SEC Filing | Ponce Bank

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41255

Ponce Financial Group, Inc.

(Exact Name of Registrant as Specified in its Charter)


Maryland	87-1893965
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 12, 2023, the registrant had 24,884,735 shares of common stock, $0.01 par value per share, outstanding.


Auditor Firm Id: 339	Auditor Name: Mazars USA LLP	Auditor Location: New York, New York, USA

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Consolidated Financial Statements	1
	Consolidated Statements of Financial Condition (Unaudited)	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Comprehensive Income (Unaudited)	3
	Consolidated Statements of Stockholders’ Equity (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
PART II.	OTHER INFORMATION	64
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65
Signatures		66

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

March 31, 2023 and December 31, 2022

(Dollars in thousands, except share data)


	March 31,			December 31,
	2023			2022
	(unaudited)
ASSETS
Cash and due from banks:
Cash	$	83,670		$	34,074
Interest-bearing deposits in banks		101,017			20,286
Total cash and cash equivalents		184,687			54,360
Available-for-sale securities, at fair value (Note 3)		128,320			129,505
Held-to-maturity securities, net of allowance for credit losses of $809 at March 31, 2023 and $0 at December 31, 2022; at amortized cost (fair value 2023 $482,621; 2022 $495,851) (Note 3)		491,649			510,820
Placements with banks		1,245			1,494
Mortgage loans held for sale, at fair value		2,987			1,979
Loans receivable, net of allowance for credit losses - 2023 $28,975; 2022 $34,592 (Note 4)		1,614,428			1,493,127
Accrued interest receivable		15,435			15,049
Premises and equipment, net (Note 5)		17,215			17,446
Right of use assets (Note 6)		33,147			33,423
Federal Home Loan Bank of New York (FHLBNY) stock, at cost		19,209			24,661
Deferred tax assets (Note 9)		15,413			16,137
Other assets		15,799			13,988
Total assets	$	2,539,534		$	2,311,989
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 7)	$	1,336,877		$	1,252,412
Operating lease liabilities		34,308			34,532
Accrued interest payable		1,767			1,390
Advance payments by borrowers for taxes and insurance		14,902			9,724
Borrowings (Note 8)		648,375			517,375
Other liabilities		7,264			3,856
Total liabilities		2,043,493			1,819,289
Commitments and contingencies (Note 12)
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, 225,000 shares issued and outstanding as of March 31, 2023 and as of December 31, 2022.		225,000			225,000
Common stock, $0.01 par value; 200,000,000 shares authorized; 24,865,476 shares issued and 24,863,500 shares outstanding as of March 31, 2023 and 24,861,329 shares issued and 24,859,353 shares outstanding as of December 31, 2022		249			249
Treasury stock, at cost; 1,976 shares as of March 31, 2023 and December 31, 2022 (Note 10)		(2	)		(2	)
Additional paid-in-capital		206,883			206,508
Retained earnings		94,399			92,955
Accumulated other comprehensive loss (Note 15)		(16,629	)		(17,860	)
Unearned compensation ─ ESOP; 1,536,040 shares as of March 31, 2023 and 1,569,475 shares as of December 31, 2022 (Note 10)		(13,859	)		(14,150	)
Total stockholders' equity		496,041			492,700
Total liabilities and stockholders' equity	$	2,539,534		$	2,311,989

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Three Months Ended March 31, 2023 and 2022

(Dollars in thousands, except share data)


	For the Three Months Ended March 31,
	2023			2022
Interest and dividend income:
Interest on loans receivable	$	19,700		$	18,200
Interest on deposits due from banks		197			36
Interest and dividend on securities and FHLBNY stock		6,459			782
Total interest and dividend income		26,356			19,018
Interest expense:
Interest on certificates of deposit		1,871			803
Interest on other deposits		4,166			284
Interest on borrowings		5,074			593
Total interest expense		11,111			1,680
Net interest income		15,245			17,338
(Benefit) provision for credit losses (Note 3) (Note 4)		(174	)		1,258
Net interest income after (benefit) provision for credit losses		15,419			16,080
Non-interest income:
Service charges and fees		491			440
Brokerage commissions		15			338
Late and prepayment charges		729			58
Income on sale of mortgage loans		99			418
Loan origination		—			625
Other		485			347
Total non-interest income		1,819			2,226
Non-interest expense:
Compensation and benefits		7,446			7,125
Occupancy and equipment		3,570			3,192
Data processing expenses		1,192			847
Direct loan expenses		412			874
Provision for contingencies		985			17
Insurance and surety bond premiums		265			147
Office supplies, telephone and postage		399			405
Professional fees		1,455			1,334
Contribution to the Ponce De Leon Foundation (Note 2)		—			4,995
Grain (recoveries) write-off (Note 4)		(914	)		8,074
Marketing and promotional expenses		128			71
Directors' fees and regulatory assessment		155			154
Other operating expenses		1,268			839
Total non-interest expense		16,361			28,074
Income (loss) before income taxes		877			(9,768	)
Provision (benefit) for income taxes (Note 9)		546			(2,948	)
Net income (loss)	$	331		$	(6,820	)
Earnings (loss) per common share (Note 10):
Basic	$	0.01		$	(0.31	)
Diluted	$	0.01		$	(0.31	)
Weighted average common shares outstanding (Note 10):
Basic		23,293,013			21,721,113
Diluted		23,324,532			21,721,113

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

Three Months Ended March 31, 2023 and 2022

(In thousands)


	For the Three Months Ended March 31,
	2023			2022
Net income (loss)	$	331		$	(6,820	)
Net change in unrealized gain (losses) on securities:
Unrealized gain (losses)		1,564			(7,108	)
Income (tax) benefit effect		(333	)		1,529
Total other comprehensive income (loss), net of tax		1,231			(5,579	)
Total comprehensive income (loss)	$	1,562		$	(12,399	)

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)

Three Months Ended March 31, 2023 and 2022

(Dollars in thousands, except share data)


																	Accumulated			Unallocated
									Treasury			Additional					Other			Common
	Preferred Stock				Common Stock				Stock,			Paid-in			Retained		Comprehensive			Stock
	Shares		Amount		Shares		Amount		At Cost			Capital			Earnings		Income (Loss)			of ESOP			Total
Balance, December 31, 2022		225,000	$	225,000		24,859,353	$	249	$	(2	)	$	206,508		$	92,955	$	(17,860	)	$	(14,150	)	$	492,700
Net income		—		—		—		—		—			—			331		—			—			331
Other comprehensive income, net of tax		—		—		—		—		—			—			—		1,231			—			1,231
Impact of CECL adoption, net of tax		—		—		—		—		—			—			1,113		—			—			1,113
Release of restricted stock units		—		—		4,147		—		—			—			—		—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			(29	)		—		—			291			262
Share-based compensation		—		—		—		—		—			404			—		—			—			404
Balance, March 31, 2023		225,000	$	225,000		24,863,500	$	249	$	(2	)	$	206,883		$	94,399	$	(16,629	)	$	(13,859	)	$	496,041


																	Accumulated			Unallocated
									Treasury			Additional					Other			Common
	Preferred Stock				Common Stock				Stock,			Paid-in		Retained			Comprehensive			Stock
	Shares		Amount		Shares		Amount		At Cost			Capital		Earnings			Loss			of ESOP			Total
Balance, December 31, 2021		—	$	—		17,425,987	$	185	$	(13,687	)	$	85,601	$	122,956		$	(1,456	)	$	(4,343	)	$	189,256
Net loss		—		—		—		—		—			—		(6,820	)		—