YORK, July 29, 2022 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), reported net income of $771,000, or $0.03 per basic and diluted share, for the second quarter of 2022, compared to a net loss of ($6.8 million), or ($0.31) per basic and diluted share, for the prior quarter and net income of $5.9 million, or $0.35 per basic and diluted share, for the second quarter of 2021.
Second Quarter Highlights
Completed a private placement of $225.0 million of Senior Non-Cumulative Perpetual Preferred Stock, Series A, to the U.S. Department of Treasury pursuant to the Emergency Capital Investment Program.
Net interest income of $15.5 million for the second quarter of 2022 decreased $1.9 million, or 10.67%, from the prior quarter due to a reduction in PPP fee amortization. Net interest income for the second quarter of 2022 increased $1.8 million, or 12.79%, from the same quarter last year.
Income before taxes was $283,000 for the second quarter of 2022 as compared to a loss before taxes of ($9.8 million) for the prior quarter and income before taxes of $7.8 million for the same quarter last year. Included in the second quarter of 2022 is $1.5 million in additional write-offs of the receivable due from Grain Technologies, Inc. (“Grain”) for microloan originations put back to Grain. Included in the first quarter of 2022 is a $6.3 million write-off and $1.7 million in additional reserves for the receivable due from Grain for microloan originations put back to Grain.
Average cost of interest-bearing deposits was 0.54% for the second quarter of 2022, an increase from 0.49% for the prior quarter and a decrease from 0.67% for the same quarter last year.
Net interest margin was 4.10% for the second quarter of 2022, a decrease from 4.68% for the prior quarter and an increase from 3.84% for the same quarter last year.
Net interest rate spread was 3.86% for the second quarter of 2022, a decrease from 4.48% for the prior quarter and an increase from 3.60% for the same quarter last year.
Efficiency ratio was 93.77% for the second quarter of 2022 compared to 143.50% for the prior quarter and 61.80% for the same quarter last year.
Non-performing loans of $18.6 million as of June 30, 2022 increased $9.6 million year-over-year and were 1.39% of total gross loans receivable at June 30, 2022. The increase was largely attributable to a completed $6.6 million condominium construction loan which is now in the selling phase and has sales under contracts.
Net loans receivable were $1.32 billion at June 30, 2022, an increase of $19.2 million, or 1.47%, from December 31, 2021. The increase of $19.2 million was attributable to a $125.2 million increase in non-PPP loans partially offset by a $106.0 million decrease in PPP loans.
Securities increased $210.6 million in held-to-maturity securities and by $26.7 million in available-for-sale securities from December 31, 2021. The increase in the securities portfolio is designed to increase interest income and enhance the diversification in interest-earning assets.
Deposits were $1.15 billion at June 30, 2022, a decrease of $56.0 million, or 4.65%, from December 31, 2021.
An Environmental, Social and Governance Committee was established; it is comprised of the Executive Management Team and is currently in the process of developing a materiality assessment in order to determine what issues, practices, and policies are most important to key stakeholders.
President and Chief Executive Officer’s Comments
Carlos P. Naudon, President and CEO, stated that “we have raised additional equity capital of $328.8 million since December 31, 2021, giving us an unprecedented $518.1 million in stockholder’s equity with which to carry out our mission and add value to our stakeholders, which now includes the United States Treasury, as the holder of our preferred stock. We have begun the process of leveraging that capital, increasing our cash and securities portfolio to a combined $626.4 million from $268.2 million last year, positioning us for additional growing sources of interest income, a new strategic priority. We continue to assess the performance of our microloan portfolio and its strategic impact on our mission as an MDI and CDFI. We are balancing our need to acquire and retain talent necessary to grow our Company with our financial performance.”
Executive Chairman’s Comments
Steven A. Tsavaris, Executive Chairman, noted that “we continue to focus on growing our loan portfolio, net of PPP loans. We increased our net loans receivable by $19.2 million, or 1.47%, since December 31, 2021. Most telling, the reported growth masks the $125.2 million increase in non-PPP loans due to the concurrent $106.0 million reduction in PPP loans. The portfolio of mortgage loans has grown 17.1% year-over-year and 11.1% since December 31, 2021. Our loan growth reflects the resilience of rent stabilized housing, and its construction, in our communities, as well as the attractiveness of our non-qualified mortgages to business customers. We continue to be humbled by the retention of relationships after PPP loan forgivenesses.”
Summary of Results of Operations
Net income for the three months ended June 30, 2022 was $771,000, compared to ($6.8 million) of net loss for the three months ended March 31, 2022 and $5.9 million of net income for the three months ended June 30, 2021.
The $771,000 net income for the three months ended June 30, 2022, was a $7.6 million increase compared to the prior quarter. This increase was attributable to a decrease of $11.5 million in non-interest expense, offset by decreases of $2.5 million of benefit for income taxes and $1.9 million of net interest income. The $11.5 million decrease in non-interest expense reflects the lower write-down of Grain receivable and the nonrecurring contribution to the Ponce De Leon Foundation during the three months ended March 31, 2022.
The $771,000 net income for the three months ended June 30, 2022, was a $5.2 million reduction compared to the same quarter last year. This reduction was due to an increase of $2.9 million in non-interest expense, a decrease of $6.2 million in non-interest income and an increase of $231,000 in provision for loan losses, partially offset by an increase of $1.8 million in net interest income and a decrease of $2.4 million in provision for income taxes quarter over quarter.
The ($6.0 million) net loss for the six months ended June 30, 2022 is a $14.4 million decrease compared to the same period last year. This variance was largely due to an increase of $18.1 million in non-interest expense explained by the one-off expenses mentioned above as well as by an increase in compensation and benefits. Non-interest income was down by $7.8 million given the gain on sale of real property booked last year of $4.8 million coupled with a reduction in income on the sale of mortgage loans. Net interest income after provision for loan losses was up by $5.4 million on higher volumes.
Net interest income for the three months ended June 30, 2022 was $15.5 million, a decrease of $1.9 million, or 10.67%, compared to the three months ended March 31, 2022 and an increase of $1.8 million, or 12.79%, compared to the three months ended June 30, 2021. The decrease of $1.9 million in net interest income for the three months ended June 30, 2022 compared to the three months ended March 31, 2022 was due to a reduction in PPP fee amortization. The increase of $1.8 million in net interest income for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to higher average interest-earning assets of $81.6 million and higher net interest margin of 26bps.
Net interest income for the six months ended June 30, 2022 was $32.8 million, an increase of $6.2 million, or 23.29%, compared to the six months ended June 30, 2021. This increase was due to increases in average interest-earning assets of $137.3 million and net interest margin of 48bps.
Non-interest income of $2.2 million for both the three months ended June 30, 2022 and the three months ended March 31, 2022, decreased $6.2 million from $8.3 million for the three months ended June 30, 2021. Excluding the $4.2 million gain, net of expense, from sale of real properties during the three months ended June 30, 2021, non-interest income decreased $2.0 million from $4.2 million for the three months ended June 30, 2021 compared to $2.2 million for the three months ended June 30, 2022, largely due to decreases in income on mortgage loan sales and originations, reflecting both a slowdown in the secondary mortgage markets for refinances as well as the retention in portfolio of originated non-qualified mortgage loans.
The $2.2 million of non-interest income for both the three months ended June 30, 2022 and the three months ended March 31, 2022 was impacted by increases of $519,000 in other non-interest income and $135,000 in late and prepayment charges, offset by decreases of $364,000 in loan origination fees, $218,000 in income on sale of mortgage loans and $124,000 in brokerage commissions, quarter over quarter.
The decrease of $6.2 million in non-interest income for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to the absence of the one-time $4.2 million in gain, net of expenses, from the sale of real properties recognized during the three months ended June 30, 2021, combined with decreases of $1.1 million in income on sale of mortgage loans, $874,000 in loan origination fees, $216,000 in brokerage commissions and $105,000 in late and prepayment charges, offset by increases of $218,000 in other non-interest income and $79,000 in service charges and fees.
Non-interest income decreased $7.8 million to $4.4 million for the six months ended June 30, 2022 from $12.2 million for the six months ended June 30, 2021. The decrease of $7.8 million was due to a one-time $4.8 million gain, net of expenses, from the sale of real properties recognized during the six months ended June 30, 2021, combined with decreases of $2.2 million in income on sale of mortgage loans, $952,000 in loan origination fees, $291,000 in late and prepayment charges and $101,000 in brokerage commissions, offset by increases of $342,000 in other non-interest income and $190,000 in service charges and fees.
Non-interest expense decreased $11.5 million, or 40.98%, to $16.6 million for the three months ended June 30, 2022 from $28.1 million for the three months ended March 31, 2022 and increased $2.9 million, or 21.46%, from $13.6 million for the three months ended June 30, 2021.
The decrease of $11.5 million in non-interest expense for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, was attributable to an aggregate $8.1 million write-off and write-down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud in the first quarter of 2022 compared to an additional $1.5 million write-off and write-down in the second quarter of 2022, and a $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization during the first quarter of 2022. Other decreases in non-interest expense included $369,000 in direct loan expenses and $214,000 in compensation and benefits, offset by increases of $414,000 in professional fees and $205,000 in other operating expenses.
The increase of $2.9 million in non-interest expense for the three months ended June 30, 2022, compared to the three months ended June 30, 2021 is a result of increases of $2.7 million in compensation and benefits, $1.5 million in write-off and write-down in the second quarter of 2022 related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $399,000 in occupancy and equipment, $103,000 in other operating expenses and $91,000 in data processing expenses, offset by decreases of $1.2 million in professional fees and $646,000 in direct loan expenses. The $2.7 million increase of compensation and benefits related to nonrecurring expense amortization related to PPP loans and new hires.
Non-interest expense increased $18.1 million to $44.6 million for the six months ended June 30, 2022 from $26.6 million for the six months ended June 30, 2021. The increase in non-interest expense for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was attributable to an aggregate $9.6 million write-off and write down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, a $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization during the first quarter of 2022. Other increases in non-interest expense included $4.1 million in compensation and benefits, $957,000 in occupancy and equipment reflecting rental expenses on facilities that were sold and leased back and $344,000 in data processing expenses, offset by decreases of $1.1 million in professional fees and $781,000 in direct loan expenses. The $4.1 million increase of compensation and benefits related to nonrecurring expense amortization related to PPP loans and new hires.
Summary of Balance Sheet
Total assets increased $388.8 million, or 23.51%, to $2.04 billion at June 30, 2022 from $1.65 billion at December 31, 2021. The increase in total assets is attributable to increases of $210.6 million in held-to-maturity securities and $120.9 million in cash and cash equivalents. Other increases in total assets are $26.7 million in available-for-sale securities, $19.2 million in net loans receivable (inclusive of $106.0 million net decrease in PPP loans), $10.4 million in FHLBNY stock, $5.8 million in deferred tax assets, $1.5 million in other assets and $893,000 in accrued interest receivable. The increase in total assets was reduced by decreases of $6.6 million in mortgage loans held for sale, at fair value and $672,000, net, in premises and equipment.
Total liabilities increased $59.9 million, or 4.09%, to $1.52 billion at June 30, 2022 from $1.46 billion at December 31, 2021. The increase in total liabilities was mainly attributable to increases of $228.1 million in advances from FHLBNY and $24.0 million in other liabilities offset by decreases of $122.0 million in second-step liabilities held at December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022, $56.0 million in deposits and $15.1 million in warehouse lines of credit.
Total stockholders’ equity increased $328.8 million, or 173.75%, to $518.1 million at June 30, 2022 from $189.3 million at December 31, 2021. This increase in stockholders’ equity was mainly attributable to the $225.0 million issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program, $118.0 million as a result of the sale of common stock in the second-step mutual conversion and reorganization, $4.0 million equity contribution to the Ponce De Leon Foundation, $756,000 in share-based compensation and $690,000 in Employee Stock Ownership Plan shares committed to be released offset by $13.6 million in accumulated other comprehensive loss and $6.0 million in net loss.
Pursuant to the conversion and reorganization, PDL Community Bancorp treasury stock was extinguished on January 27, 2022. Ponce Financial Group, Inc. currently has no treasury stock.
About Ponce Financial Group, Inc.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, 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 and construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.
Forward Looking Statements
Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; the anticipated impact of the COVID-19 pandemic and Ponce Bank’s attempts at mitigation; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in 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.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)
As of
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
ASSETS
Cash and due from banks:
Cash
$
53,544
$
32,168
$
98,954
$
29,365
$
32,541
Interest-bearing deposits in banks
221,262
37,127
54,940
33,673
33,551
Total cash and cash equivalents
274,806
69,295
153,894
63,038
66,092
Available-for-sale securities, at fair value
140,044
154,799
113,346
104,358
48,536
Held-to-maturity securities, at amortized cost
211,517
927
934
1,437
1,720
Placement with banks
2,490
2,490
2,490
2,490
2,739
Mortgage loans held for sale, at fair value
9,234
7,972
15,836
13,930
15,308
Loans receivable, net
1,324,320
1,300,446
1,305,078
1,302,238
1,343,578
Accrued interest receivable
13,255
12,799
12,362
13,360
13,134
Premises and equipment, net
18,945
19,279
19,617
34,081
34,057
Federal Home Loan Bank of New York stock (FHLBNY), at cost
16,429
5,420
6,001
6,001
6,156
Deferred tax assets
9,658
7,440
3,820
4,826
5,493
Other assets
21,585
13,730
20,132
14,793
10,837
Total assets
$
2,042,283
$
1,594,597
$
1,653,510
$
1,560,552
$
1,547,650
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
$
1,148,728
$
1,181,165
$
1,204,716
$
1,249,261
$
1,236,161
Accrued interest payable
158
223
228
238
55
Advance payments by borrowers for taxes and insurance
8,668
10,161
7,657
9,118
7,682
Advances from the FHLBNY and others
334,375
93,375
106,255
106,255
109,255
Warehouse lines of credit
—
753
15,090
11,261
13,084
Mortgage loan fundings payable
—
—
—
1,136
743
Second-step liabilities
—
—
122,000
—
—
Other liabilities
32,272
9,341
8,308
9,396
8,780
Total liabilities
1,524,201
1,295,018
1,464,254
1,386,665
1,375,760
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized
225,000
—
—
—
—
Common stock, $0.01 par value; 200,000,000 shares authorized
247
247
185
185
185
Treasury stock, at cost
—
—
(13,687
)
(15,069
)
(15,069
)
Additional paid-in-capital
205,669
205,243
85,601
86,360
85,956
Retained earnings
116,907
116,136
122,956
107,977
105,925
Accumulated other comprehensive loss
(15,032
)
(7,035
)
(1,456
)
(621
)
(41
)
Unearned compensation ─ ESOP
(14,709
)
(15,012
)
(4,343
)
(4,945
)
(5,066
)
Total stockholders' equity
518,082
299,579
189,256
173,887
171,890
Total liabilities and stockholders' equity
$
2,042,283
$
1,594,597
$
1,653,510
$
1,560,552
$
1,547,650
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Interest and dividend income:
Interest on loans receivable
$
16,057
$
18,200
$
18,013
$
16,991
$
15,603
Interest on deposits due from banks
132
36
7
9
2
Interest and dividend on securities and FHLBNY stock
978
782
632
425
239
Total interest and dividend income
17,167
19,018
18,652
17,425
15,844
Interest expense:
Interest on certificates of deposit
677
803
907
1,010
1,108
Interest on other deposits
521
284
309
354
382
Interest on borrowings
481
593
654
621
622
Total interest expense
1,679
1,680
1,870
1,985
2,112
Net interest income
15,488
17,338
16,782
15,440
13,732
Provision for loan losses
817
1,258
873
572
586
Net interest income after provision for loan losses
14,671
16,080
15,909
14,868
13,146
Non-interest income:
Service charges and fees
445
440
468
494
366
Brokerage commissions
214
338
401
270
430
Late and prepayment charges
193
58
336
329
298
Income on sale of mortgage loans
200
418
1,294
1,175
1,288
Loan origination
97
461
886
625
971
Gain on sale of real property
—
—
15,431
—
4,176
Other
1,030
511
353
341
812
Total non-interest income
2,179
2,226
19,169
3,234
8,341
Non-interest expense:
Compensation and benefits
6,911
7,125
6,959
6,427
4,212
Occupancy and equipment
3,237
3,192
3,007
2,849
2,838
Data processing expenses
824
847
771
917
733
Direct loan expenses
505
874
1,032
696
1,151
Insurance and surety bond premiums
156
147
149
147
143
Office supplies, telephone and postage
406
405
552
626
467
Professional fees
1,748
1,334
1,700
1,765
2,902
Contribution to the Ponce De Leon Foundation
—
4,995
—
—
—
Grain write-off and write-down
1,500
8,074
—
—
—
Marketing and promotional expenses
52
71
69
51
48
Directors fees
96
71
80
67
69
Regulatory dues
71
83
69
74
120
Other operating expenses
1,061
856
1,466
1,113
958
Total non-interest expense
16,567
28,074
15,854
14,732
13,641
Income (loss) before income taxes
283
(9,768
)
19,224
3,370
7,846
(Benefit) provision for income taxes
(488
)
(2,948
)
4,245
1,318
1,914
Net income (loss)
$
771
$
(6,820
)
$
14,979
$
2,052
$
5,932
Earnings (loss) per common share:
Basic
$
0.03
$
(0.31
)
$
0.90
$
0.12
$
0.35
Diluted
$
0.03
$
(0.31
)
$
0.89
$
0.12
$
0.35
Weighted average common shares outstanding:
Basic
23,056,559
21,721,113
16,864,929
16,823,731
16,737,037
Diluted
23,128,911
21,721,113
16,924,785
16,914,833
16,773,606
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
For the Six Months Ended June 30,
2022
2021
Variance $
Variance %
Interest and dividend income:
Interest on loans receivable
$
34,257
$
30,528
$
3,729
12.22
%
Interest on deposits due from banks
168
4
164
*
Interest and dividend on securities and FHLBNY stock
1,760
489
1,271
259.92
%
Total interest and dividend income
36,185
31,021
5,164
16.65
%
Interest expense:
Interest on certificates of deposit
1,480
2,327
(847
)
(36.40
%)
Interest on other deposits
805
764
41
5.37
%
Interest on borrowings
1,074
1,306
(232
)
(17.76
%)
Total interest expense
3,359
4,397
(1,038
)
(23.61
%)
Net interest income
32,826
26,624
6,202
23.29
%
Provision for loan losses
2,075
1,272
803
63.13
%
Net interest income after provision for loan losses
30,751
25,352
5,399
21.30
%
Non-interest income:
Service charges and fees
885
695
190
27.34
%
Brokerage commissions
552
653
(101
)
(15.47
%)
Late and prepayment charges
251
542
(291
)
(53.69
%)
Income on sale of mortgage loans
618
2,796
(2,178
)
(77.90
%)
Loan origination
558
1,510
(952
)
(63.05
%)
Gain on sale of real property
—
4,839
(4,839
)
(100.00
%)
Other
1,541
1,199
342
28.52
%
Total non-interest income
4,405
12,234
(7,829
)
(63.99
%)
Non-interest expense:
Compensation and benefits
14,036
9,876
4,160
42.12
%
Occupancy and equipment
6,429
5,472
957
17.49
%
Data processing expenses
1,671
1,327
344
25.92
%
Direct loan expenses
1,379
2,160
(781
)
(36.16
%)
Insurance and surety bond premiums
303
289
14
4.84
%
Office supplies, telephone and postage
811
876
(65
)
(7.42
%)
Professional fees
3,082
4,164
(1,082
)
(25.98
%)
Contribution to the Ponce De Leon Foundation
4,995
—
4,995
—
%
Grain write-off and write-down
9,574
—
9,574
—
%
Marketing and promotional expenses
123
86
37
43.02
%
Directors fees
167
138
29
21.01
%
Regulatory dues
154
180
(26
)
(14.44
%)
Other operating expenses
1,917
1,988
(71
)
(3.57
%)
Total non-interest expense
44,641
26,556
18,085
68.10
%
(Loss) income before income taxes
(9,485
)
11,030
(20,515
)
(185.99
%)
(Benefit) provision for income taxes
(3,436
)
2,646
(6,082
)
(229.86
%)
Net (loss) income
$
(6,049
)
$
8,384
$
(14,433
)
(172.15
%)
(Loss) earnings per common share:
Basic
$
(0.27
)
$
0.50
N/A
N/A
Diluted
$
(0.27
)
$
0.50
N/A
N/A
Weighted average common shares outstanding:
Basic
22,243,776
16,643,138
N/A
N/A
Diluted
22,243,776
16,661,423
N/A
N/A
* Represents more than 500%
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Key Metrics
At or for the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Performance Ratios:
Return on average assets (1)
0.18
%
(1.60
%)
3.69
%
0.52
%
1.59
%
Return on average equity (1)
1.01
%
(10.06
%)
31.46
%
4.59
%
13.95
%
Net interest rate spread (1) (2)
3.86
%
4.48
%
4.32
%
3.92
%
3.60
%
Net interest margin (1) (3)
4.10
%
4.68
%
4.51
%
4.13
%
3.84
%
Non-interest expense to average assets (1)
3.84
%
6.59
%
3.90
%
3.72
%
3.65
%
Efficiency ratio (4)
93.77
%
143.50
%
44.10
%
78.89
%
61.80
%
Average interest-earning assets to average interest- bearing liabilities
151.98
%
145.54
%
138.10
%
138.89
%
140.13
%
Average equity to average assets
17.66
%
15.92
%
11.71
%
11.27
%
11.37
%
Capital Ratios:
Total capital to risk weighted assets (Bank only)
36.00
%
23.27
%
17.23
%
16.15
%
16.08
%
Tier 1 capital to risk weighted assets (Bank only)
34.75
%
22.02
%
15.98
%
14.90
%
14.83
%
Common equity Tier 1 capital to risk-weighted assets (Bank only)
34.75
%
22.02
%
15.98
%
14.90
%
14.83
%
Tier 1 capital to average assets (Bank only)
28.79
%
14.88
%
10.95
%
9.98
%
10.22
%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans
1.31
%
1.28
%
1.24
%
1.21
%
1.16
%
Allowance for loan losses as a percentage of nonperforming loans
94.05
%
106.84
%
142.90
%
157.17
%
175.63
%
Net (charge-offs) recoveries to average outstanding loans (1)
(0.05
%)
(0.22
%)
(0.18
%)
(0.13
%)
(0.07
%)
Non-performing loans as a percentage of total gross loans
1.39
%
1.20
%
0.87
%
0.77
%
0.66
%
Non-performing loans as a percentage of total assets
0.91
%
0.99
%
0.69
%
0.65
%
0.58
%
Total non-performing assets as a percentage of total assets
0.91
%
0.99
%
0.69
%
0.65
%
0.58
%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets
1.16
%
1.32
%
1.07
%
1.05
%
1.01
%
Other:
Number of offices
18
18
19
19
19
Number of full-time equivalent employees
253
223
217
230
231
(1) Annualized where appropriate.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
(4) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Securities Portfolio
June 30, 2022
Gross
Gross
Amortized
Unrealized
Unrealized
Cost
Gains
Losses
Fair Value
(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds
$
2,983
$
—
$
(264
)
$
2,719
Corporate Bonds
25,841
2
(1,812
)
24,031
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)
47,252
—
(5,322
)
41,930
FHLMC Certificates
11,965
—
(1,513
)
10,452
FNMA Certificates
70,771
(10,003
)
60,768
GNMA Certificates
144
—
—
144
Total available-for-sale securities
$
158,956
$
2
$
(18,914
)
$
140,044
Held-to-Maturity Securities:
Corporate Bonds
$
79,000
$
7
$
—
$
79,007
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)
62,422
—
(3
)
62,419
FHLMC Certificates
842
—
(128
)
714
FNMA Certificates
69,253
—
(41
)
69,212
Total held-to-maturity securities
$
211,517
$
7
$
(172
)
$
211,352
(1) Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.
December 31, 2021
Gross
Gross
Amortized
Unrealized
Unrealized
Cost
Gains
Losses
Fair Value
(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds
$
2,981
$
—
$
(47
)
$
2,934
Corporate Bonds
21,243
144
(203
)
21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)
18,845
—
(497
)
18,348
FNMA Certificates
71,930
—
(1,231
)
70,699
GNMA Certificates
175
6
—
181
Total available-for-sale securities
$
115,174
$
150
$
(1,978
)
$
113,346
Held-to-Maturity Securities:
FHLMC Certificates
$
934
$
—
$
(20
)
$
914
Total held-to-maturity securities
$
934
$
—
$
(20
)
$
914
(1) Comprised of FHLMC, FNMA and GNMA issued securities.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Loan Portfolio
As of
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned
$
321,671
24.02
%
$
323,442
24.59
%
$
317,304
24.01
%
$
319,346
24.14
%
$
325,409
23.83
%
Owner-Occupied
100,048
7.47
%
95,234
7.24
%
96,947
7.33
%
97,493
7.37
%
98,839
7.24
%
Multifamily residential
396,470
29.60
%
368,133
27.98
%
348,300
26.34
%
317,575
24.01
%
318,579
23.33
%
Nonresidential properties
279,877
20.90
%
251,893
19.14
%
239,691
18.13
%
211,075
15.96
%
211,181
15.46
%
Construction and land
165,425
12.35
%
144,881
11.01
%
134,651
10.19
%
133,130
10.07
%
125,265
9.17
%
Total mortgage loans
1,263,491
94.34
%
1,183,583
89.96
%
1,136,893
86.00
%
1,078,619
81.55
%
1,079,273
79.02
%
Non-mortgage loans:
Business loans (1)
45,720
3.41
%
100,253
7.62
%
150,512
11.38
%
207,859
15.72
%
253,935
18.59
%
Consumer loans (2)
30,198
2.25
%
31,899
2.42
%
34,693
2.62
%
36,095
2.73
%
32,576
2.39
%
Total non-mortgage loans
75,918
5.66
%
132,152
10.04
%
185,205
14.00
%
243,954
18.45
%
286,511
20.98
%
Total loans, gross
1,339,409
100.00
%
1,315,735
100.00
%
1,322,098
100.00
%
1,322,573
100.00
%
1,365,784
100.00
%
Net deferred loan origination costs
2,446
1,604
(668
)
(4,327
)
(6,331
)
Allowance for losses on loans
(17,535
)
(16,893
)
(16,352
)
(16,008
)
(15,875
)
Loans, net
$
1,324,320
$
1,300,446
$
1,305,078
$
1,302,238
$
1,343,578
(1) As of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, business loans include $30.8 million, $86.0 million, $136.8 million, $195.9 million and $241.5 million, respectively, of PPP loans.
(2) As of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, consumer loans include $28.3 million, $31.0 million, $33.9 million, $35.5 million and $32.0 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Grain Loan Exposure
Grain Technologies, Inc. ("Grain") Total Exposure as of June 30, 2022
(Dollars in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-June 30, 2022)
$
20,449
Write-downs (year to date as of June 30, 2022)
(9,574
)
Cash receipts from Grain (inception-to-June 30, 2022)
(6,047
)
Grant/reserve
(1,826
)
Net receivable as of June 30, 2022
$
3,002
Microloan receivables
Grain originated loans receivable as of June 30, 2022
$
28,296
Allowance for loan losses as of June 30, 2022
(1,399
)
Microloans, net of allowance for loan losses as of June 30, 2022
$
26,897
Investments
Investment in Grain as of June 30, 2022
$
1,000
Total exposure to Grain
$
30,899
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Allowance for Loan Losses
For the Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
(Dollars in thousands)
Allowance for loan losses at beginning of the period
$
16,893
$
16,352
$
16,008
$
15,875
$
15,508
Provision for loan losses
817
1,258
873
572
586
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned
—
—
—
—
—
Owner occupied
—
—
—
—
—
Multifamily residences
—
—
(38
)
—
—
Nonresidential properties
—
—
—
—
—
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
(450
)
(751
)
(560
)
(510
)
(222
)
Total charge-offs
(450
)
(751
)
(598
)
(510
)
(222
)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned
156
—
8
—
—
Owner occupied
—
—
45
—
—
Multifamily residences
—
—
—
—
—
Nonresidential properties
—
—
—
—
—
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
91
2
15
69
—
Consumer
28
32
1
2
3
Total recoveries
275
34
69
71
3
Net (charge-offs) recoveries
(175
)
(717
)
(529
)
(439
)
(219
)
Allowance for loan losses at end of the period
$
17,535
$
16,893
$
16,352
$
16,008
$
15,875
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Deposits
As of
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Demand
$
284,462
24.77
%
$
281,132
23.81
%
$
274,956
22.83
%
$
297,777
23.85
%
$
320,404
25.91
%
Interest-bearing deposits:
NOW/IOLA accounts
28,597
2.49
%
33,010
2.79
%
35,280
2.93
%
28,025
2.24
%
28,996
2.35
%
Money market accounts
181,156
15.77
%
169,847
14.38
%
186,893
15.51
%
199,758
15.99
%
172,925
13.99
%
Reciprocal deposits
151,264
13.17
%
160,510
13.59
%
143,221
11.89
%
147,226
11.79
%
151,443
12.25
%
Savings accounts
139,244
12.12
%
133,966
11.34
%
134,887
11.20
%
142,851
11.43
%
130,430
10.55
%
Total NOW, money market, reciprocal and savings accounts
500,261
43.55
%
497,333
42.10
%
500,281
41.53
%
517,860
41.45
%
483,794
39.14
%
Certificates of deposit of $250K or more
65,157
5.67
%
75,130
6.36
%
78,454
6.51
%
70,996
5.68
%
74,941
6.06
%
Brokered certificates of deposit (1)
62,650
5.45
%
79,282
6.71
%
79,320
6.58
%
83,505
6.68
%
83,506
6.76
%
Listing service deposits (1)
48,953
4.26
%
53,876
4.56
%
66,411
5.51
%
66,340
5.31
%
66,518
5.38
%
All other certificates of deposit less than $250K
187,245
16.30
%
194,412
16.46
%
205,294
17.04
%
212,783
17.03
%
206,998
16.75
%
Total certificates of deposit
364,005
31.68
%
402,700
34.09
%
429,479
35.64
%
433,624
34.70
%
431,963
34.95
%
Total interest-bearing deposits
864,266
75.23
%
900,033
76.19
%
929,760
77.17
%
951,484
76.15
%
915,757
74.09
%
Total deposits
$
1,148,728
100.00
%
$
1,181,165
100.00
%
$
1,204,716
100.00
%
$
1,249,261
100.00
%
$
1,236,161
100.00
%
(1) As of June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, June 30, 2021, there were $18.5 million, $19.0 million, $29.0 million, $28.9 million and $28.9 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Nonperforming Assets
As of Three Months Ended
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned
$
3,460
$
3,596
$
3,349
$
1,669
$
1,983
Owner occupied
1,140
962
1,284
1,090
1,593
Multifamily residential
—
—
1,200
2,577
955
Nonresidential properties
1,162
1,166
2,163
1,388
1,408
Construction and land
10,817
7,567
917
922
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)
$
16,579
$
13,291
$
8,913
$
7,646
$
5,939
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
224
$
230
$
234
$
238
$
242
Owner occupied
1,746
2,192
2,196
2,200
2,199
Multifamily residential
—
—
—
—
—
Nonresidential properties
96
98
100
101
659
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total non-accruing troubled debt restructured loans
2,066
2,520
2,530
2,539
3,100
Total non-accrual loans
$
18,645
$
15,811
$
11,443
$
10,185
$
9,039
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
2,246
$
2,269
$
3,089
$
3,121
$
3,347
Owner occupied
2,019
2,313
2,374
2,396
2,431
Multifamily residential
—
—
—
—
—
Nonresidential properties
725
726
732
738
755
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total accruing troubled debt restructured loans
$
4,990
$
5,308
$
6,195
$
6,255
$
6,533
Total non-performing assets and accruing troubled debt restructured loans
$
23,635
$
21,119
$
17,638
$
16,440
$
15,572
Total non-performing loans to total gross loans
1.39
%
1.20
%
0.87
%
0.77
%
0.66
%
Total non-performing assets to total assets
0.91
%
0.99
%
0.69
%
0.65
%
0.58
%
Total non-performing assets and accruing troubled debt restructured loans to total assets
1.16
%
1.32
%
1.07
%
1.05
%
1.01
%
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Three Months Ended June 30,
2022
2021
Average
Average
Outstanding
Average
Outstanding
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
(Dollars in thousands)
Interest-earning assets:
Loans (2)
$
1,318,400
$
16,057
4.89%
$
1,332,808
$
15,603
4.70%
Securities (3)
155,939
908
2.34%
41,218
170
1.65%
Other (4)
41,708
202
1.94%
60,439
71
0.47%
Total interest-earning assets
1,516,047
17,167
4.54%
1,434,465
15,844
4.43%
Non-interest-earning assets
213,355
66,240
Total assets
$
1,729,402
$
1,500,705
Interest-bearing liabilities:
NOW/IOLA
$
32,321
$
14
0.17%
$
30,370
$
32
0.42%
Money market
338,984
474
0.56%
300,326
311
0.42%
Savings
136,755
31
0.09%
131,397
38
0.12%
Certificates of deposit
387,129
677
0.70%
431,324
1,108
1.03%
Total deposits
895,189
1,196
0.54%
893,417
1,489
0.67%
Advance payments by borrowers
12,359
2
0.06%
11,086
1
0.04%
Borrowings
89,965
481
2.14%
119,162
622
2.09%
Total interest-bearing liabilities
997,513
1,679
0.68%
1,023,665
2,112
0.83%
Non-interest-bearing liabilities:
Non-interest-bearing demand
359,181
—
293,626
—
Other non-interest-bearing liabilities
67,220
—
12,848
—
Total non-interest-bearing liabilities
426,401
—
306,474
—
Total liabilities
1,423,914
1,679
1,330,139
2,112
Total equity
305,488
170,566
Total liabilities and total equity
$
1,729,402
0.68%
$
1,500,705
0.83%
Net interest income
$
15,488
$
13,732
Net interest rate spread (5)
3.86%
3.60%
Net interest-earning assets (6)
$
518,534
$
410,800
Net interest margin (7)
4.10%
3.84%
Average interest-earning assets to interest-bearing liabilities
151.98%
140.13%
(1) Annualized where appropriate.
(2) Loans include loans and mortgage loans held for sale, at fair value.
(3) Securities include available-for-sale securities and held-to-maturity securities.
(4) Includes FHLBNY demand account and FHLBNY stock dividends.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Six Months Ended June 30,
2022
2021
Average
Average
Outstanding
Average
Outstanding
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans (2)
$
1,321,897
$
34,257
5.23%
$
1,286,226
$
30,528
4.79%
Securities (3)
147,066
1,625
2.23%
31,919
346
2.19%
Other (4)
39,990
303
1.53%
53,548
147
0.55%
Total interest-earning assets
1,508,953
36,185
4.84%
1,371,693
31,021
4.56%
Non-interest-earning assets
219,151
65,102
Total assets
$
1,728,104
$
1,436,795
Interest-bearing liabilities:
NOW/IOLA
$
32,700
$
30
0.19%
$
31,720
$
70
0.45%
Money market
329,448
709
0.43%
288,779
615
0.43%
Savings
136,084
63
0.09%
129,191
77
0.12%
Certificates of deposit
403,028
1,480
0.74%
418,722
2,327
1.12%
Total deposits
901,260
2,282
0.51%
868,412
3,089
0.72%
Advance payments by borrowers
11,091
3
0.05%
9,999
2
0.04%
Borrowings
102,258
1,074
2.12%
124,429
1,306
2.12%
Total interest-bearing liabilities
1,014,609
3,359
0.67%
1,002,840
4,397
0.88%
Non-interest-bearing liabilities:
Non-interest-bearing demand
365,771
—
254,588
—
Other non-interest-bearing liabilities
57,446
—
13,297
—
Total non-interest-bearing liabilities
423,217
—
267,885
—
Total liabilities
1,437,826
3,359
1,270,725
4,397
Total equity
290,278
166,070
Total liabilities and total equity
$
1,728,104
0.67%
$
1,436,795
0.88%
Net interest income
$
32,826
$
26,624
Net interest rate spread (5)
4.17%
3.68%
Net interest-earning assets (6)
$
494,344
$
368,853
Net interest margin (7)
4.39%
3.91%
Average interest-earning assets to
interest-bearing liabilities
148.72%
136.78%
(1) Annualized where appropriate.
(2) Loans include loans and mortgage loans held for sale, at fair value.
(3) Securities include available-for-sale securities and held-to-maturity securities.
(4) Includes FHLBNY demand account and FHLBNY stock dividends.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Other Data
As of
June 30,
March 31,
December 31,
September 30,
June 30,
2022
2022
2021
2021
2021
Other Data
Common shares issued
24,724,274
24,724,274
18,463,028
18,463,028
18,463,028
Less treasury shares
—
—
1,037,041
1,132,086
1,135,086
Common shares outstanding at end of period
24,724,274
24,724,274
17,425,987
17,330,942
17,327,942
Book value per common share
$
11.85
$
12.12
$
10.86
$
10.03
$
9.92
Tangible book value per common share
$
11.85
$
12.12
$
10.86
$
10.03
$
9.92
Contact:
Sergio Vaccaro
sergio.vaccaro@poncebank.net
718-931-9000
Source: Ponce Financial Group, Inc.