Ponce Financial Group Inc.
04/25/2025 | Press release | Distributed by Public on 04/25/2025 05:44
Ponce Financial Group, Inc. Reports First Quarter 2025 Results (Form 8-K)
Ponce Financial Group, Inc. Reports First Quarter 2025 Results
NEW YORK, April 25, 2025 - Ponce Financial Group, Inc., (the "Company") (NASDAQ: PDLB), the holding company for Ponce Bank (the "Bank"), today announced results for the first quarter of 2025.
First Quarter 2025 Highlights (Compared to Prior Periods):
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Net income available to common stockholders was $5.7 million, or $0.25 per diluted share for the three months ended March 31, 2025, as compared to net income available to common stockholders of $2.7 million, or $0.12 per diluted share for the three months ended December 31, 2024 and net income available to common stockholders of $2.4 million, or $0.11 per diluted share for the three months ended March 31, 2024. Total net income for the three months ended March 31, 2025 was $6.0 million. The Company paid dividends of $0.3 million on its preferred stock during the three months ended March 31, 2025.
•
Included in the $5.7 million of net income available to common stockholders for the first quarter of 2025 results is $44.0 million in interest and dividend income, $2.4 million in non-interest income and $0.3 million in benefit for credit losses, offset by $21.8 million in interest expense, $16.9 million in non-interest expense, $2.0 million in provision for income taxes and $0.3 million in dividends on preferred shares.
•
Net interest income of $22.2 million for the first quarter of 2025 increased $1.5 million, or 7.11%, from the prior quarter and increased $3.4 million, or 17.96%, from the same quarter last year.
•
Net interest margin was 2.98% for the first quarter of 2025, versus 2.80% for the prior quarter and 2.71% for the same quarter last year.
•
Non-interest income for the three months ended March 31, 2025 was $2.4 million, an increase of $0.3 million, or 13.54%, from $2.1 million for the three months ended December 31, 2024, and an increase of $0.7 million, or 39.48%, from $1.7 million for the three months ended March 31, 2024.
•
Non-interest expense for the three months ended March 31, 2025 was $16.9 million, a decrease of $0.6 million, or 3.30%, from $17.5 million for the three months ended December 31, 2024, and an increase of $0.1 million, or 0.61%, compared to $16.8 million for the three months ended March 31, 2024.
•
Cash and equivalents were $129.9 million as of March 31, 2025, a decrease of $9.9 million, or 7.11%, from $139.8 million as of December 31, 2024.
•
Securities totaled $461.6 million as of March 31, 2025, a decrease of $11.3 million, or 2.39%, from $472.9 million as of December 31, 2024 primarily due to regular principal payments and the call of one available-for-sale security in the amount of $1.0 million.
•
Net loans receivable were $2.37 billion as of March 31, 2025, an increase of $84.3 million, or 3.69%, from $2.29 billion as of December 31, 2024.
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Deposits were $2.00 billion as of March 31, 2025, an increase of $120.1 million, or 6.37%, from $1.88 billion as of December 31, 2024.
President and Chief Executive Officer's Comments
Carlos P. Naudon, Ponce Financial Group, Inc.'s President and CEO, stated "We continued executing well our strategy of focusing on net interest margin, operating expenses and fee income, which translated into several positive trends this quarter. Our net interest margin this quarter increased by 18 basis points, reflecting both our high-yielding construction loans and our decreasing borrowing costs. In fact, our loan yields rose by 9 basis points while our cost of funds decreased by 10 basis points. Our operating expenses have decreased quarter over quarter, and our non-interest income compares favorably to prior periods. All-in-all, a very good quarter in these turbulent and uncertain times."
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Executive Chairman's Comment
Steven A. Tsavaris, Ponce Financial Group's Executive Chairman added "Most of our high-yielding construction lending has an additional benefit - it qualifies as Deep Impact lending under the U.S. Treasury's Emergency Capital Investment Program and serves to lower the dividends payable on our preferred stock to the U.S. Treasury. Importantly, our construction initiatives also reflect our conservative underwriting, high developer equity requirements and short duration. Of our 64 on-going projects, more than 43 percent already have at least a temporary certificate of occupancy and 80 percent are at least halfway through construction."
The table below indicate the Key Metrics at or for the three months ended:
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At or for the Three Months Ended |
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|
March 31, |
December 31, |
September 30, |
June 30, |
March 31, |
|||||||||||||||
|
2025 |
2024 |
2024 |
2024 |
2024 |
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|
Performance Ratios: |
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|
Return on average assets (1) |
0.77 |
% |
0.38 |
% |
0.33 |
% |
0.45 |
% |
0.33 |
% |
|||||||||
|
Return on common equity (1) |
7.97 |
% |
3.76 |
% |
3.06 |
% |
4.60 |
% |
3.61 |
% |
|||||||||
|
Net interest margin (1) (2) |
2.98 |
% |
2.80 |
% |
2.65 |
% |
2.62 |
% |
2.71 |
% |
|||||||||
|
Non-interest expense to average assets (1) |
2.19 |
% |
2.25 |
% |
2.19 |
% |
2.28 |
% |
2.35 |
% |
|||||||||
|
Efficiency ratio (3) |
68.70 |
% |
75.63 |
% |
80.87 |
% |
80.09 |
% |
82.56 |
% |
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|
Capital Ratios: |
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|
Total capital to risk-weighted assets (Ponce Financial Group) |
22.84 |
% |
22.98 |
% |
22.87 |
% |
23.86 |
% |
24.47 |
% |
|||||||||
|
Common equity Tier 1 capital to risk-weighted assets (Ponce Financial Group) |
12.51 |
% |
12.44 |
% |
12.28 |
% |
12.71 |
% |
12.98 |
% |
|||||||||
|
Tier 1 capital to total assets (Ponce Financial Group) |
16.84 |
% |
17.70 |
% |
17.81 |
% |
17.88 |
% |
17.59 |
% |
|||||||||
|
Total capital to risk-weighted assets (Bank only) |
21.38 |
% |
21.47 |
% |
21.61 |
% |
22.47 |
% |
22.79 |
% |
|||||||||
|
Common equity Tier 1 capital to risk-weighted assets (Bank only) |
20.35 |
% |
20.40 |
% |
20.45 |
% |
21.24 |
% |
21.54 |
% |
|||||||||
|
Tier 1 capital to total assets (Bank only) |
15.61 |
% |
15.81 |
% |
16.19 |
% |
16.70 |
% |
16.26 |
% |
|||||||||
|
Asset Quality Ratios: |
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|
Allowance for credit losses on loans as a percentage of total loans |
0.96 |
% |
0.97 |
% |
1.09 |
% |
1.18 |
% |
1.23 |
% |
|||||||||
|
Allowance for credit losses on loans as a percentage of nonperforming loans |
84.15 |
% |
82.29 |
% |
139.52 |
% |
130.28 |
% |
140.90 |
% |
|||||||||
|
Net (charge-offs) recoveries to average outstanding loans (1) |
(0.04 |
%) |
(0.45 |
%) |
(0.17 |
%) |
(0.10 |
%) |
(0.25 |
%) |
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|
Non-performing loans as a percentage of total assets |
0.88 |
% |
0.90 |
% |
0.57 |
% |
0.65 |
% |
0.62 |
% |
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|
Other: |
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|
Number of offices |
18 |
19 |
19 |
18 |
18 |
||||||||||||||
|
Number of full-time equivalent employees |
211 |
218 |
228 |
227 |
233 |
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(1)
Annualized where appropriate.
(2)
Net interest margin represents net interest income divided by average total interest-earning assets.
(3)
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.
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Summary of Results of Operations
Net income for the three months ended March 31, 2025 was $6.0 million compared to net income of $2.9 million for the three months ended December 31, 2024 and net income of $2.4 million for the three months ended March 31, 2024.
The $3.0 million increase of net income for the three months ended March 31, 2025 compared to the three months ended December 31, 2024 was attributed mainly to increases of $1.5 million in net interest income, an increase of $1.2 million in benefit for credit losses, a decrease of $0.6 million in non-interest expense and an increase of $0.3 million in non-interest income; partially offset by an increase of $0.5 million in provision for income taxes.
The $3.5 million increase of net income for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was largely due to increases of $3.4 million in net interest income, $0.7 million in non-interest income and $0.3 million in benefit for credit losses, partially offset by increases of $0.7 million in provision for income taxes and $0.1 million in non-interest expense
Net Interest Income and Net Margin
Net interest income for the three months ended March 31, 2025, increased $1.5 million, or 7.11%, to $22.2 million compared to $20.7 million for the three months ended December 31, 2024 and increased $3.4 million, or 17.96%, compared to $18.8 million for the three months ended March 31, 2024.
The $1.5 million increase in net interest income from the three months ended December 31, 2024 was attributable to an increase of $1.1 million in total interest and dividend income and a decrease of $0.4 million in total interest expense.
The $3.4 million increase in net interest income from the three months ended March 31, 2024 was attributable to an increase of $4.3 million in total interest and dividend income, offset by an increase of $0.9 million in total interest expense.
For the three months ended March 31, 2025, benefit for credit losses amounted to $0.3 million, compared to $0.9 million in provision for credit losses for the prior quarter and a credit loss benefit on loans of less than $0.1 million during the first quarter of 2024.
Net interest margin was 2.98% for the three months ended March 31, 2025 compared to 2.80% for the prior quarter, an increase of 18bps and 2.71% for the same period last year, an increase of 27bps.
Non-interest Income
Non-interest income for the three months ended March 31, 2025, was $2.4 million, an increase of $0.3 million, or 13.54%, compared to $2.1 million for the three months ended December 31, 2024 and an increase of $0.7 million, or 39.48%, compared to $1.7 million for the three months ended March 31, 2024.
The $0.3 million increase in non-interest income from the three months ended December 31, 2024 was largely attributable to increases of $0.4 million in late and prepayment charges and $0.3 million in income on sale of SBA loans, partially offset by decreases of $0.2 million in other non-interest income and $0.1 million in income on sale of mortgage loans.
The $0.7 million increase in non-interest income from the three months ended March 31, 2024 was largely attributable to increases of $0.4 million in income on sale of SBA loans and $0.3 million in late and prepayment charges, partially offset by a decrease of $0.2 million in income on the sale of mortgage loans.
Non-interest Expense
Non-interest expense for the three months ended March 31, 2025, was $16.9 million, a decrease of $0.6 million, or 3.30%, compared to $17.5 million for the three months ended December 31, 2024 and an increase of $0.1 million, or 0.61%, compared to $16.8 million for the three months ended March 31, 2024.
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The $0.6 million decrease in non-interest expense from the three months ended December 31, 2024 was mainly attributable to decreases of $0.3 million in professional fees, $0.2 million in marketing and promotional expenses, $0.2 million in direct loan expenses, $0.1 million in office supplies, telephone and postage, partially offset by an increase of $0.1 million in compensation and benefits.
The $0.1 million increase in non-interest expense from the three months ended March 31, 2024 was mainly attributable to increases of $0.5 million in other operating expense and $0.2 million in occupancy and equipment, partially offset by decreases of $0.4 million in professional fees and $0.3 million in direct loan expenses.
Credit Quality:
Non-performing loans were $32.0 million at March 31, 2025 compared to $32.1 million at December 31, 2024 and $22.4 million at March 31, 2024.
During the three months ended March 31, 2025, a credit loss benefit of $0.3 million on loans was recorded, consisting of $0.7 million charged on the funded portion and a benefit of $1.0 million on the unfunded portion on loans. During the three months ended December 31, 2024, a credit loss provision of $0.9 million on loans were recorded, consisting of $1.1 million charged on the funded portion and a benefit of $0.2 million on unfunded portion on loans. During the three months ended March 31, 2024, a credit loss benefit of $0.1 million on loans were recorded, consisting of $0.3 million benefit on the funded portion and a $0.2 million charged on the on unfunded portion on loans.
Balance Sheet Summary
Total assets increased $49.9 million, or 1.64%, to $3.09 billion as of March 31, 2025 from $3.04 billion as of December 31, 2024. The increase in total assets is largely attributable to increases of $84.3 million in net loans receivable, $1.2 million in accrued interest receivable and $0.4 million in right of use assets, partially offset by decreases of $9.9 million in cash and cash equivalents, $9.9 million in held-to-maturity securities, $8.4 million in other assets, $3.4 million in Federal Home Loan Bank of New York stock, $2.2 million in mortgage loans held for sale and $1.4 million in available-for-sale securities.
Total liabilities increased $41.5 million, or 1.64%, to $2.58 billion as of March 31, 2025 from $2.53 billion as of December 31, 2024. The increase in total liabilities was largely attributable to an increase of $120.1 million in deposits, $2.6 million in advance payments by borrowers for taxes, $0.9 million in accrued interest payable, $0.4 million in operating lease liabilities, partially offset by decreases of $75.0 million in borrowings and $7.5 million in other liabilities.
Total stockholders' equity increased $8.4 million, or 1.66%, to $513.9 million as of March 31, 2025, from $505.5 million as of December 31, 2024. The $8.4 million increase in stockholders' equity was largely attributable to $6.0 million in net income, $1.8 million in other comprehensive income, $0.5 million impact to additional paid in capital as a result of share-based compensation and $0.4 million from release of ESOP shares, offset by $0.3 million in dividends on preferred 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.
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