false000187407100018740712024-10-302024-10-30

 

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): October 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 October 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 third quarter ended September 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 October 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:	October 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 Third Quarter 2024 Results

 

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

Third Quarter 2024 Highlights (Compared to Prior Periods):

 

Nine Months 2024 Highlights (Compared to 2023):

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “We continue to make progress quarter over quarter both in terms of our economic performance as well as serving our communities. Book value per share continues to grow and is now $11.74 (up $0.75 vs last year) and total equity per common share stands at $21.18. Our levels of liquidity and capital remain strong. Our net interest income grew quarter over quarter, and we’re well positioned for a decline in interest rates. We reduced our borrowings during the

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quarter, paying off the entirety of our Bank Term Funding Program Loan, while lowering the overall cost and extending our maturities. 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 “During the quarter, the US Treasury Department issued proposed guidelines under which it may sell their ECIP investment back to the issuers or related non-profit affiliates. We believe the adoption of the proposed regulations would be greatly beneficial to Ponce Financial Group, although there can be no assurance that the proposed regulations will be adopted, or that that will be adopted in their current form. Most of our loan growth of $157.6 million this quarter is explained by our desire to ensure qualification under the proposed regulations, if adopted. Deposits also grew significantly during the quarter including $35.0 million from the Banking Development District program of New York.”

 

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

 

		At or for the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
Performance Ratios (Annualized):		2024				2024				2024				2023				2023
Return on average assets (1)			0.33	%			0.45	%			0.33	%			0.08	%			0.39	%
Return on average equity (1)			1.93	%			2.59	%			1.97	%			0.42	%			2.11	%
Net interest rate spread (1) (2)			1.77	%			1.72	%			1.82	%			1.74	%			1.68	%
Net interest margin (1) (3)			2.65	%			2.62	%			2.71	%			2.66	%			2.58	%
Non-interest expense to average assets (1)			2.19	%			2.28	%			2.35	%			2.66	%			2.58	%
Efficiency ratio (4)			80.87	%			80.09	%			82.56	%			96.83	%			78.11	%
Average interest-earning assets to average interest- bearing liabilities			128.35	%			129.73	%			129.69	%			133.50	%			134.49	%
Average equity to average assets			16.97	%			17.41	%			17.00	%			18.25	%			18.32	%

 

		At or for the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
Capital Ratios (Annualized):		2024				2024				2024				2023				2023
Total capital to risk-weighted assets (Bank only)			21.61	%			22.47	%			22.79	%			23.30	%			25.10	%
Tier 1 capital to risk-weighted assets (Bank only)			20.45	%			21.24	%			21.54	%			22.05	%			23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)			20.45	%			21.24	%			21.54	%			22.05	%			23.85	%
Tier 1 capital to average assets (Bank only)			16.19	%			16.70	%			16.26	%			17.49	%			17.51	%

 

 

		At or for the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
Asset Quality Ratios (Annualized):		2024				2024				2024				2023				2023
Allowance for loan losses as a percentage of total loans			1.09	%			1.18	%			1.23	%			1.36	%			1.51	%
Allowance for loan losses as a percentage of nonperforming loans			139.52	%			130.28	%			140.90	%			152.99	%			169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)			(0.17	%)			(0.10	%)			(0.25	%)			(0.24	%)			(0.34	%)
Non-performing loans as a percentage of total gross loans			0.78	%			0.89	%			0.87	%			0.89	%			0.89	%
Non-performing loans as a percentage of total assets			0.57	%			0.65	%			0.62	%			0.62	%			0.62	%
Total non-performing assets as a percentage of total assets			0.57	%			0.65	%			0.62	%			0.62	%			0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)			0.73	%			0.82	%			0.79	%			0.81	%			0.82	%

 

 

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Summary of Results of Operations

 

Net income for the three months ended September 30, 2024 was $2.4 million compared to net income of $3.2 million for the three months ended June 30, 2024 and net income of $2.6 million for the three months ended September 30, 2023.

 

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was attributed mainly to an increase of $1.2 million in provision for credit losses, a decrease of $1.1 million in non-interest income, an increase of $0.2 million in non-interest expense, partially offset by an increase of $1.1 million in net interest income and a decrease of $0.6 million in provision for income taxes .

 

The decrease of net income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely due to a decrease of $4.5 million in non-interest income as a result of a $3.7 million grant reported in the third quarter of 2023 and an increase of $0.3 million in provision for credit losses, partially offset by an increase of $2.5 million in net interest income and decreases of $1.1 million in provision for income taxes and $ 1.0 million in non-interest expense.

 

Net income for the nine months ended September 30, 2024 was $8.0 million compared to a net income of $2.8 million for the nine months ended September 30, 2023. The increase of $5.2 million in net income was attributable to an increase of $7.7 million in net interest income, a decrease of $1.3 million in non-interest expense and a decrease of $1.1 million in provision for credit losses, partially offset by a decrease of $3.8 million in non-interest income and an increase of $1.1 million in provision for income taxes.

 

Net Interest Income and Net Margin

 

Net interest income for the three months ended September 30, 2024, increased $1.1 million, or 6.25%, to $19.0 million compared to $17.9 million for the three months ended June 30, 2024 and increased $2.5 million, or 15.00%, compared to $16.5 million for the three months ended September 30, 2023.

 

Net interest income for the nine months ended September 30, 2024, increased $7.7 million, or 15.98%, to $55.8 million, compared to $48.1 million for the nine months ended September 30, 2023. The increase of $7.7 million of net interest income was attributable to an increase of $28.8 million in total interest and dividend income, offset by an increase of $21.1 million in total interest expense.

 

For the nine months ended September 30, 2024, provision for credit losses amounted to $0.2 million consisting of a provision for credit losses on loans in the amount of $0.4 million and a benefit for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million provision for credit losses on loans for the nine months ended September 30, 2024 resulted from a benefit of $2.1 million related to microloans offset by a provision of $2.5 million related to non-microloans.

Net interest margin was 2.65% for the three months ended September 30, 2024 compared to 2.62% for the prior quarter, an increase of 3bps and 2.58% for the same period last year, an increase of 7bps.

 

Net interest margin was 2.66% for the nine months ended September 30, 2024 compared to 2.65% for the nine months ended September 30, 2023, an increase of 1bp.

Non-interest Income

 

Non-interest income for the three months ended September 30, 2024, was $1.2 million, a decrease of $1.1 million, or 49.03%, compared to $2.3 million the three months ended June 30, 2024 and a decrease of $4.5 million, or 79.55%, compared to $5.6 million the three months ended September 30, 2023.

The $1.1 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was largely attributable to decreases of $0.7 million in other non-interest income related to the mark to market adjustments on a private equity fund investment and $0.3 million in late and prepayment charges.

The $4.5 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely attributable to $3.7 million in grants received in the third quarter of 2023 and a decrease of $0.8 million in late and prepayment charges.

 

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Non-interest income for the nine months ended September 30, 2024, was $5.1 million, a decrease of $3.8 million, or 42.76%, compared to $8.9 million for the nine months ended September 30, 2023. The decrease was largely attributable to $3.7 million related to grants received in the third quarter of 2023 and a decrease of $1.1 million in late and prepayment charges, partially, offset by increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans.

 

Non-interest Expense

 

Non-interest expense for the three months ended September 30, 2024, was $16.3 million, an increase of $0.2 million, or 1.03%, compared to $16.1 million for the three months ended June 30, 2024 and a decrease of $1.0 million, or 5.79%, compared to $17.3 million for the three months ended September 30, 2023.

 

The $0.2 million increase from the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was mainly attributable to a decrease of $0.2 million in benefit for contingencies and an increase of $0.2 million in occupancy and equipment, partially offset by a decrease of $0.3 million in other operating expense.

 

The $1.0 million decrease from the three months ended September 30, 2023 compared to the three months ended September 30, 2023 was mainly attributable to decreases of $0.6 million in provision for contingencies, $0.5 million in data processing expenses and $0.3 million in professional fees, partially offset by increases of $0.2 million in direct loan expenses, $0.2 million in occupancy and equipment and $0.1 million in compensation and benefits.

 

Non-interest expense for the nine months ended September 30, 2024, was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023. The $1.4 million decrease from the nine months ended September 30, 2023 was mainly attributable to decreases of $2.5 million in provision for contingencies, $0.7 million in data processing expenses, $0.6 million in professional fees and $0.5 million in office supplies, telephone and postage, partially offset by a decrease of $1.2 million in microloans recoveries and increases of $0.8 million in compensation and benefits and $0.8 million in direct loan expenses.

 

Balance Sheet Summary

 

Total assets increased $265.2 million, or 9.64%, to $3.02 billion as of September 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $284.4 million in net loans receivable, $26.7 million in other assets, $16.6 million in cash and cash equivalents, $9.1 million in Federal Home Loan Bank of New York stock and $0.8 million in net premises and equipment, partially offset by decreases of $58.0 million in held-to-maturity securities, $8.9 million in available-for-sale securities, $2.5 million in deferred tax assets, $1.5 million in right of use assets, $1.1 million in accrued interest receivable and $0.4 million in mortgage loans held for sale.

 

Total liabilities increased $252.1 million, or 11.16%, to $2.51 billion as of September 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $362.7 million in deposits, $3.0 million in advance payments by borrowers for taxes and insurance and $0.8 million in other liabilities, partially offset by decreases of $104.0 million in borrowings, $9.0 million in accrued interest payable and $1.4 million in operating lease liabilities.

Total stockholders’ equity increased $13.2 million, or 2.69%, to $504.6 million as of September 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders’ equity was largely attributable to $8.0 million in net income, $3.0 million in other comprehensive income, $1.6 million impact to additional paid in capital as a result of share-based compensation and $1.0 million from release of ESOP shares, offset by $0.4 million in preferred stock dividend for shares issued pursuant to the ECIP.

 

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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				2023				2023
ASSETS
Cash and due from banks:
Cash	$	32,061			$	23,128			$	29,972			$	28,930			$	26,046
Interest-bearing deposits		123,751				80,038				104,752				110,260				90,966
Total cash and cash equivalents		155,812				103,166				134,724				139,190				117,012
Available-for-sale securities, at fair value		111,005				113,125				116,044				119,902				116,753
Held-to-maturity securities, at amortized cost		403,736				442,113				452,955				461,748				471,065
Placement with banks		249				249				249				249				996
Mortgage loans held for sale, at fair value		9,566				37,764				7,860				9,980				14,103
Loans receivable, net		2,180,331				2,022,173				1,981,428				1,895,886				1,787,607
Accrued interest receivable		16,890				17,441				18,063				18,010				16,624
Premises and equipment, net		16,843				16,976				17,396				16,053				16,453
Right of use assets		29,785				30,349				31,021				31,272				32,110
Federal Home Loan Bank of New York stock (FHLBNY), at cost		28,515				23,972				23,892				19,377				18,870
Deferred tax assets		11,845				13,172				13,919				14,332				15,984
Other assets		51,392				21,507				21,151				24,723				16,286
Total assets	$	3,015,969			$	2,842,007			$	2,818,702			$	2,750,722			$	2,623,863
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,870,323			$	1,606,097			$	1,585,784			$	1,507,620			$	1,401,132
Operating lease liabilities		31,343				31,861				32,486				32,684				33,459
Accrued interest payable		2,918				6,820				4,218				11,965				8,385
Advance payments by borrowers for taxes and insurance		13,733				10,838				13,245				10,778				13,743
Borrowings		580,421				680,421				680,421				684,421				675,100
Other liabilities		12,642				8,313				8,866				11,859				6,986
Total liabilities		2,511,380				2,344,350				2,325,020				2,259,327				2,138,805
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		(9,445	)			(9,519	)			(9,702	)			(9,747	)			(10,975	)
Additional paid-in-capital		208,478				207,934				207,584				207,106				207,626
Retained earnings		105,103				102,951				99,834				97,420				96,902
Accumulated other comprehensive loss		(12,686	)			(16,557	)			(16,590	)			(15,649	)			(20,468	)
Unearned compensation ─ ESOP		(12,110	)			(12,401	)			(12,693	)			(12,984	)			(13,276	)
Total stockholders' equity		504,589				497,657				493,682				491,395				485,058
Total liabilities and stockholders' equity	$	3,015,969			$	2,842,007			$	2,818,702			$	2,750,722			$	2,623,863

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				2023				2023
Interest and dividend income:
Interest on loans receivable	$	32,945			$	31,281			$	30,664			$	27,814			$	25,276
Interest on deposits due from banks		2,430				1,542				2,911				990				1,969
Interest and dividend on securities and FHLBNY stock		5,918				5,969				6,091				6,146				6,261
Total interest and dividend income		41,293				38,792				39,666				34,950				33,506
Interest expense:
Interest on certificates of deposit		6,926				6,358				6,380				5,103				4,362
Interest on other deposits		8,519				7,389				6,540				5,706				5,639
Interest on borrowings		6,825				7,141				7,923				6,944				6,963
Total interest expense		22,270				20,888				20,843				17,753				16,964
Net interest income		19,023				17,904				18,823				17,197				16,542
Provision (benefit) for credit losses		789				(374	)			(180	)			(375	)			535
Net interest income after provision (benefit) for credit losses		18,234				18,278				19,003				17,572				16,007
Non-interest income:
Service charges and fees		508				492				473				498				516
Brokerage commissions		—				9				8				13				17
Late and prepayment charges		77				426				359				365				899
Income on sale of mortgage loans		218				274				302				244				173
Grant income		—				—				—				438				3,718
Other		348				1,057				565				(273	)			304
Total non-interest income		1,151				2,258				1,707				1,285				5,627
Non-interest expense:
Compensation and benefits		7,674				7,724				7,844				8,262				7,566
Occupancy and equipment		3,786				3,564				3,667				3,686				3,588
Data processing expenses		1,099				1,013				1,127				1,101				1,582
Direct loan expenses		573				633				732				497				369
(Benefit) provision for contingencies		(252	)			(493	)			164				418				391
Insurance and surety bond premiums		292				263				253				250				255
Office supplies, telephone and postage		222				233				249				294				301
Professional fees		1,351				1,369				1,723				2,040				1,693
Microloans recoveries		(54	)			(65	)			(53	)			(152	)			(69	)
Marketing and promotional expenses		180				145				100				146				248
Directors fees and regulatory assessment		178				176				179				173				169
Other operating expenses		1,265				1,585				965				1,182				1,223
Total non-interest expense		16,314				16,147				16,950				17,897				17,316
Income before income taxes		3,071				4,389				3,760				960				4,318
Provision for income taxes		638				1,197				1,346				442				1,728
Net income	$	2,433			$	3,192			$	2,414			$	518			$	2,590
Dividends on preferred shares		281				75				—				—				—
Net income available to common stockholders	$	2,152			$	3,117			$	2,414			$	518			$	2,590
Earnings per common share:
Basic	$	0.10			$	0.14			$	0.11			$	0.02			$	0.12
Diluted	$	0.10			$	0.14			$	0.11			$	0.02			$	0.12
Weighted average common shares outstanding:
Basic		22,446,009				22,409,803				22,353,492				22,224,945				22,272,076
Diluted		22,612,028				22,419,309				22,366,728				22,406,102				22,349,217

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

 

		For the Nine Months Ended September 30,
		2024				2023				Variance $				Variance %
Interest and dividend income:
Interest on loans receivable		$	94,890			$	67,991			$	26,899				39.56	%
Interest on deposits due from banks			6,883				3,983				2,900				72.81	%
Interest and dividend on securities and FHLBNY stock			17,978				18,943				(965	)			(5.09	%)
Total interest and dividend income			119,751				90,917				28,834				31.71	%
Interest expense:
Interest on certificates of deposit			19,664				11,468				8,196				71.47	%
Interest on other deposits			22,448				12,864				9,584				74.50	%
Interest on borrowings			21,889				18,516				3,373				18.22	%
Total interest expense			64,001				42,848				21,153				49.37	%
Net interest income			55,750				48,069				7,681				15.98	%
Provision for credit losses			235				1,348				(1,113	)			(82.57	%)
Net interest income after provision for credit losses			55,515				46,721				8,794				18.82	%
Non-interest income:
Service charges and fees			1,473				1,488				(15	)			(1.01	%)
Brokerage commissions			17				67				(50	)			(74.63	%)
Late and prepayment charges			862				2,000				(1,138	)			(56.90	%)
Income on sale of mortgage loans			794				354				440				124.29	%
Grant income			—				3,718				(3,718	)			(100.00	%)
Other			1,970				1,311				659				50.27	%
Total non-interest income			5,116				8,938				(3,822	)			(42.76	%)
Non-interest expense:
Compensation and benefits			23,242				22,437				805				3.59	%
Occupancy and equipment			11,017				10,882				135				1.24	%
Data processing expenses			3,239				3,982				(743	)			(18.66	%)
Direct loan expenses			1,938				1,126				812				72.11	%
(Benefit) provision for contingencies			(581	)			1,893				(2,474	)			(130.69	%)
Insurance and surety bond premiums			808				768				40				5.21	%
Office supplies, telephone and postage			704				1,189				(485	)			(40.79	%)
Professional fees			4,443				5,052				(609	)			(12.05	%)
Microloans recoveries			(172	)			(1,329	)			1,157				(87.06	%)
Marketing and promotional expenses			425				679				(254	)			(37.41	%)
Directors fees and regulatory assessment			533				484				49				10.12	%
Other operating expenses			3,815				3,603				212				5.88	%
Total non-interest expense			49,411				50,766				(1,355	)			(2.67	%)
Income before income taxes			11,220				4,893				6,327				129.31	%
Provision for income taxes			3,181				2,059				1,122				54.49	%
Net income		$	8,039			$	2,834			$	5,205				183.66	%
Dividends on preferred shares			356				—				356				100.00	%
Net income available to common stockholders		$	7,683			$	2,834			$	4,849				171.10	%
Earnings per common share:
Basic		$	0.34			$	0.12			$	0.22				177.36	%
Diluted		$	0.34			$	0.12			$	0.22				177.10	%
Weighted average common shares outstanding:
Basic			22,403,258				22,920,680				(517,422	)			(2.26	%)
Diluted			22,466,178				22,962,956				(496,778	)			(2.16	%)

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

	At or for the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				2023				2023
Performance Ratios:
Return on average assets (1)		0.33	%			0.45	%			0.33	%			0.08	%			0.39	%
Return on average equity (1)		1.93	%			2.59	%			1.97	%			0.42	%			2.11	%
Net interest rate spread (1) (2)		1.77	%			1.72	%			1.82	%			1.74	%			1.68	%
Net interest margin (1) (3)		2.65	%			2.62	%			2.71	%			2.66	%			2.58	%
Non-interest expense to average assets (1)		2.19	%			2.28	%			2.35	%			2.66	%			2.58	%
Efficiency ratio (4)		80.87	%			80.09	%			82.56	%			96.83	%			78.11	%
Average interest-earning assets to average interest- bearing liabilities		128.35	%			129.73	%			129.69	%			133.50	%			134.49	%
Average equity to average assets		16.97	%			17.41	%			17.00	%			18.25	%			18.32	%
Capital Ratios:
Total capital to risk-weighted assets (Bank only)		21.61	%			22.47	%			22.79	%			23.30	%			25.10	%
Tier 1 capital to risk-weighted assets (Bank only)		20.45	%			21.24	%			21.54	%			22.05	%			23.85	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		20.45	%			21.24	%			21.54	%			22.05	%			23.85	%
Tier 1 capital to average assets (Bank only)		16.19	%			16.70	%			16.26	%			17.49	%			17.51	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.09	%			1.18	%			1.23	%			1.36	%			1.51	%
Allowance for credit losses on loans as a percentage of nonperforming loans		139.52	%			130.28	%			140.90	%			152.99	%			169.49	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.17	%)			(0.10	%)			(0.25	%)			(0.24	%)			(0.34	%)
Non-performing loans as a percentage of total gross loans		0.78	%			0.89	%			0.87	%			0.89	%			0.89	%
Non-performing loans as a percentage of total assets		0.57	%			0.65	%			0.62	%			0.62	%			0.62	%
Total non-performing assets as a percentage of total assets		0.57	%			0.65	%			0.62	%			0.62	%			0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.73	%			0.82	%			0.79	%			0.81	%			0.82	%
Other:
Number of offices		19				18				18				18				19
Number of full-time equivalent employees		228				227				233				237				243

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Securities Portfolio

 

		September 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		$	2,993			$	—			$	(124	)		$	2,869			$	2,990			$	—			$	(206	)		$	2,784
Corporate Bonds			21,766				—				(1,438	)			20,328				25,790				—				(2,122	)			23,668
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			35,620				—				(4,976	)			30,644				39,375				—				(6,227	)			33,148
FHLMC Certificates			9,310				—				(1,119	)			8,191				10,163				—				(1,482	)			8,681
FNMA Certificates			57,345				—				(8,463	)			48,882				61,359				—				(9,842	)			51,517
GNMA Certificates			91				—				—				91				104				—				—				104
Total available-for-sale securities		$	127,125			$	—			$	(16,120	)		$	111,005			$	139,781			$	—			$	(19,879	)		$	119,902
Held-to-Maturity Securities:
U.S. Agency Bonds		$	25,000			$	—			$	(49	)		$	24,951			$	25,000			$	—			$	(181	)		$	24,819
Corporate Bonds			57,500				—				(618	)			56,882				82,500				—				(2,691	)			79,809
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			193,440				454				(2,946	)			190,948				212,093				104				(5,170	)			207,027
FHLMC Certificates			3,441				—				(169	)			3,272				3,897				—				(244	)			3,653
FNMA Certificates			108,577				22				(1,967	)			106,632				118,944				—				(4,088	)			114,856
SBA Certificates			15,985				153				—				16,138				19,712				166				—				19,878
Allowance for Credit Losses			(207	)			—				—				—				(398	)			—				—				—
Total held-to-maturity securities		$	403,736			$	629			$	(5,749	)		$	398,823			$	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 Nine				For the
		Months Ended				Year Ended
		September 30, 2024				December 31, 2023
Allowance for credit losses on securities at beginning of the period		$	398			$	—
CECL adoption			—				662
Benefit for credit losses			(191	)			(264	)
Allowance for credit losses on securities at end of the period		$	207			$	398

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

 

		As of
		September 30,								June 30,								March 31,								December 31,								September 30,
		2024								2024								2024								2023								2023
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned		$	332,380				15.09	%		$	337,292				16.49	%		$	339,331				16.92	%		$	343,689				17.89	%		$	347,082				19.13	%
Owner-Occupied			145,065				6.59	%			147,485				7.21	%			150,842				7.52	%			152,311				7.93	%			151,866				8.37	%
Multifamily residential			678,029				30.78	%			545,323				26.66	%			545,825				27.22	%			550,559				28.65	%			553,694				30.52	%
Nonresidential properties			383,277				17.40	%			337,583				16.51	%			327,350				16.32	%			342,343				17.81	%			321,472				17.71	%
Construction and land			631,461				28.67	%			641,879				31.39	%			608,665				30.35	%			503,925				26.22	%			411,383				22.67	%
Total mortgage loans			2,170,212				98.53	%			2,009,562				98.26	%			1,972,013				98.33	%			1,892,827				98.50	%			1,785,497				98.40	%
Non-mortgage loans:
Business loans			28,499				1.29	%			30,222				1.48	%			26,664				1.33	%			19,779				1.03	%			18,416				1.02	%
Consumer loans (1)			4,021				0.18	%			5,305				0.26	%			6,741				0.34	%			8,966				0.47	%			10,416				0.58	%
Total non-mortgage loans			32,520				1.47	%			35,527				1.74	%			33,405				1.67	%			28,745				1.50	%			28,832				1.60	%
Total loans, gross			2,202,732				100.00	%			2,045,089				100.00	%			2,005,418				100.00	%			1,921,572				100.00	%			1,814,329				100.00	%
Net deferred loan origination costs			1,565								1,145								674								468								692
Allowance for credit losses on loans			(23,966	)							(24,061	)							(24,664	)							(26,154	)							(27,414	)
Loans, net		$	2,180,331							$	2,022,173							$	1,981,428							$	1,895,886							$	1,787,607

 

 

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Microloans Exposure (previously originated by the Bank under its arrangement with Grain)

 

Total Microloans Exposure as of September 30, 2024
(in thousands)
Microloans Receivable from Grain
Microloans originated - put back (inception-to-September 30, 2024)		$	23,932
Write-downs, net of recoveries (inception-to-date as of September 30, 2024)			(15,287	)
Cash receipts (inception-to-September 30, 2024)			(6,819	)
Grant/reserve			(1,826	)
Net receivable as of September 30, 2024		$	—
Microloans Receivables from Borrowers
Microloans receivable as of September 30, 2024		$	3,033
Allowance for credit losses on loans as of September 30, 2024 (1)			(2,570	)
Microloans, net of allowance for credit losses on loans as of September 30, 2024		$	463
Investments
Investment in Grain		$	1,000
Investment write-off in Q3 2022			(1,000	)
Net investment as of September 30, 2024			—
Total exposure related to microloans as of September 30, 2024 (2)		$	463

 

(1) Excludes $1.5 million of security deposits by microloans originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.

(2) Total remaining exposure to microloan borrowers. These loans are now serviced by the Bank.

 

On November 1, 2023, Ponce Financial Group, Inc. and Grain Technologies, Inc. ("Grain") signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining microloans. 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 microloans.

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Ponce Financial Group, Inc. and Subsidiaries

Allowance for Credit Losses on Loans

 

	For the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				2023				2023
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	24,061			$	24,664			$	26,154			$	27,414			$	28,173
Provision (benefit) for credit losses on loans		801				(120	)			(255	)			(126	)			750
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—				—				—				—				—
Owner occupied		—				—				—				—				—
Multifamily residences		—				—				—				—				—
Nonresidential properties		(7	)			—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		(450	)			—				(52	)			(63	)			—
Consumer		(634	)			(747	)			(1,302	)			(1,135	)			(1,592	)
Total charge-offs		(1,091	)			(747	)			(1,354	)			(1,198	)			(1,592	)
Recoveries:
Non-mortgage loans:
Business		1				7				1				—				3
Consumer		194				257				118				64				80
Total recoveries		195				264				119				64				83
Net (charge-offs) recoveries		(896	)			(483	)			(1,235	)			(1,134	)			(1,509	)
Allowance for credit losses on loans at end of the period	$	23,966			$	24,061			$	24,664			$	26,154			$	27,414

 

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Ponce Financial Group, Inc. and Subsidiaries

Deposits

 

		As of
		September 30,								June 30,								March 31,								December 31,								September 30,
		2024								2024								2024								2023								2023
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Demand (1)		$	182,737				9.78	%		$	178,125				11.09	%		$	191,541				12.07	%		$	185,151				12.28	%		$	214,326				15.30	%
Interest-bearing deposits:
NOW/IOLA accounts (1)			71,445				3.82	%			81,178				5.05	%			73,202				4.62	%			77,909				5.17	%			74,055				5.29	%
Money market accounts			660,168				35.30	%			502,255				31.27	%			482,344				30.42	%			432,735				28.70	%			370,500				26.44	%
Reciprocal deposits			94,145				5.03	%			109,945				6.85	%			97,718				6.16	%			96,860				6.42	%			82,670				5.90	%
Savings accounts			108,941				5.82	%			109,694				6.83	%			112,713				7.11	%			114,139				7.57	%			117,870				8.41	%
Total NOW, money market, reciprocal and savings accounts			934,699				49.97	%			803,072				50.00	%			765,977				48.31	%			721,643				47.86	%			645,095				46.04	%
Certificates of deposit of $250K or more			174,053				9.31	%			156,224				9.73	%			146,296				9.23	%			132,153				8.77	%			122,353				8.73	%
Brokered certificates of deposit (2)			94,531				5.05	%			94,614				5.89	%			94,689				5.97	%			98,729				6.55	%			98,729				7.05	%
Listing service deposits (2)			7,376				0.39	%			9,361				0.58	%			12,688				0.80	%			14,433				0.96	%			15,180				1.08	%
All other certificates of deposit less than $250K			476,927				25.50	%			364,701				22.71	%			374,593				23.62	%			355,511				23.58	%			305,449				21.80	%
Total certificates of deposit			752,887				40.25	%			624,900				38.91	%			628,266				39.62	%			600,826				39.86	%			541,711				38.66	%
Total interest-bearing deposits			1,687,586				90.22	%			1,427,972				88.91	%			1,394,243				87.93	%			1,322,469				87.72	%			1,186,806				84.70	%
Total deposits		$	1,870,323				100.00	%		$	1,606,097				100.00	%		$	1,585,784				100.00	%		$	1,507,620				100.00	%		$	1,401,132				100.00	%

 

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Ponce Financial Group, Inc. and Subsidiaries

Borrowings

 

	September 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	$	59,321			$	59,321				4.00	%		$	363,321			$	363,321				4.55	%
2025		50,000				50,000				4.41				50,000				50,000				4.41
2026		200,000				200,000				4.25				—				—				—
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
	$	580,421			$	580,421				3.86	%		$	684,421			$	684,421				4.10	%

 

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Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

 

	As of Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				2023				2023
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	436			$	436			$	399			$	793			$	396
Owner occupied		1,423				1,423				1,426				1,682				1,685
Multifamily residential		4,685				5,754				4,098				2,979				1,444
Nonresidential properties		824				828				441				—				—
Construction and land		8,907				8,907				10,277				10,759				11,721
Non-mortgage loans:
Business		180				396				146				165				209
Consumer		—				—				—				—				—
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) (1)	$	16,455			$	17,744			$	16,787			$	16,378			$	15,455
Non-accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	278			$	277			$	270			$	270			$	270
Owner occupied		444				448				447				447				449
Multifamily residential		—				—				—				—				—
Nonresidential properties		—				—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total non-accruing modifications to borrowers experiencing financial difficulty (1)		722				725				717				717				719
Total non-accrual loans (2)	$	17,177			$	18,469			$	17,504			$	17,095			$	16,174
Accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	1,821			$	1,830			$	1,850			$	2,112			$	2,131
Owner occupied		2,116				2,171				2,288				2,313				2,335
Multifamily residential		—				—				—				—				—
Nonresidential properties		672				707				748				757				765
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		222				—				—				—				—
Consumer		—				—				—				—				—
Total accruing modifications to borrowers experiencing financial difficulty (1)	$	4,831			$	4,708			$	4,886			$	5,182			$	5,231
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty (1)	$	22,008			$	23,177			$	22,390			$	22,277			$	21,405
Total non-performing loans to total gross loans		0.78	%			0.89	%			0.87	%			0.89	%			0.89	%
Total non-performing assets to total assets		0.57	%			0.65	%			0.62	%			0.62	%			0.62	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (1)		0.73	%			0.82	%			0.79	%			0.81	%			0.82	%

 

 

(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 September 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)	$	2,096,592			$	32,945			6.25%		$	1,777,585			$	25,276			5.64%
Securities (3)		548,708				5,324			3.86%			599,573				5,821			3.85%
Other (4)		210,057				3,024			5.73%			169,570				2,409			5.64%
Total interest-earning assets		2,855,357				41,293			5.75%			2,546,728				33,506			5.22%
Non-interest-earning assets		107,153										111,771
Total assets	$	2,962,510									$	2,658,499
Interest-bearing liabilities:
NOW/IOLA (5) (6)	$	74,690			$	174			0.93%		$	69,935			$	141			0.80%
Money market (6)		711,385				8,318			4.65%			485,042				5,468			4.47%
Savings		109,571				25			0.09%			118,095				29			0.10%
Certificates of deposit		655,562				6,926			4.20%			527,302				4,362			3.28%
Total deposits		1,551,208				15,443			3.96%			1,200,374				10,000			3.31%
Advance payments by borrowers		13,151				2			0.06%			14,537				1			0.03%
Borrowings		660,312				6,825			4.11%			678,676				6,963			4.07%
Total interest-bearing liabilities		2,224,671				22,270			3.98%			1,893,587				16,964			3.55%
Non-interest-bearing liabilities:
Non-interest-bearing demand (5)		185,543				—						231,299				—
Other non-interest-bearing liabilities		49,702				—						46,643				—
Total non-interest-bearing liabilities		235,245				—						277,942				—
Total liabilities		2,459,916				22,270						2,171,529				16,964
Total equity		502,594										486,970
Total liabilities and total equity	$	2,962,510							3.98%		$	2,658,499							3.55%
Net interest income					$	19,023									$	16,542
Net interest rate spread (7)									1.77%										1.67%
Net interest-earning assets (8)	$	630,686									$	653,141
Net interest margin (9)									2.65%										2.58%
Average interest-earning assets to interest-bearing liabilities									128.35%										134.49%

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Average Balance Sheets

 

 

	For the Nine Months Ended September 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)	$	2,038,879			$	94,890				6.22	%		$	1,678,369			$	67,991				5.42	%
Securities (3)		562,451				16,429				3.90	%			614,987				17,627				3.83	%
Other (4)		196,668				8,432				5.73	%			127,961				5,299				5.54	%
Total interest-earning assets		2,797,998				119,751				5.72	%			2,421,317				90,917				5.02	%
Non-interest-earning assets		106,500												118,609
Total assets	$	2,904,498											$	2,539,926
Interest-bearing liabilities:
NOW/IOLA (5) (6)	$	76,817			$	543				0.94	%		$	69,331			$	1,133				2.18	%
Money market (6)		618,725				21,819				4.71	%			403,171				11,637				3.86	%
Savings		111,636				80				0.10	%			123,218				88				0.10	%
Certificates of deposit		640,369				19,664				4.10	%			522,740				11,468				2.93	%
Total deposits		1,447,547				42,106				3.89	%			1,118,460				24,326				2.91	%
Advance payments by borrowers		13,660				6				0.06	%			14,814				6				0.05	%
Borrowings		703,775				21,889				4.15	%			617,912				18,516				4.01	%
Total interest-bearing liabilities		2,164,982				64,001				3.95	%			1,751,186				42,848				3.27	%
Non-interest-bearing liabilities:
Non-interest-bearing demand (5)		191,087				—								251,645				—
Other non-interest-bearing liabilities		51,061				—								43,864				—
Total non-interest-bearing liabilities		242,148				—								295,509				—
Total liabilities		2,407,130				64,001								2,046,695				42,848
Total equity		497,368												493,231
Total liabilities and total equity	$	2,904,498								3.95	%		$	2,539,926								3.27	%
Net interest income					$	55,750											$	48,069
Net interest rate spread (7)										1.77	%											1.74	%
Net interest-earning assets (8)	$	633,016											$	670,131
Net interest margin (9)										2.66	%											2.65	%
Average interest-earning assets to
interest-bearing liabilities										129.24	%											138.27	%

 

 

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Ponce Financial Group, Inc. and Subsidiaries

Other Data

 

	As of
	September 30,				June 30,				March 31,				December 31,				September 30,
	2024				2024				2024				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		1,067,248				1,074,979				1,096,214				1,101,191				1,233,111
Common shares outstanding at end of period		23,819,463				23,811,732				23,790,497				23,785,520				23,653,600
Book value per common share	$	11.74			$	11.45			$	11.29			$	11.20			$	10.99
Tangible book value per common share	$	11.74			$	11.45			$	11.29			$	11.20			$	10.99

 

 

 

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