NEW YORK, April 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 first quarter of 2024. First Quarter 2024 Highlights (Compared to Prior Periods): Net income of $2.4 million, or $0.11 per diluted share for the three months ended March 31, 2024, as compared to net income of $0.5 million, or $0.02 per diluted share for the three months ended December 31, 2023 and net income of $0.3 million, or $0.01 per diluted share for the three months ended March 31, 2023. Included in the $2.4 million of net income for the first quarter of 2024 results is $39.7 million in interest and dividend income, $1.7 million in non-interest income and $0.2 million in benefit for credit losses, offset by $20.8 million in interest expense and $17.0 million in non-interest expense. Net interest income of $18.8 million for the first quarter of 2024 increased $1.6 million, or 9.46%, from the prior quarter and increased $3.6 million, or 23.47%, from the same quarter last year. Net interest margin was 2.71% for the first quarter of 2024, increased from 2.66% for the prior quarter and decreased from 2.75% for the same quarter last year. Non-interest income for the three months ended March 31, 2024 was $1.7 million, increased $0.4 million, or 32.84%, from $1.3 million for the three months ended December 31, 2023 and decreased $0.1 million, or 6.16%, from $1.8 million for the three months ended March 31, 2023. Non-interest expense for the three months ended March 31, 2024 was $17.0 million, decreased $0.9 million, or 5.29%, compared to $17.9 million for the three months ended December 31, 2023 and increased $0.6 million, or 3.60% compared to $16.4 million for the three months ended March 31, 2023. Cash and equivalents were $134.7 million as of March 31, 2024, decreased $4.5 million, or 3.21%, from December 31, 2023. Securities totaled $569.0 million as of March 31, 2024, decreased $12.7 million, or 2.18%, from December 31, 2023 primarily due to regular principal payments. Net loans receivable were $1.98 billion as of March 31, 2024, increased $85.5 million, or 4.51%, from December 31, 2023. Deposits were $1.59 billion as of March 31, 2024, increased $78.2 million, or 5.18%, from December 31, 2023. President and Chief Executive Officer's Comments Carlos P. Naudon, Ponce Financial Group's President and CEO, stated "Despite the challenging operating environment, we continue to make progress: net interest income grew for the fourth quarter in a row, and net interest margin grew for the second quarter in a row. Book value per share is now $11.29 (up $0.39 vs last year) and total equity per share stands at $20.75. We're also making progress on the expense side and have reduced headcount by 7% year over year. We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 23.33%, 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 $724.1 million, approximately 1.7 times of our uninsured deposits of $416.9 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 continue to grow both loans and deposits while maintaining credit quality. While we see resiliency in our client base, our prudent approach might result in lower growth in the coming quarters as we prioritize sound underwriting practices and balance sheet management over loan growth."  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):   2024     2023     2023     2023     2023   Return on average assets (1)     0.33 %     0.08 %     0.39 %     (0.01 %)     0.06 % Return on average equity (1)     1.97 %     0.42 %     2.11 %     (0.07 %)     0.27 % Net interest rate spread (1) (2)     1.82 %     1.74 %     1.68 %     1.75 %     1.88 % Net interest margin (1) (3)     2.71 %     2.66 %     2.58 %     2.65 %     2.75 % Non-interest expense to average assets (1)     2.35 %     2.66 %     2.58 %     2.65 %     2.79 % Efficiency ratio (4)     82.56 %     96.83 %     78.11 %     96.15 %     95.88 % Average interest-earning assets to average interest- bearing liabilities     129.69 %     133.50 %     134.49 %     137.67 %     143.62 % Average equity to average assets     17.00 %     18.25 %     18.32 %     19.21 %     20.91 %     At or for the Three Months Ended       March 31,     December 31,     September 30,     June 30,     March 31,   Capital Ratios (Annualized):   2024     2023     2023     2023     2023   Total capital to risk-weighted assets (Bank only)     22.79 %     23.30 %     25.10 %     26.30 %     27.54 % Tier 1 capital to risk-weighted assets (Bank only)     21.54 %     22.05 %     23.85 %     25.05 %     26.28 % Common equity Tier 1 capital to risk-weighted assets (Bank only)     21.54 %     22.05 %     23.85 %     25.05 %     26.28 % Tier 1 capital to average assets (Bank only)     16.26 %     17.49 %     17.51 %     17.95 %     19.51 %     At or for the Three Months Ended       March 31,     December 31,     September 30,     June 30,     March 31,   Asset Quality Ratios (Annualized):   2024     2023     2023     2023     2023   Allowance for loan losses as a percentage of total loans     1.23 %     1.36 %     1.51 %     1.64 %     1.77 % Allowance for loan losses as a percentage of nonperforming loans     140.90 %     152.99 %     169.49 %     167.06 %     149.73 % Net (charge-offs) recoveries to average outstanding loans (1)     (0.25 %)     (0.24 %)     (0.34 %)     (0.41 %)     (0.57 %) Non-performing loans as a percentage of total gross loans     0.87 %     0.89 %     0.89 %     0.98 %     1.18 % Non-performing loans as a percentage of total assets     0.62 %     0.62 %     0.62 %     0.63 %     0.76 % Total non-performing assets as a percentage of total assets     0.62 %     0.62 %     0.62 %     0.63 %     0.76 % Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)     0.79 %     0.81 %     0.82 %     0.83 %     0.93 %   (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)  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 March 31, 2024 was $2.4 million compared to net income of $0.5 million for the three months ended December 31, 2023 and net income of $0.3 million for the three months ended March 31, 2023. The increase of net income for the three months ended March 31, 2024 compared to the three months ended December 31, 2023 was attributed mainly to an increase in net interest income, 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 benefit for credit losses. The increase of net income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was largely due to increases in net interest income, partially offset by increases in provision for income taxes and non-interest expense and a decrease in non-interest income. Net Interest Income and Net Margin Net interest income for the three months ended March 31, 2024, increased $1.6 million, or 9.46%, to $18.8 million compared to $17.2 million for the three months ended December 31, 2023 and increased $3.6 million, or 23.47%, compared to $15.2 million for the three months ended March 31, 2023. Included in this increase was a recovery of $1.0 million in interest income from a construction loan that was previously nonperforming. For the three months ended March 31, 2024, benefit for credit losses amounted to $0.2 million consists of a benefit for credit losses on loans in the amount of $0.3 million and a provision on credit losses on held-to-maturity securities in the amount of $0.1 million. The $0.3 million benefit for credit losses on loans for the three months ended March 31, 2024 resulted from a benefit of $0.8 million related to micro loans originated by Grain and a provision of $0.5 million related to non-micro loans. Net interest margin was 2.71% for the three months ended March 31, 2024 compared to 2.66% for the prior quarter, an increase of 5bps and 2.75% for the same period last year, a decrease of 4bps. The decrease in net interest margin for the three months ended March 31, 2024 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 March 31, 2024, was $1.7 million, an increase of $0.4 million, or 32.84%, compared to the three months ended December 31, 2023 and a decrease of $0.1 million, or 6.16%, compared to the three months ended March 31, 2023. The $0.4 million increase in non-interest income for the three months ended March 31, 2024 compared to the three months ended December 31, 2023 was largely attributable to an increase of $0.8 million in other non-interest income partially offset by a grant of $0.4 million received in the fourth quarter of 2023 from the U.S. Treasury. No grants were received in the first quarter of 2024. The $0.1 million decrease in non-interest income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was largely attributable to a decrease of $0.4 million in late and prepayment charges, partially offset by increases of $0.2 million in income on sale of mortgage loans and $0.1 million in other non-interest income. Non-interest Expense Non-interest expense for the three months ended March 31, 2024, was $17.0 million, a decrease of $0.9 million, or 5.29%, compared to $17.9 million for the three months ended December 31, 2023 and an increase of $0.6 million, or 3.60%, compared to $16.4 million for the three months ended March 31, 2023. The $0.9 million decrease from the three months ended December 31, 2023 was mainly attributable to decreases of $0.4 million in compensation and benefits, $0.3 million in provision for contingencies, $0.3 million in professional fees and $0.2 million in other operating expense, partially offset by an increase of $0.3 million in direct loan expense. The $0.6 million increase from the three months ended March 31, 2023 was mainly attributable to a decrease of $0.9 million in Grain recoveries, increases of $0.4 million in compensation and benefits, $0.3 million in direct loan expenses and $0.3 million in professional fees, partially offset by decreases of $0.8 million in provision for contingencies, $0.3 million in other operating expense  and $0.2 million in office supplies, telephone and postage. Balance Sheet Summary Total assets increased $68.0 million, or 2.47%, to $2.82 billion as of March 31, 2024 from $2.75 billion as of December 31, 2023.  The increase in total assets is largely attributable to increases of $85.5 million in net loans receivable, $4.5 million in Federal Home Loan Bank of New York stock and $1.3 million in premises and equipment, partially offset by decreases of $8.8 million in held-to-maturity securities, $4.5 million in cash and cash equivalents, $3.9 million in available-for-sale securities. $3.6 million in other assets and $2.1 million in mortgage loans held for sale. Total liabilities increased $65.7 million, or 2.91%, to $2.33 billion as of March 31, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to increases of $78.2 million in deposits and $2.5 million in advance payments by borrowers for taxes and insurance, partially offset by decreases of $7.7 million in accrued interest payable, $4.0 million in borrowings and $3.0 million in other liabilities. Total stockholders' equity increased $2.3 million, or 0.47%, to $493.7 million as of March 31, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders' equity was largely attributable to $2.4 million in net income, $0.5 million impact to additional paid in capital as a result of share-based compensation and $0.3 million from release of ESOP shares, offset by $0.9 million in other comprehensive loss. 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 SubsidiariesConsolidated Statements of Financial Condition(Dollars in thousands, except for share data)                                 As of     March 31,     December 31,     September 30,     June 30,     March 31,     2024     2023     2023     2023     2023   ASSETS                             Cash and due from banks:                             Cash $ 29,972     $ 28,930     $ 26,046     $ 31,162     $ 26,951   Interest-bearing deposits   104,752       110,260       90,966       212,627       157,736   Total cash and cash equivalents   134,724       139,190       117,012       243,789       184,687   Available-for-sale securities, at fair value   116,044       119,902       116,753       123,720       128,320   Held-to-maturity securities, at amortized cost   452,955       461,748       471,065       481,952       491,649   Placement with banks   249       249       996       996       1,245   Mortgage loans held for sale, at fair value   7,860       9,980       14,103       10,070       2,987   Loans receivable, net   1,981,428       1,895,886       1,787,607       1,695,047       1,614,428   Accrued interest receivable   18,063       18,010       16,624       16,054       15,435   Premises and equipment, net   17,396       16,053       16,453       16,856       17,215   Right of use assets   31,021       31,272       32,110       32,435       33,147   Federal Home Loan Bank of New York stock (FHLBNY), at cost   23,892       19,377       18,870       19,195       19,209   Deferred tax assets   13,919       14,332       15,984       15,924       15,413   Other assets   21,151       24,723       16,286       15,919       15,799   Total assets $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957     $ 2,539,534   LIABILITIES AND STOCKHOLDERS' EQUITY                             Liabilities:                             Deposits $ 1,585,784     $ 1,507,620     $ 1,401,132     $ 1,442,013     $ 1,336,877   Operating lease liabilities   32,486       32,684       33,459       33,716       34,308   Accrued interest payable   4,218       11,965       8,385       4,704       1,767   Advance payments by borrowers for taxes and insurance   13,245       10,778       13,743       12,402       14,902   Borrowings   680,421       684,421       675,100       682,100       648,375   Other liabilities   8,866       11,859       6,986       6,540       7,264   Total liabilities   2,325,020       2,259,327       2,138,805       2,181,475       2,043,493   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   (9,702 )     (9,747 )     (10,975 )     (5,202 )     (2 ) Additional paid-in-capital   207,584       207,106       207,626       207,287       206,883   Retained earnings   99,834       97,420       96,902       94,312       94,399   Accumulated other comprehensive loss   (16,590 )     (15,649 )     (20,468 )     (17,597 )     (16,629 ) Unearned compensation ─ ESOP   (12,693 )     (12,984 )     (13,276 )     (13,567 )     (13,859 ) Total stockholders' equity   493,682       491,395       485,058       490,482       496,041   Total liabilities and stockholders' equity $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957     $ 2,539,534     Ponce Financial Group, Inc. and SubsidiariesConsolidated Statements of Operations(Dollars in thousands, except per share data)       Three Months Ended     March 31,     December 31,     September 30,     June 30,     March 31,     2024     2023     2023     2023     2023   Interest and dividend income:                             Interest on loans receivable $ 30,664     $ 27,814     $ 25,276     $ 23,015     $ 19,700   Interest on deposits due from banks   2,911       990       1,969       1,817       197   Interest and dividend on securities and FHLBNY stock   6,091       6,146       6,261       6,223       6,459   Total interest and dividend income   39,666       34,950       33,506       31,055       26,356   Interest expense:                             Interest on certificates of deposit   6,380       5,103       4,362       3,881       3,225   Interest on other deposits   6,540       5,706       5,639       4,413       2,812   Interest on borrowings   7,923       6,944       6,963       6,479       5,074   Total interest expense   20,843       17,753       16,964       14,773       11,111   Net interest income   18,823       17,197       16,542       16,282       15,245   (Benefit) provision for credit losses   (180 )     (375 )     535       987       (174 ) Net interest income after (benefit) provision for credit losses   19,003       17,572       16,007       15,295       15,419   Non-interest income:                             Service charges and fees   473       498       516       481       491   Brokerage commissions   8       13       17       35       15   Late and prepayment charges   359       365       899       372       729   Income on sale of mortgage loans   302       244       173       82       99   Grant income   —       438       3,718       —       —   Other   565       (273 )     304       522       485   Total non-interest income   1,707       1,285       5,627       1,492       1,819   Non-interest expense:                             Compensation and benefits   7,844       8,262       7,566       7,425       7,446   Occupancy and equipment   3,667       3,686       3,588       3,724       3,570   Data processing expenses   1,127       1,101       1,582       1,208       1,192   Direct loan expenses   732       497       369       345       412   Provision for contingencies   164       418       391       517       985   Insurance and surety bond premiums   253       250       255       248       265   Office supplies, telephone and postage   249       294       301       489       399   Professional fees   1,723       2,040       1,693       1,904       1,455   Grain recoveries   (53 )     (152 )     (69 )     (346 )     (914 ) Marketing and promotional expenses   100       146       248       303       128   Directors fees and regulatory assessment   179       173       169       160       155   Other operating expenses   965       1,182       1,223       1,112       1,268   Total non-interest expense   16,950       17,897       17,316       17,089       16,361   Income (loss) before income taxes   3,760       960       4,318       (302 )     877   Provision (benefit) for income taxes   1,346       442       1,728       (215 )     546   Net income (loss) $ 2,414     $ 518     $ 2,590     $ (87 )   $ 331   Earnings per common share:                             Basic $ 0.11     $ 0.02     $ 0.12     $ (0.00 )   $ 0.01   Diluted $ 0.11     $ 0.02     $ 0.12     $ (0.00 )   $ 0.01   Weighted average common shares outstanding:                             Basic   22,353,492       22,224,945       22,272,076       23,208,168       23,293,013   Diluted   22,366,728       22,406,102       22,349,217       23,208,168       23,324,532     Ponce Financial Group, Inc. and SubsidiariesConsolidated Statements of Operations(Dollars in thousands, except per share data)       For the Three Months Ended March 31,       2024     2023     Variance $     Variance %   Interest and dividend income: