Ponce Financial Group, Inc. Reports Third Quarter 2024 Results
NEW YORK, Oct. 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 third quarter of 2024.
Third Quarter 2024 Highlights (Compared to Prior Periods):
Net income available to common stockholders was $2.2 million, or $0.10 per diluted share for the three months ended September 30, 2024, as compared to net income available to common stockholders of $3.1 million, or $0.14 per diluted share for the three months ended June 30, 2024 and net income available to common stockholders of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023. Total net income for the three months ended September 30, 2024 was $2.4 million. The Company paid dividends of $0.3 million on its preferred stock during the quarter ended September 30, 2024.
Included in the $2.2 million of net income available to common stockholders for the third quarter of 2024 results is $41.3 million in interest and dividend income and $1.2 million in non-interest income, offset by $22.3 million in interest expense, $16.3 million in non-interest expense, $0.8 million in provision for credit losses, $0.6 million in provision for income taxes and $0.3 million in dividends on preferred shares.
Net interest income of $19.0 million for the third quarter of 2024 increased $1.1 million, or 6.25%, from the prior quarter and increased $2.5 million, or 15.00%, from the same quarter last year.
Net interest margin was 2.65% for the third quarter of 2024, versus 2.62% for the prior quarter and versus 2.58% for the same quarter last year.
Nine Months 2024 Highlights (Compared to 2023):
Net income available to common stockholders was $7.7 million, or $0.34 per diluted share for the nine months ended September 30, 2024, as compared to net income available to common stockholders of $2.8 million, or $0.12 per diluted share for the nine months ended September 30, 2023. Total net income for the nine months ended September 30, 2024, prior to the payment of $0.4 million in dividends on preferred shares, was $8.0 million.
Net interest income for the nine months ended September 30, 2024 was $55.8 million, an increase of $7.7 million, or 15.98%, compared to $48.1 million for the nine months ended September 30, 2023.
Non-interest income for the nine months ended September 30, 2024 was $5.1 million, a decrease of $3.8 million, or 42.76%, from $8.9 million for the nine months ended September 30, 2023. The decrease was primarily driven by a $3.7 million in grants that were received in the prior year.
Non-interest expense for the nine months ended September 30, 2024 was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023.
Cash and equivalents were $155.8 million as of September 30, 2024, an increase of $16.6 million, or 11.94%, from $139.2 million as of December 31, 2023.
Securities totaled $514.7 million as of September 30, 2024, a decrease of $66.9 million, or 11.50%, from $581.7 million as of December 31, 2023 primarily due to regular principal payments, maturity of one available-for-sale security in the amount of $4.0 million and call of one held-to-maturity security in the amount of $25.0 million.
Net loans receivable were $2.18 billion as of September 30, 2024, an increase of $284.4 million, or 15.00%, from $1.90 billion as of December 31, 2023.
Deposits were $1.87 billion as of September 30, 2024, an increase of $362.7 million, or 24.06%, from $1.51 billion as of December 31, 2023.
President and Chief Executive Officer's Comments
Carlos P. Naudon, Ponce Financial Group's President and CEO, stated, "We continue to make progress quarter over quarter both in terms of our economic performance as well as serving our communities. Book value per share continues to grow and is now $11.74 (up $0.75 vs last year) and total equity per common share stands at $21.18. Our levels of liquidity and capital remain strong. Our net interest income grew quarter over quarter, and we're well positioned for a decline in interest rates. We reduced our borrowings during the quarter, paying off the entirety of our Bank Term Funding Program Loan, while lowering the overall cost and extending our maturities. We remain committed to the communities we serve and our status as a Minority Depository Institution ("MDI")/Community Development Financial Institution ("CDFI"), and we continue 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, "During the quarter, the US Treasury Department issued proposed guidelines under which it may sell their ECIP investment back to the issuers or related non-profit affiliates. We believe the adoption of the proposed regulations would be greatly beneficial to Ponce Financial Group, although there can be no assurance that the proposed regulations will be adopted, or that that will be adopted in their current form. Most of our loan growth of $157.6 million this quarter is explained by our desire to ensure qualification under the proposed regulations, if adopted. Deposits also grew significantly during the quarter including $35.0 million from the Banking Development District program of New York."
Selected performance metrics are as follows (refer to "Key Metrics" for additional information):
At or for the Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Performance Ratios (Annualized):
2024
2024
2024
2023
2023
Return on average assets (1)
0.33
%
0.45
%
0.33
%
0.08
%
0.39
%
Return on average equity (1)
1.93
%
2.59
%
1.97
%
0.42
%
2.11
%
Net interest rate spread (1) (2)
1.77
%
1.72
%
1.82
%
1.74
%
1.68
%
Net interest margin (1) (3)
2.65
%
2.62
%
2.71
%
2.66
%
2.58
%
Non-interest expense to average assets (1)
2.19
%
2.28
%
2.35
%
2.66
%
2.58
%
Efficiency ratio (4)
80.87
%
80.09
%
82.56
%
96.83
%
78.11
%
Average interest-earning assets to average interest- bearing liabilities
128.35
%
129.73
%
129.69
%
133.50
%
134.49
%
Average equity to average assets
16.97
%
17.41
%
17.00
%
18.25
%
18.32
%
At or for the Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Capital Ratios (Annualized):
2024
2024
2024
2023
2023
Total capital to risk-weighted assets (Bank only)
21.61
%
22.47
%
22.79
%
23.30
%
25.10
%
Tier 1 capital to risk-weighted assets (Bank only)
20.45
%
21.24
%
21.54
%
22.05
%
23.85
%
Common equity Tier 1 capital to risk-weighted assets (Bank only)
20.45
%
21.24
%
21.54
%
22.05
%
23.85
%
Tier 1 capital to average assets (Bank only)
16.19
%
16.70
%
16.26
%
17.49
%
17.51
%
At or for the Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Asset Quality Ratios (Annualized):
2024
2024
2024
2023
2023
Allowance for loan losses as a percentage of total loans
1.09
%
1.18
%
1.23
%
1.36
%
1.51
%
Allowance for loan losses as a percentage of nonperforming loans
139.52
%
130.28
%
140.90
%
152.99
%
169.49
%
Net (charge-offs) recoveries to average outstanding loans (1)
(0.17
%)
(0.10
%)
(0.25
%)
(0.24
%)
(0.34
%)
Non-performing loans as a percentage of total gross loans
0.78
%
0.89
%
0.87
%
0.89
%
0.89
%
Non-performing loans as a percentage of total assets
0.57
%
0.65
%
0.62
%
0.62
%
0.62
%
Total non-performing assets as a percentage of total assets
0.57
%
0.65
%
0.62
%
0.62
%
0.62
%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)
0.73
%
0.82
%
0.79
%
0.81
%
0.82
%
(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 cost 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)
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.
Summary of Results of Operations
Net income for the three months ended September 30, 2024 was $2.4 million compared to net income of $3.2 million for the three months ended June 30, 2024 and net income of $2.6 million for the three months ended September 30, 2023.
The decrease of net income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was attributed mainly to an increase of $1.2 million in provision for credit losses, a decrease of $1.1 million in non-interest income, an increase of $0.2 million in non-interest expense, partially offset by an increase of $1.1 million in net interest income and a decrease of $0.6 million in provision for income taxes .
The decrease of net income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely due to a decrease of $4.5 million in non-interest income as a result of a $3.7 million grant reported in the third quarter of 2023 and an increase of $0.3 million in provision for credit losses, partially offset by an increase of $2.5 million in net interest income and decreases of $1.1 million in provision for income taxes and $ 1.0 million in non-interest expense.
Net income for the nine months ended September 30, 2024 was $8.0 million compared to a net income of $2.8 million for the nine months ended September 30, 2023. The increase of $5.2 million in net income was attributable to an increase of $7.7 million in net interest income, a decrease of $1.3 million in non-interest expense and a decrease of $1.1 million in provision for credit losses, partially offset by a decrease of $3.8 million in non-interest income and an increase of $1.1 million in provision for income taxes.
Net Interest Income and Net Margin
Net interest income for the three months ended September 30, 2024, increased $1.1 million, or 6.25%, to $19.0 million compared to $17.9 million for the three months ended June 30, 2024 and increased $2.5 million, or 15.00%, compared to $16.5 million for the three months ended September 30, 2023.
Net interest income for the nine months ended September 30, 2024, increased $7.7 million, or 15.98%, to $55.8 million, compared to $48.1 million for the nine months ended September 30, 2023. The increase of $7.7 million of net interest income was attributable to an increase of $28.8 million in total interest and dividend income, offset by an increase of $21.1 million in total interest expense.
For the nine months ended September 30, 2024, provision for credit losses amounted to $0.2 million consisting of a provision for credit losses on loans in the amount of $0.4 million and a benefit for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million provision for credit losses on loans for the nine months ended September 30, 2024 resulted from a benefit of $2.1 million related to microloans offset by a provision of $2.5 million related to non-microloans.
Net interest margin was 2.65% for the three months ended September 30, 2024 compared to 2.62% for the prior quarter, an increase of 3bps and 2.58% for the same period last year, an increase of 7bps.
Net interest margin was 2.66% for the nine months ended September 30, 2024 compared to 2.65% for the nine months ended September 30, 2023, an increase of 1bp.
Non-interest Income
Non-interest income for the three months ended September 30, 2024, was $1.2 million, a decrease of $1.1 million, or 49.03%, compared to $2.3 million the three months ended June 30, 2024 and a decrease of $4.5 million, or 79.55%, compared to $5.6 million the three months ended September 30, 2023.
The $1.1 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was largely attributable to decreases of $0.7 million in other non-interest income related to the mark to market adjustments on a private equity fund investment and $0.3 million in late and prepayment charges.
The $4.5 million decrease in non-interest income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was largely attributable to $3.7 million in grants received in the third quarter of 2023 and a decrease of $0.8 million in late and prepayment charges.
Non-interest income for the nine months ended September 30, 2024, was $5.1 million, a decrease of $3.8 million, or 42.76%, compared to $8.9 million for the nine months ended September 30, 2023. The decrease was largely attributable to $3.7 million related to grants received in the third quarter of 2023 and a decrease of $1.1 million in late and prepayment charges, partially, offset by increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans.
Non-interest Expense
Non-interest expense for the three months ended September 30, 2024, was $16.3 million, an increase of $0.2 million, or 1.03%, compared to $16.1 million for the three months ended June 30, 2024 and a decrease of $1.0 million, or 5.79%, compared to $17.3 million for the three months ended September 30, 2023.
The $0.2 million increase from the three months ended September 30, 2024 compared to the three months ended June 30, 2024 was mainly attributable to a decrease of $0.2 million in benefit for contingencies and an increase of $0.2 million in occupancy and equipment, partially offset by a decrease of $0.3 million in other operating expense.
The $1.0 million decrease from the three months ended September 30, 2023 compared to the three months ended September 30, 2023 was mainly attributable to decreases of $0.6 million in provision for contingencies, $0.5 million in data processing expenses and $0.3 million in professional fees, partially offset by increases of $0.2 million in direct loan expenses, $0.2 million in occupancy and equipment and $0.1 million in compensation and benefits.
Non-interest expense for the nine months ended September 30, 2024, was $49.4 million, a decrease of $1.4 million, or 2.67%, compared to $50.8 million for the nine months ended September 30, 2023. The $1.4 million decrease from the nine months ended September 30, 2023 was mainly attributable to decreases of $2.5 million in provision for contingencies, $0.7 million in data processing expenses, $0.6 million in professional fees and $0.5 million in office supplies, telephone and postage, partially offset by a decrease of $1.2 million in microloans recoveries and increases of $0.8 million in compensation and benefits and $0.8 million in direct loan expenses.
Balance Sheet Summary
Total assets increased $265.2 million, or 9.64%, to $3.02 billion as of September 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $284.4 million in net loans receivable, $26.7 million in other assets, $16.6 million in cash and cash equivalents, $9.1 million in Federal Home Loan Bank of New York stock and $0.8 million in net premises and equipment, partially offset by decreases of $58.0 million in held-to-maturity securities, $8.9 million in available-for-sale securities, $2.5 million in deferred tax assets, $1.5 million in right of use assets, $1.1 million in accrued interest receivable and $0.4 million in mortgage loans held for sale.
Total liabilities increased $252.1 million, or 11.16%, to $2.51 billion as of September 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $362.7 million in deposits, $3.0 million in advance payments by borrowers for taxes and insurance and $0.8 million in other liabilities, partially offset by decreases of $104.0 million in borrowings, $9.0 million in accrued interest payable and $1.4 million in operating lease liabilities.
Total stockholders' equity increased $13.2 million, or 2.69%, to $504.6 million as of September 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders' equity was largely attributable to $8.0 million in net income, $3.0 million in other comprehensive income, $1.6 million impact to additional paid in capital as a result of share-based compensation and $1.0 million from release of ESOP shares, offset by $0.4 million in preferred stock dividend for shares issued pursuant to the ECIP.
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; 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
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
ASSETS
Cash and due from banks:
Cash
$
32,061
$
23,128
$
29,972
$
28,930
$
26,046
Interest-bearing deposits
123,751
80,038
104,752
110,260
90,966
Total cash and cash equivalents
155,812
103,166
134,724
139,190
117,012
Available-for-sale securities, at fair value
111,005
113,125
116,044
119,902
116,753
Held-to-maturity securities, at amortized cost
403,736
442,113
452,955
461,748
471,065
Placement with banks
249
249
249
249
996
Mortgage loans held for sale, at fair value
9,566
37,764
7,860
9,980
14,103
Loans receivable, net
2,180,331
2,022,173
1,981,428
1,895,886
1,787,607
Accrued interest receivable
16,890
17,441
18,063
18,010
16,624
Premises and equipment, net
16,843
16,976
17,396
16,053
16,453
Right of use assets
29,785
30,349
31,021
31,272
32,110
Federal Home Loan Bank of New York stock (FHLBNY), at cost
28,515
23,972
23,892
19,377
18,870
Deferred tax assets
11,845
13,172
13,919
14,332
15,984
Other assets
51,392
21,507
21,151
24,723
16,286
Total assets
$
3,015,969
$
2,842,007
$
2,818,702
$
2,750,722
$
2,623,863
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
$
1,870,323
$
1,606,097
$
1,585,784
$
1,507,620
$
1,401,132
Operating lease liabilities
31,343
31,861
32,486
32,684
33,459
Accrued interest payable
2,918
6,820
4,218
11,965
8,385
Advance payments by borrowers for taxes and insurance
13,733
10,838
13,245
10,778
13,743
Borrowings
580,421
680,421
680,421
684,421
675,100
Other liabilities
12,642
8,313
8,866
11,859
6,986
Total liabilities
2,511,380
2,344,350
2,325,020
2,259,327
2,138,805
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
(9,445
)
(9,519
)
(9,702
)
(9,747
)
(10,975
)
Additional paid-in-capital
208,478
207,934
207,584
207,106
207,626
Retained earnings
105,103
102,951
99,834
97,420
96,902
Accumulated other comprehensive loss
(12,686
)
(16,557
)
(16,590
)
(15,649
)
(20,468
)
Unearned compensation ─ ESOP
(12,110
)
(12,401
)
(12,693
)
(12,984
)
(13,276
)
Total stockholders' equity
504,589
497,657
493,682
491,395
485,058
Total liabilities and stockholders' equity
$
3,015,969
$
2,842,007
$
2,818,702
$
2,750,722
$
2,623,863
Ponce Financial Group, Inc. and Subsidiaries Consolidated Statements of Operations (Dollars in thousands, except per share data)
Three Months Ended
September 30,
June 30,
March 31,
December 31,
September 30,
2024
2024
2024
2023
2023
Interest and dividend income:
Interest on loans receivable
$
32,945
$
31,281
$
30,664
$
27,814
$
25,276
Interest on deposits due from banks
2,430
1,542
2,911
990
1,969
Interest and dividend on securities and FHLBNY stock
5,918
5,969
6,091
6,146
6,261
Total interest and dividend income
41,293
38,792
39,666
34,950
33,506
Interest expense:
Interest on certificates of deposit
6,926
6,358
6,380
5,103
4,362
Interest on other deposits
8,519
7,389
6,540
5,706
5,639
Interest on borrowings
6,825
7,141
7,923
6,944
6,963
Total interest expense
22,270
20,888
20,843
17,753
16,964
Net interest income
19,023
17,904
18,823
17,197
16,542
Provision (benefit) for credit losses
789
(374
)
(180
)
(375
)
535
Net interest income after provision (benefit) for credit losses
18,234
18,278
19,003
17,572
16,007
Non-interest income:
Service charges and fees
508
492
473
498
516
Brokerage commissions
—
9
8
13
17
Late and prepayment charges
77
426
359
365
899
Income on sale of mortgage loans
218
274
302
244
173
Grant income
—
—
—
438
3,718
Other
348
1,057
565
(273
)
304
Total non-interest income
1,151
2,258
1,707
1,285
5,627
Non-interest expense:
Compensation and benefits
7,674
7,724
7,844
8,262
7,566
Occupancy and equipment
3,786
3,564
3,667
3,686
3,588
Data processing expenses
1,099
1,013
1,127
1,101
1,582
Direct loan expenses
573
633
732
497
369
(Benefit) provision for contingencies
(252
)
(493
)
164
418
391
Insurance and surety bond premiums
292
263
253
250
255
Office supplies, telephone and postage
222
233
249
294
301
Professional fees
1,351
1,369
1,723
2,040
1,693
Microloans recoveries
(54
)
(65
)
(53
)
(152
)
(69
)
Marketing and promotional expenses
180
145
100
146
248
Directors fees and regulatory assessment
178
176
179
173
169
Other operating expenses
1,265
1,585
965
1,182
1,223
Total non-interest expense
16,314
16,147
16,950
17,897
17,316
Income before income taxes
3,071
4,389
3,760
960
4,318
Provision for income taxes
638
1,197
1,346
442
1,728
Net income
$
2,433
$
3,192
$
2,414
$
518
$
2,590
Dividends on preferred shares
281
75
—
—
—
Net income available to common stockholders
$
2,152
$
3,117
$
2,414
$
518
$
2,590
Earnings per common share:
Basic
$
0.10
$
0.14
$
0.11
$
0.02
$
0.12
Diluted
$
0.10
$
0.14
$
0.11
$
0.02
$
0.12
Weighted average common shares outstanding:
Basic
22,446,009
22,409,803
22,353,492
22,224,945
22,272,076
Diluted
22,612,028
22,419,309
22,366,728
22,406,102
22,349,217
Ponce Financial Group, Inc. and Subsidiaries Consolidated Statements of Operations (Dollars in thousands, except per share data)
For the Nine Months Ended September 30,
2024
2023
Variance $
Variance %
Interest and dividend income:
Interest on loans receivable
$
94,890
$
67,991
$
26,899
39.56
%
Interest on deposits due from banks
6,883
3,983
2,900
72.81
%
Interest and dividend on securities and FHLBNY stock
17,978
18,943
(965
)
(5.09
%)
Total interest and dividend income
119,751
90,917
28,834
31.71
%
Interest expense:
Interest on certificates of deposit
19,664
11,468
8,196
71.47
%
Interest on other deposits
22,448
12,864
9,584
74.50
%
Interest on borrowings
21,889
18,516
3,373
18.22
%
Total interest expense
64,001
42,848
