 60 years ago, we have survived and flourished. In 2021 we reached critical milestones: our strongest-ever capital position – and getting even stronger; our largest loan portfolio at $1.3 billion; our impeccable asset quality; and, our improved loan origination capabilities. Now, as Ponce Financial Group, we will continue to responsibly deploy our capital.”

Loan Payment Deferrals

As of December 31, 2021, four loans in the amount of $8.0 million remained in forbearance as a result of renewed forbearance. Of the four loans receiving renewed forbearance, one loan in the amount of $6.6 million is related to construction real estate, two loans, totaling $1.0 million are related to one-to-four family residential real estate and one loan in the amount of $391,000 is related to non-residential properties. All of these loans had been performing in accordance with their contractual obligations prior to the granting of the initial forbearance.

 

 

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Results of Operations Summary

Net income for the three months ended December 31, 2021 was $15.0 million, compared to $2.1 million of net income for the three months ended September 30, 2021 and $1.6 million of net income for the three months ended December 31, 2020.

The $12.9 million increase in net income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was due substantially to an increase of $15.9 million in non-interest income primarily resulting from an increase of $15.4 million in gains, net of expenses, on sale of real properties. The increase in net income was also attributable to an increase of $1.3 million in net interest income, offset by increases of $2.9 million in provision for income taxes, $1.1 million in non-interest expense and $301,000 in provision for loan losses.

The $13.4 million increase in net income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was due substantially to an increase of $14.4 million in non-interest income primarily resulting from an increase of $15.4 million in gains, net of expenses, on sale of real properties, offset by a $1.5 million decrease in income on sale of mortgage loans. The increase in net income was also attributable to an increase of $5.1 million in net interest income, offset by increases of $3.8 million in provision for income taxes, $1.9 million in non-interest expense and $467,000 in provision for loan losses.

Net income for the year ended December 31, 2021 was $25.4 million, compared to $3.9 million of net income for the year ended December 31, 2020. The change from the year ended December 31, 2020 is primarily due to a $21.4 million increase in non-interest income resulting from increases of $16.1 million in gains, net of expenses, on sale of real properties, $2.1 million in loan origination fees and $1.1 million in sale of mortgage loans. The increase in net income was also attributable to a $16.9 million increase in net interest income, offset by increases of $9.6 million in non-interest expense, $6.8 million in provision for income taxes and a $274,000 in provision for loan losses.

Net interest income for the three months ended December 31, 2021 was $16.8 million, an increase of $1.3 million, or 8.7%, compared to the three months ended September 30, 2021 and an increase of $5.1 million, or 43.8%, compared to the three months ended December 31, 2020. The increase of $1.3 million in net interest income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was attributable to an increase of $1.2 million in interest and dividend income and a decrease of $115,000 in interest expense. The increase of $5.1 million in net interest income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was attributable to an increase of $4.3 million in interest and dividend income and a decrease of $769,000 in interest expense.

Net interest income for the year ended December 31, 2021 was $58.8 million, an increase of $16.9 million, or 40.2%, compared to the year ended December 31, 2020. The increase in net interest income was attributable to an increase of $13.8 million in interest and dividend income and a decrease of $3.1 million in interest expense.

Net interest margin was 4.51% for the three months ended December 31, 2021, an increase of 38 basis points from 4.13% for the three months ended September 30, 2021 and an increase of 73 basis points from 3.78% for the three months ended December 31, 2020. 

Net interest rate spread increased by 40 basis points to 4.32% for the three months ended December 31, 2021 from 3.92% for the three months ended September 30, 2021 and increased by 82 basis points from 3.50% for the three months ended December 31, 2020. The increase in the net interest rate spread for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was primarily due to an increase in the average yields on interest-earning assets of 35 basis points to 5.01% for the three months ended December 31, 2021 from 4.66% for the three months ended September 30, 2021, and a decrease on the average rates on interest-bearing liabilities of 5 basis points to 0.69% for the three months ended December 31, 2021 from 0.74% for the three months ended September 30, 2021. The increase in the net interest rate spread for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was primarily due to an increase in the average yields on interest-earning assets of 38 basis points to 5.01% for the three months ended December 31, 2021 from 4.63% for the three months ended December 31, 2020 and by a decrease on the average rates on interest-bearing liabilities of 44 basis points to 0.69% for the three months ended December 31, 2021 from 1.13% for the three months ended December 31, 2020.

Non-interest income increased $15.9 million to $19.2 million for the three months ended December 31, 2021 from $3.2 million for the three months ended September 30, 2021 and increased $14.4 million from $4.8 million for the three months ended December 31, 2020. Excluding the $15.4 million gain, net of expense, from sale of real properties, non-interest income increased $504,000 to $3.7 million for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 and decreased $1.1 million compared to the three months ended December 31, 2020.

The increase of $15.9 million in non-interest income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was due to increases of $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, $261,000 in loan origination fees, $131,000 in brokerage commissions, $119,000 in income on sale of mortgage loans, $12,000 in other non-interest income and $7,000 in late and prepayment charges offset by a decrease of $26,000 in service charges and fees.

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The increase of $14.4 million in non-interest income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was primarily due to increases of $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, $255,000 in late and prepayment charges, $230,000 in loan origination fees, $205,000 in service charges and fees, offset by decreases of $1.5 million in income on sale of mortgage, $243,000 in other non-interest income, and $54,000 in brokerage commissions.

Non-interest income increased $21.4 million to $34.6 million for the year ended December 31, 2021 from $13.2 million for the year ended December 31, 2020. The increase in non-interest income for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to increases of $16.1 million in gain, net of expenses, from the sale of real properties, $2.1 million in loan origination fees and $1.1 million on sale of mortgage loans. Other increases include $849,000 in late and prepayment charges, $765,000 in service charges and fees, $350,000 in brokerage commissions and $92,000 in other non-interest income. Excluding the $16.1 million increase in gain, net of expense, from the sale of real properties, non-interest income increased $5.3 million to $14.4 million for the year ended December 31, 2021 compared to $9.1 million for the year ended December 31, 2020.

Non-interest expense increased $1.1 million, or 7.6%, to $15.9 million for the three months ended December 31, 2021, from $14.7 million for the three months ended September 30, 2021 and increased $1.9 million from $14.0 million for the three months ended December 31, 2020.

The increase of $1.1 million in non-interest expense for the three months ended December 31, 2021, compared to the three months ended September 30, 2021, was attributable to an increase of $532,000 in compensation and benefits, primarily attributable to $700,000 of ESOP expenses attributable to an additional 48,250 shares to be released as of December 31, 2021, offset by decreases of $102,000 in bonuses and $111,000 in employer’s portion of social security. Other increases in non-interest expense were $353,000 in other operating expenses, $336,000 in direct loan expenses, $158,000 in occupancy and equipment, offset by a decrease of $146,000 in data processing expenses.

The increase of $1.9 million in non-interest expense for the three months ended December 31, 2021, compared to the three months ended December 31, 2020 primarily reflects increases of $433,000 in direct loan expenses, $432,000 in other operating expenses, $321,000 in occupancy and equipment, $193,000 in data processing expenses, $167,000 in office supplies, telephone and postage, $167,000 in professional fees and $113,000 in compensation and benefits. The $113,000 increase in compensation and benefits was primarily attributable to $748,000 of ESOP expenses of which $700,000 was attributable to an additional 48,250 shares to be released as of December 31, 2021, offset by decreases of $463,000 in bonuses and $109,000 in employer’s portion of social security.

Non-interest expense increased $9.6 million, or 20.2%, to $57.1 million for the year ended December 31, 2021, compared to $47.5 million for the year ended December 31, 2020. The increase in non-interest expense for the year ended December 31, 2021, compared to the year ended December 31, 2020 was attributable to increases of $2.4 million in direct loan expenses, $1.8 million in occupancy and equipment, $1.6 million in professional fees, primarily due to an increase in consulting expenses related to a third-party service provider that provided loan origination services related to PPP loans and $1.2 million in compensation and benefits. Other increases in non-interest expense include $1.2 million in other operating expenses, $878,000 in data processing expenses, $655,000 in office supplies, telephone and postage and $113,000 in regulatory dues, offset by a decrease of $282,000 in marketing and promotional expenses. The $1.2 million increase in compensation and benefits was primarily attributable to $867,000 of ESOP expenses of which $700,000 was attributable to an additional 48,250 shares to be released as of December 31, 2021 and $334,000 in bonuses.

Balance Sheet Summary

Total assets increased $298.3 million, or 22.0%, to $1.65 billion at December 31, 2021 from $1.36 billion at December 31, 2020. The increase in total assets is attributable to increases of $146.4 million in net loans receivable, including $51.4 million net increase in PPP loans, $95.8 million in available-for-sale securities, $81.8 million in cash and cash equivalents, $7.5 million in other assets and $966,000 in accrued interest receivable. The increase in total assets was reduced by decreases of $19.6 million in mortgage loans held for sale, at fair value, $12.4 million, net, in premises and equipment, $836,000 in deferred tax assets, $809,000 in held-to-maturity securities, $425,000 in FHLBNY stock, and $249,000 in placement with banks.

Total liabilities increased $268.6 million, or 22.5%, to $1.46 billion at December 31, 2021 from $1.20 billion at December 31, 2020. The increase in total liabilities was mainly attributable to increases of $175.1 million in deposits, of which $122.0 million were related to conversion and reorganization, $638,000 in advance payments by borrowers for taxes and insurance and $168,000 in accrued interest payable, offset by decreases of $14.9 million in warehouse lines of credit, $11.0 million in advances from FHLBNY and others, $2.0 in other liabilities and $1.5 million of mortgage loan fundings payable.

Total stockholders’ equity increased $29.7 million, or 18.6%, to $189.3 million at December 31, 2021 from $159.5 million at December 31, 2020. This increase in stockholders’ equity was mainly attributable to $25.4 million in net income, $3.1 million in net treasury stock activity, related to PDL Community Bancorp, $1.4 million related to share-based compensation and $1.3 million related to the Company’s ESOP, offset by $1.6 million related to unrealized loss on available-for-sale securities.

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Pursuant to the conversion and reorganization, PDL Community Bancorp treasury stock was extinguished on January 27, 2022. The Ponce Financial Group, Inc. has no treasury stock.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, is the financial holding company for Ponce Bank. 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.

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; the anticipated impact of the COVID-19 pandemic and Ponce Bank’s attempts at mitigation; 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 PDL Community Bancorp’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.

  

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Key Metrics

 

 

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Loan Portfolio

 

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Deposits

 

 

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Nonperforming Assets

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Average Balance Sheets

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Average Balance Sheets

 

 

 

 

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Other Data

 

 

 

 

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