NEW YORK, July 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 second quarter of 2024. Second Quarter 2024 Highlights (Compared to Prior Periods): Net income available to common stockholders was $3.1 million, or $0.14 per diluted share for the three months ended June 30, 2024, as compared to net income available to common stockholders of $2.4 million, or $0.11 per diluted share for the three months ended March 31, 2024 and net loss to common stockholders of ($0.1) million, or $0.00 per diluted share for the three months ended June 30, 2023. Net income for the three months ended June 30, 2024, which excludes $0.1 million in dividends on preferred shares, was $3.2 million. The Company began paying dividends on its preferred stock during the quarter ended June 30, 2024, as required by the terms thereof. Included in the $3.1 million of net income available to common stockholders for the second quarter of 2024 results is $38.8 million in interest and dividend income, $2.3 million in non-interest income and $0.4 million in benefit for credit losses, offset by $20.9 million in interest expense, $16.1 million in non-interest expense and $0.1 million in payments and accrued dividends on preferred shares. Net interest income of $17.9 million for the second quarter of 2024 decreased $0.9 million, or 4.88%, from the prior quarter and increased $1.6 million, or 9.96%, from the same quarter last year. As discussed in our prior earnings release, the first quarter of 2024 included a $1.0 million recovery of interest from a previously non-performing loan, which increased net interest income in that period as compared to the current period. Net interest margin was 2.62% for the second quarter of 2024, versus 2.71% for the prior quarter and versus 2.65% for the same quarter last year. A significant driver of the reduction in net interest margin is the aforementioned recovery. Six Months 2024 Highlights (Compared to 2023): Net income available to common stockholders was $5.5 million, or $0.25 per diluted share for the six months ended June 30, 2024, as compared to net income available to common stockholders of $0.2 million, or $0.01 per diluted share for the six months ended June 30, 2023. Net income for the six months ended June 30, 2024, which excludes $0.1 million in dividends on preferred shares, was $5.6 million. Net interest income for the six months ended June 30, 2024 was $36.7 million, an increase of $5.2 million, or 16.49%, compared to $31.5 million for the six months ended June 30, 2023. Non-interest income for the six months ended June 30, 2024 was $4.0 million, an increase of $0.7 million, or 19.75%, from $3.3 million for the six months ended June 30, 2023. Non-interest expense for the six months ended June 30, 2024 was $33.1 million, a decrease of $0.4 million, or 1.06%, compared to $33.5 million for the six months ended June 30, 2023. Cash and equivalents were $103.2 million as of June 30, 2024, a decrease of $36.0 million, or 25.88%, from December 31, 2023. Securities totaled $555.2 million as of June 30, 2024, a decrease of $26.4 million, or 4.54%, from December 31, 2023 primarily due to regular principal payments. Net loans receivable were $2.02 billion as of June 30, 2024, an increase of $126.3 million, or 6.66%, from December 31, 2023. Deposits were $1.61 billion as of June 30, 2024, an increase of $98.5 million, or 6.53%, 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 both in terms of improving our economic performance as well as serving our communities. We have exceeded our qualified lending targets under ECIP and qualified for a 0.50% preferred dividend rate. Book value per share continues to grow and is now $11.45 (up $0.51 vs last year) and total equity per common share stands at $20.90. 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 22.47%, 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 $679.9 million, approximately 1.7 times of our uninsured deposits of $401.7 million. 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 "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       June 30,     March 31,     December 31,     September 30,     June 30,   Performance Ratios (Annualized):   2024     2024     2023     2023     2023   Return on average assets (1)     0.45 %     0.33 %     0.08 %     0.39 %     (0.01 %) Return on average equity (1)     2.59 %     1.97 %     0.42 %     2.11 %     (0.07 %) Net interest rate spread (1) (2)     1.72 %     1.82 %     1.74 %     1.68 %     1.75 % Net interest margin (1) (3)     2.62 %     2.71 %     2.66 %     2.58 %     2.65 % Non-interest expense to average assets (1)     2.28 %     2.35 %     2.66 %     2.58 %     2.65 % Efficiency ratio (4)     80.09 %     82.56 %     96.83 %     78.11 %     96.15 % Average interest-earning assets to average interest- bearing liabilities     129.73 %     129.69 %     133.50 %     134.49 %     137.67 % Average equity to average assets     17.41 %     17.00 %     18.25 %     18.32 %     19.21 %     At or for the Three Months Ended       June 30,     March 31,     December 31,     September 30,     June 30,   Capital Ratios (Annualized):   2024     2024     2023     2023     2023   Total capital to risk-weighted assets (Bank only)     22.47 %     22.79 %     23.30 %     25.10 %     26.30 % Tier 1 capital to risk-weighted assets (Bank only)     21.24 %     21.54 %     22.05 %     23.85 %     25.05 % Common equity Tier 1 capital to risk-weighted assets (Bank only)     21.24 %     21.54 %     22.05 %     23.85 %     25.05 % Tier 1 capital to average assets (Bank only)     16.70 %     16.26 %     17.49 %     17.51 %     17.95 %     At or for the Three Months Ended       June 30,     March 31,     December 31,     September 30,     June 30,   Asset Quality Ratios (Annualized):   2024     2024     2023     2023     2023   Allowance for loan losses as a percentage of total loans     1.18 %     1.23 %     1.36 %     1.51 %     1.64 % Allowance for loan losses as a percentage of nonperforming loans     130.28 %     140.90 %     152.99 %     169.49 %     167.06 % Net (charge-offs) recoveries to average outstanding loans (1)     (0.10 %)     (0.25 %)     (0.24 %)     (0.34 %)     (0.41 %) Non-performing loans as a percentage of total gross loans     0.89 %     0.87 %     0.89 %     0.89 %     0.98 % Non-performing loans as a percentage of total assets     0.65 %     0.62 %     0.62 %     0.62 %     0.63 % Total non-performing assets as a percentage of total assets     0.65 %     0.62 %     0.62 %     0.62 %     0.63 % Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)     0.82 %     0.79 %     0.81 %     0.82 %     0.83 %                                           Annualized where appropriate. 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. Net interest margin represents net interest income divided by average total interest-earning assets. Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. 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 June 30, 2024 was $3.2 million compared to net income of $2.4 million for the three months ended March 31, 2024 and net loss of $0.1 million for the three months ended June 30, 2023. The increase of net income for the three months ended June 30, 2024 compared to the three months ended March 31, 2024 was attributed mainly to a decrease in non-interest expense, an increase in non-interest income, a decrease in provision for income taxes and an increase in benefit for credit losses, partially offset by a decrease in net interest income. The increase of net income for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was largely due to increases in net interest income, an increase to benefit for credit losses, a decrease in non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes. Net income for the six months ended June 30, 2024 was $5.6 million compared to a net income of $0.2 million for the six months ended June 30, 2023. The increase in net income was attributable to increases in net interest income, benefit for credit losses and non-interest income and a decrease in non-interest expense, partially offset by an increase in provision for income taxes. Net Interest Income and Net Margin Net interest income for the three months ended June 30, 2024, decreased $0.9 million, or 4.88%, to $17.9 million compared to $18.8 million for the three months ended March 31, 2024 and increased $1.6 million, or 9.96%, compared to $16.3 million for the three months ended June 30, 2023. As discussed in our prior earnings release, the first quarter of 2024 included a $1.0 million recovery of interest from a previously non-performing loan, which increased net interest income in that period as compared to the current period. Net interest income for the six months ended June 30, 2024, increased $5.2 million, or 16.49%, to $36.7 million, compared to $31.5 million for the six months ended June 30, 2023. For the six months ended June 30, 2024, benefit for credit losses amounted to $0.6 million consisting of a benefit for credit losses on loans in the amount of $0.4 million and a release in the provision for credit losses on held-to-maturity securities in the amount of $0.2 million. The $0.4 million benefit for credit losses on loans for the six months ended June 30, 2024 resulted from a benefit of $1.5 million related to micro loans offset by a provision of $1.1 million related to non-micro loans. Net interest margin was 2.62% for the three months ended June 30, 2024 compared to 2.71% for the prior quarter, a decrease of 9bps and 2.65% for the same period last year, a decrease of 3bps. Net interest margin was 2.67% for the six months ended June 30, 2024 compared to 2.71% for the six months ended June 30, 2023, a decrease of 4bps. Non-interest Income Non-interest income for the three months ended June 30, 2024, was $2.3 million, an increase of $0.6 million, or 32.28%, compared to $1.7 million the three months ended March 31, 2024 and an increase of $0.8 million, or 51.34%, compared to $1.5 million the three months ended June 30, 2023. The $0.6 million increase in non-interest income for the three months ended June 30, 2024 compared to the three months ended March 31, 2024 was largely attributable to an increase of $0.5 million in other non-interest income related to the mark to market adjustments on a private equity fund and $0.1 million in late and prepayment charges. The $0.8 million increase in non-interest income for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was largely attributable to increases of $0.5 million in other non-interest income related to the mark to market adjustments on a private equity fund, $0.2 million in income on sale of mortgage loans and $0.1 million in late and prepayment charges. Non-interest income for the six months ended June 30, 2024, was $4.0 million, an increase of $0.7 million, or 19.75%, compared to $3.3 million for the six months ended June 30, 2023. The increase was largely attributable to increases of $0.6 million in other non-interest income and $0.4 million in income on sale of mortgage loans, partially offset by a decrease of $0.3 million in late and prepayment charges. Non-interest Expense Non-interest expense for the three months ended June 30, 2024, was $16.1 million, a decrease of $0.8 million, or 4.74%, compared to $17.0 million for the three months ended March 31, 2024 and a decrease of $0.9 million, or 5.51%, compared to $17.1 million for the three months ended June 30, 2023. The $0.8 million decrease from the three months ended March 31, 2024 was mainly attributable to decreases of $0.7 million in provision for contingencies, $0.4 million in professional fees, $0.1 million in compensation and benefits, $0.1 million in occupancy and equipment and $0.1 million in data processing, partially offset by an increase of $0.6 million in other operating expense. The $0.9 million decrease from the three months ended June 30, 2023 was mainly attributable to decreases of $1.0 million in provision for contingencies, $0.5 million in professional fees, $0.3 million in office supplies, telephone and postage, $0.2 million in occupancy and equipment, $0.2 million in data processing expenses and $0.1 million in marketing and promotional expenses, partially offset by increases of $0.4 million in other operating expense, $0.3 million in direct loan expenses and $0.3 million in compensation and benefits and a decrease of $0.3 million in Grain recoveries. Non-interest expense for the six months ended June 30, 2024, was $33.1 million, a decrease of $0.4 million, or 1.06%, compared to $33.5 million for the six months ended June 30, 2023. The $0.4 million decrease from the six months ended June 30, 2023 was mainly attributable to decreases of $1.8 million in provision for contingencies, $0.4 million in office supplies, telephone and postage, $0.3 million in professional fees, $0.3 million in data processing expenses, $0.2 million in marketing and promotional expenses and $0.1 million in occupancy and equipment, partially offset by a decrease of $1.1 million in Grain recoveries, and increases of $0.7 million in compensation and benefits and $0.6 million in direct loan expenses. Balance Sheet Summary Total assets increased $91.3 million, or 3.32%, to $2.84 billion as of June 30, 2024 from $2.75 billion as of December 31, 2023. The increase in total assets is largely attributable to increases of $126.3 million in net loans receivable, $27.8 million in mortgage loans held for sale and $4.6 million in Federal Home Loan Bank of New York stock, partially offset by decreases of $36.0 million in cash and cash equivalents, $19.6 million in held-to-maturity securities, $6.8 million in available-for-sale securities, $3.2 million in other assets, $1.2 million in deferred tax assets and $0.6 million in accrued interest receivable. Total liabilities increased $85.0 million, or 3.76%, to $2.34 billion as of June 30, 2024 from $2.26 billion as of December 31, 2023. The increase in total liabilities was largely attributable to an increase of $98.5 million in deposits, partially offset by decreases of $5.1 million in accrued interest payable, $4.0 million in borrowings, $3.5 million in other liabilities and $0.8 million in operating lease liabilities. Total stockholders' equity increased $6.3 million, or 1.27%, to $497.7 million as of June 30, 2024, from $491.4 million as of December 31, 2023. This increase in stockholders' equity was largely attributable to $5.5 million in net income available to common stockholders, $1.0 million impact to additional paid in capital as a result of share-based compensation and $0.6 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; 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     June 30,     March 31,     December 31,     September 30,     June 30,     2024     2024     2023     2023     2023   ASSETS                             Cash and due from banks:                             Cash $ 23,128     $ 29,972     $ 28,930     $ 26,046     $ 31,162   Interest-bearing deposits   80,038       104,752       110,260       90,966       212,627   Total cash and cash equivalents   103,166       134,724       139,190       117,012       243,789   Available-for-sale securities, at fair value   113,125       116,044       119,902       116,753       123,720   Held-to-maturity securities, at amortized cost   442,113       452,955       461,748       471,065       481,952   Placement with banks   249       249       249       996       996   Mortgage loans held for sale, at fair value   37,764       7,860       9,980       14,103       10,070   Loans receivable, net   2,022,173       1,981,428       1,895,886       1,787,607       1,695,047   Accrued interest receivable   17,441       18,063       18,010       16,624       16,054   Premises and equipment, net   16,976       17,396       16,053       16,453       16,856   Right of use assets   30,349       31,021       31,272       32,110       32,435   Federal Home Loan Bank of New York stock (FHLBNY), at cost   23,972       23,892       19,377       18,870       19,195   Deferred tax assets   13,172       13,919       14,332       15,984       15,924   Other assets   21,507       21,151       24,723       16,286       15,919   Total assets $ 2,842,007     $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957   LIABILITIES AND STOCKHOLDERS' EQUITY                             Liabilities:                             Deposits $ 1,606,097     $ 1,585,784     $ 1,507,620     $ 1,401,132     $ 1,442,013   Operating lease liabilities   31,861       32,486       32,684       33,459       33,716   Accrued interest payable   6,820       4,218       11,965       8,385       4,704   Advance payments by borrowers for taxes and insurance   10,838       13,245       10,778       13,743       12,402   Borrowings   680,421       680,421       684,421       675,100       682,100   Other liabilities   8,313       8,866       11,859       6,986       6,540   Total liabilities   2,344,350       2,325,020       2,259,327       2,138,805       2,181,475   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   (9,519 )     (9,702 )     (9,747 )     (10,975 )     (5,202 ) Additional paid-in-capital   207,934       207,584       207,106       207,626       207,287   Retained earnings   102,951       99,834       97,420       96,902       94,312   Accumulated other comprehensive loss   (16,557 )     (16,590 )     (15,649 )     (20,468 )     (17,597 ) Unearned compensation ─ ESOP   (12,401 )     (12,693 )     (12,984 )     (13,276 )     (13,567 ) Total stockholders' equity   497,657       493,682       491,395       485,058       490,482   Total liabilities and stockholders' equity $ 2,842,007     $ 2,818,702     $ 2,750,722     $ 2,623,863     $ 2,671,957     Ponce Financial Group, Inc. and Subsidiaries Consolidated Statements of Operations (Dollars in thousands, except per share data)   Three Months Ended     June 30,     March 31,     December 31,     September 30,     June 30,     2024     2024     2023     2023     2023   Interest and dividend income:                             Interest on loans receivable $ 31,281     $ 30,664     $ 27,814     $ 25,276     $ 23,015   Interest on deposits due from banks   1,542       2,911       990       1,969       1,817   Interest and dividend on securities and FHLBNY stock   5,969       6,091       6,146       6,261       6,223   Total interest and dividend income   38,792       39,666       34,950       33,506       31,055   Interest expense:                             Interest on certificates of deposit   6,358       6,380       5,103       4,362       3,881   Interest on other deposits   7,389       6,540       5,706       5,639       4,413   Interest on borrowings   7,141       7,923       6,944       6,963       6,479   Total interest expense   20,888       20,843       17,753       16,964       14,773   Net interest income   17,904       18,823       17,197       16,542       16,282   (Benefit) provision for credit losses   (374 )     (180 )     (375 )     535       987   Net interest income after (benefit) provision for credit losses   18,278       19,003       17,572       16,007       15,295   Non-interest income:                             Service charges and fees   492       473       498       516       481   Brokerage commissions   9       8       13       17       35   Late and prepayment charges   426       359       365       899       372   Income on sale of mortgage loans   274       302       244       173       82   Grant income   —       —       438       3,718       —   Other   1,057       565       (273 )     304       522   Total non-interest income   2,258       1,707       1,285       5,627       1,492   Non-interest expense:                             Compensation and benefits   7,724       7,844       8,262       7,566       7,425   Occupancy and equipment   3,564       3,667       3,686       3,588       3,724   Data processing expenses   1,013       1,127       1,101       1,582       1,208   Direct loan expenses   633       732       497       369       345   (Benefit) provision for contingencies   (493 )     164       418       391       517   Insurance and surety bond premiums   263       253       250       255       248   Office supplies, telephone and postage   233       249       294       301       489   Professional fees   1,369       1,723       2,040       1,693       1,904   Grain recoveries   (65 )     (53 )     (152 )     (69 )     (346 ) Marketing and promotional expenses   145       100       146       248       303   Directors fees and regulatory assessment   176       179       173       169       160   Other operating expenses   1,585       965       1,182       1,223       1,112   Total non-interest expense   16,147       16,950       17,897       17,316       17,089   Income (loss) before income taxes   4,389       3,760       960       4,318       (302 ) Provision (benefit) for income taxes   1,197       1,346       442       1,728       (215 ) Net income (loss) $ 3,192     $ 2,414     $ 518     $ 2,590     $ (87 ) Dividends on preferred shares   75       —       —       —       —   Net income (loss) available to common stockholders $ 3,117     $ 2,414     $ 518     $ 2,590     $ (87 ) Earnings per common share:                             Basic $ 0.14     $ 0.11     $ 0.02     $ 0.12     $ (0.00 ) Diluted $ 0.14     $ 0.11     $ 0.02     $ 0.12     $ (0.00 ) Weighted average common shares outstanding:                             Basic   22,409,803       22,353,492       22,224,945       22,272,076       23,208,168   Diluted   22,419,309       22,366,728       22,406,102       22,349,217       23,208,168     Ponce Financial Group, Inc. and Subsidiaries Consolidated Statements of Operations (Dollars in thousands, except per share data)     For the Six Months Ended June 30,       2024     2023     Variance $     Variance %   Interest and dividend income:                         Interest on loans receivable   $ 61,945     $ 42,715     $ 19,230       45.02 % Interest on deposits due from banks     4,453       2,014       2,439       121.10 % Interest and dividend on securities and FHLBNY stock     12,060       12,682       (622 )     (4.90 %) Total interest and dividend income     78,458       57,411       21,047       36.66 % Interest expense:                         Interest on certificates of deposit     12,738       7,106       5,632       79.26 % Interest on other deposits     13,929       7,225       6,704       92.79 % Interest on borrowings     15,064       11,553       3,511       30.39 % Total interest expense     41,731       25,884       15,847       61.22 % Net interest income     36,727       31,527       5,200       16.49 % (Benefit) provision for credit losses     (554 )     813