Ponce Financial Group, Inc. Reports First Quarter 2023 Results

Ponce Bank Apr 26, 2023 12:00:00 AM

YORK, April 26, 2023 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the first quarter of 2023.

First Quarter 2023 Highlights (Compared to Prior Periods):

Net income of $0.3 million or $0.01 per diluted share, for the three months ended March 31, 2023, as compared to net loss of ($9.2) million, or ($0.40) per diluted share for the three months ended December 31, 2022 and net loss of ($6.8) million, or ($0.31) per diluted share for the three months ended March 31, 2022.

Included in the $0.3 million of net income for the first quarter of 2023 results is $15.2 million in net interest income and $1.8 million in non-interest income, offset by a $16.4 million in non-interest expense.

Net interest income of $15.2 million for the first quarter of 2023 decreased $0.9 million, or 5.70%, from the prior quarter and $2.1 million, or 12.07%, from the same quarter last year, largely due to an increase in funding costs driven by the significant increase in interest rates during the quarter.

Net interest margin was 2.75% for the first quarter of 2023, a decrease from 2.98% for the prior quarter and from 4.68% for the same quarter last year.

Cash and equivalents were $184.7 million as of March 31, 2023, an increase of $130.3 million, or 239.75%, from December 31,2022 as we were able to take advantage of borrowing rates below what we collect on our interest bearing overnight deposit with banks.

Securities totaled $620.0 million as of March 31, 2023, a decrease of $20.4 million, or 3.18%, from December 31, 2022 due to a call on one of the securities and changes in principal.

Net loans receivable were $1.61 billion as of March 31, 2023, an increase of $121.3 million, or 8.12%, from December 31, 2022.

Deposits were $1.34 billion as of March 31, 2023, an increase of $84.5 million, or 6.74%, from December 31, 2022.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “Although the U.S. economy continues to show strength, we saw plenty of volatility as well as a continuation of rate increases during the quarter. Despite that backdrop we were able to grow our loan and deposit base while keeping plenty of liquidity available – our liquid assets (cash and equivalents plus unpledged securities) stand at $573 million, almost double the level of our uninsured deposits of approximately $317 million. Our capital levels continue to be industry leading and multiples of regulatory requirements. We were also able to regain profitability and grow our book value per share. During the quarter we implemented Current Expected Credit Losses ("CECL") which slightly reduced our allowance for credit losses but increased our reserve for contingent exposures (which are booked as operating expenses). On the quarterly provision, we booked a net recovery as the $1.5 million charge due to loan increases and the $0.1 million related to the investment portfolio, offset by recoveries on the micro consumer loan portfolio of $1.8 million as the portfolio paid off significantly during the quarter. We also booked $0.9 million in recoveries related to the micro consumer loan receivable given our cash collections during the quarter.

“While we continue to prepare for different scenarios and it’s reasonable to expect further volatility, we remain committed to invest in our people and in technology to make us more efficient. Our commitment is also to the communities we serve and to our MDI/CDFI status – as an example, we announced on April 17, 2023 that we were awarded a grant of $3.7 million from the U.S. Treasury as part of the CDFI Equitable Recovery Program.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added, “Despite a challenging environment, we were able to organically add over $140 million to our real estate loan portfolio across most categories during the quarter while reducing our exposure related to consumer micro loans. We achieved this growth, without sacrificing quality - we will never choose loan growth over safe and sound underwriting practices. Our prudence has served us well over the years and it will continue to do so for years to come.”

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

At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Performance Ratios (Annualized):

2023

2022

Return on average assets (1)

0.06

(1.62

(2.80

0.17

(1.55

Return on average equity (1)

0.27

(7.28

(11.25

1.01

(10.06

Net interest rate spread (1) (2)

1.79

2.14

3.12

3.86

4.48

Net interest margin (1) (3)

2.75

2.98

3.62

4.10

4.68

Non-interest expense to average assets (1)

2.79

2.78

4.83

3.73

6.39

Efficiency ratio (4)

95.88

94.95

132.46

93.77

143.50

Average interest-earning assets to average interest- bearing liabilities

147.75

151.73

161.30

151.98

145.54

Average equity to average assets

20.91

22.32

24.90

17.32

15.76

At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Capital Ratios (Annualized):

2023

2022

Total capital to risk weighted assets (Bank only)

27.54

30.53

33.39

36.00

23.27

Tier 1 capital to risk weighted assets (Bank only)

26.28

29.26

32.13

34.75

22.02

Common equity Tier 1 capital to risk-weighted assets (Bank only)

26.28

29.26

32.13

34.75

22.02

Tier 1 capital to average assets (Bank only)

19.51

20.47

22.91

28.79

14.88

At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Asset Quality Ratios (Annualized):

2023

2022

Allowance for loan losses as a percentage of total loans

1.77

2.27

1.77

1.31

1.28

Allowance for loan losses as a percentage of nonperforming loans

149.73

252.33

118.43

94.05

106.84

Net (charge-offs) recoveries to average outstanding loans (1)

(0.57

(0.85

(0.52

(0.05

(0.22

Non-performing loans as a percentage of total gross loans

1.18

0.90

1.50

1.39

1.20

Non-performing loans as a percentage of total assets

0.76

0.59

0.97

0.90

0.97

Total non-performing assets as a percentage of total assets

0.76

0.59

0.97

0.90

0.97

Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets

0.93

0.78

1.16

1.14

1.30

Annualized where appropriate.

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.

Net interest margin represents net interest income divided by average total interest-earning assets.

Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

Summary of Results of Operations

Net income for the three months ended March 31, 2023, was $0.3 million compared to a net loss of ($9.2) million for the three months ended December 31, 2022 and net loss of ($6.8) million for the three months ended March 31, 2022. The increase of net income for the three months ended March 31, 2023 compared to the three months ended December 31, 2022 was attributed mainly to Grain Technology, Inc. ("Grain")’s net provision recovery this quarter versus a large Grain-related provision charge the prior quarter. The increase of net income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation in the first quarter of 2022.

Net Interest Income and Net Margin

Net interest income for the three months ended March 31, 2023, was $15.2 million compared to $16.2 million for the three months ended December 31, 2022 and $17.3 million for the three months end March 31, 2022. This decrease is largely explained by increases in interest expenses due to higher interest rates, offset by increases in interest and dividend income.

Net interest margin was 2.75% for the three months ended March 31, 2023 compared to 2.98% for the prior quarter, a decrease of 23bps and 4.68% for the same period last year, a decrease of 193bps. The decrease in net interest margin was a result of an increase in the cost of funds driven by higher interest rates.

Non-interest Income

Non-interest income for the three months ended March 31, 2023, was $1.8 million, an increase of $1.4 million, or 316.25%, compared to the three months ended December 31, 2022 and a decrease of $0.4 million, or 18.28%, compared to the three months ended March 31, 2022.

The $1.4 million increase in non-interest income for the three months ended March 31, 2023 compared to the three months ended December 31, 2022 was impacted by the reversal of loan origination income that had been taken upfront (as opposed to deferred) last quarter and increases in late and prepayment charges and other non-interest income this quarter.

The $0.4 million decrease in non-interest income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was attributable to decreases of $0.6 million in loan origination fees, $0.3 million in income on sale of mortgage loans and $0.3 million in brokerage commission, partially offset by increases of $0.7 million in late and prepayment charges and $0.1 million in other non-interest income.

Non-interest Expense

Non-interest expense for the three months ended March 31, 2023, was $16.4 million, an increase of $0.6 million, or 3.78%, compared to the three months ended December 31, 2022 and a decrease of $11.7 million, or 41.72%, compared to the three months ended March 31, 2022.

The $0.6 million increase from the three months ended December 31, 2022 was mainly attributable to increases of $1.4 million in provision for contingencies (mostly due to CECL implementation) and $0.9 million in compensation and benefits expense, offset by decreases of $0.8 million in other expenses, $0.4 million in Grain recoveries and $0.4 million in occupancy and equipment.

The $11.7 million decrease from the three months ended March 31, 2022 was attributable to a $9.0 million decrease in Grain write-off and write-down, as well as a $5.0 million contribution to the Ponce De Leon Foundation last year, partially offset by a higher provision for contingencies of $1.0 million (due to higher volumes and CECL implementation).

Balance Sheet Summary

Total assets increased $227.5 million, or 9.84%, to $2.54 billion as of March 31, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $130.3 million in cash and cash equivalents, $121.3 million in net loans receivable (inclusive of a $16.5 million net decrease in PPP loans) and $1.8 million in other assets, offset by decreases of $19.2 million in held-to-maturity securities and $5.5 million in Federal Home Loan Bank of New York stock.

Total liabilities increased $224.2 million, or 12.32%, to $2.04 billion as of March 31, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $131.0 million in borrowings and $84.5 million in deposits.

Total stockholders’ equity increased $3.3 million, or 0.68%, to $496.0 million as of March 31, 2023, from $492.7 million as of December 31, 2022. This increase in stockholders’ equity was largely attributable to $1.2 million in other comprehensive income related to improved valuation of securities, $1.1 million as a result of implementation of CECL, $0.4 million in share-based compensation, $0.3 million in net income and $0.3 million in ESOP.

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, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; anticipated losses with respect to the Company's investment in Grain; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

ASSETS

Cash and due from banks:

Cash

83,670

34,074

37,235

53,544

32,168

Interest-bearing deposits in banks

101,017

20,286

25,286

221,262

37,127

Total cash and cash equivalents

184,687

54,360

62,521

274,806

69,295

Available-for-sale securities, at fair value

128,320

129,505

131,977

140,044

154,799

Held-to-maturity securities, at amortized cost (1)

491,649

510,820

494,297

211,517

927

Placement with banks

1,245

1,494

2,490

Mortgage loans held for sale, at fair value

2,987

1,979

3,357

9,234

7,972

Loans receivable, net

1,614,428

1,493,127

1,392,553

1,324,320

1,300,446

Accrued interest receivable

15,435

15,049

14,063

13,255

12,799

Premises and equipment, net

17,215

17,446

17,759

18,945

19,279

Right of use assets

33,147

33,423

34,121

34,416

35,179

Federal Home Loan Bank of New York stock (FHLBNY), at cost

19,209

24,661

14,272

16,429

5,420

Deferred tax assets

15,413

16,137

13,822

9,658

7,440

Other assets

15,799

13,988

11,170

21,585

13,730

Total assets

2,539,534

2,311,989

2,192,402

2,076,699

1,629,776

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits

1,336,877

1,252,412

1,351,189

1,148,728

1,181,165

Operating lease liabilities

34,308

34,532

35,081

35,217

35,821

Accrued interest payable

1,767

1,390

854

158

223

Advance payments by borrowers for taxes and insurance

14,902

9,724

10,589

8,668

10,161

Borrowings

648,375

517,375

286,375

334,375

93,375

Warehouse lines of credit

—

753

Other liabilities

7,264

3,856

7,631

31,471

8,699

Total liabilities

2,043,493

1,819,289

1,691,719

1,558,617

1,330,197

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

249

247

Treasury stock, at cost

)

—

Additional paid-in-capital

206,883

206,508

206,092

205,669

205,243

Retained earnings

94,399

92,955

102,169

116,907

116,136

Accumulated other comprehensive loss

(16,629

)

(17,860

)

(18,420

)

(15,032

)

(7,035

)

Unearned compensation ─ ESOP

(13,859

)

(14,150

)

(14,405

)

(14,709

)

(15,012

)

Total stockholders' equity

496,041

492,700

500,683

518,082

299,579

Total liabilities and stockholders' equity

2,539,534

2,311,989

2,192,402

2,076,699

1,629,776

(1) Included for the quarterly period ended March 31, 2023 was $0.8 million related to the allowance for credit loss on held-to-maturity securities.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

Interest and dividend income:

Interest on loans receivable

19,700

18,550

17,058

16,057

18,200

Interest on deposits due from banks

197

199

346

132

Interest and dividend on securities and FHLBNY stock

6,459

6,184

4,230

978

782

Total interest and dividend income

26,356

24,933

21,634

17,167

19,018

Interest expense:

Interest on certificates of deposit

1,871

1,310

687

677

803

Interest on other deposits

4,166

4,125

1,543

521

284

Interest on borrowings

5,074

3,332

1,793

481

593

Total interest expense

11,111

8,767

4,023

1,679

1,680

Net interest income

15,245

16,166

17,611

15,488

17,338

(Benefit) provision for credit losses

(174

)

12,641

9,330

817

1,258

Net interest income after (benefit) provision for credit losses

15,419

3,525

8,281

14,671

16,080

Non-interest income:

Service charges and fees

491

481

464

445

440

Brokerage commissions

180

288

214

338

Late and prepayment charges

729

263

109

193

Income on sale of mortgage loans

116

200

418

Loan origination (1)

—

(557

)

522

696

625

(Loss) gain on sale of premises and equipment

—

(436

)

—

Other

485

514

431

347

Total non-interest income

1,819

437

1,577

2,179

2,226

Non-interest expense:

Compensation and benefits

7,446

6,501

7,377

6,911

7,125

Occupancy and equipment

3,570

3,928

3,611

3,237

3,192

Data processing expenses

1,192

1,114

994

824

847

Direct loan expenses

412

454

654

505

874

Provision for contingencies

985

(440

)

519

Insurance and surety bond premiums

265

270

297

156

147

Office supplies, telephone and postage

399

375

369

406

405

Professional fees

1,455

1,571

1,251

1,748

1,334

Contribution to the Ponce De Leon Foundation

—

4,995

Grain (recoveries) and write-off

(914

)

(515

)

8,881

1,500

8,074

Marketing and promotional expenses

128

256

214

Directors fees and regulatory assessment

155

196

188

167

154

Other operating expenses

1,268

2,055

1,061

1,031

839

Total non-interest expense

16,361

15,765

25,416

16,567

28,074

Income (loss) before income taxes

877

(11,803

)

(15,558

)

283

(9,768

)

Provision (benefit) for income taxes

546

(2,589

)

(820

)

(488

)

(2,948

)

Net income (loss)

331

(9,214

)

(14,738

)

771

(6,820

)

Earnings (loss) per common share:

Basic

0.01

(0.40

)

(0.64

)

0.03

(0.31

)

Diluted

0.01

(0.40

)

(0.64

)

0.03

(0.31

)

Weighted average common shares outstanding:

Basic

23,293,013

23,168,097

23,094,859

23,056,559

21,721,113

Diluted

23,324,532

23,168,097

23,094,859

23,128,911

21,721,113

(1) Amounts for the quarterly period ended December 31, 2022 include the reversal of $0.8 million of loan origination income that had been taken upfront in prior quarters of 2022 (as opposed to deferred over the life of ‎the loan)‎.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

For the Three Months Ended March 31,

2023

2022

Variance $

Variance %

Interest and dividend income:

Interest on loans receivable

19,700

18,200

1,500

8.24

Interest on deposits due from banks

197

161

447.22

Interest and dividend on securities and FHLBNY stock

6,459

782

5,677

725.96

Total interest and dividend income

26,356

19,018

7,338

38.58

Interest expense:

Interest on certificates of deposit

1,871

803

1,068

133.00

Interest on other deposits

4,166

284

3,882

1,366.90

Interest on borrowings

5,074

593

4,481

755.65

Total interest expense

11,111

1,680

9,431

561.37

Net interest income

15,245

17,338

(2,093

)

(12.07

(Benefit) provision for credit losses

(174

)

1,258

(1,432

)

(113.83

Net interest income after (benefit) provision for credit losses

15,419

16,080

(661

)

(4.11

Non-interest income:

Service charges and fees

491

440

11.59

Brokerage commissions

338

(323

)

(95.56

Late and prepayment charges

729

671

1,156.90

Income on sale of mortgage loans

418

(319

)

(76.32

Loan origination

—

625

(625

)

(100.00

Other

485

347

138

39.77

Total non-interest income

1,819

2,226

(407

)

(18.28

Non-interest expense:

Compensation and benefits

7,446

7,125

321

4.51

Occupancy and equipment

3,570

3,192

378

11.84

Data processing expenses

1,192

847

345

40.73

Direct loan expenses

412

874

(462

)

(52.86

Provision for contingencies

985

968

5,694.12

Insurance and surety bond premiums

265

147

118

80.27

Office supplies, telephone and postage

399

405

)

(1.48

Professional fees

1,455

1,334

121

9.07

Contribution to the Ponce De Leon Foundation

—

4,995

(4,995

)

(100.00

Grain (recoveries) and write-off

(914

)

8,074

(8,988

)

(111.32

Marketing and promotional expenses

128

80.28

Directors fees and regulatory assessment

155

154

0.65

Other operating expenses

1,268

839

429

51.13

Total non-interest expense

16,361

28,074

(11,713

)

(41.72

Income (loss) before income taxes

877

(9,768

)

10,645

(108.98

Provision (benefit) for income taxes

546

(2,948

)

3,494

(118.52

Net income (loss)

331

(6,820

)

7,151

(104.85

Earnings (loss) per common share:

Basic

0.01

(0.31

)

0.33

(104.53

Diluted

0.01

(0.31

)

0.33

(104.52

Weighted average common shares outstanding:

Basic

23,293,013

21,721,113

1,571,900

7.24

Diluted

23,324,532

21,721,113

1,603,419

7.38

Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

Performance Ratios:

Return on average assets (1)

0.06

(1.62

(2.80

0.17

(1.55

Return on average equity (1)

0.27

(7.28

(11.25

1.01

(10.06

Net interest rate spread (1) (2)

1.79

2.14

3.12

3.86

4.48

Net interest margin (1) (3)

2.75

2.98

3.62

4.10

4.68

Non-interest expense to average assets (1)

2.79

2.78

4.83

3.73

6.39

Efficiency ratio (4)

95.88

94.95

132.46

93.77

143.50

Average interest-earning assets to average interest- bearing liabilities

147.75

151.73

161.30

151.98

145.54

Average equity to average assets

20.91

22.32

24.90

17.32

15.76

Capital Ratios:

Total capital to risk weighted assets (Bank only)

27.54

30.53

33.39

36.00

23.27

Tier 1 capital to risk weighted assets (Bank only)

26.28

29.26

32.13

34.75

22.02

Common equity Tier 1 capital to risk-weighted assets (Bank only)

26.28

29.26

32.13

34.75

22.02

Tier 1 capital to average assets (Bank only)

19.51

20.47

22.91

28.79

14.88

Asset Quality Ratios:

Allowance for credit losses on loans as a percentage of total loans

1.77

2.27

1.77

1.31

1.28

Allowance for credit losses on loans as a percentage of nonperforming loans

149.73

252.33

118.43

94.05

106.84

Net (charge-offs) recoveries to average outstanding loans (1)

(0.57

(0.85

(0.52

(0.05

(0.22

Non-performing loans as a percentage of total gross loans

1.18

0.90

1.50

1.39

1.20

Non-performing loans as a percentage of total assets

0.76

0.59

0.97

0.90

0.97

Total non-performing assets as a percentage of total assets

0.76

0.59

0.97

0.90

0.97

Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets

0.93

0.78

1.16

1.14

1.30

Other:

Number of offices

Number of full-time equivalent employees

251

253

257

253

223

Annualized where appropriate.

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.

Net interest margin represents net interest income divided by average total interest-earning assets.

Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

Ponce Financial Group, Inc. and Subsidiaries

Securities Portfolio

March 31, 2023

December 31, 2022

Gross

Amortized

Unrealized

Amortized

Unrealized

Cost

Gains

Losses

Fair Value

Cost

Gains

Losses

Fair Value

(in thousands)

Available-for-Sale Securities:

U.S. Government Bonds

2,987

—

(241

)

2,746

2,985

—

(296

)

2,689

Corporate Bonds

25,816

—

(2,639

)

23,177

25,824

—

(2,465

)

23,359

Mortgage-Backed Securities:

Collateralized Mortgage Obligations (1)

43,421

—

(6,030

)

37,391

44,503

—

(6,726

)

37,777

FHLMC Certificates

11,036

—

(1,490

)

9,546

11,310

—

(1,676

)

9,634

FNMA Certificates

65,819

—

(10,474

)

55,345

67,199

—

(11,271

)

55,928

GNMA Certificates

117

—

)

115

122

—

)

118

Total available-for-sale securities

149,196

—

(20,876

)

128,320

151,943

—

(22,438

)

129,505

Held-to-Maturity Securities:

U.S. Agency Bonds

25,000

—

(206

)

24,794

35,000

—

(380

)

34,620

Corporate Bonds

82,500

—

(4,158

)

78,342

82,500

(3,819

)

78,738

Mortgage-Backed Securities:

Collateralized Mortgage Obligations (1)

230,531

853

(2,457

)

228,927

235,479

192

(5,558

)

230,113

FHLMC Certificates

4,008

—

(245

)

3,763

4,120

—

(268

)

3,852

FNMA Certificates

128,968

—

(3,695

)

125,273

131,918

—

(5,227

)

126,691

SBA Certificates

21,451

—

21,522

21,803

—

21,837

Total held-to-maturity securities (2)

492,458

924

(10,761

)

482,621

510,820

283

(15,252

)

495,851

Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

Excludes $0.8 million related to allowance for credit losses on securities.

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

For the Three Months Ended March 31,

2023

2022

Beginning balance

—

CECL adoption

662

—

Provision for credit losses

147

—

Allowance for credit losses on securities

809

—

Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Mortgage loans:

1-4 family residential

Investor Owned

354,559

21.60

343,968

22.54

336,667

23.79

321,671

24.02

323,442

24.59

Owner-Occupied

149,481

9.10

134,878

8.84

112,749

7.97

100,048

7.47

95,234

7.24

Multifamily residential

553,430

33.71

494,667

32.42

421,917

29.81

396,470

29.60

368,133

27.98

Nonresidential properties

314,560

19.17

308,043

20.19

282,642

19.97

279,877

20.90

251,893

19.14

Construction and land

235,157

14.33

185,018

12.13

197,437

13.95

165,425

12.35

144,881

11.01

Total mortgage loans

1,607,187

97.91

1,466,574

96.12

1,351,412

95.49

1,263,491

94.34

1,183,583

89.96

Non-mortgage loans:

Business loans (1)

19,890

1.21

39,965

2.62

41,398

2.92

45,720

3.41

100,253

7.62

Consumer loans (2)

14,227

0.88

19,129

1.26

22,563

1.59

30,198

2.25

31,899

2.42

Total non-mortgage loans

34,117

2.09

59,094

3.88

63,961

4.51

75,918

5.66

132,152

10.04

Total loans, gross

1,641,304

100.00

1,525,668

100.00

1,415,373

100.00

1,339,409

100.00

1,315,735

100.00

Net deferred loan origination costs

2,099

2,051

2,288

2,446

1,604

Allowance for credit losses on loans

(28,975

)

(34,592

)

(25,108

)

(17,535

)

(16,893

)

Loans, net

1,614,428

1,493,127

1,392,553

1,324,320

1,300,446

As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, business loans include $3.6 million, $20.0 million, $24.7 million, $30.8 million and $86.0 million, respectively, of PPP loans.

As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, consumer loans include $13.4 million, $18.2 million, $21.5 million, $28.3 million and $31.0 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.

Ponce Financial Group, Inc. and Subsidiaries

Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of March 31, 2023

(in thousands)

Receivable from Grain

Microloans originated - put back to Grain (inception-to-March 31, 2023)

25,057

Write-downs, net of recoveries (inception-to-date as of March 31, 2023)

(16,541

)

Cash receipts from Grain (inception-to-March 31, 2023)

(6,690

)

Grant/reserve

(1,826

)

Net receivable as of March 31, 2023

—

Microloan receivables from Grain Borrowers

Grain originated loans receivable as of March 31, 2023

13,365

Allowance for credit losses on loans as of March 31, 2023 (1)

(11,597

)

Microloans, net of allowance for credit losses on loans as of March 31, 2023

1,768

Investments

Investment in Grain

1,000

Investment in Grain write-off in Q3 2022

(1,000

)

Investment in Grain as of March 31, 2023

—

Total exposure to Grain as of March 31, 2023

1,768

(1) Includes $0.3 million for allowance for unused commitments on the $2.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.2 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.

Ponce Financial Group, Inc. and Subsidiaries

Allowance for Credit Losses on Loans

For the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

(Dollars in thousands)

Allowance for credit losses on loans at beginning of the period

34,592

25,108

17,535

16,893

16,352

(Benefit) provision for credit losses on loans

(321

)

12,641

9,330

817

1,258

Adoption of CECL

(3,090

)

—

Charge-offs:

Mortgage loans:

1-4 family residences

Investor owned

—

Owner occupied

—

Multifamily residences

—

Nonresidential properties

—

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

(2,569

)

(3,659

)

(1,799

)

(450

)

(751

)

Total charge-offs

(2,569

)

(3,659

)

(1,799

)

(450

)

(751

)

Recoveries:

Mortgage loans:

1-4 family residences

Investor owned

—

156

—

Owner occupied

—

Multifamily residences

—

Nonresidential properties

—

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

363

502

Total recoveries

363

502

275

Net (charge-offs) recoveries

(2,206

)

(3,157

)

(1,757

)

(175

)

(717

)

Allowance for credit losses on loans at end of the period

28,975

34,592

25,108

17,535

16,893

Ponce Financial Group, Inc. and Subsidiaries

Deposits

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Demand

282,741

21.15

289,149

23.08

288,654

21.37

284,462

24.77

281,132

23.81

Interest-bearing deposits:

NOW/IOLA accounts

21,735

1.63

24,349

1.94

28,799

2.13

28,597

2.49

33,010

2.79

Money market accounts

408,404

30.55

317,815

25.38

360,293

26.66

181,156

15.77

169,847

14.38

Reciprocal deposits

109,649

8.20

114,049

9.11

162,858

12.05

151,264

13.17

160,510

13.59

Savings accounts

127,731

9.55

130,432

10.41

140,055

10.37

139,244

12.12

133,966

11.34

Total NOW, money market, reciprocal and savings accounts

667,519

49.93

586,645

46.84

692,005

51.21

500,261

43.55

497,333

42.10

Certificates of deposit of $250K or more

76,893

5.75

70,113

5.60

61,900

4.58

65,157

5.67

75,130

6.36

Brokered certificates of deposit (1)

98,754

7.39

98,754

7.89

98,760

7.31

62,650

5.45

79,282

6.71

Listing service deposits (1)

28,417

2.13

35,813

2.86

40,964

3.03

48,953

4.26

53,876

4.56

All other certificates of deposit less than $250K

182,553

13.65

171,938

13.73

168,906

12.50

187,245

16.30

194,412

16.46

Total certificates of deposit

386,617

28.92

376,618

30.08

370,530

27.42

364,005

31.68

402,700

34.09

Total interest-bearing deposits

1,054,136

78.85

963,263

76.92

1,062,535

78.63

864,266

75.23

900,033

76.19

Total deposits

1,336,877

100.00

1,252,412

100.00

1,351,189

100.00

1,148,728

100.00

1,181,165

100.00

(1) As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, there were $9.5 million, $13.6 million, $13.8 million, $18.5 million, and $19.0 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. and Subsidiaries

Borrowings

March 31,

December 31,

2023

2022

Scheduled

Maturity

Redeemable

at Call Date

Weighted

Average

Rate

Scheduled

Maturity

Redeemable

at Call Date

Weighted

Average

Rate

(Dollars in thousands)

Overnight line of credit

advance

—

6,000

4.6

Term advances ending:

2023

24,775

2.81

178,375

4.32

2024

302,500

4.51

50,000

4.75

2025

50,000

4.41

50,000

4.41

2026

—

2027

212,000

3.44

183,000

3.25

Thereafter

59,100

3.43

50,000

3.35

648,375

3.99

517,375

3.90

Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

As of Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

(Dollars in thousands)

Non-accrual loans:

Mortgage loans:

1-4 family residential

Investor owned

2,836

2,844

5,902

3,460

3,596

Owner occupied

2,245

961

971

1,140

962

Multifamily residential

—

Nonresidential properties

—

778

1,162

1,166

Construction and land

11,906

7,567

10,660

10,817

7,567

Non-mortgage loans:

Business

—

359

—

Consumer

—

Total non-accrual loans (not including non-accruing troubled debt restructured loans)

17,027

11,372

18,670

16,579

13,291

Non-accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

213

217

221

224

230

Owner occupied

2,020

2,027

2,215

1,746

2,192

Multifamily residential

—

Nonresidential properties

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total non-accruing troubled debt restructured loans

2,324

2,337

2,531

2,066

2,520

Total non-accrual loans

19,351

13,709

21,201

18,645

15,811

Accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

2,185

2,207

2,228

2,246

2,269

Owner occupied

1,310

1,328

1,254

2,019

2,313

Multifamily residential

—

Nonresidential properties

701

708

715

725

726

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total accruing troubled debt restructured loans

4,196

4,243

4,197

4,990

5,308

Total non-performing assets and accruing troubled debt restructured loans

23,547

17,952

25,398

23,635

21,119

Total non-performing loans to total gross loans

1.18

0.90

1.50

1.39

1.20

Total non-performing assets to total assets

0.76

0.59

0.97

0.90

0.97

Total non-performing assets and accruing troubled debt restructured loans to total assets

0.93

0.78

1.16

1.14

1.30

Ponce Financial Group, Inc. and Subsidiaries

Average Balance Sheets

For the Three Months Ended March 31,

2023

2022

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

(Dollars in thousands)

Interest-earning assets:

Loans (2)

1,572,148

19,700

5.08

1,325,433

18,200

5.57

Securities (3)

631,138

6,075

3.90

138,095

717

2.11

Other (4)

41,643

581

5.66

38,253

101

1.07

Total interest-earning assets

2,244,929

26,356

4.76

1,501,781

19,018

5.14

Non-interest-earning assets

129,837

225,006

Total assets

2,374,766

1,726,787

Interest-bearing liabilities:

NOW/IOLA

23,334

0.16

33,083

0.20

Money market

449,206

4,124

3.72

319,806

235

0.30

Savings

128,876

0.09

135,404

0.10

Certificates of deposit

381,362

1,871

1.99

419,104

803

0.78

Total deposits

982,778

6,034

2.49

907,397

1,086

0.49

Advance payments by borrowers

12,919

0.09

9,808

0.04

Borrowings

523,705

5,074

3.93

114,688

593

2.10

Total interest-bearing liabilities

1,519,402

11,111

2.97

1,031,893

1,680

0.66

Non-interest-bearing liabilities:

Non-interest-bearing demand

316,803

—

372,433

—

Other non-interest-bearing liabilities

42,038

—

47,562

—

Total non-interest-bearing liabilities

358,841

—

419,995

—

Total liabilities

1,878,243

11,111

1,451,888

1,680

Total equity

496,523

274,899

Total liabilities and total equity

2,374,766

2.97

1,726,787

0.66

Net interest income

15,245

17,338

Net interest rate spread (5)

1.79

4.48

Net interest-earning assets (6)

725,527

469,888

Net interest margin (7)

2.75

4.68

Average interest-earning assets to interest-bearing liabilities

147.75

145.54

Annualized where appropriate.

Loans include loans and mortgage loans held for sale, at fair value.

Securities include available-for-sale securities and held-to-maturity securities.

Includes FHLBNY demand account and FHLBNY stock dividends.

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.

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries

Other Data

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2023

2022

Other Data

Common shares issued

24,865,476

24,861,329

24,728,460

24,724,274

Less treasury shares

1,976

—

Common shares outstanding at end of period

24,863,500

24,859,353

24,728,460

24,724,274

Book value per common share

10.90

10.77

11.15

11.85

12.12

Tangible book value per common share

10.90

10.77

11.15

11.85

12.12

Contact:

Frank Perez

frank.perez@poncebank.net

718-931-9000

Source: Ponce Financial Group, Inc.

Why Work Here

Build Confidence, Clarity, And Control Over Your Financial Future

Security & Fraud

Ponce Financial Group, Inc. Reports First Quarter 2023 Results

Read On

Ponce Financial Group, Inc. Reports First Quarter 2025 Results

Ponce Financial Group, Inc. Reports Second Quarter 2025 Results

Ponce Financial Group, Inc. Reports Second Quarter 2023 Results