Ponce Financial Group, Inc. Reports First Quarter 2023 Results


NEW 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%
  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.

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 
               
  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. 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 
  1. Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.
  2. 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    
  1. 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.
  2. 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%
  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. 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