Ponce Financial Group, Inc. Reports Fourth Quarter 2023 Results


NEW YORK, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the fourth quarter of 2023.

Fourth Quarter 2023 Highlights (Compared to Prior Periods):

  • Net income of $0.5 million, or $0.02 per diluted share for the three months ended December 31, 2023, as compared to net income of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023 and net loss of ($9.2) million, or ($0.40) per diluted share for the three months ended December 31, 2022.
  • Included in the $0.5 million of net income for the fourth quarter of 2023 results is $35.0 million in interest and dividend income and $1.3 million in non-interest income, offset by $17.9 million in non-interest expense and $17.8 million in interest expense.
  • Net interest income of $17.2 million for the fourth quarter of 2023 increased $0.7 million, or 3.96%, from the prior quarter and increased $1.0 million, or 6.38%, from the same quarter last year.
  • Net interest margin was 2.66% for the fourth quarter of 2023, increased from 2.58% for the prior quarter and decreased from 2.97% for the same quarter last year.

Full Year 2023 Highlights (Compared to 2022):

  • Net income of $3.4 million, or $0.15 per diluted share for the year ended December 31, 2023, as compared to a net loss of ($30.0) million, or ($1.32) per diluted share for the year ended December 31, 2022.
  • Net interest income for the year ended December 31, 2023 was $65.3 million, decreased $1.3 million, or 2.01%, compared to $66.6 million for the year ended December 31, 2022.
  • Non-interest income for the year ended December 31, 2023 was $10.2 million, increased $3.8 million, or 59.26%, compared to $6.4 million for the year ended December 31, 2022.
  • Non-interest expense for the year ended December 31, 2023 was $68.7 million, decreased $17.2 million, or 19.99%, compared to $85.8 million for the year ended December 31, 2022.
  • Net interest margin was 2.66% for the year ended December 31, 2023, decreased from 3.66% for the same period last year.
  • Cash and equivalents were $139.2 million as of December 31, 2023, increased $84.8 million, or 156.05%, from December 31, 2022, as we decided to keep ample sources of liquidity at hand while taking advantage of the positive spread between our interest bearing overnight deposits at the Fed and borrowing costs under the Bank Term Funding Program ("BTFP").
  • Securities totaled $581.7 million as of December 31, 2023, decreased $58.7 million, or 9.16%, from December 31, 2022 primarily due to a call on one of the securities amounting to $10.0 million and regular principal payments.
  • Net loans receivable were $1.90 billion as of December 31, 2023, increased $402.8 million, or 26.97%, from December 31, 2022.
  • Deposits were $1.51 billion as of December 31, 2023, increased $255.2 million, or 20.38%, from December 31, 2022.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “We were pleased to see continued improvement during the quarter: Net interest income grew for the third quarter in a row and, despite the challenging operating environment, net interest income was also up quarter over quarter. Book value per share was $11.20 at year-end, up $0.21 quarter over quarter and up $0.43 versus last year. Total equity per share now stands at $20.66. Additionally, in order to better manage our interest risk, during the fourth quarter, we entered into two pay fixed, receiver SOFR swaps, one with notional amount of $150 million for 2 years and one with notional amount of $100 million for 3 years.

We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 23.30%, well in excess of regulatory requirements. In terms of liquidity, our liquid assets plus borrowing capacity at the Federal Home Loan Bank of New York ("FHLBNY") stands at $778.8 million, two times of our uninsured deposits of $389.4 million.

We remain committed to the communities we serve, our Minority Depository Institution (“MDI”)/Community Development Financial Institutions ("CDFI") status and continuing to invest in our people and in technology to improve our efficiency".

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added “We were able to grow both loans and deposits by over $100 million this quarter. We continue to see resiliency of our client base, but we’ll prioritize sound underwriting practices and balance sheet management even at the expense of loan growth.”

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): 2023  2023  2023  2023  2022 
Return on average assets (1)  0.08%  0.39%  (0.01%)  0.06%  (1.62%)
Return on average equity (1)  0.42%  2.11%  (0.07%)  0.27%  (7.28%)
Net interest rate spread (1) (2)  1.63%  1.58%  1.66%  1.78%  2.13%
Net interest margin (1) (3)  2.66%  2.58%  2.65%  2.75%  2.97%
Non-interest expense to average assets (1)  2.66%  2.58%  2.65%  2.79%  2.78%
Efficiency ratio (4)  96.83%  78.11%  96.15%  95.88%  94.95%
Average interest-earning assets to average interest- bearing liabilities  137.49%  137.92%  141.14%  148.20%  152.30%
Average equity to average assets  18.25%  18.32%  19.21%  20.91%  22.32%


  At or for the Three Months Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
Capital Ratios (Annualized): 2023  2023  2023  2023  2022 
Total capital to risk weighted assets (Bank only)  23.30%  25.10%  26.30%  27.54%  30.53%
Tier 1 capital to risk weighted assets (Bank only)  22.05%  23.85%  25.05%  26.28%  29.26%
Common equity Tier 1 capital to risk-weighted assets (Bank only)  22.05%  23.85%  25.05%  26.28%  29.26%
Tier 1 capital to average assets (Bank only)  17.49%  17.51%  17.95%  19.51%  20.47%


  At or for the Three Months Ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
Asset Quality Ratios (Annualized): 2023  2023  2023  2023  2022 
Allowance for loan losses as a percentage of total loans  1.36%  1.51%  1.64%  1.77%  2.27%
Allowance for loan losses as a percentage of nonperforming loans  152.99%  169.49%  167.06%  149.73%  252.33%
Net (charge-offs) recoveries to average outstanding loans (1)  (0.24%)  (0.34%)  (0.41%)  (0.57%)  (0.85%)
Non-performing loans as a percentage of total gross loans  0.89%  0.89%  0.98%  1.18%  0.90%
Non-performing loans as a percentage of total assets  0.62%  0.62%  0.63%  0.76%  0.59%
Total non-performing assets as a percentage of total assets  0.62%  0.62%  0.63%  0.76%  0.59%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)  0.81%  0.82%  0.83%  0.93%  0.78%

(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.
(5)   For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the period in 2022, the balances only include troubled debt restructurings.

Summary of Results of Operations

Net income for the three months ended December 31, 2023 was $0.5 million compared to net income of $2.6 million for the three months ended September 30, 2023 and a net loss of ($9.2) million for the three months ended December 31, 2022. The decrease of net income for the three months ended December 31, 2023 compared to the three months ended September 30, 2023 was attributed mainly to a decrease in non-interest income and an increase in non-interest expense, partially offset by a decrease in provision for income taxes and, increases in a benefit for credit losses and net interest income. The increase of net income for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was largely due to increases in benefit for credit losses, net interest income and non-interest income, partially offset by increases in provision for income taxes and non-interest expense.

Net income for the year ended December 31, 2023 was $3.4 million compared to a net loss of ($30.0) million for the year ended December 31, 2022. The increase in net income was attributable to an increase in benefit for credit losses and a decrease in non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes and a decrease in net interest income.

Net Interest Income and Net Margin

Net interest income for the three months ended December 31, 2023, increased $0.7 million, or 3.96%, to $17.2 million compared to $16.5 million for the three months ended September 30, 2023 and increased $1.0 million, or 6.38%, compared to $16.2 million for the three months ended December 31, 2022.

Net interest margin was 2.66% for the three months ended December 31, 2023 compared to 2.58% for the prior quarter, an increase of 8bps and 2.97% for the same period last year, a decrease of 31bps. The decrease in net interest margin for the three months ended December 31, 2023 when compared to the same period last year 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 December 31, 2023, was $1.3 million, a decrease of $4.3 million, or 77.16%, compared to the three months ended September 30, 2023 and an increase of $0.8 million, or 194.05%, compared to the three months ended December 31, 2022.

The $4.3 million decrease in non-interest income for the three months ended December 31, 2023 compared to the three months ended September 30, 2023 was largely attributable to a grant of $3.7 million received in the third quarter of 2023 from the U.S. Treasury, partially offset by a smaller grant of $0.4 million received in the fourth quarter of 2023 from the U.S. Treasury. The decrease in non-interest income was also impacted by decreases of $0.6 million in other non-interest income and $0.5 million in late and prepayment charges.

Non-interest income for the year ended December 31, 2023, was $10.2 million, an increase of $3.8 million, or 59.26%, compared to $6.4 million for the year ended December 31, 2022. The $3.8 million increase from the year ended December 31, 2022 was attributable to two grants totaled $4.2 million received from the U.S. Treasury and an increase of $1.7 million in late and prepayment charges, partially offset by decreases of $1.3 million in loan origination and $0.9 million in brokerage commission.

Non-interest Expense

Non-interest expense for the three months ended December 31, 2023, was $17.9 million, an increase of $0.6 million, or 3.36%, compared to $17.3 million for the three months ended September 30, 2023 and an increase of $2.1 million, or 13.52%, compared to $15.8 million for the three months ended December 31, 2022.

The $2.1 million increase from the three months ended December 31, 2022 was mainly attributable to increases of $1.8 million in compensation and benefits, $0.9 million in provision for contingencies and $0.5 million in professional fees, partially offset by a decrease of $0.9 million in other operating expense.

Non-interest expense for the year ended December 31, 2023 was $68.7 million, a decrease of $17.2 million, or 19.99%, compared to $85.8 million for the year ended December 31, 2022. The $17.2 million decrease of non-interest expense from the year ended December 31, 2022 was attributable to $17.9 million Grain consumer microloan write-off during 2022 compared with $1.5 million of Grain consumer microloan recoveries recognized during the current period. The decrease in non-interest expense was also impacted by a $5.0 million contribution to the Ponce De Leon Foundation during 2022, partially offset by increases of $2.8 million in compensation and benefits, $2.2 million in provision for contingencies, $1.3 million in data processing expenses and $1.2 million in professional fees.

Balance Sheet Summary

Total assets increased $438.7 million, or 18.98%, to $2.75 billion as of December 31, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $402.8 million in net loans receivable, $84.8 million in cash and cash equivalents, $10.7 million in other assets and $8.0 million in mortgage loans held for sale, partially offset by decreases of $49.1 million in held-to-maturity securities, $9.6 million in available-for-sale securities and $5.3 million in Federal Home Loan Bank of New York stock.

Total liabilities increased $440.0 million, or 24.19%, to $2.26 billion as of December 31, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $255.2 million in deposits, $167.0 million in borrowings, $10.6 million in accrued interest payable and $8.0 million in other liabilities.

Total stockholders’ equity decreased $1.3 million, or 0.26%, to $491.4 million as of December 31, 2023, from $492.7 million as of December 31, 2022. This decrease in stockholders’ equity was largely attributable to $11.0 million in share repurchases during 2023 and $2.2 million in other comprehensive loss, offset by $3.4 million in net income, $1.9 million impact to additional paid in capital as a result of share-based compensation, $1.1 million as a result of implementation of CECL and $1.1 million from release of ESOP shares.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc. 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 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
ASSETS              
Cash and due from banks:              
Cash$28,930  $26,046  $31,162  $26,951  $31,977 
Interest-bearing deposits 110,260   90,966   212,627   157,736   22,383 
Total cash and cash equivalents 139,190   117,012   243,789   184,687   54,360 
Available-for-sale securities, at fair value 119,902   116,753   123,720   128,320   129,505 
Held-to-maturity securities, at amortized cost (1) 461,748   471,065   481,952   491,649   510,820 
Placement with banks 249   996   996   1,245   1,494 
Mortgage loans held for sale, at fair value 9,980   14,103   10,070   2,987   1,979 
Loans receivable, net 1,895,886   1,787,607   1,695,047   1,614,428   1,493,127 
Accrued interest receivable 18,010   16,624   16,054   15,435   15,049 
Premises and equipment, net 16,053   16,453   16,856   17,215   17,446 
Right of use assets 31,272   32,110   32,435   33,147   33,423 
Federal Home Loan Bank of New York stock (FHLBNY), at cost 19,377   18,870   19,195   19,209   24,661 
Deferred tax assets 14,332   15,984   15,924   15,413   16,137 
Other assets 24,723   16,286   15,919   15,799   13,988 
Total assets$2,750,722  $2,623,863  $2,671,957  $2,539,534  $2,311,989 
LIABILITIES AND STOCKHOLDERS' EQUITY              
Liabilities:              
Deposits$1,507,620  $1,401,132  $1,442,013  $1,336,877  $1,252,412 
Operating lease liabilities 32,684   33,459   33,716   34,308   34,532 
Accrued interest payable 11,965   8,385   4,704   1,767   1,390 
Advance payments by borrowers for taxes and insurance 10,778   13,743   12,402   14,902   9,724 
Borrowings 684,421   675,100   682,100   648,375   517,375 
Other liabilities 11,859   6,986   6,540   7,264   3,856 
Total liabilities 2,259,327   2,138,805   2,181,475   2,043,493   1,819,289 
Commitments and contingencies              
Stockholders' Equity:              
Preferred stock, $0.01 par value; 100,000,000 shares authorized 225,000   225,000   225,000   225,000   225,000 
Common stock, $0.01 par value; 200,000,000 shares authorized 249   249   249   249   249 
Treasury stock, at cost (9,747)  (10,975)  (5,202)  (2)  (2)
Additional paid-in-capital 207,106   207,626   207,287   206,883   206,508 
Retained earnings 97,420   96,902   94,312   94,399   92,955 
Accumulated other comprehensive loss (15,649)  (20,468)  (17,597)  (16,629)  (17,860)
Unearned compensation ─ ESOP (12,984)  (13,276)  (13,567)  (13,859)  (14,150)
Total stockholders' equity 491,395   485,058   490,482   496,041   492,700 
Total liabilities and stockholders' equity$2,750,722  $2,623,863  $2,671,957  $2,539,534  $2,311,989 

(1)   Included for the quarterly period ended December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023 were $0.4 million, $0.6 million, $0.9 million and $0.8 million, respectively, 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 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
Interest and dividend income:              
Interest on loans receivable$27,814  $25,276  $23,015  $19,700  $18,550 
Interest on deposits due from banks 990   1,969   1,817   197   199 
Interest and dividend on securities and FHLBNY stock 6,146   6,261   6,223   6,459   6,184 
Total interest and dividend income 34,950   33,506   31,055   26,356   24,933 
Interest expense:              
Interest on certificates of deposit 5,103   4,362   3,881   3,225   1,786 
Interest on other deposits 5,706   5,639   4,413   2,812   3,649 
Interest on borrowings 6,944   6,963   6,479   5,074   3,332 
Total interest expense 17,753   16,964   14,773   11,111   8,767 
Net interest income 17,197   16,542   16,282   15,245   16,166 
(Benefit) provision for credit losses (375)  535   987   (174)  12,641 
Net interest income after provision (benefit) for credit losses 17,572   16,007   15,295   15,419   3,525 
Non-interest income:              
Service charges and fees 498   516   481   491   481 
Brokerage commissions 13   17   35   15   180 
Late and prepayment charges 365   899   372   729   263 
Income on sale of mortgage loans 244   173   82   99   7 
Loan origination (1)             (557)
Grant income 438   3,718          
Other (273)  304   522   485   63 
Total non-interest income 1,285   5,627   1,492   1,819   437 
Non-interest expense:              
Compensation and benefits 8,262   7,566   7,425   7,446   6,501 
Occupancy and equipment 3,686   3,588   3,724   3,570   3,928 
Data processing expenses 1,101   1,582   1,208   1,192   1,114 
Direct loan expenses 497   369   345   412   454 
Provision for contingencies 418   391   517   985   (440)
Insurance and surety bond premiums 250   255   248   265   270 
Office supplies, telephone and postage 294   301   489   399   375 
Professional fees 2,040   1,693   1,904   1,455   1,571 
Grain (recoveries) and write-off (152)  (69)  (346)  (914)  (515)
Marketing and promotional expenses 146   248   303   128   256 
Directors fees and regulatory assessment 173   169   160   155   196 
Other operating expenses 1,182   1,223   1,112   1,268   2,055 
Total non-interest expense 17,897   17,316   17,089   16,361   15,765 
Income (loss) before income taxes 960   4,318   (302)  877   (11,803)
Provision (benefit) for income taxes 442   1,728   (215)  546   (2,589)
Net income (loss)$518  $2,590  $(87) $331  $(9,214)
Earnings (loss) per common share:              
Basic$0.02  $0.12  $(0.00) $0.01  $(0.40)
Diluted$0.02  $0.12  $(0.00) $0.01  $(0.40)
Weighted average common shares outstanding:              
Basic 22,224,945   22,272,076   23,208,168   23,293,013   23,168,097 
Diluted 22,406,102   22,349,217   23,208,168   23,324,532   23,168,097 

(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 Years Ended December 31, 
  2023  2022  Variance $  Variance % 
Interest and dividend income:            
Interest on loans receivable $95,805  $69,865  $25,940   37.13%
Interest on deposits due from banks  4,973   713   4,260   597.48%
Interest and dividend on securities and FHLBNY stock  25,089   12,174   12,915   106.09%
Total interest and dividend income  125,867   82,752   43,115   52.10%
Interest expense:            
Interest on certificates of deposit  16,571   4,148   12,423   299.49%
Interest on other deposits  18,570   5,802   12,768   220.06%
Interest on borrowings  25,460   6,199   19,261   310.71%
Total interest expense  60,601   16,149   44,452   275.26%
Net interest income  65,266   66,603   (1,337)  (2.01%)
Provision for credit losses  973   24,046   (23,073)  (95.95%)
Net interest income after provision for credit losses  64,293   42,557   21,736   51.08%
Non-interest income:            
Service charges and fees  1,986   1,830   156   8.52%
Brokerage commissions  80   1,020   (940)  (92.16%)
Late and prepayment charges  2,365   623   1,742   279.61%
Income on sale of mortgage loans  598   741   (143)  (19.30%)
Loan origination     1,286   (1,286)  (100.00%)
Grant income  4,156      4,156   %
Loss on sale of premises and equipment     (436)  436   (100.00%)
Other  1,038   1,355   (317)  (23.39%)
Total non-interest income  10,223   6,419   3,804   59.26%
Non-interest expense:            
Compensation and benefits  30,699   27,914   2,785   9.98%
Occupancy and equipment  14,568   13,968   600   4.30%
Data processing expenses  5,083   3,779   1,304   34.51%
Direct loan expenses  1,623   2,487   (864)  (34.74%)
Provision for contingencies  2,311   126   2,185   1,734.13%
Insurance and surety bond premiums  1,018   870   148   17.01%
Office supplies, telephone and postage  1,483   1,555   (72)  (4.63%)
Professional fees  7,092   5,904   1,188   20.12%
Contribution to the Ponce De Leon Foundation     4,995   (4,995)  (100.00%)
Grain (recoveries) and write-off  (1,481)  17,940   (19,421)  (108.26%)
Marketing and promotional expenses  825   593   232   39.12%
Directors fees and regulatory assessment  657   705   (48)  (6.81%)
Other operating expenses  4,785   4,986   (201)  (4.03%)
Total non-interest expense  68,663   85,822   (17,159)  (19.99%)
Income (loss) before income taxes  5,853   (36,846)  42,699   (115.89%)
Provision (benefit) for income taxes  2,501   (6,845)  9,346   (136.54%)
Net income (loss) $3,352  $(30,001) $33,353   (111.17%)
Earnings (loss) per common share:            
Basic $0.15  $(1.32) $1.47   (111.15%)
Diluted $0.15  $(1.32) $1.47   (111.11%)
Weighted average common shares outstanding:            
Basic  22,745,317   22,690,943   54,374   0.24%
Diluted  22,822,313   22,690,943   131,370   0.58%



Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

 At or for the Three Months Ended 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
Performance Ratios:              
Return on average assets (1) 0.08%  0.39%  (0.01%)  0.06%  (1.62%)
Return on average equity (1) 0.42%  2.11%  (0.07%)  0.27%  (7.28%)
Net interest rate spread (1) (2) 1.63%  1.58%  1.66%  1.78%  2.13%
Net interest margin (1) (3) 2.66%  2.58%  2.65%  2.75%  2.97%
Non-interest expense to average assets (1) 2.66%  2.58%  2.65%  2.79%  2.78%
Efficiency ratio (4) 96.83%  78.11%  96.15%  95.88%  94.95%
Average interest-earning assets to average interest- bearing liabilities 137.49%  137.92%  141.14%  148.20%  152.30%
Average equity to average assets 18.25%  18.32%  19.21%  20.91%  22.32%
Capital Ratios:              
Total capital to risk weighted assets (Bank only) 23.30%  25.10%  26.30%  27.54%  30.53%
Tier 1 capital to risk weighted assets (Bank only) 22.05%  23.85%  25.05%  26.28%  29.26%
Common equity Tier 1 capital to risk-weighted assets (Bank only) 22.05%  23.85%  25.05%  26.28%  29.26%
Tier 1 capital to average assets (Bank only) 17.49%  17.51%  17.95%  19.51%  20.47%
Asset Quality Ratios:              
Allowance for credit losses on loans as a percentage of total loans 1.36%  1.51%  1.64%  1.77%  2.27%
Allowance for credit losses on loans as a percentage of nonperforming loans 152.99%  169.49%  167.06%  149.73%  252.33%
Net (charge-offs) recoveries to average outstanding loans (1) (0.24%)  (0.34%)  (0.41%)  (0.57%)  (0.85%)
Non-performing loans as a percentage of total gross loans 0.89%  0.89%  0.98%  1.18%  0.90%
Non-performing loans as a percentage of total assets 0.62%  0.62%  0.63%  0.76%  0.59%
Total non-performing assets as a percentage of total assets 0.62%  0.62%  0.63%  0.76%  0.59%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5) 0.81%  0.82%  0.83%  0.93%  0.78%
Other:              
Number of offices 18   19   19   19   19 
Number of full-time equivalent employees 237   243   244   251   253 
               

(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.
(5)   For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the period in 2022, the balances only include troubled debt restructurings.


Ponce Financial Group, Inc. and Subsidiaries
Securities Portfolio

  December 31, 2023  December 31, 2022 
     Gross  Gross        Gross  Gross    
  Amortized  Unrealized  Unrealized  Fair  Amortized  Unrealized  Unrealized  Fair 
  Cost  Gains  Losses  Value  Cost  Gains  Losses  Value 
  (in thousands)  (in thousands) 
Available-for-Sale Securities:                        
U.S. Government Bonds $2,990  $  $(206) $2,784  $2,985  $  $(296) $2,689 
Corporate Bonds  25,790      (2,122)  23,668   25,824      (2,465)  23,359 
Mortgage-Backed Securities:                        
Collateralized Mortgage Obligations (1)  39,375      (6,227)  33,148   44,503      (6,726)  37,777 
FHLMC Certificates  10,163      (1,482)  8,681   11,310      (1,676)  9,634 
FNMA Certificates  61,359      (9,842)  51,517   67,199      (11,271)  55,928 
GNMA Certificates  104         104   122      (4)  118 
Total available-for-sale securities $139,781  $  $(19,879) $119,902  $151,943  $  $(22,438) $129,505 
                         
Held-to-Maturity Securities:                        
U.S. Agency Bonds $25,000  $  $(181) $24,819  $35,000  $  $(380) $34,620 
Corporate Bonds  82,500      (2,691)  79,809   82,500   57   (3,819)  78,738 
Mortgage-Backed Securities:                        
Collateralized Mortgage Obligations (1)  212,093   104   (5,170)  207,027   235,479   192   (5,558)  230,113 
FHLMC Certificates  3,897      (244)  3,653   4,120      (268)  3,852 
FNMA Certificates  118,944      (4,088)  114,856   131,918      (5,227)  126,691 
SBA Certificates  19,712   166      19,878   21,803   34      21,837 
Allowance for Credit Losses  (398)                     
Total held-to-maturity securities $461,748  $270  $(12,374) $450,042  $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.

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

  December 31, 
  2023  2022 
Beginning balance $  $ 
CECL adoption  662    
Provision for credit losses  (264)   
Allowance for credit losses on securities $398  $ 



Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

  As of 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2023  2023  2023  2023  2022 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Mortgage loans:                              
1-4 family residential                              
Investor Owned $343,689   17.89% $347,082   19.13% $351,754   20.43% $354,559   21.60% $343,968   22.54%
Owner-Occupied  152,311   7.93%  151,866   8.37%  154,116   8.94%  149,481   9.10%  134,878   8.84%
Multifamily residential  550,559   28.65%  553,694   30.52%  550,033   31.94%  553,430   33.71%  494,667   32.42%
Nonresidential properties  342,343   17.81%  321,472   17.71%  317,416   18.43%  314,560   19.17%  308,043   20.19%
Construction and land  503,925   26.22%  411,383   22.67%  315,843   18.34%  235,157   14.33%  185,018   12.13%
Total mortgage loans  1,892,827   98.50%  1,785,497   98.40%  1,689,162   98.08%  1,607,187   97.91%  1,466,574   96.12%
Non-mortgage loans:                              
Business loans (1)  19,779   1.03%  18,416   1.02%  21,041   1.22%  19,890   1.21%  39,965   2.62%
Consumer loans (2)  8,966   0.47%  10,416   0.58%  11,958   0.70%  14,227   0.88%  19,129   1.26%
Total non-mortgage loans  28,745   1.50%  28,832   1.60%  32,999   1.92%  34,117   2.09%  59,094   3.88%
Total loans, gross  1,921,572   100.00%  1,814,329   100.00%  1,722,161   100.00%  1,641,304   100.00%  1,525,668   100.00%
Net deferred loan origination costs  468      692      1,059      2,099      2,051    
Allowance for credit losses on loans  (26,154)     (27,414)     (28,173)     (28,975)     (34,592)   
Loans, net $1,895,886     $1,787,607     $1,695,047     $1,614,428     $1,493,127    

(1)   As of December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, business loans include $1.0 million, $1.1 million, $3.2 million, $3.6 million and $20.0 million, respectively, of PPP loans.
(2)   As of December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, consumer loans include $8.0 million, $9.3 million, $11.2 million, $13.4 million and $18.2 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 December 31, 2023 
(in thousands) 
Receivable from Grain   
Microloans originated - put back to Grain (inception-to-December 31, 2023) $24,104 
Write-downs, net of recoveries (inception-to-date as of December 31, 2023)  (15,459)
Cash receipts from Grain (inception-to-December 31, 2023)  (6,819)
Grant/reserve  (1,826)
Net receivable as of December 31, 2023 $ 
Microloan receivables from Grain Borrowers   
Grain originated loans receivable as of December 31, 2023 $7,985 
Allowance for credit losses on loans as of December 31, 2023 (1)  (7,026)
Microloans, net of allowance for credit losses on loans as of December 31, 2023 $959 
Investments   
Investment in Grain $1,000 
Investment in Grain write-off in Q3 2022  (1,000)
Investment in Grain as of December 31, 2023   
Total exposure related to Grain as of December 31, 2023 (2) $959 

(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 $1.6 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.
(2)   Total remaining exposure to Grain borrowers. These loans are now serviced by the Bank.

On November 1, 2023, Ponce Financial Group, Inc. and Grain signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining Grain loans. In order to facilitate the transfer of the servicing responsibilities to the Bank, Grain granted the Bank a perpetual right and license to use the Grain software, including the source code to service the remaining loans.



Ponce Financial Group, Inc. and Subsidiaries

Allowance for Credit Losses on Loans

 For the Three Months Ended 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
 (Dollars in thousands) 
Allowance for credit losses on loans at beginning of the period$27,414  $28,173  $28,975  $34,592  $25,108 
Provision (benefit) for credit losses on loans (126)  750   934   (321)  12,641 
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 (63)            
Consumer (1,135)  (1,592)  (1,931)  (2,569)  (3,659)
Total charge-offs (1,198)  (1,592)  (1,931)  (2,569)  (3,659)
Recoveries:              
Mortgage loans:              
1-4 family residences              
Investor owned              
Owner occupied              
Multifamily residences              
Nonresidential properties              
Construction and land              
Non-mortgage loans:              
Business    3          
Consumer 64   80   195   363   502 
Total recoveries 64   83   195   363   502 
Net (charge-offs) recoveries (1,134)  (1,509)  (1,736)  (2,206)  (3,157)
Allowance for credit losses on loans at end of the period$26,154  $27,414  $28,173  $28,975  $34,592 



Ponce Financial Group, Inc. and Subsidiaries

Deposits

  As of 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2023  2023  2023  2023  2022 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Demand $243,384   16.14% $265,862   18.98% $266,545   18.48% $282,741   21.15% $289,149   23.08%
Interest-bearing deposits:                              
NOW/IOLA accounts  19,676   1.31%  22,519   1.61%  22,754   1.57%  21,735   1.63%  24,349   1.94%
Money market accounts (1)  432,735   28.70%  370,500   26.44%  387,970   26.91%  293,140   21.93%  236,143   18.86%
Reciprocal deposits  96,860   6.42%  82,670   5.90%  100,919   7.00%  109,649   8.20%  114,049   9.11%
Savings accounts  114,139   7.57%  117,870   8.41%  119,635   8.30%  127,731   9.55%  130,432   10.41%
Total NOW, money market, reciprocal and savings accounts  663,410   44.00%  593,559   42.36%  631,278   43.78%  552,255   41.31%  504,973   40.32%
Certificates of deposit of $250K or more (1)  132,153   8.77%  122,353   8.73%  120,043   8.32%  113,955   8.52%  106,336   8.49%
Brokered certificates of deposit (2)  98,729   6.55%  98,729   7.05%  98,729   6.85%  98,754   7.39%  98,754   7.89%
Listing service deposits (2)  14,433   0.96%  15,180   1.08%  20,258   1.40%  28,417   2.13%  35,813   2.86%
All other certificates of deposit less than $250K (1)  355,511   23.58%  305,449   21.80%  305,160   21.17%  260,755   19.50%  217,387   17.36%
Total certificates of deposit  600,826   39.86%  541,711   38.66%  544,190   37.74%  501,881   37.54%  458,290   36.60%
Total interest-bearing deposits  1,264,236   83.86%  1,135,270   81.02%  1,175,468   81.52%  1,054,136   78.85%  963,263   76.92%
Total deposits $1,507,620   100.00% $1,401,132   100.00% $1,442,013   100.00% $1,336,877   100.00% $1,252,412   100.00%

(1)   As of June 30, 2023, March 31, 2023 and December 31, 2022, $150.6 million, $115.3 million and $81.7 million, respectively, of SaveBetter deposits were reclassified from money market accounts to certificates of deposits. $36.4 million, $37.1 million and $36.2 million, respectively, were reclassified to Certificates of deposits of $250K or more and $114.2 million, $78.2 million and $45.5 million, respectively, were reclassified to certificates of deposit less than $250K.
(2)   As of December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, there were $0.3 million, $0.3 million, $3.3 million, $9.5 million and $13.6 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

 December 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   4.61%
                  
Term advances ending:                 
2023$  $     $178,375  $178,375   4.32 
2024 363,321   363,321   4.55   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 
2028 9,100   9,100   3.84          
Thereafter 50,000   50,000   3.35   50,000   50,000   3.35 
 $684,421  $684,421   4.10% $517,375  $517,375   3.90%



Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

 As of Three Months Ended 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
 (Dollars in thousands) 
Non-accrual loans:              
Mortgage loans:              
1-4 family residential              
Investor owned$793  $396  $296  $2,836  $2,844 
Owner occupied 1,682   1,685   2,363   2,245   961 
Multifamily residential 2,979   1,444   1,435       
Nonresidential properties              
Construction and land 10,759   11,721   11,721   11,906   7,567 
Non-mortgage loans:              
Business 19   209      40    
Consumer 146             
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty) (1)$16,378  $15,455  $15,815  $17,027  $11,372 
               
Non-accruing modifications to borrowers experiencing financial difficulty (1):              
Mortgage loans:              
1-4 family residential              
Investor owned$270  $270  $209  $213  $217 
Owner occupied 447   449   840   2,020   2,027 
Multifamily residential              
Nonresidential properties          91   93 
Construction and land              
Non-mortgage loans:              
Business              
Consumer              
Total non-accruing modifications to borrowers experiencing financial difficulty (1) 717   719   1,049   2,324   2,337 
Total non-accrual loans$17,095  $16,174  $16,864  $19,351  $13,709 
               
Accruing modifications to borrowers experiencing financial difficulty (1):              
Mortgage loans:              
1-4 family residential              
Investor owned$2,112  $2,131  $2,161  $2,185  $2,207 
Owner occupied 2,313   2,335   2,353   1,310   1,328 
Multifamily residential              
Nonresidential properties 757   765   783   701   708 
Construction and land              
Non-mortgage loans:              
Business              
Consumer              
Total accruing modifications to borrowers experiencing financial difficulty (1)$5,182  $5,231  $5,297  $4,196  $4,243 
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty (1)$22,277  $21,405  $22,161  $23,547  $17,952 
Total non-performing loans to total gross loans 0.89%  0.89%  0.98%  1.18%  0.90%
Total non-performing assets to total assets 0.62%  0.62%  0.63%  0.76%  0.59%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (1) 0.81%  0.82%  0.83%  0.93%  0.78%

(1)   For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the period in 2022, the balances only include troubled debt restructurings.


Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

 For the Three Months Ended December 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)$1,884,301  $27,814  5.86% $1,478,308  $18,550  4.98%
Securities (3) 582,563   5,715  3.89%  636,457   5,931  3.70%
Other (4) (5) 96,070   1,421  5.87%  47,069   452  3.81%
Total interest-earning assets 2,562,934   34,950  5.41%  2,161,834   24,933  4.58%
Non-interest-earning assets (5) 107,305        87,861      
Total assets$2,670,239       $2,249,695      
Interest-bearing liabilities:               
NOW/IOLA$20,210  $8  0.16% $25,349  $22  0.34%
Money market (6) 474,306   5,668  4.74%  437,813   3,619  3.28%
Savings 116,600   28  0.10%  139,115   8  0.02%
Certificates of deposit (6) 559,713   5,103  3.62%  434,368   1,786  1.63%
Total deposits 1,170,829   10,807  3.66%  1,036,645   5,435  2.08%
Advance payments by borrowers 15,033   2  0.05%  12,942     %
Borrowings 678,235   6,944  4.06%  369,832   3,332  3.57%
Total interest-bearing liabilities 1,864,097   17,753  3.78%  1,419,419   8,767  2.45%
Non-interest-bearing liabilities:               
Non-interest-bearing demand 267,150        325,616      
Other non-interest-bearing liabilities 51,764        2,424      
Total non-interest-bearing liabilities 318,914        328,040      
Total liabilities 2,183,011   17,753     1,747,459   8,767   
Total equity 487,228        502,236      
Total liabilities and total equity$2,670,239     3.78% $2,249,695     2.45%
Net interest income   $17,197       $16,166   
Net interest rate spread (7)      1.63%       2.13%
Net interest-earning assets (8)$698,837       $742,415      
Net interest margin (9)      2.66%       2.97%
Average interest-earning assets to interest-bearing liabilities      137.49%       152.30%

(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, FHLBNY stock dividends and FRB demand deposits.
(5)   FRB demand deposits for prior period have been reclassified for consistency.
(6)   Includes reclassification of $65.5 million average outstanding balances and $0.5 million of interest expenses from money market to certificates of deposit for the three months ended December 31, 2022.
(7)   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.
(8)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(9)   Net interest margin represents net interest income divided by average total interest-earning assets.


Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

 For the Years Ended December 31, 
 2023  2022 
 Average        Average       
 Outstanding     Average  Outstanding     Average 
 Balance  Interest  Yield/Rate (1)  Balance  Interest  Yield/Rate 
 (Dollars in thousands) 
Interest-earning assets:                 
Loans (2)$1,730,275  $95,805   5.54% $1,375,723  $69,865   5.08%
Securities (3) 606,815   23,342   3.85%  357,446   11,709   3.28%
Other (4) (5) 119,923   6,720   5.60%  84,133   1,178   1.40%
Total interest-earning assets 2,457,013   125,867   5.12%  1,817,302   82,752   4.55%
Non-interest-earning assets (5) 115,760         124,351       
Total assets$2,572,773        $1,941,653       
Interest-bearing liabilities:                 
NOW/IOLA$22,168  $33   0.15% $30,151  $65   0.22%
Money market (6) 424,160   18,413   4.34%  367,838   5,604   1.52%
Savings 121,550   116   0.10%  138,137   128   0.09%
Certificates of deposit (6) 528,999   16,571   3.13%  407,739   4,148   1.02%
Total deposits 1,096,877   35,133   3.20%  943,865   9,945   1.05%
Advance payments by borrowers 14,869   8   0.05%  11,514   5   0.04%
Borrowings 633,116   25,460   4.02%  206,969   6,199   3.00%
Total interest-bearing liabilities 1,744,862   60,601   3.47%  1,162,348   16,149   1.39%
Non-interest-bearing liabilities:                 
Non-interest-bearing demand 290,335         344,505       
Other non-interest-bearing liabilities 45,858         33,225       
Total non-interest-bearing liabilities 336,193         377,730       
Total liabilities 2,081,055   60,601      1,540,078   16,149    
Total equity 491,718         401,575       
Total liabilities and total equity$2,572,773      3.47% $1,941,653      1.39%
Net interest income   $65,266        $66,603    
Net interest rate spread (7)       1.65%        3.16%
Net interest-earning assets (8)$712,151        $654,954       
Net interest margin (9)       2.66%        3.66%
Average interest-earning assets to                 
interest-bearing liabilities       140.81%        156.35%

(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, FHLBNY stock dividends and FRB demand deposit.
(5)   FRB demand deposits for prior period have been reclassified for consistency.
(6)   Includes reclassification of $25.7 million average outstanding balances and $0.7 million of interest expenses from money market to certificates of deposit for the year ended December 31, 2022.
(7)   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.
(8)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(9)   Net interest margin represents net interest income divided by average total interest-earning assets.


Ponce Financial Group, Inc. and Subsidiaries
Other Data

 As of 
 December 31,  September 30,  June 30,  March 31,  December 31, 
 2023  2023  2023  2023  2022 
Other Data              
Common shares issued 24,886,711   24,886,711   24,886,711   24,865,476   24,861,329 
Less treasury shares 1,101,191   1,233,111   617,924   1,976   1,976 
Common shares outstanding at end of period 23,785,520   23,653,600   24,268,787   24,863,500   24,859,353 
               
Book value per common share$11.20  $10.99  $10.94  $10.90  $10.77 
Tangible book value per common share$11.20  $10.99  $10.94  $10.90  $10.77 


Contact:
Frank Perez
frank.perez@poncebank.net
718-981-9000