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
2022
2022
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
2022
2022
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
2022
2022
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
2022
2022
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
2,490
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
225,000
225,000
225,000
—
Common stock, $0.01 par value; 200,000,000 shares authorized
249
249
247
247
247
Treasury stock, at cost
(2
)
(2
)
—
—
—
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
2022
2022
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
36
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
15
180
288
214
338
Late and prepayment charges
729
263
109
193
58
Income on sale of mortgage loans
99
7
116
200
418
Loan origination (1)
—
(557
)
522
696
625
(Loss) gain on sale of premises and equipment
—
—
(436
)
—
—
Other
485
63
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
30
17
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
52
71
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
36
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
51
11.59
%
Brokerage commissions
15
338
(323
)
(95.56
%)
Late and prepayment charges
729
58
671
1,156.90
%
Income on sale of mortgage loans
99
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
17
968
5,694.12
%
Insurance and surety bond premiums
265
147
118
80.27
%
Office supplies, telephone and postage
399
405
(6
)
(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
71
57
80.28
%
Directors fees and regulatory assessment
155
154
1
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
2022
2022
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
19
19
19
19
19
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
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
$
2,987
$
—
$
(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
—
(2
)
115
122
—
(4
)
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
57
(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
71
—
21,522
21,803
34
—
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
2022
2022
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
2022
2022
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
—
—
39
—
—
Multifamily residences
—
—
—
—
—
Nonresidential properties
—
—
—
—
—
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
1
91
2
Consumer
363
502
2
28
32
Total recoveries
363
502
42
275
34
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
2022
2022
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
$
6,000
4.6
%
Term advances ending:
2023
$
24,775
$
24,775
2.81
$
178,375
$
178,375
4.32
2024
302,500
302,500
4.51
50,000
50,000
4.75
2025
50,000
50,000
4.41
50,000
50,000
4.41
2026
—
—
—
—
—
—
2027
212,000
212,000
3.44
183,000
183,000
3.25
%
Thereafter
59,100
59,100
3.43
50,000
50,000
3.35
%
$
648,375
$
648,375
3.99
%
$
517,375
$
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
2022
2022
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
40
—
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
91
93
95
96
98
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
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
$
9
0.16
%
$
33,083
$
16
0.20
%
Money market
449,206
4,124
3.72
%
319,806
235
0.30
%
Savings
128,876
30
0.09
%
135,404
32
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
3
0.09
%
9,808
1
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
2022
2022
2022
Other Data
Common shares issued
24,865,476
24,861,329
24,728,460
24,724,274
24,724,274
Less treasury shares
1,976
1,976
—
—
—
Common shares outstanding at end of period
24,863,500
24,859,353
24,728,460
24,724,274
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.