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Ponce Financial Group, Inc. Reports Third Quarter 2022 Results
(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 third quarter of 2022.
Third Quarter Highlights (Compared to Prior Periods):
Net loss of ($14.7) million or ($0.64) per diluted share, for the three months ended September 30, 2022, as compared to net income of $771,000, or $0.03 per diluted share for the three months ended June 30, 2022 and net income of $2.1 million, or $0.12 per diluted share for the three months ended September 30, 2021.
Included in the ($14.7) million 2022 third quarter results are $17.5 million of pre-tax charges related to Grain Technologies, Inc. (“Grain”) inclusive of the following: $7.9 million in additional write-offs of the receivable for loans put back to Grain; $8.6 million increase in provision for loan loss reserves/unused commitments to Grain-originated microloan portfolio and write-off of $1.0 million equity investment in Grain. In addition to pre-tax charges related to Grain, the Company also recognized a one-time $436,000 loss on equipment sales as it moved to implement ATMs as a service.
Net interest income of $17.6 million for the 2022 third quarter increased $2.1 million, or 13.71%, from the prior quarter and $2.2 million, or 14.06%, from the same quarter last year, largely due to increases in the Company's securities portfolio.
Net interest margin was 3.62% for the 2022 third quarter, a decrease from 4.10% for the prior quarter and from 4.13% 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 $626.3 million as of September 30, 2022, an increase of $512.0 million from December 31, 2021.
Net loans receivable were $1.39 billion as of September 30, 2022, an increase of $87.5 million, or 6.70%, from December 31, 2021. The increase of $87.5 million was attributable to a $199.5 million net increase in non-PPP loans partially offset by a $112.0 million decrease in PPP loans.
Deposits were $1.35 billion as of September 30, 2022, an increase of 12.16%, from December 31, 2021.
President and Chief Executive Officer’s Comments
Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “Last quarter we announced the purchase of $225 million of preferred stock by the U.S. Department of the Treasury, resulting in the company having $500 million in stockholders' equity with which to add value for our stakeholders – our communities, customers, employees and shareholders. In the third quarter, we continued to implement our capital leveraging strategy by growing our securities portfolio. Moving forward, given the significant volatility in interest rates, we will be taking a more measured approach to putting our excess capital to work. Through continued investments in our people, technology and customers and utilizing our strong capital base, we are focused on management's goal to more than double the size of our loan business over the next several years.”
Mr. Naudon continued, “Our reported results this quarter, were impacted by additional action we took to more aggressively ring fence our overall exposure to Grain, recognizing pre-tax charges totaling $17.5 million as we moved to put ourselves in a position to minimize future losses from the microloan portfolio. Importantly, we remain well capitalized as we evaluate all means of delivering value to our stakeholders, including using all available capital management tools. As we grow our business, we will continue to leverage our existing partnerships, our strong core loan growth, and our status as a nationally recognized MDI and CDFI lending institution that has a strong asset growth capacity.”
Executive Chairman’s Comment
Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman, added, “This quarter, we continued the growth in our more traditional and focused areas of lending, including both qualified and non-qualified mortgages, the latter of which represents an important area of focus for Ponce. This portfolio continues to show resiliency in a challenging economic environment. With our abundant capital base and balance sheet liquidity, we are focused on significant growth opportunities across the historic communities we have served for over six decades in the New York City area, as well as expanding opportunities in other similarly underserved communities.”
Selected performance metrics are as follows (refer to “Key Metrics” for additional information):
Performance Ratios (Annualized):
For the Three Months Ended,
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Return on average assets
(2.85%)
0.18%
(1.60%)
3.69%
0.52%
Return on average stockholders’ equity
(11.25%)
1.01%
(10.06%)
31.46%
4.59%
Net interest rate spread
3.12%
3.86%
4.48%
4.32%
3.92%
Net interest margin
3.62%
4.10%
4.68%
4.51%
4.13%
Non-interest expense to average assets
4.91%
3.84%
6.59%
3.90%
3.72%
Efficiency ratio
132.46%
93.77%
143.50%
44.10%
78.89%
Average interest-earning assets to average interest- bearing liabilities
161.30%
151.98%
145.54%
138.10%
138.89%
Average equity to average assets
25.31%
17.66%
15.92%
11.71%
11.27%
Capital Ratios (Annualized):
For the Three Months Ended,
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Total Capital to risk weighted assets
33.39%
36.00%
23.27%
17.23%
16.15%
Tier 1 Capital to risk weighted assets
32.13%
34.75%
22.02%
15.98%
14.90%
Common equity Tier 1 capital to risk-weighted assets
32.13%
34.75%
22.02%
15.98%
14.90%
Tier 1 capital to average assets
22.91%
28.79%
14.88%
10.95%
9.98%
Asset Quality Ratios (Annualized):
For the Three Months Ended,
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Allowance for loan losses as a percentage of total loans
1.77%
1.31%
1.28%
1.24%
1.21%
Allowance for loan losses as a percentage of nonperforming loans
118.43%
94.05%
106.84%
142.90%
157.17%
Net (charge-offs) recoveries to average outstanding loans
(0.52%)
(0.05%)
(0.22%)
(0.18%)
(0.13%)
Non-performing loans as a percentage of total gross loans
1.50%
1.39%
1.20%
0.87%
0.77%
Non-performing loans as a percentage of total assets
0.98%
0.91%
0.99%
0.69%
0.65%
Total non-performing assets as a percentage of total assets
0.98%
0.91%
0.99%
0.69%
0.65%
Summary of Results of Operations
Net loss for the nine months ended September 30, 2022, was ($20.8) million compared to net income of $10.4 million for the nine months ended September 30, 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 nine months ended September 30, 2022, was $50.4 million compared to $42.1 million for the nine months ended September 30, 2021. This increase is largely explained by the increase in the securities and loan portfolios.
Net interest margin was 4.09% for the nine months ended September 30, 2022 compared to 3.99% for the same period last year, an increase of 10bps. The increase in net interest margin was a result of an increase in net interest-earning assets as well as higher yields.
Non-interest Income
Non-interest income for the three months ended September 30, 2022, was $1.6 million, a decrease of $602,000, or 27.63%, compared to the three months ended June 30, 2022 and a decrease of $1.7 million, or 51.24%, compared to the three months ended September 30, 2021.
The $602,000 decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended June 30, 2022 was impacted by a one-time $436,000 loss on sale of equipment and a decrease of $174,000 in loan origination fees.
The $1.7 million decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was attributable to a decrease of $1.1 million in income on sale of mortgage loans, a one-time $436,000 loss on sale of equipment, and decreases of $220,000 in late and prepayment charges and $103,000 in loan origination fees, offset by an increase of $173,000 in other non-interest income.
Non-interest income for the nine months ended September 30, 2022, decreased $9.5 million, or 61.33%, to $6.0 million compared to $15.5 million for the nine months ended September 30, 2021. The decrease is due to the loss on sale of equipment this year versus gains on sale of property last year and reductions in income on sale of mortgage loans, late and prepayment charges and loan origination fees.
Non-interest Expense
Non-interest expense for the three months ended September 30, 2022, was $25.4 million, an increase of $8.8 million, or 53.41%, compared to the three months ended June 30, 2022 and of $10.7 million, or 72.52%, compared to the three months ended September 30, 2021. The $8.8 million increase from the three months ended June 30, 2022 was mainly attributable to the Grain write-off and write-down and to a lesser extent, the increases in other operating expenses, compensation and benefits and occupancy and equipment. These factors also explain the $10.7 million increase in non-interest expense versus the same quarter last year.
Non-interest expense for the nine months ended September 30, 2022, was $70.1 million, an increase of $28.8 million or 69.68%, compared to the nine months ended September 30, 2021. The $28.8 million increase in non-interest expense was attributable to the $18.5 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $5.1 million in compensation and benefits, $1.7 million in occupancy and equipment expenses, $421,000 in data processing expenses and $396,000 in other operating expenses. These items were partially offset by decreases of $1.6 million in professional fees and $823,000 in direct loan expenses.
Balance Sheet Summary
Total assets increased $504.8 million, or 30.53%, to $2.16 billion as of September 30, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $493.4 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 an increase of $87.5 million in net loans receivable (inclusive of a $112.0 million net decrease in PPP loans), partially offset by a decrease of $91.4 million in cash and equivalents.
Total liabilities increased $193.3 million, or 13.20%, to $1.66 billion as of September 30, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $180.1 million in advances from FHLBNY and $146.5 million in deposits, offset by a decrease 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.
Total stockholders’ equity increased $311.4 million, or 164.55%, to $500.7 million as of September 30, 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
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
ASSETS
Cash and due from banks:
Cash
$
37,235
$
53,544
$
32,168
$
98,954
$
29,365
Interest-bearing deposits in banks
25,286
221,262
37,127
54,940
33,673
Total cash and cash equivalents
62,521
274,806
69,295
153,894
63,038
Available-for-sale securities, at fair value
131,977
140,044
154,799
113,346
104,358
Held-to-maturity securities, at amortized cost
494,297
211,517
927
934
1,437
Placement with banks
2,490
2,490
2,490
2,490
2,490
Mortgage loans held for sale, at fair value
3,357
9,234
7,972
15,836
13,930
Loans receivable, net
1,392,553
1,324,320
1,300,446
1,305,078
1,302,238
Accrued interest receivable
14,063
13,255
12,799
12,362
13,360
Premises and equipment, net
17,759
18,945
19,279
19,617
34,081
Federal Home Loan Bank of New York stock (FHLBNY), at cost
14,272
16,429
5,420
6,001
6,001
Deferred tax assets
13,822
9,658
7,440
3,820
4,826
Other assets
11,170
21,585
13,730
20,132
14,793
Total assets
$
2,158,281
$
2,042,283
$
1,594,597
$
1,653,510
$
1,560,552
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
$
1,351,189
$
1,148,728
$
1,181,165
$
1,204,716
$
1,249,261
Accrued interest payable
854
158
223
228
238
Advance payments by borrowers for taxes and insurance
10,589
8,668
10,161
7,657
9,118
Advances from the FHLBNY and others
286,375
334,375
93,375
106,255
106,255
Warehouse lines of credit
—
—
753
15,090
11,261
Mortgage loan fundings payable
—
—
—
—
1,136
Mutual holding company conversion subscription liabilities
—
—
—
122,000
—
Other liabilities
8,591
32,272
9,341
8,308
9,396
Total liabilities
1,657,598
1,524,201
1,295,018
1,464,254
1,386,665
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized
225,000
225,000
—
—
—
Common stock, $0.01 par value; 200,000,000 shares authorized
247
247
247
185
185
Treasury stock, at cost
—
—
—
(13,687
)
(15,069
)
Additional paid-in-capital
206,092
205,669
205,243
85,601
86,360
Retained earnings
102,169
116,907
116,136
122,956
107,977
Accumulated other comprehensive loss
(18,420
)
(15,032
)
(7,035
)
(1,456
)
(621
)
Unearned compensation ─ ESOP
(14,405
)
(14,709
)
(15,012
)
(4,343
)
(4,945
)
Total stockholders' equity
500,683
518,082
299,579
189,256
173,887
Total liabilities and stockholders' equity
$
2,158,281
$
2,042,283
$
1,594,597
$
1,653,510
$
1,560,552
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
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Interest and dividend income:
Interest on loans receivable
$
17,058
$
16,057
$
18,200
$
18,013
$
16,991
Interest on deposits due from banks
346
132
36
7
9
Interest and dividend on securities and FHLBNY stock
4,230
978
782
632
425
Total interest and dividend income
21,634
17,167
19,018
18,652
17,425
Interest expense:
Interest on certificates of deposit
687
677
803
907
1,010
Interest on other deposits
1,543
521
284
309
354
Interest on borrowings
1,793
481
593
654
621
Total interest expense
4,023
1,679
1,680
1,870
1,985
Net interest income
17,611
15,488
17,338
16,782
15,440
Provision for loan losses
9,330
817
1,258
873
572
Net interest income after provision for loan losses
8,281
14,671
16,080
15,909
14,868
Non-interest income:
Service charges and fees
464
445
440
468
494
Brokerage commissions
288
214
338
401
270
Late and prepayment charges
109
193
58
336
329
Income on sale of mortgage loans
116
200
418
1,294
1,175
Loan origination
522
696
625
886
625
(Loss) gain on sale of premises and equipment
(436
)
—
—
15,431
—
Other
514
431
347
353
341
Total non-interest income
1,577
2,179
2,226
19,169
3,234
Non-interest expense:
Compensation and benefits
7,377
6,911
7,125
6,959
6,427
Occupancy and equipment
3,611
3,237
3,192
3,007
2,849
Data processing expenses
994
824
847
771
917
Direct loan expenses
654
505
874
1,032
696
Insurance and surety bond premiums
297
156
147
149
147
Office supplies, telephone and postage
369
406
405
552
626
Professional fees
1,251
1,748
1,334
1,700
1,765
Contribution to the Ponce De Leon Foundation
—
—
4,995
—
—
Grain write-off and write-down
8,881
1,500
8,074
—
—
Marketing and promotional expenses
214
52
71
69
51
Directors fees
89
96
71
80
67
Regulatory assessment
99
71
83
69
74
Other operating expenses
1,580
1,061
856
1,466
1,113
Total non-interest expense
25,416
16,567
28,074
15,854
14,732
(Loss) income before income taxes
(15,558
)
283
(9,768
)
19,224
3,370
(Benefit) provision for income taxes
(820
)
(488
)
(2,948
)
4,245
1,318
Net (loss) income
$
(14,738
)
$
771
$
(6,820
)
$
14,979
$
2,052
(Loss) earnings per common share:
Basic
$
(0.64
)
$
0.03
$
(0.31
)
$
0.90
$
0.12
Diluted
$
(0.64
)
$
0.03
$
(0.31
)
$
0.89
$
0.12
Weighted average common shares outstanding:
Basic
23,094,859
23,056,559
21,721,113
16,864,929
16,823,731
Diluted
23,094,859
23,128,911
21,721,113
16,924,785
16,914,833
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 Nine Months Ended September 30,
2022
2021
Variance $
Variance %
Interest and dividend income:
Interest on loans receivable
$
51,315
$
47,519
$
3,796
7.99
%
Interest on deposits due from banks
514
13
501
3,853.85
%
Interest and dividend on securities and FHLBNY stock
5,990
914
5,076
555.36
%
Total interest and dividend income
57,819
48,446
9,373
19.35
%
Interest expense:
Interest on certificates of deposit
2,167
3,337
(1,170
)
(35.06
%)
Interest on other deposits
2,348
1,118
1,230
110.02
%
Interest on borrowings
2,867
1,927
940
48.78
%
Total interest expense
7,382
6,382
1,000
15.67
%
Net interest income
50,437
42,064
8,373
19.91
%
Provision for loan losses
11,405
1,844
9,561
518.49
%
Net interest income after provision for loan losses
39,032
40,220
(1,188
)
(2.95
%)
Non-interest income:
Service charges and fees
1,349
1,189
160
13.46
%
Brokerage commissions
840
923
(83
)
(8.99
%)
Late and prepayment charges
360
871
(511
)
(58.67
%)
Income on sale of mortgage loans
734
3,971
(3,237
)
(81.52
%)
Loan origination
1,843
2,135
(292
)
(13.68
%)
(Loss) gain on sale of premises and equipment
(436
)
4,812
(5,248
)
(109.06
%)
Other
1,292
1,567
(275
)
(17.55
%)
Total non-interest income
5,982
15,468
(9,486
)
(61.33
%)
Non-interest expense:
Compensation and benefits
21,413
16,303
5,110
31.34
%
Occupancy and equipment
10,040
8,321
1,719
20.66
%
Data processing expenses
2,665
2,244
421
18.76
%
Direct loan expenses
2,033
2,856
(823
)
(28.82
%)
Insurance and surety bond premiums
600
436
164
37.61
%
Office supplies, telephone and postage
1,180
1,502
(322
)
(21.44
%)
Professional fees
4,333
5,929
(1,596
)
(26.92
%)
Contribution to the Ponce De Leon Foundation
4,995
—
4,995
—
%
Grain write-off and write-down
18,455
—
18,455
—
%
Marketing and promotional expenses
337
137
200
145.99
%
Directors fees
256
205
51
24.88
%
Regulatory assessment
253
254
(1
)
(0.39
%)
Other operating expenses
3,497
3,101
396
12.77
%
Total non-interest expense
70,057
41,288
28,769
69.68
%
(Loss) income before income taxes
(25,043
)
14,400
(39,443
)
(273.91
%)
(Benefit) provision for income taxes
(4,256
)
3,964
(8,220
)
(207.37
%)
Net (loss) income
$
(20,787
)
$
10,436
$
(31,223
)
(299.19
%)
(Loss) earnings per common share:
Basic
$
(0.92
)
$
0.62
N/A
N/A
Diluted
$
(0.92
)
$
0.62
N/A
N/A
Weighted average common shares outstanding:
Basic
22,524,477
16,703,997
N/A
N/A
Diluted
22,524,477
16,746,554
N/A
N/A
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Key Metrics
At or for the Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Performance Ratios:
Return on average assets (1)
(2.85
%)
0.18
%
(1.60
%)
3.69
%
0.52
%
Return on average equity (1)
(11.25
%)
1.01
%
(10.06
%)
31.46
%
4.59
%
Net interest rate spread (1) (2)
3.12
%
3.86
%
4.48
%
4.32
%
3.92
%
Net interest margin (1) (3)
3.62
%
4.10
%
4.68
%
4.51
%
4.13
%
Non-interest expense to average assets (1)
4.91
%
3.84
%
6.59
%
3.90
%
3.72
%
Efficiency ratio (4)
132.46
%
93.77
%
143.50
%
44.10
%
78.89
%
Average interest-earning assets to average interest- bearing liabilities
161.30
%
151.98
%
145.54
%
138.10
%
138.89
%
Average equity to average assets
25.31
%
17.66
%
15.92
%
11.71
%
11.27
%
Capital Ratios:
Total capital to risk weighted assets (Bank only)
33.39
%
36.00
%
23.27
%
17.23
%
16.15
%
Tier 1 capital to risk weighted assets (Bank only)
32.13
%
34.75
%
22.02
%
15.98
%
14.90
%
Common equity Tier 1 capital to risk-weighted assets (Bank only)
32.13
%
34.75
%
22.02
%
15.98
%
14.90
%
Tier 1 capital to average assets (Bank only)
22.91
%
28.79
%
14.88
%
10.95
%
9.98
%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans
1.77
%
1.31
%
1.28
%
1.24
%
1.21
%
Allowance for loan losses as a percentage of nonperforming loans
118.43
%
94.05
%
106.84
%
142.90
%
157.17
%
Net (charge-offs) recoveries to average outstanding loans (1)
(0.52
%)
(0.05
%)
(0.22
%)
(0.18
%)
(0.13
%)
Non-performing loans as a percentage of total gross loans
1.50
%
1.39
%
1.20
%
0.87
%
0.77
%
Non-performing loans as a percentage of total assets
0.98
%
0.91
%
0.99
%
0.69
%
0.65
%
Total non-performing assets as a percentage of total assets
0.98
%
0.91
%
0.99
%
0.69
%
0.65
%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets
1.18
%
1.16
%
1.32
%
1.07
%
1.05
%
Other:
Number of offices
18
18
18
19
19
Number of full-time equivalent employees
257
253
223
217
230
(1) Annualized where appropriate.
(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
(4) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Securities Portfolio
September 30, 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
$
2,984
$
—
$
(325
)
$
2,659
$
2,981
$
—
$
(47
)
$
2,934
Corporate Bonds
25,833
—
(2,475
)
23,358
21,243
144
(203
)
21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)
45,727
—
(6,362
)
39,365
18,845
—
(497
)
18,348
FHLMC Certificates
11,614
—
(1,821
)
9,793
—
—
—
—
FNMA Certificates
68,840
—
(12,166
)
56,674
71,930
—
(1,231
)
70,699
GNMA Certificates
129
—
(1
)
128
175
6
—
181
Total available-for-sale securities
$
155,127
$
—
$
(23,150
)
$
131,977
$
115,174
$
150
$
(1,978
)
$
113,346
Held-to-Maturity Securities:
U.S. Agency Bonds
$
25,000
$
—
$
(308
)
$
24,692
$
—
$
—
$
—
$
—
Corporate Bonds
80,500
—
(3,242
)
77,258
—
—
—
—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)
227,257
—
(5,184
)
222,073
—
—
—
—
FHLMC Certificates
4,146
—
(272
)
3,874
934
—
(20
)
914
FNMA Certificates
135,178
—
(6,076
)
129,102
—
—
—
—
SBA Certificates
22,216
87
—
22,303
—
—
—
—
Total held-to-maturity securities
$
494,297
$
87
$
(15,082
)
$
479,302
$
934
$
—
$
(20
)
$
914
(1) 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
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned
$
336,667
23.79
%
$
321,671
24.02
%
$
323,442
24.59
%
$
317,304
24.01
%
$
319,346
24.14
%
Owner-Occupied
112,749
7.97
%
100,048
7.47
%
95,234
7.24
%
96,947
7.33
%
97,493
7.37
%
Multifamily residential
421,917
29.81
%
396,470
29.60
%
368,133
27.98
%
348,300
26.34
%
317,575
24.01
%
Nonresidential properties
282,642
19.97
%
279,877
20.90
%
251,893
19.14
%
239,691
18.13
%
211,075
15.96
%
Construction and land
197,437
13.95
%
165,425
12.35
%
144,881
11.01
%
134,651
10.19
%
133,130
10.07
%
Total mortgage loans
1,351,412
95.49
%
1,263,491
94.34
%
1,183,583
89.96
%
1,136,893
86.00
%
1,078,619
81.55
%
Non-mortgage loans:
Business loans (1)
41,398
2.92
%
45,720
3.41
%
100,253
7.62
%
150,512
11.38
%
207,859
15.72
%
Consumer loans (2)
22,563
1.59
%
30,198
2.25
%
31,899
2.42
%
34,693
2.62
%
36,095
2.73
%
Total non-mortgage loans
63,961
4.51
%
75,918
5.66
%
132,152
10.04
%
185,205
14.00
%
243,954
18.45
%
Total loans, gross
1,415,373
100.00
%
1,339,409
100.00
%
1,315,735
100.00
%
1,322,098
100.00
%
1,322,573
100.00
%
Net deferred loan origination costs
2,288
2,446
1,604
(668
)
(4,327
)
Allowance for losses on loans
(25,108
)
(17,535
)
(16,893
)
(16,352
)
(16,008
)
Loans, net
$
1,392,553
$
1,324,320
$
1,300,446
$
1,305,078
$
1,302,238
(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, business loans include $24.7 million, $30.8 million, $86.0 million, $136.8 million and $195.9 million, respectively, of PPP loans.
(2) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, consumer loans include $21.5 million, $28.3 million, $31.0 million, $33.9 million and $35.5 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 September 30, 2022
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-September 30, 2022)
$
25,467
Write-downs (year to date as of September 30, 2022)
(17,455
)
Cash receipts from Grain (inception-to-September 30, 2022)
(6,186
)
Grant/reserve
(1,826
)
Net receivable as of September 30, 2022
$
—
Microloan receivables
Grain originated loans receivable as of September 30, 2022
$
21,507
Allowance for loan losses as of September 30, 2022 *
(8,213
)
Microloans, net of allowance for loan losses as of September 30, 2022
$
13,294
Investments
Investment in Grain as of June 30, 2022
$
1,000
Investment in Grain write-off in Q3 2022
(1,000
)
Investment in Grain as of September 30, 2022
—
Total exposure to Grain as of September 30, 2022
$
13,294
* Includes $460,000 for allowance for unused commitments on the $15.3 million of unused commitments available to Grain borrowers reported in other liabilities 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
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
(Dollars in thousands)
Allowance for loan losses at beginning of the period
$
17,535
$
16,893
$
16,352
$
16,008
$
15,875
Provision for loan losses
9,330
817
1,258
873
572
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
(1,799
)
(450
)
(751
)
(560
)
(510
)
Total charge-offs
(1,799
)
(450
)
(751
)
(598
)
(510
)
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
69
Consumer
2
28
32
1
2
Total recoveries
42
275
34
69
71
Net (charge-offs) recoveries
(1,757
)
(175
)
(717
)
(529
)
(439
)
Allowance for loan losses at end of the period
$
25,108
$
17,535
$
16,893
$
16,352
$
16,008
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Deposits
As of
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount
Percent
(Dollars in thousands)
Demand
$
288,654
21.37
%
$
284,462
24.77
%
$
281,132
23.81
%
$
274,956
22.83
%
$
297,777
23.85
%
Interest-bearing deposits:
NOW/IOLA accounts
28,799
2.13
%
28,597
2.49
%
33,010
2.79
%
35,280
2.93
%
28,025
2.24
%
Money market accounts
360,293
26.66
%
181,156
15.77
%
169,847
14.38
%
186,893
15.51
%
199,758
15.99
%
Reciprocal deposits
162,858
12.05
%
151,264
13.17
%
160,510
13.59
%
143,221
11.89
%
147,226
11.79
%
Savings accounts
140,055
10.37
%
139,244
12.12
%
133,966
11.34
%
134,887
11.20
%
142,851
11.43
%
Total NOW, money market, reciprocal and savings accounts
692,005
51.21
%
500,261
43.55
%
497,333
42.10
%
500,281
41.53
%
517,860
41.45
%
Certificates of deposit of $250K or more
61,900
4.58
%
65,157
5.67
%
75,130
6.36
%
78,454
6.51
%
70,996
5.68
%
Brokered certificates of deposit (1)
98,760
7.31
%
62,650
5.45
%
79,282
6.71
%
79,320
6.58
%
83,505
6.68
%
Listing service deposits (1)
40,964
3.03
%
48,953
4.26
%
53,876
4.56
%
66,411
5.51
%
66,340
5.31
%
All other certificates of deposit less than $250K
168,906
12.50
%
187,245
16.30
%
194,412
16.46
%
205,294
17.04
%
212,783
17.03
%
Total certificates of deposit
370,530
27.42
%
364,005
31.68
%
402,700
34.09
%
429,479
35.64
%
433,624
34.70
%
Total interest-bearing deposits
1,062,535
78.63
%
864,266
75.23
%
900,033
76.19
%
929,760
77.17
%
951,484
76.15
%
Total deposits
$
1,351,189
100.00
%
$
1,148,728
100.00
%
$
1,181,165
100.00
%
$
1,204,716
100.00
%
$
1,249,261
100.00
%
(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, there were $13.8 million, $18.5 million, $19.0 million, $29.0 million, and $28.9 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Nonperforming Assets
As of Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned
$
5,902
$
3,460
$
3,596
$
3,349
$
1,669
Owner occupied
971
1,140
962
1,284
1,090
Multifamily residential
—
—
—
1,200
2,577
Nonresidential properties
778
1,162
1,166
2,163
1,388
Construction and land
10,660
10,817
7,567
917
922
Non-mortgage loans:
Business
359
—
—
—
—
Consumer
—
—
—
—
—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)
$
18,670
$
16,579
$
13,291
$
8,913
$
7,646
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
221
$
224
$
230
$
234
$
238
Owner occupied
2,215
1,746
2,192
2,196
2,200
Multifamily residential
—
—
—
—
—
Nonresidential properties
95
96
98
100
101
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total non-accruing troubled debt restructured loans
2,531
2,066
2,520
2,530
2,539
Total non-accrual loans
$
21,201
$
18,645
$
15,811
$
11,443
$
10,185
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned
$
2,228
$
2,246
$
2,269
$
3,089
$
3,121
Owner occupied
1,254
2,019
2,313
2,374
2,396
Multifamily residential
—
—
—
—
—
Nonresidential properties
715
725
726
732
738
Construction and land
—
—
—
—
—
Non-mortgage loans:
Business
—
—
—
—
—
Consumer
—
—
—
—
—
Total accruing troubled debt restructured loans
$
4,197
$
4,990
$
5,308
$
6,195
$
6,255
Total non-performing assets and accruing troubled debt restructured loans
$
25,398
$
23,635
$
21,119
$
17,638
$
16,440
Total non-performing loans to total gross loans
1.50
%
1.39
%
1.20
%
0.87
%
0.77
%
Total non-performing assets to total assets
0.98
%
0.91
%
0.99
%
0.69
%
0.65
%
Total non-performing assets and accruing troubled debt restructured loans to total assets
1.18
%
1.16
%
1.32
%
1.07
%
1.05
%
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Three Months Ended September 30,
2022
2021
Average
Average
Outstanding
Average
Outstanding
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate (1)
(Dollars in thousands)
Interest-earning assets:
Loans (2)
$
1,379,029
$
17,058
4.91%
$
1,356,130
$
16,991
4.97%
Securities (3)
492,337
4,153
3.35%
72,960
355
1.93%
Other (4)
57,646
423
2.91%
53,182
79
0.59%
Total interest-earning assets
1,929,012
21,634
4.45%
1,482,272
17,425
4.66%
Non-interest-earning assets
124,738
90,110
Total assets
$
2,053,750
$
1,572,382
Interest-bearing liabilities:
NOW/IOLA
$
29,939
$
13
0.17%
$
30,221
$
23
0.30%
Money market
409,947
1,471
1.42%
323,840
294
0.36%
Savings
141,200
57
0.16%
137,078
36
0.10%
Certificates of deposit
353,822
687
0.77%
448,191
1,010
0.89%
Total deposits
934,908
2,228
0.95%
939,330
1,363
0.58%
Advance payments by borrowers
10,918
2
0.07%
10,061
1
0.04%
Borrowings
250,112
1,793
2.84%
117,824
621
2.09%
Total interest-bearing liabilities
1,195,938
4,023
1.33%
1,067,215
1,985
0.74%
Non-interest-bearing liabilities:
Non-interest-bearing demand
321,556
—
317,727
—
Other non-interest-bearing liabilities
16,377
—
10,154
—
Total non-interest-bearing liabilities
337,933
—
327,881
—
Total liabilities
1,533,871
4,023
1,395,096
1,985
Total equity
519,879
177,286
Total liabilities and total equity
$
2,053,750
1.33%
$
1,572,382
0.74%
Net interest income
$
17,611
$
15,440
Net interest rate spread (5)
3.12%
3.92%
Net interest-earning assets (6)
$
733,074
$
415,057
Net interest margin (7)
3.62%
4.13%
Average interest-earning assets to interest-bearing liabilities
161.30%
138.89%
(1) Annualized where appropriate.
(2) Loans include loans and mortgage loans held for sale, at fair value.
(3) Securities include available-for-sale securities and held-to-maturity securities.
(4) Includes FHLBNY demand account and FHLBNY stock dividends.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Average Balance Sheets
For the Nine Months Ended September 30,
2022
2021
Average
Average
Outstanding
Average
Outstanding
Average
Balance
Interest
Yield/Rate (1)
Balance
Interest
Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans (2)
$
1,341,151
$
51,315
5.12
%
$
1,309,765
$
47,519
4.85
%
Securities (3)
263,421
5,778
2.93
%
45,749
701
2.05
%
Other (4)
45,940
726
2.11
%
53,425
226
0.57
%
Total interest-earning assets
1,650,512
57,819
4.68
%
1,408,939
48,446
4.60
%
Non-interest-earning assets
187,333
73,493
Total assets
$
1,837,845
$
1,482,432
Interest-bearing liabilities:
NOW/IOLA
$
31,769
$
43
0.18
%
$
31,215
$
93
0.40
%
Money market
356,576
2,180
0.82
%
300,594
909
0.40
%
Savings
137,808
120
0.12
%
131,849
113
0.11
%
Certificates of deposit
386,446
2,167
0.75
%
428,653
3,337
1.04
%
Total deposits
912,599
4,510
0.66
%
892,311
4,452
0.67
%
Advance payments by borrowers
11,033
5
0.06
%
10,020
3
0.04
%
Borrowings
152,084
2,867
2.52
%
122,203
1,927
2.11
%
Total interest-bearing liabilities
1,075,716
7,382
0.92
%
1,024,534
6,382
0.83
%
Non-interest-bearing liabilities:
Non-interest-bearing demand
350,871
—
275,865
—
Other non-interest-bearing liabilities
43,606
—
12,182
—
Total non-interest-bearing liabilities
394,477
—
288,047
—
Total liabilities
1,470,193
7,382
1,312,581
6,382
Total equity
367,652
169,851
Total liabilities and total equity
$
1,837,845
0.92
%
$
1,482,432
0.83
%
Net interest income
$
50,437
$
42,064
Net interest rate spread (5)
3.76
%
3.77
%
Net interest-earning assets (6)
$
574,796
$
384,405
Net interest margin (7)
4.09
%
3.99
%
Average interest-earning assets to
interest-bearing liabilities
153.43
%
137.52
%
(1) Annualized where appropriate.
(2) Loans include loans and mortgage loans held for sale, at fair value.
(3) Securities include available-for-sale securities and held-to-maturity securities.
(4) Includes FHLBNY demand account and FHLBNY stock dividends.
(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
Other Data
As of
September 30,
June 30,
March 31,
December 31,
September 30,
2022
2022
2022
2021
2021
Other Data
Common shares issued
24,728,460
24,724,274
24,724,274
18,463,028
18,463,028
Less treasury shares
—
—
—
1,037,041
1,132,086
Common shares outstanding at end of period
24,728,460
24,724,274
24,724,274
17,425,987
17,330,942
Book value per common share
$
11.15
$
11.85
$
12.12
$
10.86
$
10.03
Tangible book value per common share
$
11.15
$
11.85
$
12.12
$
10.86
$
10.03
Contact:
Frank Perez
frank.perez@poncebank.net
718-931-9000
Source: Ponce Financial Group, Inc.