false000187407100018740712024-04-302024-04-30

 

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): April 30, 2024

 

 

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, New York				10462
(Address of Principal Executive Offices)				(Zip Code)

 

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

 

(Former Name or Former Address, if Changed Since Last Report)

 

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:

☐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 Global Market

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 2.02 Results of Operations and Financial Condition.

On April 30, 2024, Ponce Financial Group, Inc., the holding company for Ponce Bank (the "Bank"), issued a press release announcing its financial results with respect to its first quarter ended March 31, 2024. 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 9.01 Financial Statements and Exhibits.

(d)Exhibits.

Exhibit Number		Description
99.1		Press release dated April 30, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL)

 

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SIGNATURE

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:	April 30, 2024	By:	/s/ Carlos P. Naudon
			Carlos P. Naudon President and Chief Executive Officer

 

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Exhibit 99.1

Ponce Financial Group, Inc. Reports First Quarter 2024 Results

 

NEW YORK, April 30, 2024 - 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):

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.”

 

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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	%

 

 

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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.

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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.

 

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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

 

 

 

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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

 

 

 

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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	%)

 

 

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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

 

 

 

 

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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

 

 

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

 

 

 

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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

 

 

 

 

 

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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.

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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

 

 

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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	%

 

 

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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	%

 

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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.

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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%

 

 

 

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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

 

 

 

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