(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”), today announced results for the fourth quarter of 2022.
Fourth Quarter Highlights (Compared to Prior Periods):
Net loss of ($9.2) million or ($0.40) per diluted share, for the three months ended December 31, 2022, as compared to net loss of ($14.7) million, or ($0.64) per diluted share for the three months ended September 30, 2022 and net income of $15.0 million, or $0.89 per diluted share for the three months ended December 31, 2021.
Included in the ($9.2) million 2022 fourth quarter results is a $10.4 million increase in net provision for loan loss reserves/unused commitments to our Grain-originated microloan portfolio, as well as a reversal of $0.8 million of loan origination income that had been taken upfront (as opposed to deferred over the life of the loan).
Net interest income of $16.2 million for the fourth quarter of 2022 decreased $1.4 million, or 8.21%, from the prior quarter and $0.6 million, or 3.67%, 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 2.98% for the fourth quarter of 2022, a decrease from 3.62% for the prior quarter and from 4.51% for the same quarter last year. The reduction was largely attributable to an increase of lower yielding securities in the Company's portfolio and to an increase in the cost of funds.
Securities totaled $640.3 million as of December 31, 2022, an increase of $526.0 million, or 460.31%, from December 31, 2021.
Net loans receivable were $1.49 billion as of December 31, 2022, an increase of $188.0 million, or 14.41%, from December 31, 2021. The increase of $188.0 million was attributable to a $304.8 million net increase in non-PPP loans partially offset by a $116.7 million decrease in PPP loans.
Deposits were $1.25 billion as of December 31, 2022, an increase of $47.7 million, or 3.96%, from December 31, 2021.
President and Chief Executive Officer’s Comments
Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “We took action this quarter, within applicable guidelines, to further reduce future exposure to our consumer microloan program with Grain by reducing available credit lines for many borrowers. Grain unused credit line exposure was reduced from $15.3 million at the end of the third quarter of 2022 to $0.4 million at the end of the fourth quarter of 2022. We also increased our allowance for loan losses for this portfolio to $15.4 million, leaving us with total possible remaining exposure, inclusive of unused commitments, of $3.2 million at year-end, down from previous exposure of $28.6 million at the end of the third quarter. We also retained $1.4 million of security deposits from Grain borrowers, which may be available to offset the remaining exposure. While we are winding down our partnership with Grain, we will continue to explore and foster other partnerships, to invest in our people and in efficiency enhancing technologies and to use all available capital management tools to deliver value to our stakeholders as a nationally recognized MDI and CDFI institution.
Mr. Naudon continued, “Looking to the coming year, we are focused on successfully navigating a dramatically changed environment compared to a year ago in terms of credit costs and economic uncertainty. We are keenly aware, as many others in our industry have pointed out, that the road ahead will continue to be more volatile as we navigate through this necessary adjustment from an extended period of ultra-low interest rates. Fortunately for Ponce, during 2022 we significantly increased our capital base, both due to the second-step conversion as well as the $225 million sale of our perpetual preferred stock to the U.S. Department of the Treasury, as evidenced by our strong capital ratios. Our financial strength provides significant capacity for future growth, but we will be patient and judicious in deploying this capital while at the same time making use of our strength to support underserved but not undeserving members of our communities.”
Executive Chairman’s Comment
Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman, added, “Despite a challenging environment, we were able to add almost $200 million to our loan portfolio across most categories during the quarter. We saw healthy growth in our multi-family loan and non-qualified mortgage portfolios. The loan portfolio, excluding Grain originations, continues to show great resiliency and continues to enjoy low LTVs”.
Selected performance metrics are as follows (refer to “Key Metrics” for additional information):
At or for the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Performance Ratios (Annualized):
2022
2022
2022
2022
2021
Return on average assets (1)
(1.62
%)
(2.80
%)
0.17
%
(1.55
%)
3.69
%
Return on average equity (1)
(7.28
%)
(11.25
%)
1.01
%
(10.06
%)
31.46
%
Net interest rate spread (1) (2)
2.14
%
3.12
%
3.86
%
4.48
%
4.32
%
Net interest margin (1) (3)
2.98
%
3.62
%
4.10
%
4.68
%
4.51
%
Non-interest expense to average assets (1)
2.78
%
4.83
%
3.73
%
6.39
%
3.90
%
Efficiency ratio (4)
94.95
%
132.46
%
93.77
%
143.50
%
44.10
%
Average interest-earning assets to average interest- bearing liabilities
151.73
%
161.30
%
151.98
%
145.54
%
138.10
%
Average equity to average assets
22.32
%
24.90
%
17.32
%
15.76
%
11.71
%
At or for the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Capital Ratios (Annualized):
2022
2022
2022
2022
2021
Total capital to risk weighted assets (Bank only)
30.53
%
33.39
%
36.00
%
23.27
%
17.23
%
Tier 1 capital to risk weighted assets (Bank only)
29.26
%
32.13
%
34.75
%
22.02
%
15.98
%
Common equity Tier 1 capital to risk-weighted assets (Bank only)
29.26
%
32.13
%
34.75
%
22.02
%
15.98
%
Tier 1 capital to average assets (Bank only)
20.47
%
22.91
%
28.79
%
14.88
%
10.95
%
At or for the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Asset Quality Ratios (Annualized):
2022
2022
2022
2022
2021
Allowance for loan losses as a percentage of total loans
2.27
%
1.77
%
1.31
%
1.28
%
1.24
%
Allowance for loan losses as a percentage of nonperforming loans
252.33
%
118.43
%
94.05
%
106.84
%
142.90
%
Net (charge-offs) recoveries to average outstanding loans (1)
(0.85
%)
(0.52
%)
(0.05
%)
(0.22
%)
(0.18
%)
Non-performing loans as a percentage of total gross loans
0.90
%
1.50
%
1.39
%
1.20
%
0.87
%
Non-performing loans as a percentage of total assets
0.59
%
0.97
%
0.90
%
0.97
%
0.69
%
Total non-performing assets as a percentage of total assets
0.59
%
0.97
%
0.90
%
0.97
%
0.69
%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets
0.78
%
1.16
%
1.14
%
1.30
%
1.07
%
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 loss for the year ended December 31, 2022, was ($30.0) million compared to net income of $25.4 million for the year ended December 31, 2021. This variance was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation this year, gains on property sales last year versus a loss on equipment sale this year, higher compensation and occupancy expenses and a reduction on the income on sale of mortgage loans.
Net Interest Income and Net Margin
Net interest income for the year ended December 31, 2022, was $66.6 million compared to $58.8 million for the year ended December 31, 2021. This increase is largely explained by the increases in the securities and loan portfolios.
Net interest margin was 3.75% for the year ended December 31, 2022 compared to 4.13% for the same period last year, a decrease of 38bps. The decrease in net interest margin was a result of an increase in the cost of funds driven by higher interest rates as well as a higher proportion of investment securities within interest-earning assets. These securities offer lower yields versus traditional loans.
Non-interest Income
Non-interest income for the three months ended December 31, 2022, was $0.4 million, a decrease of $1.1 million, or 72.29%, compared to the three months ended September 30, 2022 and a decrease of $18.7 million, or 97.72%, compared to the three months ended December 31, 2021.
The $1.1 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended September 30, 2022 was impacted by the reversal of loan origination income that had been taken upfront (as opposed to deferred) as well as lower income on sale of mortgage loans.
The $18.7 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 was attributable to the non-recurring $15.4 million gains on sale of property last year, a $1.4 million reduction in loan origination fees and a $1.3 million reduction in income on sale of mortgage loans.
Non-interest income for the year ended December 31, 2022, decreased $28.2 million, or 81.47%, to $6.4 million compared to $34.6 million for the year ended December 31, 2021. The decrease is primarily due to $20.3 million gains on sale of property last year versus a loss on sale of equipment of $0.4 million, a $4.5 million reduction in income on sale of mortgage loans and a $1.7 million reduction in loan origination fees this year.
Non-interest Expense
Non-interest expense for the three months ended December 31, 2022, was $15.8 million, a decrease of $9.7 million, or 37.97%, compared to the three months ended September 30, 2022 and $0.1 million, or 0.56%, compared to the three months ended December 31, 2021. The $9.7 million decrease from the three months ended September 30, 2022 was mainly attributable to the Grain write-off and write-down in the third quarter and to a lesser extent, a decrease in compensation and benefits expense as we reduced the bonus accrual during the fourth quarter. The $0.1 million decrease from the three months ended December 31, 2021 was attributable to a decrease of $0.6 million in direct loan expense, a $0.5 million recovery of Grain charge-offs and a decrease of $0.5 million in compensation and benefits expense, offset by increases of $0.9 million in occupancy and equipment, mainly due to rental expenses incurred after the sale of property during 2021 and $0.3 million in data processing expenses.
Non-interest expense for the year ended December 31, 2022, was $85.8 million, an increase of $28.7 million or 50.19%, compared to $57.1 million the year ended December 31, 2021. The $28.7 million increase in non-interest expense was attributable to the $17.9 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $4.7 million in compensation and benefits expense, $2.6 million in occupancy and equipment expenses, $0.8 million in data processing expenses, $0.5 million in other operating expenses, $0.4 million in marketing and promotional expenses and $0.3 million in insurance and surety bond premiums. These items were partially offset by decreases of $1.7 million in professional fees, $1.4 million in direct loan expenses and $0.5 million in office supplies, telephone and postage.
Balance Sheet Summary
Total assets increased $658.5 million, or 39.82%, to $2.31 billion as of December 31, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $509.9 million resulting from the purchases in held-to-maturity securities utilizing the $225.0 million received from the issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program. The increase in total assets is further impacted by increases of $188.0 million in net loans receivable (inclusive of a $116.7 million net decrease in PPP loans), $33.4 million in right of use assets, $18.7 million in Federal Home Loan Bank of New York stock, $16.2 million resulting from the purchase of available-for-sale securities and $12.3 million in deferred tax assets. These increases are partially offset by decreases of $99.5 million in cash and equivalents, $13.9 million in mortgage loans held for sale, at fair value and $6.2 million in other assets.
Total liabilities increased $355.0 million, or 24.25%, to $1.82 billion as of December 31, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $411.1 million in advances from FHLBNY, $47.7 million in deposits, and $34.5 million in operating lease liabilities, offset by decreases of $122.0 million in subscription liabilities related to the conversion of the mutual holding company to a stock company held as of December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022 and $15.1 million in warehouse lines of credit.
Total stockholders’ equity increased $303.4 million, or 160.34%, to $492.7 million as of December 31, 2022, from $189.3 million as of December 31, 2021. This increase in stockholders’ equity was largely attributable to the $225.0 million issuance of preferred stock to the U.S. Department of the Treasury pursuant to its Emergency Capital Investment Program and the $118.0 million received as a result of the sale of common stock in the conversion of the mutual holding company to a stock company.
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; 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
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
ASSETS
Cash and due from banks:
Cash
$
34,074
$
37,235
$
53,544
$
32,168
$
98,954
Interest-bearing deposits in banks
20,286
25,286
221,262
37,127
54,940
Total cash and cash equivalents
54,360
62,521
274,806
69,295
153,894
Available-for-sale securities, at fair value
129,505
131,977
140,044
154,799
113,346
Held-to-maturity securities, at amortized cost
510,820
494,297
211,517
927
934
Placement with banks
1,494
2,490
2,490
2,490
2,490
Mortgage loans held for sale, at fair value
1,979
3,357
9,234
7,972
15,836
Loans receivable, net
1,493,127
1,392,553
1,324,320
1,300,446
1,305,078
Accrued interest receivable
15,049
14,063
13,255
12,799
12,362
Premises and equipment, net
17,446
17,759
18,945
19,279
19,617
Right of use assets
33,423
34,121
34,416
35,179
—
Federal Home Loan Bank of New York stock (FHLBNY), at cost
24,661
14,272
16,429
5,420
6,001
Deferred tax assets
16,137
13,822
9,658
7,440
3,820
Other assets
13,988
11,170
21,585
13,730
20,132
Total assets
$
2,311,989
$
2,192,402
$
2,076,699
$
1,629,776
$
1,653,510
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
$
1,252,412
$
1,351,189
$
1,148,728
$
1,181,165
$
1,204,716
Operating lease liabilities
34,532
35,081
35,217
35,821
—
Accrued interest payable
1,390
854
158
223
228
Advance payments by borrowers for taxes and insurance
9,724
10,589
8,668
10,161
7,657
Advances from the FHLBNY and others
517,375
286,375
334,375
93,375
106,255
Warehouse lines of credit
—
—
—
753
15,090
Mutual holding company conversion subscription liabilities
—
—
—
—
122,000
Other liabilities
3,856
7,631
31,471
8,699
8,308
Total liabilities
1,819,289
1,691,719
1,558,617
1,330,197
1,464,254
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized
225,000
225,000
225,000
—
—
Common stock, $0.01 par value; 200,000,000 shares authorized
249
247
247
247
185
Treasury stock, at cost
(2
)
—
—
—
(13,687
)
Additional paid-in-capital
206,508
206,092
205,669
205,243
85,601
Retained earnings
92,955
102,169
116,907
116,136
122,956
Accumulated other comprehensive loss
(17,860
)
(18,420
)
(15,032
)
(7,035
)
(1,456
)
Unearned compensation ─ ESOP
(14,150
)
(14,405
)
(14,709
)
(15,012
)
(4,343
)
Total stockholders' equity
492,700
500,683
518,082
299,579
189,256
Total liabilities and stockholders' equity
$
2,311,989
$
2,192,402
$
2,076,699
$
1,629,776
$
1,653,510
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
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Interest and dividend income:
Interest on loans receivable
$
18,550
$
17,058
$
16,057
$
18,200
$
18,013
Interest on deposits due from banks
199
346
132
36
7
Interest and dividend on securities and FHLBNY stock
6,184
4,230
978
782
632
Total interest and dividend income
24,933
21,634
17,167
19,018
18,652
Interest expense:
Interest on certificates of deposit
1,310
687
677
803
907
Interest on other deposits
4,125
1,543
521
284
309
Interest on borrowings
3,332
1,793
481
593
654
Total interest expense
8,767
4,023
1,679
1,680
1,870
Net interest income
16,166
17,611
15,488
17,338
16,782
Provision for loan losses
12,641
9,330
817
1,258
873
Net interest income after provision for loan losses
3,525
8,281
14,671
16,080
15,909
Non-interest income:
Service charges and fees
481
464
445
440
468
Brokerage commissions
180
288
214
338
401
Late and prepayment charges
263
109
193
58
336
Income on sale of mortgage loans
7
116
200
418
1,294
Loan origination(1)
(557
)
522
696
625
886
(Loss) gain on sale of premises and equipment
—
(436
)
—
—
15,431
Other
63
514
431
347
353
Total non-interest income
437
1,577
2,179
2,226
19,169
Non-interest expense:
Compensation and benefits
6,501
7,377
6,911
7,125
6,959
Occupancy and equipment
3,928
3,611
3,237
3,192
3,007
Data processing expenses
1,114
994
824
847
771
Direct loan expenses
454
654
505
874
1,032
Insurance and surety bond premiums
270
297
156
147
149
Office supplies, telephone and postage
375
369
406
405
552
Professional fees
1,571
1,251
1,748
1,334
1,700
Contribution to the Ponce De Leon Foundation
—
—
—
4,995
—
Grain write-off and write-down
(515
)
8,881
1,500
8,074
—
Marketing and promotional expenses
256
214
52
71
69
Directors fees
112
89
96
71
80
Regulatory assessment
84
99
71
83
69
Other operating expenses
1,615
1,580
1,061
856
1,466
Total non-interest expense
15,765
25,416
16,567
28,074
15,854
(Loss) income before income taxes
(11,803
)
(15,558
)
283
(9,768
)
19,224
(Benefit) provision for income taxes
(2,589
)
(820
)
(488
)
(2,948
)
4,245
Net (loss) income
$
(9,214
)
$
(14,738
)
$
771
$
(6,820
)
$
14,979
(Loss) earnings per common share:
Basic
$
(0.40
)
$
(0.64
)
$
0.03
$
(0.31
)
$
0.90
Diluted
$
(0.40
)
$
(0.64
)
$
0.03
$
(0.31
)
$
0.89
Weighted average common shares outstanding:
Basic
23,168,097
23,094,859
23,056,559
21,721,113
16,864,929
Diluted
23,168,097
23,094,859
23,128,911
21,721,113
16,924,785
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., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
For the Years Ended December 31,
2022
2021
Variance $
Variance %
Interest and dividend income:
Interest on loans receivable
$
69,865
$
65,532
$
4,333
6.61
%
Interest on deposits due from banks
713
20
693
3,465.00
%
Interest and dividend on securities and FHLBNY stock
12,174
1,546
10,628
687.45
%
Total interest and dividend income
82,752
67,098
15,654
23.33
%
Interest expense:
Interest on certificates of deposit
3,477
4,244
(767
)
(18.07
%)
Interest on other deposits
6,473
1,427
5,046
353.61
%
Interest on borrowings
6,199
2,581
3,618
140.18
%
Total interest expense
16,149
8,252
7,897
95.70
%
Net interest income
66,603
58,846
7,757
13.18
%
Provision for loan losses
24,046
2,717
21,329
785.02
%
Net interest income after provision for loan losses
42,557
56,129
(13,572
)
(24.18
%)
Non-interest income:
Service charges and fees
1,830
1,657
173
10.44
%
Brokerage commissions
1,020
1,324
(304
)
(22.96
%)
Late and prepayment charges
623
1,207
(584
)
(48.38
%)
Income on sale of mortgage loans
741
5,265
(4,524
)
(85.93
%)
Loan origination
1,286
3,021
(1,735
)
(57.43
%)
(Loss) gain on sale of premises and equipment
(436
)
20,270
(20,706
)
(102.15
%)
Other
1,355
1,893
(538
)
(28.42
%)
Total non-interest income
6,419
34,637
(28,218
)
(81.47
%)
Non-interest expense:
Compensation and benefits
27,914
23,262
4,652
20.00
%
Occupancy and equipment
13,968
11,328
2,640
23.31
%
Data processing expenses
3,779
3,015
764
25.34
%
Direct loan expenses
2,487
3,888
(1,401
)
(36.03
%)
Insurance and surety bond premiums
870
585
285
48.72
%
Office supplies, telephone and postage
1,555
2,054
(499
)
(24.29
%)
Professional fees
5,904
7,629
(1,725
)
(22.61
%)
Contribution to the Ponce De Leon Foundation
4,995
—
4,995
—
%
Grain write-off and write-down
17,940
—
17,940
—
%
Marketing and promotional expenses
593
206
387
187.86
%
Directors fees
368
285
83
29.12
%
Regulatory assessment
337
323
14
4.33
%
Other operating expenses
5,112
4,567
545
11.93
%
Total non-interest expense
85,822
57,142
28,680
50.19
%
(Loss) income before income taxes
(36,846
)
33,624
(70,470
)
(209.58
%)
(Benefit) provision for income taxes
(6,845
)
8,209
(15,054
)
(183.38
%)
Net (loss) income
$
(30,001
)
$
25,415
$
(55,416
)
(218.04
%)
(Loss) earnings per common share:
Basic
$
(1.32
)
$
1.52
$
(2.84
)
(187.11
%)
Diluted
$
(1.32
)
$
1.51
$
(2.84
)
(187.35
%)
Weighted average common shares outstanding:
Basic
22,690,943
16,744,561
5,946,382
35.51
%
Diluted
22,690,943
16,791,443
5,899,500
35.13
%
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Key Metrics
At or for the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Performance Ratios:
Return on average assets (1)
(1.62
%)
(2.80
%)
0.17
%
(1.55
%)
3.69
%
Return on average equity (1)
(7.28
%)
(11.25
%)
1.01
%
(10.06
%)
31.46
%
Net interest rate spread (1) (2)
2.14
%
3.12
%
3.86
%
4.48
%
4.32
%
Net interest margin (1) (3)
2.98
%
3.62
%
4.10
%
4.68
%
4.51
%
Non-interest expense to average assets (1)
2.78
%
4.83
%
3.73
%
6.39
%
3.90
%
Efficiency ratio (4)
94.95
%
132.46
%
93.77
%
143.50
%
44.10
%
Average interest-earning assets to average interest- bearing liabilities
151.73
%
161.30
%
151.98
%
145.54
%
138.10
%
Average equity to average assets
22.32
%
24.90
%
17.32
%
15.76
%
11.71
%
Capital Ratios:
Total capital to risk weighted assets (Bank only)
30.53
%
33.39
%
36.00
%
23.27
%
17.23
%
Tier 1 capital to risk weighted assets (Bank only)
29.26
%
32.13
%
34.75
%
22.02
%
15.98
%
Common equity Tier 1 capital to risk-weighted assets (Bank only)
29.26
%
32.13
%
34.75
%
22.02
%
15.98
%
Tier 1 capital to average assets (Bank only)
20.47
%
22.91
%
28.79
%
14.88
%
10.95
%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans
2.27
%
1.77
%
1.31
%
1.28
%
1.24
%
Allowance for loan losses as a percentage of nonperforming loans
252.33
%
118.43
%
94.05
%
106.84
%
142.90
%
Net (charge-offs) recoveries to average outstanding loans (1)
(0.85
%)
(0.52
%)
(0.05
%)
(0.22
%)
(0.18
%)
Non-performing loans as a percentage of total gross loans
0.90
%
1.50
%
1.39
%
1.20
%
0.87
%
Non-performing loans as a percentage of total assets
0.59
%
0.97
%
0.90
%
0.97
%
0.69
%
Total non-performing assets as a percentage of total assets
0.59
%
0.97
%
0.90
%
0.97
%
0.69
%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets
0.78
%
1.16
%
1.14
%
1.30
%
1.07
%
Other:
Number of offices
18
18
18
18
19
Number of full-time equivalent employees
253
257
253
223
217
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., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Securities Portfolio
December 31, 2022
December 31, 2021
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
$
2,985
$
—
$
(296
)
$
2,689
$
2,981
$
—
$
(47
)
$
2,934
Corporate Bonds
25,824
—
(2,465
)
23,359
21,243
144
(203
)
21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations(1)
44,503
—
(6,726
)
37,777
18,845
—
(497
)
18,348
FHLMC Certificates
11,310
—
(1,676
)
9,634
—
—
—
—
FNMA Certificates
67,199
—
(11,271
)
55,928
71,930
—
(1,231
)
70,699
GNMA Certificates
122
—
(4
)
118
175
6
—
181
Total available-for-sale securities
$
151,943
$
—
$
(22,438
)
$
129,505
$
115,174
$
150
$
(1,978
)
$
113,346
Held-to-Maturity Securities:
U.S. Agency Bonds
$
35,000
$
—
$
(380
)
$
34,620
$
—
$
—
$
—
$
—
Corporate Bonds
82,500
57
(3,819
)
78,738
—
—
—
—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations(1)
235,479
192
(5,558
)
230,113
—
—
—
—
FHLMC Certificates
4,120
—
(268
)
3,852
934
—
(20
)
914
FNMA Certificates
131,918
—
(5,227
)
126,691
—
—
—
—
SBA Certificates
21,803
34
—
21,837
—
—
—
—
Total held-to-maturity securities
$
510,820
$
283
$
(15,252
)
$
495,851
$
934
$
—
$
(20
)
$
914
Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Loan Portfolio
As of
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned
$
343,968
22.54
%
$
336,667
23.79
%
$
321,671
24.02
%
$
323,442
24.59
%
$
317,304
24.01
%
Owner-Occupied
134,878
8.84
%
112,749
7.97
%
100,048
7.47
%
95,234
7.24
%
96,947
7.33
%
Multifamily residential
494,667
32.42
%
421,917
29.81
%
396,470
29.60
%
368,133
27.98
%
348,300
26.34
%
Nonresidential properties
308,043
20.19
%
282,642
19.97
%
279,877
20.90
%
251,893
19.14
%
239,691
18.13
%
Construction and land
185,018
12.13
%
197,437
13.95
%
165,425
12.35
%
144,881
11.01
%
134,651
10.19
%
Total mortgage loans
1,466,574
96.12
%
1,351,412
95.49
%
1,263,491
94.34
%
1,183,583
89.96
%
1,136,893
86.00
%
Non-mortgage loans:
Business loans (1)
39,965
2.62
%
41,398
2.92
%
45,720
3.41
%
100,253
7.62
%
150,512
11.38
%
Consumer loans (2)
19,129
1.26
%
22,563
1.59
%
30,198
2.25
%
31,899
2.42
%
34,693
2.62
%
Total non-mortgage loans
59,094
3.88
%
63,961
4.51
%
75,918
5.66
%
132,152
10.04
%
185,205
14.00
%
Total loans, gross
1,525,668
100.00
%
1,415,373
100.00
%
1,339,409
100.00
%
1,315,735
100.00
%
1,322,098
100.00
%
Net deferred loan origination costs
2,051
2,288
2,446
1,604
(668
)
Allowance for losses on loans
(34,592
)
(25,108
)
(17,535
)
(16,893
)
(16,352
)
Loans, net
$
1,493,127
$
1,392,553
$
1,324,320
$
1,300,446
$
1,305,078
As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, business loans include $20.0 million, $24.7 million, $30.8 million, $86.0 million and $136.8 million, respectively, of PPP loans.
As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, consumer loans include $18.2 million, $21.5 million, $28.3 million, $31.0 million and $33.9 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 December 31, 2022
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-December 31, 2022)
$
25,467
Write-downs, net of recoveries (year to date as of December 31, 2022)
(17,455
)
Cash receipts from Grain (inception-to-December 31, 2022)
(6,186
)
Grant/reserve
(1,826
)
Net receivable as of December 31, 2022
$
—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of December 31, 2022
$
18,158
Allowance for loan losses as of December 31, 2022(1)
(15,415
)
Microloans, net of allowance for loan losses as of December 31, 2022
$
2,743
Investments
Investment in Grain
$
1,000
Investment in Grain write-off in Q3 2022
(1,000
)
Investment in Grain as of December 31, 2022
—
Total exposure to Grain as of December 31, 2022
$
2,743
Includes $0.03 million for allowance for unused commitments on the $0.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.4 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Allowance for Loan Losses
For the Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
(Dollars in thousands)
Allowance for loan losses at beginning of the period
$
25,108
$
17,535
$
16,893
$
16,352
$
16,008
Provision for loan losses
12,641
9,330
817
1,258
873
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
(3,659
)
(1,799
)
(450
)
(751
)
(560
)
Total charge-offs
(3,659
)
(1,799
)
(450
)
(751
)
(598
)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned
—
—
156
—
8
Owner occupied
—
39
—
—
45
Multifamily residences
—
—
—
—
—
Nonresidential properties
—
—
—
—
—
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
1
91
2
15
Consumer
502
2
28
32
1
Total recoveries
502
42
275
34
69
Net (charge-offs) recoveries
(3,157
)
(1,757
)
(175
)
(717
)
(529
)
Allowance for loan losses at end of the period
$
34,592
$
25,108
$
17,535
$
16,893
$
16,352
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Deposits
As of
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Demand
$
289,149
23.08
%
$
288,654
21.37
%
$
284,462
24.77
%
$
281,132
23.81
%
$
274,956
22.83
%
Interest-bearing deposits:
NOW/IOLA accounts
24,349
1.94
%
28,799
2.13
%
28,597
2.49
%
33,010
2.79
%
35,280
2.93
%
Money market accounts
317,815
25.38
%
360,293
26.66
%
181,156
15.77
%
169,847
14.38
%
186,893
15.51
%
Reciprocal deposits
114,049
9.11
%
162,858
12.05
%
151,264
13.17
%
160,510
13.59
%
143,221
11.89
%
Savings accounts
130,432
10.41
%
140,055
10.37
%
139,244
12.12
%
133,966
11.34
%
134,887
11.20
%
Total NOW, money market, reciprocal and savings accounts
586,645
46.84
%
692,005
51.21
%
500,261
43.55
%
497,333
42.10
%
500,281
41.53
%
Certificates of deposit of $250K or more
70,113
5.60
%
61,900
4.58
%
65,157
5.67
%
75,130
6.36
%
78,454
6.51
%
Brokered certificates of deposit(1)
98,754
7.89
%
98,760
7.31
%
62,650
5.45
%
79,282
6.71
%
79,320
6.58
%
Listing service deposits(1)
35,813
2.86
%
40,964
3.03
%
48,953
4.26
%
53,876
4.56
%
66,411
5.51
%
All other certificates of deposit less than $250K
171,938
13.73
%
168,906
12.50
%
187,245
16.30
%
194,412
16.46
%
205,294
17.04
%
Total certificates of deposit
376,618
30.08
%
370,530
27.42
%
364,005
31.68
%
402,700
34.09
%
429,479
35.64
%
Total interest-bearing deposits
963,263
76.92
%
1,062,535
78.63
%
864,266
75.23
%
900,033
76.19
%
929,760
77.17
%
Total deposits
$
1,252,412
100.00
%
$
1,351,189
100.00
%
$
1,148,728
100.00
%
$
1,181,165
100.00
%
$
1,204,716
100.00
%
As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, there were $13.6 million, $13.8 million, $18.5 million, $19.0 million, and $29.0 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., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Nonperforming Assets
As of Three Months Ended
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned
$
2,844
$
5,902
$
3,460
$
3,596
$
3,349
Owner occupied
961
971
1,140
962
1,284
Multifamily residential
—
—
—
—
1,200
Nonresidential properties
—
778
1,162
1,166
2,163
Construction and land
7,567
10,660
10,817
7,567
917
Non-mortgage loans:
Business
—
359
—
—
—
Consumer
—
—
—
—
—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)
$
11,372
$
18,670
$
16,579
$
13,291
$
8,913
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
217
$
221
$
224
$
230
$
234
Owner occupied
2,027
2,215
1,746
2,192
2,196
Multifamily residential
—
—
—
—
—
Nonresidential properties
93
95
96
98
100
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total non-accruing troubled debt restructured loans
2,337
2,531
2,066
2,520
2,530
Total non-accrual loans
$
13,709
$
21,201
$
18,645
$
15,811
$
11,443
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
2,207
$
2,228
$
2,246
$
2,269
$
3,089
Owner occupied
1,328
1,254
2,019
2,313
2,374
Multifamily residential
—
—
—
—
—
Nonresidential properties
708
715
725
726
732
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total accruing troubled debt restructured loans
$
4,243
$
4,197
$
4,990
$
5,308
$
6,195
Total non-performing assets and accruing troubled debt restructured loans
$
17,952
$
25,398
$
23,635
$
21,119
$
17,638
Total non-performing loans to total gross loans
0.90
%
1.50
%
1.39
%
1.20
%
0.87
%
Total non-performing assets to total assets
0.59
%
0.97
%
0.90
%
0.97
%
0.69
%
Total non-performing assets and accruing troubled debt restructured loans to total assets
0.78
%
1.16
%
1.14
%
1.30
%
1.07
%
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Three Months Ended December 31,
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)
$
1,478,308
$
18,550
4.98
%
$
1,320,635
$
18,013
5.41
%
Securities(3)
636,457
5,931
3.70
%
113,826
566
1.97
%
Other(4)
38,879
452
4.61
%
43,346
73
0.67
%
Total interest-earning assets
2,153,644
24,933
4.59
%
1,477,807
18,652
5.01
%
Non-interest-earning assets
96,051
134,798
Total assets
$
2,249,695
$
1,612,605
Interest-bearing liabilities:
NOW/IOLA
$
25,349
$
22
0.34
%
$
29,771
$
16
0.21
%
Money market
503,286
4,095
3.23
%
340,334
259
0.30
%
Savings
139,115
8
0.02
%
137,383
33
0.10
%
Certificates of deposit
368,895
1,310
1.41
%
433,571
907
0.83
%
Total deposits
1,036,645
5,435
2.08
%
941,059
1,215
0.51
%
Advance payments by borrowers
12,942
—
0.00
%
10,361
1
0.04
%
Borrowings
369,832
3,332
3.57
%
118,692
654
2.19
%
Total interest-bearing liabilities
1,419,419
8,767
2.45
%
1,070,112
1,870
0.69
%
Non-interest-bearing liabilities:
Non-interest-bearing demand
325,616
—
320,074
—
Other non-interest-bearing liabilities
2,424
—
33,506
—
Total non-interest-bearing liabilities
328,040
—
353,580
—
Total liabilities
1,747,459
8,767
1,423,692
1,870
Total equity
502,236
188,913
Total liabilities and total equity
$
2,249,695
2.45
%
$
1,612,605
0.69
%
Net interest income
$
16,166
$
16,782
Net interest rate spread(5)
2.14
%
4.32
%
Net interest-earning assets(6)
$
734,225
$
407,695
Net interest margin(7)
2.98
%
4.51
%
Average interest-earning assets to interest-bearing liabilities
151.73
%
138.10
%
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., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Years Ended December 31,
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)
$
1,375,723
$
69,865
5.08
%
$
1,312,505
$
65,532
4.99
%
Securities(3)
357,446
11,709
3.28
%
62,908
1,267
2.01
%
Other(4)
44,160
1,178
2.67
%
51,156
299
0.58
%
Total interest-earning assets
1,777,329
82,752
4.66
%
1,426,569
67,098
4.70
%
Non-interest-earning assets
164,324
89,152
Total assets
$
1,941,653
$
1,515,721
Interest-bearing liabilities:
NOW/IOLA
$
30,151
$
65
0.22
%
$
30,851
$
109
0.35
%
Money market
393,555
6,275
1.59
%
310,611
1,168
0.38
%
Savings
138,137
128
0.09
%
133,244
146
0.11
%
Certificates of deposit
382,022
3,477
0.91
%
430,164
4,244
0.99
%
Total deposits
943,865
9,945
1.05
%
904,870
5,667
0.63
%
Advance payments by borrowers
11,514
5
0.04
%
10,106
4
0.04
%
Borrowings
206,969
6,199
3.00
%
121,319
2,581
2.13
%
Total interest-bearing liabilities
1,162,348
16,149
1.39
%
1,036,295
8,252
0.80
%
Non-interest-bearing liabilities:
Non-interest-bearing demand
344,505
—
287,008
—
Other non-interest-bearing liabilities
33,225
—
17,763
—
Total non-interest-bearing liabilities
377,730
—
304,771
—
Total liabilities
1,540,078
16,149
1,341,066
8,252
Total equity
401,575
174,655
Total liabilities and total equity
$
1,941,653
1.39
%
$
1,515,721
0.80
%
Net interest income
$
66,603
$
58,846
Net interest rate spread(5)
3.27
%
3.90
%
Net interest-earning assets(6)
$
614,981
$
390,274
Net interest margin(7)
3.75
%
4.13
%
Average interest-earning assets to
interest-bearing liabilities
152.91
%
137.66
%
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., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Other Data
As of
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Other Data
Common shares issued
24,859,353
24,728,460
24,724,274
24,724,274
18,463,028
Less treasury shares
—
—
—
—
1,037,041
Common shares outstanding at end of period
24,859,353
24,728,460
24,724,274
24,724,274
17,425,987
Book value per common share
$
10.77
$
11.15
$
11.85
$
12.12
$
10.86
Tangible book value per common share
$
10.77
$
11.15
$
11.85
$
12.12
$
10.86
Contact:
Frank Perez
Frank.perez@poncebank.net
718-931-9000
Source: Ponce Financial Group, Inc.