false000187407100018740712024-07-302024-07-30

 

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): July 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 July 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 second quarter ended June 30, 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 July 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:	July 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 Second Quarter 2024 Results

 

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

Second Quarter 2024 Highlights (Compared to Prior Periods):

 

Six Months 2024 Highlights (Compared to 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 both in terms of improving our economic performance as well as serving our communities. We have exceeded our qualified lending targets under ECIP and qualified for a 0.50% preferred dividend rate. Book value per share continues to grow and is now $11.45 (up $0.51 vs last year) and total equity per common share stands at $20.90. 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

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total capital ratio at Ponce Bank stands at 22.47%, 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 $679.9 million, approximately 1.7 times of our uninsured deposits of $401.7 million. We remain committed to the communities we serve and our status as a Minority Depository Institution (“MDI”)/Community Development Financial Institution ("CDFI"), and we continue 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
		June 30,				March 31,				December 31,				September 30,				June 30,
Performance Ratios (Annualized):		2024				2024				2023				2023				2023
Return on average assets (1)			0.45	%			0.33	%			0.08	%			0.39	%			(0.01	%)
Return on average equity (1)			2.59	%			1.97	%			0.42	%			2.11	%			(0.07	%)
Net interest rate spread (1) (2)			1.72	%			1.82	%			1.74	%			1.68	%			1.75	%
Net interest margin (1) (3)			2.62	%			2.71	%			2.66	%			2.58	%			2.65	%
Non-interest expense to average assets (1)			2.28	%			2.35	%			2.66	%			2.58	%			2.65	%
Efficiency ratio (4)			80.09	%			82.56	%			96.83	%			78.11	%			96.15	%
Average interest-earning assets to average interest- bearing liabilities			129.73	%			129.69	%			133.50	%			134.49	%			137.67	%
Average equity to average assets			17.41	%			17.00	%			18.25	%			18.32	%			19.21	%

 

		At or for the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
Capital Ratios (Annualized):		2024				2024				2023				2023				2023
Total capital to risk-weighted assets (Bank only)			22.47	%			22.79	%			23.30	%			25.10	%			26.30	%
Tier 1 capital to risk-weighted assets (Bank only)			21.24	%			21.54	%			22.05	%			23.85	%			25.05	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)			21.24	%			21.54	%			22.05	%			23.85	%			25.05	%
Tier 1 capital to average assets (Bank only)			16.70	%			16.26	%			17.49	%			17.51	%			17.95	%

 

 

		At or for the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
Asset Quality Ratios (Annualized):		2024				2024				2023				2023				2023
Allowance for loan losses as a percentage of total loans			1.18	%			1.23	%			1.36	%			1.51	%			1.64	%
Allowance for loan losses as a percentage of nonperforming loans			130.28	%			140.90	%			152.99	%			169.49	%			167.06	%
Net (charge-offs) recoveries to average outstanding loans (1)			(0.10	%)			(0.25	%)			(0.24	%)			(0.34	%)			(0.41	%)
Non-performing loans as a percentage of total gross loans			0.89	%			0.87	%			0.89	%			0.89	%			0.98	%
Non-performing loans as a percentage of total assets			0.65	%			0.62	%			0.62	%			0.62	%			0.63	%
Total non-performing assets as a percentage of total assets			0.65	%			0.62	%			0.62	%			0.62	%			0.63	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)			0.82	%			0.79	%			0.81	%			0.82	%			0.83	%

 

 

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Summary of Results of Operations

 

Net income for the three months ended June 30, 2024 was $3.2 million compared to net income of $2.4 million for the three months ended March 31, 2024 and net loss of $0.1 million for the three months ended June 30, 2023.

 

The increase of net income for the three months ended June 30, 2024 compared to the three months ended March 31, 2024 was attributed mainly to a decrease in non-interest expense, an increase in non-interest income, a decrease in provision for income taxes and an increase in benefit for credit losses, partially offset by a decrease in net interest income.

 

The increase of net income for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was largely due to increases in net interest income, an increase to benefit for credit losses, a decrease in non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes.

 

Net income for the six months ended June 30, 2024 was $5.6 million compared to a net income of $0.2 million for the six months ended June 30, 2023. The increase in net income was attributable to increases in net interest income, benefit for credit losses and non-interest income and a decrease in non-interest expense, partially offset by an increase in provision for income taxes.

 

Net Interest Income and Net Margin

 

Net interest income for the three months ended June 30, 2024, decreased $0.9 million, or 4.88%, to $17.9 million compared to $18.8 million for the three months ended March 31, 2024 and increased $1.6 million, or 9.96%, compared to $16.3 million for the three months ended June 30, 2023. As discussed in our prior earnings release, the first quarter of 2024 included a $1.0 million recovery of interest from a previously non-performing loan, which increased net interest income in that period as compared to the current period.

 

Net interest income for the six months ended June 30, 2024, increased $5.2 million, or 16.49%, to $36.7 million, compared to $31.5 million for the six months ended June 30, 2023.

 

For the six months ended June 30, 2024, benefit for credit losses amounted to $0.6 million consisting of a benefit for credit losses on loans in the amount of $0.4 million and a release in the provision for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million benefit for credit losses on loans for the six months ended June 30, 2024 resulted from a benefit of $1.5 million related to micro loans offset by a provision of $1.1 million related to non-micro loans.

Net interest margin was 2.62% for the three months ended June 30, 2024 compared to 2.71% for the prior quarter, a decrease of 9bps and 2.65% for the same period last year, a decrease of 3bps.

 

Net interest margin was 2.67% for the six months ended June 30, 2024 compared to 2.71% for the six months ended June 30, 2023, a decrease of 4bps.

Non-interest Income

 

Non-interest income for the three months ended June 30, 2024, was $2.3 million, an increase of $0.6 million, or 32.28%, compared to $1.7 million the three months ended March 31, 2024 and an increase of $0.8 million, or 51.34%, compared to $1.5 million the three months ended June 30, 2023.

The $0.6 million increase in non-interest income for the three months ended June 30, 2024 compared to the three months ended March 31, 2024 was largely attributable to an increase of $0.5 million in other non-interest income related to the mark to market adjustments on a private equity fund and $0.1 million in late and prepayment charges.

The $0.8 million increase in non-interest income for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was largely attributable to increases of $0.5 million in other non-interest income related to the mark to market adjustments on a private equity fund, $0.2 million in income on sale of mortgage loans and $0.1 million in late and prepayment charges.

 

Non-interest income for the six months ended June 30, 2024, was $4.0 million, an increase of $0.7 million, or 19.75%, compared to $3.3 million for the six months ended June 30, 2023. The increase was largely attributable to increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans, partially offset by a decrease of $0.3 million in late and prepayment charges.

 

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Non-interest Expense

 

Non-interest expense for the three months ended June 30, 2024, was $16.1 million, a decrease of $0.8 million, or 4.74%, compared to $17.0 million for the three months ended March 31, 2024 and a decrease of $0.9 million, or 5.51%, compared to $17.1 million for the three months ended June 30, 2023.

 

The $0.8 million decrease from the three months ended March 31, 2024 was mainly attributable to decreases of $0.7 million in provision for contingencies, $0.4 million in professional fees, $0.1 million in compensation and benefits, $0.1 million in occupancy and equipment and $0.1 million in data processing, partially offset by an increase of $0.6 million in other operating expense.

 

The $0.9 million decrease from the three months ended June 30, 2023 was mainly attributable to decreases of $1.0 million in provision for contingencies, $0.5 million in professional fees, $0.3 million in office supplies, telephone and postage, $0.2 million in occupancy and equipment, $0.2 million in data processing expenses and $0.1 million in marketing and promotional expenses, partially offset by increases of $0.4 million in other operating expense, $0.3 million in direct loan expenses and $0.3 million in compensation and benefits and a decrease of $0.3 million in Grain recoveries.

 

Non-interest expense for the six months ended June 30, 2024, was $33.1 million, a decrease of $0.4 million, or 1.06%, compared to $33.5 million for the six months ended June 30, 2023. The $0.4 million decrease from the six months ended June 30, 2023 was mainly attributable to decreases of $1.8 million in provision for contingencies, $0.4 million in office supplies, telephone and postage, $0.3 million in professional fees, $0.3 million in data processing expenses, $0.2 million in marketing and promotional expenses and $0.1 million in occupancy and equipment, partially offset by a decrease of $1.1 million in Grain recoveries, and increases of $0.7 million in compensation and benefits and $0.6 million in direct loan expenses.

 

Balance Sheet Summary

 

Total assets increased $91.3 million, or 3.32%, to $2.84 billion as of June 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $126.3 million in net loans receivable, $27.8 million in mortgage loans held for sale and $4.6 million in Federal Home Loan Bank of New York stock, partially offset by decreases of $36.0 million in cash and cash equivalents, $19.6 million in held-to-maturity securities, $6.8 million in available-for-sale securities, $3.2 million in other assets, $1.2 million in deferred tax assets and $0.6 million in accrued interest receivable.

 

Total liabilities increased $85.0 million, or 3.76%, to $2.34 billion as of June 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $98.5 million in deposits, partially offset by decreases of $5.1 million in accrued interest payable, $4.0 million in borrowings, $3.5 million in other liabilities and $0.8 million in operating lease liabilities.

Total stockholders’ equity increased $6.3 million, or 1.27%, to $497.7 million as of June 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders’ equity was largely attributable to $5.5 million in net income available to common stockholders, $1.0 million impact to additional paid in capital as a result of share-based compensation and $0.6 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.

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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; 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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
ASSETS
Cash and due from banks:
Cash	$	23,128			$	29,972			$	28,930			$	26,046			$	31,162
Interest-bearing deposits		80,038				104,752				110,260				90,966				212,627
Total cash and cash equivalents		103,166				134,724				139,190				117,012				243,789
Available-for-sale securities, at fair value		113,125				116,044				119,902				116,753				123,720
Held-to-maturity securities, at amortized cost		442,113				452,955				461,748				471,065				481,952
Placement with banks		249				249				249				996				996
Mortgage loans held for sale, at fair value		37,764				7,860				9,980				14,103				10,070
Loans receivable, net		2,022,173				1,981,428				1,895,886				1,787,607				1,695,047
Accrued interest receivable		17,441				18,063				18,010				16,624				16,054
Premises and equipment, net		16,976				17,396				16,053				16,453				16,856
Right of use assets		30,349				31,021				31,272				32,110				32,435
Federal Home Loan Bank of New York stock (FHLBNY), at cost		23,972				23,892				19,377				18,870				19,195
Deferred tax assets		13,172				13,919				14,332				15,984				15,924
Other assets		21,507				21,151				24,723				16,286				15,919
Total assets	$	2,842,007			$	2,818,702			$	2,750,722			$	2,623,863			$	2,671,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,606,097			$	1,585,784			$	1,507,620			$	1,401,132			$	1,442,013
Operating lease liabilities		31,861				32,486				32,684				33,459				33,716
Accrued interest payable		6,820				4,218				11,965				8,385				4,704
Advance payments by borrowers for taxes and insurance		10,838				13,245				10,778				13,743				12,402
Borrowings		680,421				680,421				684,421				675,100				682,100
Other liabilities		8,313				8,866				11,859				6,986				6,540
Total liabilities		2,344,350				2,325,020				2,259,327				2,138,805				2,181,475
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		(9,519	)			(9,702	)			(9,747	)			(10,975	)			(5,202	)
Additional paid-in-capital		207,934				207,584				207,106				207,626				207,287
Retained earnings		102,951				99,834				97,420				96,902				94,312
Accumulated other comprehensive loss		(16,557	)			(16,590	)			(15,649	)			(20,468	)			(17,597	)
Unearned compensation ─ ESOP		(12,401	)			(12,693	)			(12,984	)			(13,276	)			(13,567	)
Total stockholders' equity		497,657				493,682				491,395				485,058				490,482
Total liabilities and stockholders' equity	$	2,842,007			$	2,818,702			$	2,750,722			$	2,623,863			$	2,671,957

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Interest and dividend income:
Interest on loans receivable	$	31,281			$	30,664			$	27,814			$	25,276			$	23,015
Interest on deposits due from banks		1,542				2,911				990				1,969				1,817
Interest and dividend on securities and FHLBNY stock		5,969				6,091				6,146				6,261				6,223
Total interest and dividend income		38,792				39,666				34,950				33,506				31,055
Interest expense:
Interest on certificates of deposit		6,358				6,380				5,103				4,362				3,881
Interest on other deposits		7,389				6,540				5,706				5,639				4,413
Interest on borrowings		7,141				7,923				6,944				6,963				6,479
Total interest expense		20,888				20,843				17,753				16,964				14,773
Net interest income		17,904				18,823				17,197				16,542				16,282
(Benefit) provision for credit losses		(374	)			(180	)			(375	)			535				987
Net interest income after (benefit) provision for credit losses		18,278				19,003				17,572				16,007				15,295
Non-interest income:
Service charges and fees		492				473				498				516				481
Brokerage commissions		9				8				13				17				35
Late and prepayment charges		426				359				365				899				372
Income on sale of mortgage loans		274				302				244				173				82
Grant income		—				—				438				3,718				—
Other		1,057				565				(273	)			304				522
Total non-interest income		2,258				1,707				1,285				5,627				1,492
Non-interest expense:
Compensation and benefits		7,724				7,844				8,262				7,566				7,425
Occupancy and equipment		3,564				3,667				3,686				3,588				3,724
Data processing expenses		1,013				1,127				1,101				1,582				1,208
Direct loan expenses		633				732				497				369				345
(Benefit) provision for contingencies		(493	)			164				418				391				517
Insurance and surety bond premiums		263				253				250				255				248
Office supplies, telephone and postage		233				249				294				301				489
Professional fees		1,369				1,723				2,040				1,693				1,904
Grain recoveries		(65	)			(53	)			(152	)			(69	)			(346	)
Marketing and promotional expenses		145				100				146				248				303
Directors fees and regulatory assessment		176				179				173				169				160
Other operating expenses		1,585				965				1,182				1,223				1,112
Total non-interest expense		16,147				16,950				17,897				17,316				17,089
Income (loss) before income taxes		4,389				3,760				960				4,318				(302	)
Provision (benefit) for income taxes		1,197				1,346				442				1,728				(215	)
Net income (loss)	$	3,192			$	2,414			$	518			$	2,590			$	(87	)
Dividends on preferred shares		75				—				—				—				—
Net income (loss) available to common stockholders	$	3,117			$	2,414			$	518			$	2,590			$	(87	)
Earnings per common share:
Basic	$	0.14			$	0.11			$	0.02			$	0.12			$	(0.00	)
Diluted	$	0.14			$	0.11			$	0.02			$	0.12			$	(0.00	)
Weighted average common shares outstanding:
Basic		22,409,803				22,353,492				22,224,945				22,272,076				23,208,168
Diluted		22,419,309				22,366,728				22,406,102				22,349,217				23,208,168

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

		For the Six Months Ended June 30,
		2024				2023				Variance $				Variance %
Interest and dividend income:
Interest on loans receivable		$	61,945			$	42,715			$	19,230				45.02	%
Interest on deposits due from banks			4,453				2,014				2,439				121.10	%
Interest and dividend on securities and FHLBNY stock			12,060				12,682				(622	)			(4.90	%)
Total interest and dividend income			78,458				57,411				21,047				36.66	%
Interest expense:
Interest on certificates of deposit			12,738				7,106				5,632				79.26	%
Interest on other deposits			13,929				7,225				6,704				92.79	%
Interest on borrowings			15,064				11,553				3,511				30.39	%
Total interest expense			41,731				25,884				15,847				61.22	%
Net interest income			36,727				31,527				5,200				16.49	%
(Benefit) provision for credit losses			(554	)			813				(1,367	)			(168.14	%)
Net interest income after benefit for credit losses			37,281				30,714				6,567				21.38	%
Non-interest income:
Service charges and fees			965				972				(7	)			(0.72	%)
Brokerage commissions			17				50				(33	)			(66.00	%)
Late and prepayment charges			785				1,101				(316	)			(28.70	%)
Income on sale of mortgage loans			576				181				395				218.23	%
Other			1,622				1,007				615				61.07	%
Total non-interest income			3,965				3,311				654				19.75	%
Non-interest expense:
Compensation and benefits			15,568				14,871				697				4.69	%
Occupancy and equipment			7,231				7,294				(63	)			(0.86	%)
Data processing expenses			2,140				2,400				(260	)			(10.83	%)
Direct loan expenses			1,365				757				608				80.32	%
(Benefit) provision for contingencies			(329	)			1,502				(1,831	)			(121.90	%)
Insurance and surety bond premiums			516				513				3				0.58	%
Office supplies, telephone and postage			482				888				(406	)			(45.72	%)
Professional fees			3,092				3,359				(267	)			(7.95	%)
Grain recoveries			(118	)			(1,260	)			1,142				(90.63	%)
Marketing and promotional expenses			245				431				(186	)			(43.16	%)
Directors fees and regulatory assessment			355				315				40				12.70	%
Other operating expenses			2,550				2,380				170				7.14	%
Total non-interest expense			33,097				33,450				(353	)			(1.06	%)
Income before income taxes			8,149				575				7,574				1,317.22	%
Provision for income taxes			2,543				331				2,212				668.28	%
Net income		$	5,606			$	244			$	5,362				2,197.54	%
Dividends on preferred shares			75				—				75
Net income available to common stockholders		$	5,531			$	244			$	5,287				2,166.80	%
Earnings per common share:
Basic		$	0.25			$	0.01			$	0.24				2,254.79	%
Diluted		$	0.25			$	0.01			$	0.24				2,256.11	%
Weighted average common shares outstanding:
Basic			22,381,647				23,250,357				(868,710	)			(3.74	%)
Diluted			22,393,018				23,275,201				(882,183	)			(3.79	%)

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

	At or for the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Performance Ratios:
Return on average assets (1)		0.45	%			0.33	%			0.08	%			0.39	%			(0.01	%)
Return on average equity (1)		2.59	%			1.97	%			0.42	%			2.11	%			(0.07	%)
Net interest rate spread (1) (2)		1.72	%			1.82	%			1.74	%			1.68	%			1.75	%
Net interest margin (1) (3)		2.62	%			2.71	%			2.66	%			2.58	%			2.65	%
Non-interest expense to average assets (1)		2.28	%			2.35	%			2.66	%			2.58	%			2.65	%
Efficiency ratio (4)		80.09	%			82.56	%			96.83	%			78.11	%			96.15	%
Average interest-earning assets to average interest- bearing liabilities		129.73	%			129.69	%			133.50	%			134.49	%			137.67	%
Average equity to average assets		17.41	%			17.00	%			18.25	%			18.32	%			19.21	%
Capital Ratios:
Total capital to risk-weighted assets (Bank only)		22.47	%			22.79	%			23.30	%			25.10	%			26.30	%
Tier 1 capital to risk-weighted assets (Bank only)		21.24	%			21.54	%			22.05	%			23.85	%			25.05	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		21.24	%			21.54	%			22.05	%			23.85	%			25.05	%
Tier 1 capital to average assets (Bank only)		16.70	%			16.26	%			17.49	%			17.51	%			17.95	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.18	%			1.23	%			1.36	%			1.51	%			1.64	%
Allowance for credit losses on loans as a percentage of nonperforming loans		130.28	%			140.90	%			152.99	%			169.49	%			167.06	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.10	%)			(0.25	%)			(0.24	%)			(0.34	%)			(0.41	%)
Non-performing loans as a percentage of total gross loans		0.89	%			0.87	%			0.89	%			0.89	%			0.98	%
Non-performing loans as a percentage of total assets		0.65	%			0.62	%			0.62	%			0.62	%			0.63	%
Total non-performing assets as a percentage of total assets		0.65	%			0.62	%			0.62	%			0.62	%			0.63	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.82	%			0.79	%			0.81	%			0.82	%			0.83	%
Other:
Number of offices		18				18				18				19				19
Number of full-time equivalent employees		227				233				237				243				244

 

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Securities Portfolio

 

		June 30, 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		$	2,992			$	—			$	(196	)		$	2,796			$	2,990			$	—			$	(206	)		$	2,784
Corporate Bonds			25,773				—				(1,859	)			23,914				25,790				—				(2,122	)			23,668
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			36,886				—				(6,280	)			30,606				39,375				—				(6,227	)			33,148
FHLMC Certificates			9,611				—				(1,523	)			8,088				10,163				—				(1,482	)			8,681
FNMA Certificates			58,797				—				(11,174	)			47,623				61,359				—				(9,842	)			51,517
GNMA Certificates			99				—				(1	)			98				104				—				—				104
Total available-for-sale securities		$	134,158			$	—			$	(21,033	)		$	113,125			$	139,781			$	—			$	(19,879	)		$	119,902
Held-to-Maturity Securities:
U.S. Agency Bonds		$	25,000			$	—			$	(253	)		$	24,747			$	25,000			$	—			$	(181	)		$	24,819
Corporate Bonds			82,500				—				(2,230	)			80,270				82,500				—				(2,691	)			79,809
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			200,684				—				(8,533	)			192,151				212,093				104				(5,170	)			207,027
FHLMC Certificates			3,664				—				(274	)			3,390				3,897				—				(244	)			3,653
FNMA Certificates			112,925				—				(5,565	)			107,360				118,944				—				(4,088	)			114,856
SBA Certificates			17,558				169				—				17,727				19,712				166				—				19,878
Allowance for Credit Losses			(218	)			—				—				—				(398	)			—				—				—
Total held-to-maturity securities		$	442,113			$	169			$	(16,855	)		$	425,645			$	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 Six				For the
		Months Ended				Year Ended
		June 30, 2024				December 31, 2023
Allowance for credit losses on securities at beginning of the period		$	398			$	—
CECL adoption			—				662
Benefit for credit losses			(180	)			(264	)
Allowance for credit losses on securities at end of the period		$	218			$	398

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

 

		As of
		June 30,								March 31,								December 31,								September 30,								June 30,
		2024								2024								2023								2023								2023
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned		$	337,292				16.49	%		$	339,331				16.92	%		$	343,689				17.89	%		$	347,082				19.13	%		$	351,754				20.43	%
Owner-Occupied			147,485				7.21	%			150,842				7.52	%			152,311				7.93	%			151,866				8.37	%			154,116				8.94	%
Multifamily residential			545,323				26.66	%			545,825				27.22	%			550,559				28.65	%			553,694				30.52	%			550,033				31.94	%
Nonresidential properties			337,583				16.51	%			327,350				16.32	%			342,343				17.81	%			321,472				17.71	%			317,416				18.43	%
Construction and land			641,879				31.39	%			608,665				30.35	%			503,925				26.22	%			411,383				22.67	%			315,843				18.34	%
Total mortgage loans			2,009,562				98.26	%			1,972,013				98.33	%			1,892,827				98.50	%			1,785,497				98.40	%			1,689,162				98.08	%
Non-mortgage loans:
Business loans			30,222				1.48	%			26,664				1.33	%			19,779				1.03	%			18,416				1.02	%			21,041				1.22	%
Consumer loans (1)			5,305				0.26	%			6,741				0.34	%			8,966				0.47	%			10,416				0.58	%			11,958				0.70	%
Total non-mortgage loans			35,527				1.74	%			33,405				1.67	%			28,745				1.50	%			28,832				1.60	%			32,999				1.92	%
Total loans, gross			2,045,089				100.00	%			2,005,418				100.00	%			1,921,572				100.00	%			1,814,329				100.00	%			1,722,161				100.00	%
Net deferred loan origination costs			1,145								674								468								692								1,059
Allowance for credit losses on loans			(24,061	)							(24,664	)							(26,154	)							(27,414	)							(28,173	)
Loans, net		$	2,022,173							$	1,981,428							$	1,895,886							$	1,787,607							$	1,695,047

 

 

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Grain Loan Exposure

 

Grain Technologies, Inc. ("Grain") Total Exposure as of June 30, 2024
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-June 30, 2024)		$	23,986
Write-downs, net of recoveries (inception-to-date as of June 30, 2024)			(15,341	)
Cash receipts from Grain (inception-to-June 30, 2024)			(6,819	)
Grant/reserve			(1,826	)
Net receivable as of June 30, 2024		$	—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of June 30, 2024		$	4,277
Allowance for credit losses on loans as of June 30, 2024 (1)			(3,623	)
Microloans, net of allowance for credit losses on loans as of June 30, 2024		$	654
Investments
Investment in Grain		$	1,000
Investment in Grain write-off in Q3 2022			(1,000	)
Investment in Grain as of June 30, 2024			—
Total exposure related to Grain as of June 30, 2024 (2)		$	654

 

(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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	24,664			$	26,154			$	27,414			$	28,173			$	28,975
(Benefit) provision for credit losses on loans		(120	)			(255	)			(126	)			750				934
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		(747	)			(1,302	)			(1,135	)			(1,592	)			(1,931	)
Total charge-offs		(747	)			(1,354	)			(1,198	)			(1,592	)			(1,931	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—				—				—				—				—
Owner occupied		—				—				—				—				—
Multifamily residences		—				—				—				—				—
Nonresidential properties		—				—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		7				1				—				3				—
Consumer		257				118				64				80				195
Total recoveries		264				119				64				83				195
Net (charge-offs) recoveries		(483	)			(1,235	)			(1,134	)			(1,509	)			(1,736	)
Allowance for credit losses on loans at end of the period	$	24,061			$	24,664			$	26,154			$	27,414			$	28,173

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Deposits

 

		As of
		June 30,								March 31,								December 31,								September 30,								June 30,
		2024								2024								2023								2023								2023
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Demand (1)		$	178,125				11.09	%		$	191,541				12.07	%		$	185,151				12.28	%		$	214,326				15.30	%		$	225,106				15.61	%
Interest-bearing deposits:
NOW/IOLA accounts (1)			81,178				5.05	%			73,202				4.62	%			77,909				5.17	%			74,055				5.29	%			64,193				4.45	%
Money market accounts (2)			502,255				31.27	%			482,344				30.42	%			432,735				28.70	%			370,500				26.44	%			387,970				26.91	%
Reciprocal deposits			109,945				6.85	%			97,718				6.16	%			96,860				6.42	%			82,670				5.90	%			100,919				7.00	%
Savings accounts			109,694				6.83	%			112,713				7.11	%			114,139				7.57	%			117,870				8.41	%			119,635				8.30	%
Total NOW, money market, reciprocal and savings accounts			803,072				50.00	%			765,977				48.31	%			721,643				47.86	%			645,095				46.04	%			672,717				46.66	%
Certificates of deposit of $250K or more (2)			156,224				9.73	%			146,296				9.23	%			132,153				8.77	%			122,353				8.73	%			120,043				8.32	%
Brokered certificates of deposit (3)			94,614				5.89	%			94,689				5.97	%			98,729				6.55	%			98,729				7.05	%			98,729				6.85	%
Listing service deposits (3)			9,361				0.58	%			12,688				0.80	%			14,433				0.96	%			15,180				1.08	%			20,258				1.40	%
All other certificates of deposit less than $250K (2)			364,701				22.71	%			374,593				23.62	%			355,511				23.58	%			305,449				21.80	%			305,160				21.16	%
Total certificates of deposit			624,900				38.91	%			628,266				39.62	%			600,826				39.86	%			541,711				38.66	%			544,190				37.73	%
Total interest-bearing deposits			1,427,972				88.91	%			1,394,243				87.93	%			1,322,469				87.72	%			1,186,806				84.70	%			1,216,907				84.39	%
Total deposits		$	1,606,097				100.00	%		$	1,585,784				100.00	%		$	1,507,620				100.00	%		$	1,401,132				100.00	%		$	1,442,013				100.00	%

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Borrowings

 

	June 30,												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				4.69	%		$	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				4.20	%		$	684,421			$	684,421				4.10	%

 

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Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

 

	As of Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	436			$	399			$	793			$	396			$	296
Owner occupied		1,423				1,426				1,682				1,685				2,363
Multifamily residential		5,754				4,098				2,979				1,444				1,435
Nonresidential properties		828				441				—				—				—
Construction and land		8,907				10,277				10,759				11,721				11,721
Non-mortgage loans:
Business		396				146				165				209				—
Consumer		—				—				—				—				—
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) (1)	$	17,744			$	16,787			$	16,378			$	15,455			$	15,815
Non-accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	277			$	270			$	270			$	270			$	209
Owner occupied		448				447				447				449				840
Multifamily residential		—				—				—				—				—
Nonresidential properties		—				—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total non-accruing modifications to borrowers experiencing financial difficulty (1)		725				717				717				719				1,049
Total non-accrual loans (2)	$	18,469			$	17,504			$	17,095			$	16,174			$	16,864
Accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	1,830			$	1,850			$	2,112			$	2,131			$	2,161
Owner occupied		2,171				2,288				2,313				2,335				2,353
Multifamily residential		—				—				—				—				—
Nonresidential properties		707				748				757				765				783
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total accruing modifications to borrowers experiencing financial difficulty (1)	$	4,708			$	4,886			$	5,182			$	5,231			$	5,297
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty (1)	$	23,177			$	22,390			$	22,277			$	21,405			$	22,161
Total non-performing loans to total gross loans		0.89	%			0.87	%			0.89	%			0.89	%			0.98	%
Total non-performing assets to total assets		0.65	%			0.62	%			0.62	%			0.62	%			0.63	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (1)		0.82	%			0.79	%			0.81	%			0.82	%			0.83	%

 

 

(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 June 30,
	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)	$	2,040,149			$	31,281			6.17%		$	1,683,117			$	23,015			5.48%
Securities (3)		562,560				5,486			3.92%			614,598				5,731			3.74%
Other (4) (5)		141,368				2,025			5.76%			164,509				2,309			5.63%
Total interest-earning assets		2,744,077				38,792			5.69%			2,462,224				31,055			5.06%
Non-interest-earning assets (5)		105,774										121,169
Total assets	$	2,849,851									$	2,583,393
Interest-bearing liabilities:
NOW/IOLA (6) (7)	$	72,932			$	151			0.83%		$	66,314			$	305			1.84%
Money market (7) (8)		599,209				7,209			4.84%			408,329				4,077			4.00%
Savings		111,859				27			0.10%			122,802				29			0.09%
Certificates of deposit (8)		635,850				6,358			4.02%			524,445				3,881			2.97%
Total deposits		1,419,850				13,745			3.89%			1,121,890				8,292			2.96%
Advance payments by borrowers		14,948				2			0.05%			16,967				2			0.05%
Borrowings		680,421				7,141			4.22%			649,652				6,479			4.00%
Total interest-bearing liabilities		2,115,219				20,888			3.97%			1,788,509				14,773			3.31%
Non-interest-bearing liabilities:
Non-interest-bearing demand (6)		188,920				—						255,673				—
Other non-interest-bearing liabilities		49,437				—						42,906				—
Total non-interest-bearing liabilities		238,357				—						298,579				—
Total liabilities		2,353,576				20,888						2,087,088				14,773
Total equity		496,275										496,305
Total liabilities and total equity	$	2,849,851							3.97%		$	2,583,393							3.31%
Net interest income					$	17,904									$	16,282
Net interest rate spread (9)									1.72%										1.75%
Net interest-earning assets (10)	$	628,858									$	673,715
Net interest margin (11)									2.62%										2.65%
Average interest-earning assets to interest-bearing liabilities									129.73%										137.67%

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Average Balance Sheets

 

 

	For the Six Months Ended June 30,
	2024												2023
	Average												Average
	Outstanding								Average				Outstanding								Average
	Balance				Interest				Yield/Rate (1)				Balance				Interest				Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans (2)	$	2,009,706			$	61,945				6.20	%		$	1,627,939			$	42,715				5.29	%
Securities (3)		569,397				11,105				3.92	%			622,822				11,806				3.82	%
Other (4) (5)		189,899				5,408				5.73	%			106,812				2,890				5.46	%
Total interest-earning assets		2,769,002				78,458				5.70	%			2,357,573				57,411				4.91	%
Non-interest-earning assets (5)		106,172												122,083
Total assets	$	2,875,174											$	2,479,656
Interest-bearing liabilities:
NOW/IOLA (6) (7)	$	77,891			$	369				0.95	%		$	69,024			$	993				2.90	%
Money market (7) (8)		571,886				13,501				4.75	%			361,557				6,168				3.44	%
Savings		112,680				55				0.10	%			125,823				59				0.09	%
Certificates of deposit (8)		632,689				12,738				4.05	%			520,420				7,106				2.75	%
Total deposits		1,395,146				26,663				3.84	%			1,076,824				14,326				2.68	%
Advance payments by borrowers		13,917				4				0.06	%			14,954				5				0.07	%
Borrowings		725,745				15,064				4.17	%			587,026				11,553				3.97	%
Total interest-bearing liabilities		2,134,808				41,731				3.93	%			1,678,804				25,884				3.11	%
Non-interest-bearing liabilities:
Non-interest-bearing demand (6)		193,891				—								261,988				—
Other non-interest-bearing liabilities		51,749				—								42,451				—
Total non-interest-bearing liabilities		245,640				—								304,439				—
Total liabilities		2,380,448				41,731								1,983,243				25,884
Total equity		494,726												496,413
Total liabilities and total equity	$	2,875,174								3.93	%		$	2,479,656								3.11	%
Net interest income					$	36,727											$	31,527
Net interest rate spread (9)										1.77	%											1.80	%
Net interest-earning assets (10)	$	634,194											$	678,769
Net interest margin (11)										2.67	%											2.71	%
Average interest-earning assets to
interest-bearing liabilities										129.71	%											140.43	%

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Other Data

 

	As of
	June 30,				March 31,				December 31,				September 30,				June 30,
	2024				2024				2023				2023				2023
Other Data
Common shares issued		24,886,711				24,886,711				24,886,711				24,886,711				24,886,711
Less treasury shares		1,074,979				1,096,214				1,101,191				1,233,111				617,924
Common shares outstanding at end of period		23,811,732				23,790,497				23,785,520				23,653,600				24,268,787
Book value per common share	$	11.45			$	11.29			$	11.20			$	10.99			$	10.94
Tangible book value per common share	$	11.45			$	11.29			$	11.20			$	10.99			$	10.94

 

 

 

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