Core Points - Ponce Bank has been awarded $50,000 through the FHLBNY Small Business Recovery Grant Program to support local small businesses and nonprofits [1][2] - The grant funds have been distributed to 12 small businesses, providing essential support to help them sustain operations amid economic challenges [1][3] - Ponce Bank emphasizes its commitment to economic inclusion and community development, focusing on underserved communities [2][3] Company Overview - Ponce Bank was founded in 1960 in the Bronx by Puerto Ricans, aiming to invest in their community during a time when many financial institutions were withdrawing [4] - The bank operates 13 branches in the New York Metro area, with total assets of $3.2 billion and over $500 million in capital [4][6] - Ponce Bank is recognized as one of the largest Latino-led Minority Depository Institutions (MDIs) and Community Development Financial Institutions (CDFIs) in the nation [4][6] Grant Program Details - The FHLBNY Small Business Recovery Grant Program provides funds to assist small businesses and nonprofits within the FHLBNY district, which includes New York, New Jersey, Puerto Rico, and the U.S. Virgin Islands [2] - The grant funds are intended to help businesses manage expenses such as payroll, equipment, and working capital [3] Award Recipients - The following small businesses and nonprofits received funding through the FHLBNY Small Business Recovery Grant Program: RID Trucking LLC, JC Trucking LLC, Diaz Security Services LLC, JAS Grocery, 735 Supermarket Corp., Atlantic Bagels Foods, LLC, The Great Reset Restaurant Corp, Manitos Media Group, UA3 Inc., Churches United For Fair Housing, Inc., New York Women's Chamber of Commerce, Las Panteras Negras [5]

Ponce Financial (PDLB) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.Analysts' growing optimism on the earnings prospects of this holding company of Ponce Bank is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earning ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41255 Ponce Financial Group, Inc. (Exact Name of Registrant as Specified in its Charter) Maryland 87-189396 ...

Financial Performance - Net income available to common stockholders for Q3 2025 was $6.2 million, or $0.27 per diluted share, compared to $5.8 million, or $0.25 per diluted share in Q2 2025, and $2.2 million, or $0.10 per diluted share in Q3 2024[5] - Total net income for the nine months ended September 30, 2025, was $18.6 million, compared to $8.0 million for the same period in 2024[10] - Net income for the three months ended September 30, 2025, was $6,508,000, up from $2,433,000 in the same period of 2024, marking a significant increase of 168.5%[33] - For the nine months ended September 30, 2025, net income was $18,567,000, a 130.96% increase from $8,039,000 in the same period of 2024[35] - Basic earnings per common share for the nine months ended September 30, 2025, was $0.78, compared to $0.34 for the same period in 2024, representing a 129.41% increase[35] Interest Income and Margin - Net interest income for Q3 2025 was $25.2 million, an increase of $0.8 million, or 3.37% from Q2 2025, and an increase of $6.2 million, or 32.72% from Q3 2024[11] - Net interest margin for Q3 2025 was 3.30%, up from 3.27% in Q2 2025 and 2.65% in Q3 2024[14] - Total interest and dividend income for the three months ended September 30, 2025, was $46,847,000, an increase from $41,293,000 in the same period of 2024, representing a growth of 13.5%[33] - Net interest income after provision for credit losses for the three months ended September 30, 2025, was $23,884,000, compared to $18,486,000 for the same period in 2024, reflecting a 29.4% increase[33] - The net interest margin improved to 3.30% for the three months ended September 30, 2025, compared to 2.65% for the same period in 2024[43] Non-Interest Income and Expense - Non-interest income for Q3 2025 was $1.5 million, a decrease of $0.6 million, or 27.57% from Q2 2025, but an increase of $0.3 million, or 29.63% from Q3 2024[15] - Non-interest expense for Q3 2025 was $16.6 million, a decrease of $0.3 million, or 1.49% from Q2 2025, remaining flat compared to Q3 2024[19] - Non-interest expense for the nine months ended September 30, 2025, was $50.4 million, an increase of $0.4 million, or 0.77%, compared to the same period in 2024[21] - Total non-interest income for the three months ended September 30, 2025, was $1,492,000, a decrease from $2,381,000 in the same period of 2024, reflecting a decline of 37.3%[33] Assets and Liabilities - Total assets increased by $117.1 million, or 3.85%, to $3.16 billion as of September 30, 2025, from $3.04 billion as of December 31, 2024[25] - Total liabilities increased by $92.8 million, or 3.66%, to $2.63 billion as of September 30, 2025, from $2.53 billion as of December 31, 2024[26] - Total stockholders' equity increased by $24.3 million, or 4.81%, to $529.8 million as of September 30, 2025, from $505.5 million as of December 31, 2024[27] - Total deposits increased to $2.06 billion as of September 30, 2025, up $167.9 million, or 8.86% from December 31, 2024[5] - Total deposits reached $2,063.0 million as of September 30, 2025, a slight increase of 0.1% from $2,053.1 million as of June 30, 2025[39] Loan Performance - Net loans receivable were $2.49 billion as of September 30, 2025, an increase of $203.4 million, or 8.90% from December 31, 2024[5] - The company recorded a credit loss provision of $1.4 million on loans during the three months ended September 30, 2025[23] - A credit loss provision of $2.7 million on loans was recorded for the nine months ended September 30, 2025, compared to a credit loss benefit of $0.2 million for the same period in 2024[24] - The allowance for credit losses on loans increased to $24,764 thousand as of September 30, 2025, up from $24,100 thousand at the end of June 2025, indicating a provision for credit losses of $864 thousand during the quarter[38] - Business loans amounted to $58,012 thousand as of September 30, 2025, representing a 22.5% increase from $47,372 thousand as of June 30, 2025[36] Non-Performing Assets - Total non-performing assets increased to $32.4 million at September 30, 2025, up from $28.5 million at June 30, 2025, and $22.0 million at September 30, 2024[22] - Total non-performing assets increased to $27,863 thousand as of September 30, 2025, up from $23,858 thousand in the previous quarter, representing a 12.5% increase[41] - Total non-accrual loans reached $27,165 thousand, compared to $23,150 thousand in the prior quarter, marking a 17.0% increase[41] - The total non-performing assets to total assets ratio was 0.88% as of September 30, 2025, up from 0.76% in the previous quarter[41] Future Outlook and Risks - The company anticipates potential risks including adverse conditions in capital markets and changes in interest rates affecting future performance[30]

NEW YORK, Oct. 24, 2025 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank, N.A. (the “Bank”), today announced results for the third quarter of 2025. Third Quarter 2025 Highlights (Compared to Prior Periods): Net income available to common stockholders was $6.2 million, or $0.27 per diluted share for the three months ended September 30, 2025, as compared to net income available to common stockholders of $5.8 million, or $0.25 per diluted share ...

NEW YORK, Oct. 22, 2025 (GLOBE NEWSWIRE) -- On October 6, 2025, Ponce Bank, N.A., celebrated the grand opening of its newest branch in the Inwood neighborhood of Upper Manhattan with a ribbon-cutting ceremony, marking an important milestone in the community bank’s ongoing commitment to providing accessible, dignified, and mission-driven banking services across New York City. The event brought together community leaders, local business owners, and elected officials, including Congressman Adriano Espaillat, S ...

NEW YORK, Oct. 14, 2025 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc. (the “Company”) announces that effective October 10, 2025, its wholly-owned subsidiary, Ponce Bank (formerly a federally chartered stock savings association), has completed its previously announced conversion to a national bank and commenced operations as Ponce Bank, National Association (the “Bank”). In connection with the conversion of the Bank, the Company also commenced operations as a bank holding company as of the same date. Furth ...

Core Viewpoint - Ponce Financial (PDLB) shows a significantly improving earnings outlook, making it a solid investment choice as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimates - Analysts' optimism regarding Ponce Financial's earnings prospects is driving higher estimates, which is expected to positively impact the stock price [2]. - The consensus earnings estimate for the current quarter is $0.23 per share, reflecting a 130.0% increase from the previous year [5]. - For the full year, the earnings estimate stands at $0.96 per share, indicating a 108.7% increase from the year-ago figure [6]. - Over the past 30 days, the Zacks Consensus Estimate for Ponce Financial has risen by 21.05%, with one estimate moving higher and no negative revisions [5][6]. Zacks Rank - Ponce Financial has achieved a Zacks Rank 1 (Strong Buy) due to favorable estimate revisions, which historically correlate with stock performance [7]. - Stocks with Zacks Rank 1 and 2 significantly outperform the S&P 500, indicating strong potential for Ponce Financial [7]. Stock Performance - The stock has increased by 8.2% over the past four weeks, driven by strong estimate revisions and investor interest [8]. - There may still be further upside potential for the stock, suggesting it could be a good addition to investment portfolios [8].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements and detailed notes explaining accounting policies [Consolidated Statements of Financial Condition (Unaudited)](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition%20(Unaudited)) Total assets increased to **$3.15 billion**, driven by growth in loans receivable and deposits, while borrowings decreased | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $3,153,869 | $3,039,938 | $113,931 | 3.75% | | Loans receivable, net | $2,458,712 | $2,286,599 | $172,113 | 7.53% | | Total liabilities | $2,632,781 | $2,534,438 | $98,343 | 3.88% | | Deposits | $2,042,209 | $1,884,864 | $157,345 | 8.35% | | Borrowings | $536,100 | $596,100 | $(60,000) | -10.07% | | Total stockholders' equity | $521,088 | $505,500 | $15,588 | 3.08% | [Consolidated Statements of Operations (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) Net income and earnings per common share significantly improved for both periods, primarily due to increased net interest income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net interest income | $24,426 | $17,904 | $46,629 | $36,727 | | Provision (benefit) for credit losses | $1,626 | $(867) | $1,341 | $(883) | | Non-interest income | $2,060 | $2,258 | $4,441 | $3,965 | | Non-interest expense | $16,869 | $16,640 | $33,757 | $33,426 | | Net income | $6,100 | $3,192 | $12,059 | $5,606 | | Net income available to common stockholders | $5,818 | $3,117 | $11,496 | $5,531 | | Basic EPS | $0.26 | $0.14 | $0.51 | $0.25 | | Diluted EPS | $0.25 | $0.14 | $0.50 | $0.25 | [Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) Total comprehensive income significantly increased, driven by higher net income and positive unrealized gains on securities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $6,100 | $3,192 | $12,059 | $5,606 | | Net change in unrealized gain (losses) on securities | $595 | $42 | $2,859 | $(1,154) | | Income (tax) benefit effect | $(127) | $(9) | $(609) | $246 | | Total other comprehensive income (loss), net of tax | $468 | $33 | $2,250 | $(908) | | Total comprehensive income | $6,568 | $3,225 | $14,309 | $4,698 | | Total comprehensive income available to common stockholders | $6,286 | $3,150 | $13,746 | $4,623 | [Consolidated Statements of Stockholders' Equity (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Unaudited)) Stockholders' equity increased to **$521.1 million**, primarily from net income and other comprehensive income, offset by dividends | Metric (in thousands) | Balance, December 31, 2024 | Net Income | Other Comprehensive Income, net of tax | Preferred Stock Dividend | ESOP shares committed to be released | Share-based compensation | Balance, June 30, 2025 | | :-------------------------------- | :------------------------- | :--------- | :------------------------------------- | :----------------------- | :----------------------------------- | :----------------------- | :--------------------- | | Total Stockholders' Equity | $505,500 | $12,059 | $2,250 | $(563) | $901 | $956 | $521,088 | [Consolidated Statements of Cash Flows (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Operating activities generated positive cash flow, investing used cash for loan growth, and financing provided cash from deposits | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $19,261 | $(1,092) | | Net cash used in investing activities | $(129,243) | $(129,384) | | Net cash provided by financing activities | $96,782 | $94,452 | | Net decrease in cash and cash equivalents | $(13,200) | $(36,024) | | Cash and cash equivalents at end of period | $126,639 | $103,166 | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) Detailed disclosures cover accounting policies, financial instruments, regulatory compliance, and specific financial details [Note 1. Nature of Business](index=8&type=section&id=Note%201.%20Nature%20of%20Business) Ponce Financial Group operates as one segment, with financial statements prepared under GAAP requiring significant management estimates - The Company operates as one operating segment and one reportable segment, with the CEO as the Chief Operating Decision Maker (CODM)[26](index=26&type=chunk) - Material estimates susceptible to significant change include allowance for credit losses, valuation of real estate, loans held for sale, deferred tax assets, investment securities, and share-based awards[25](index=25&type=chunk) [Note 2. Preferred Stock](index=8&type=section&id=Note%202.%20Preferred%20Stock) The Company issued **$225 million** in ECIP Preferred Stock with variable dividends and a repurchase option tied to lending - The Company issued **$225 million** in Preferred Stock to the Treasury under the ECIP to support lending in low-income and underserved communities[28](index=28&type=chunk) - Dividend rates on Preferred Stock vary (**2.0%**, **1.25%**, or **0.5%**) based on qualified and deep impact lending levels, with the Company currently paying at **0.5%**[28](index=28&type=chunk)[35](index=35&type=chunk) - A repurchase option for the Preferred Stock exists, potentially at a substantial discount, if specific 'Threshold Conditions' related to lending are met, with the earliest possible date being June 30, 2026[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3. Securities](index=11&type=section&id=Note%203.%20Securities) The securities portfolio decreased, with unrealized losses primarily due to interest rate changes, not credit quality | Security Type | June 30, 2025 (Fair Value, in thousands) | December 31, 2024 (Fair Value, in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------------------- | :----------------------------------------- | :-------------------- | :------- | | Available-for-sale securities | $96,562 | $104,970 | $(8,408) | -8.01% | | Held-to-maturity securities | $329,279 | $355,294 | $(26,015) | -7.32% | | Total securities | $425,841 | $460,264 | $(34,423) | -7.48% | | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total available-for-sale securities (Gross Unrealized Losses) | $(16,581) | $(19,448) | | Total held-to-maturity securities (Gross Unrealized Losses) | $(7,984) | $(12,964) | | Allowance for credit losses on securities | $199 | $216 | - Gross unrealized losses on securities are primarily due to changes in interest rates, not credit quality, particularly for U.S. government-sponsored entities and agencies[46](index=46&type=chunk) [Note 4. Mortgage Loans Held-for-Sale](index=17&type=section&id=Note%204.%20Mortgage%20Loans%20Held-for-Sale) Mortgage loans held-for-sale decreased significantly to **$5.7 million**, with a notable portion remaining past due | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Mortgage loans held-for-sale, at fair value | $5,703 | $10,736 | $(5,033) | -46.88% | | Mortgage loans held-for-sale, contractual principal outstanding | $5,675 | $10,674 | $(4,999) | -46.83% | | Loans held-for-sale greater than 90 days past due and non-accrual | $4,400 | $4,400 | $0 | 0.00% | [Note 5. Loans Receivable, Net and Allowance for Credit Losses](index=18&type=section&id=Note%205.%20Loans%20Receivable%2C%20Net%20and%20Allowance%20for%20Credit%20Losses) Net loans receivable increased by **7.5%**, driven by construction loans, while non-performing assets decreased | Loan Type (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Total loans, gross | $2,482,206 | $2,308,020 | $174,186 | 7.55% | | Allowance for Credit Losses | $(24,100) | $(22,502) | $(1,598) | 7.10% | | Loans receivable, net | $2,458,712 | $2,286,599 | $172,113 | 7.53% | | Construction and land loans | $883,462 | $733,660 | $149,802 | 20.42% | | Multifamily residential loans | $693,670 | $670,159 | $23,511 | 3.51% | | Business loans | $47,372 | $40,849 | $6,523 | 15.97% | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Allowance for credit losses on loans at beginning of period | $22,502 | $26,154 | | (Benefit) provision charged to expense | $2,079 | $(375) | | Charge-offs | $(485) | $(2,101) | | Recoveries | $4 | $383 | | Allowance for credit losses on loans at end of period | $24,100 | $24,061 | - Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty decreased by **$3.6 million** to **$28.5 million** at June 30, 2025, from **$32.1 million** at December 31, 2024[212](index=212&type=chunk) - The allowance for off-balance sheet credit losses decreased to **$2.1 million** at June 30, 2025, from **$2.8 million** at December 31, 2024, with a **$0.7 million** benefit for credit losses during the six months ended June 30, 2025[74](index=74&type=chunk)[75](index=75&type=chunk) [Note 6. Leases](index=28&type=section&id=Note%206.%20Leases) The Company holds 23 operating leases with stable ROU assets and liabilities, incurring **$2.28 million** in lease costs | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Operating lease ROU assets | $28,806 | $29,093 | | Operating lease liabilities | $30,501 | $30,696 | | Weighted-average remaining lease term-operating leases | 11.8 years | 12.0 years | | Weighted average discount rate-operating leases | 5.1% | 5.1% | | Total lease cost (Six Months Ended June 30) | $2,280 | $2,155 | [Note 7. Deposits](index=29&type=section&id=Note%207.%20Deposits) Total deposits increased by **8.3%** to **$2.04 billion**, driven by money market and demand accounts, offsetting CD decreases | Deposit Type (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Demand | $197,671 | $169,178 | $28,493 | 16.84% | | Money market accounts | $790,939 | $636,219 | $154,720 | 24.32% | | Total interest-bearing deposits | $1,844,538 | $1,715,686 | $128,852 | 7.51% | | Total certificates of deposit | $750,521 | $780,304 | $(29,783) | -3.82% | | Total deposits | $2,042,209 | $1,884,864 | $157,345 | 8.35% | - Scheduled maturities for certificates of deposit in the remainder of 2025 total **$494.2 million**[81](index=81&type=chunk) [Note 8. Borrowings](index=30&type=section&id=Note%208.%20Borrowings) Total borrowings decreased by **$60 million** to **$536.1 million** due to FHLBNY repayments, reducing interest expense | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Total borrowings | $536,100 | $596,100 | $(60,000) | -10.07% | | FHLBNY Term advances | $521,100 | $571,100 | $(50,000) | -8.75% | | FHLBNY Overnight line of credit advance | $15,000 | $25,000 | $(10,000) | -40.00% | | Weighted Average Rate | 3.86% | 3.94% | -0.08% | -2.03% | | Interest expense on advances (3 months) | $4,994 | $7,141 | $(2,147) | -30.06% | | Interest expense on advances (6 months) | $10,480 | $15,064 | $(4,584) | -30.43% | [Note 9. Earnings Per Common Share](index=32&type=section&id=Note%209.%20Earnings%20Per%20Common%20Share) Earnings per common share significantly increased for both basic and diluted measures, reflecting improved net income | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income available to common stockholders (in thousands) | $5,818 | $3,117 | $11,496 | $5,531 | | Basic earnings per common share | $0.26 | $0.14 | $0.51 | $0.25 | | Diluted earnings per common share | $0.25 | $0.14 | $0.50 | $0.25 | [Note 10. Commitments, Contingencies and Credit Risk](index=32&type=section&id=Note%2010.%20Commitments%2C%20Contingencies%20and%20Credit%20Risk) Total off-balance sheet commitments decreased to **$359.8 million**, mainly due to reduced mortgage loan commitments | Commitment Type (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Commitments to grant mortgage loans | $231,946 | $359,170 | $(127,224) | -35.42% | | Unfunded commitments under lines of credit | $127,824 | $52,329 | $75,495 | 144.27% | | Total commitments | $359,770 | $411,499 | $(51,729) | -12.57% | - The Company has unfunded commitments of **$1.7 million** with Oaktree SBIC Fund, L.P. and **$1.4 million** with EJF Silvergate Ventures Fund LP as of June 30, 2025[92](index=92&type=chunk) - The Company is involved in routine legal proceedings, but management believes their resolution will not materially affect financial condition or results of operations[95](index=95&type=chunk) [Note 11. Fair Value](index=33&type=section&id=Note%2011.%20Fair%20Value) Financial instruments are measured using a three-level fair value hierarchy, with most recurring measurements in Level 2 | Asset Type (in thousands) | Total Fair Value (June 30, 2025) | Level 1 | Level 2 | Level 3 | | :-------------------------------- | :------------------------------- | :------ | :------ | :------ | | Available-for-Sale Securities | $96,562 | $3,172 | $93,390 | $— | | Mortgage Loans Held for Sale | $5,703 | $— | $5,703 | $— | | Impaired loans (nonrecurring) | $19,474 | $— | $— | $19,474 | - Fair values for cash, FHLBNY stock, and certain liabilities approximate their carrying amounts due to short-term nature or redeemability at cost[98](index=98&type=chunk)[100](index=100&type=chunk) [Note 12. Regulatory Capital Requirements](index=39&type=section&id=Note%2012.%20Regulatory%20Capital%20Requirements) Both Ponce Financial Group and Ponce Bank met all regulatory capital requirements, maintaining a 'well capitalized' status | Capital Ratio | Ponce Financial Group, Inc. (June 30, 2025) | Regulatory Minimum | Well Capitalized Minimum | | :-------------------------------- | :------------------------------------------ | :----------------- | :----------------------- | | Total Capital to Risk-Weighted Assets | 22.65% | 8.00% | 10.00% | | Tier 1 Capital to Risk-Weighted Assets | 21.59% | 6.00% | 8.00% | | Common Equity Tier 1 Capital Ratio | 12.49% | 4.50% | 6.50% | | Tier 1 Capital to Total Assets | 17.13% | 4.00% | 5.00% | | Capital Ratio | Ponce Bank (June 30, 2025) | Regulatory Minimum | Well Capitalized Minimum | | :-------------------------------- | :------------------------- | :----------------- | :----------------------- | | Total Capital to Risk-Weighted Assets | 21.22% | 8.00% | 10.00% | | Tier 1 Capital to Risk-Weighted Assets | 20.15% | 6.00% | 8.00% | | Common Equity Tier 1 Capital Ratio | 20.15% | 4.50% | 6.50% | | Tier 1 Capital to Total Assets | 15.99% | 4.00% | 5.00% | - The Bank was categorized as 'well capitalized' by the OCC, and no conditions have changed this status[120](index=120&type=chunk) [Note 13. Accumulated Other Comprehensive Loss](index=42&type=section&id=Note%2013.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss improved to **$(13.0) million**, driven by positive changes in AFS unrealized losses | Metric (in thousands) | December 31, 2024 | Change | June 30, 2025 | | :-------------------------------- | :---------------- | :----- | :------------ | | Unrealized losses on available-for-sale securities, net | $(15,297) | $2,250 | $(13,047) | | Total | $(15,297) | $2,250 | $(13,047) | [Note 14. Transactions with Related Parties](index=42&type=section&id=Note%2014.%20Transactions%20with%20Related%20Parties) Aggregate loan balances with related parties increased to **$8.3 million**, while deposits from related parties decreased slightly | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Beginning loan balance | $7,671 | $8,810 | | Originations | $725 | $1,592 | | Payments | $(140) | $(1,099) | | Ending loan balance | $8,256 | $9,303 | | Deposits from related parties (June 30, 2025) | $7,900 | N/A | | Deposits from related parties (December 31, 2024) | $8,800 | N/A | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion covers financial performance, condition, key trends, strategies, risk management, and regulatory compliance [General](index=43&type=section&id=General) This section provides insight into Ponce Financial Group's financial condition and results of operations [Cautionary Note Regarding Forward-Looking Statements](index=43&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Forward-looking statements are subject to significant business, economic, and competitive uncertainties, potentially altering actual results - Forward-looking statements are subject to significant uncertainties, including rising interest rates, changes in U.S. trade policies, consumer habits, general economic conditions, and the Company's ability to manage various risks[126](index=126&type=chunk)[127](index=127&type=chunk) [Federal Economic Relief Funds To Aid Lending](index=45&type=section&id=Federal%20Economic%20Relief%20Funds%20To%20Aid%20Lending) The Company participates in ECIP with **$225 million** Preferred Stock and received a **$1.3 million** CDFI award - The Company issued **$225 million** in Preferred Stock under the ECIP, with dividend rates (currently **0.5%**) dependent on qualified and deep impact lending levels[130](index=130&type=chunk)[132](index=132&type=chunk)[138](index=138&type=chunk) - A repurchase option for the Preferred Stock, potentially at a discount, is contingent on meeting specific 'Threshold Conditions' related to lending, with the earliest exercise date being June 30, 2026[133](index=133&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Ponce Bank received a **$1.3 million** CDFI Financial Assistance Award and its Westchester Avenue Branch was approved as a Banking Development District, receiving **$35.0 million** in program deposits[142](index=142&type=chunk)[143](index=143&type=chunk) [Westchester Avenue Branch Re-Design](index=47&type=section&id=Westchester%20Avenue%20Branch%20Re-Design) Ponce Bank transformed its Westchester Avenue Branch into a 'community hub' with advanced technology and community-centric design - Ponce Bank transformed its Westchester Avenue Branch into a 'community hub' with state-of-the-art banking technologies and community-centric design[144](index=144&type=chunk)[145](index=145&type=chunk) [Coral Gables, Florida Office](index=49&type=section&id=Coral%20Gables%2C%20Florida%20Office) Ponce Bank opened its first Florida office in Coral Gables to serve existing customers and the Hispanic community - Ponce Bank opened its first Florida representative office in Coral Gables on June 1, 2024, targeting existing customers and the large Hispanic community[147](index=147&type=chunk) [Ponce Bank Plan of Conversion](index=49&type=section&id=Ponce%20Bank%20Plan%20of%20Conversion) Ponce Bank is converting to a national bank to expand banking powers, including eligibility for municipal deposits - Ponce Bank is converting to a national bank to expand banking powers, including eligibility for municipal deposits in New York[148](index=148&type=chunk)[149](index=149&type=chunk) [Critical Accounting Policies](index=49&type=section&id=Critical%20Accounting%20Policies) The allowance for credit losses is the most critical accounting policy, involving significant judgment and assumptions - The allowance for credit losses is identified as the most critical accounting policy, requiring significant management judgment and assumptions[150](index=150&type=chunk) - A **10 basis point** increase or decrease in the loss rate factor would result in an approximate **$2.5 million** change in the credit loss reserve[151](index=151&type=chunk) [Company's Growth](index=49&type=section&id=Company%27s%20Growth) The Company has significantly grown assets, loans, and deposits since 2018, leveraging technology and MDI/CDFI status | Metric | December 31, 2018 (in billions) | June 30, 2025 (in billions) | Growth (in billions) | % Growth | | :-------------------------------- | :------------------------------ | :-------------------------- | :------------------- | :------- | | Total assets | $1.06 | $3.15 | $2.09 | 197.17% | | Loans, net of ACL | $0.9185 | $2.46 | $1.5415 | 167.83% | | Deposits | $0.8098 | $2.04 | $1.2302 | 151.92% | - The Company uses a mobile application for digitized small business lending, enabling automated underwriting and loan origination without a physical presence[153](index=153&type=chunk) - The Company's partnership with Raisin Solutions US LLC has resulted in **$650.4 million** in core deposits as of June 30, 2025[154](index=154&type=chunk) [Comparison of Financial Condition at June 30, 2025 and December 31, 2024](index=51&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202025%20and%20December%2031%2C%202024) Total assets increased by **3.7%** to **$3.15 billion**, driven by loans and deposits, while equity also grew [Total Assets](index=51&type=section&id=Total%20Assets) Total consolidated assets increased by **$113.9 million** (**3.7%**) to **$3.15 billion**, primarily from net loans receivable | Metric | June 30, 2025 (in billions) | December 31, 2024 (in billions) | Change (in millions) | % Change | | :-------------------------------- | :-------------------------- | :---------------------------- | :------------------- | :------- | | Total consolidated assets | $3.15 | $3.04 | $113.9 | 3.7% | | Net loans receivable increase | N/A | N/A | $172.1 | N/A | | Held-to-maturity securities decrease | N/A | N/A | $(31.1) | N/A | | Cash and cash equivalents decrease | N/A | N/A | $(13.2) | N/A | [Cash and Cash Equivalents](index=51&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased by **$13.2 million** to **$126.6 million**, due to loan growth and borrowing repayments | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Cash and cash equivalents | $126.6 | $139.8 | $(13.2) | -9.4% | | Increase in net loans | N/A | N/A | $179.5 | N/A | | Net repayment of borrowings | N/A | N/A | $60.0 | N/A | | Increase in net deposits | N/A | N/A | $157.3 | N/A | [Securities](index=51&type=section&id=Securities) The securities portfolio decreased by **$39.5 million**, primarily due to calls of AFS and maturities of HTM securities | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Available-for-sale securities | N/A | N/A | $(8.4) | N/A | | Held-to-maturity securities | N/A | N/A | $(31.1) | N/A | | Total decrease in securities portfolio | N/A | N/A | $(39.5) | N/A | - The decrease was primarily due to the call of two available-for-sale securities (**$6.0 million**) and the maturity of one held-to-maturity security (**$10.0 million**)[159](index=159&type=chunk) [Gross Loans Receivable](index=51&type=section&id=Gross%20Loans%20Receivable) Gross loans receivable increased by **7.5%** to **$2.48 billion**, driven by construction and multifamily residential loans | Loan Type (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Total gross loans receivable | $2,482,206 | $2,308,020 | $174,186 | 7.5% | | Construction and land | $883,462 | $733,660 | $149,802 | 20.4% | | Multifamily residential | $693,670 | $670,159 | $23,511 | 3.5% | | Business loans | $47,372 | $40,849 | $6,523 | 16.0% | - The Bank's construction and land mortgage loans were **169.4%** of total risk-based capital (vs. **100%** regulatory guideline, **200%** internal policy)[166](index=166&type=chunk) - Investor-owned commercial real estate mortgage loans were **366.0%** of total risk-based capital (vs. **300%** regulatory guideline, **450%** internal policy)[166](index=166&type=chunk) [Loans Held For Sale](index=53&type=section&id=Loans%20Held%20For%20Sale) Loans held for sale decreased by **$5.0 million** (**46.9%**) to **$5.7 million** at June 30, 2025 | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Loans held for sale, at fair value | $5.7 | $10.7 | $(5.0) | -46.9% | [Deposits](index=53&type=section&id=Deposits) Total deposits increased by **$157.3 million** to **$2.04 billion**, driven by money market and demand accounts | Deposit Type (in thousands) | June 30, 2025 | December 31, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :------------ | :---------------- | :-------------------- | :------- | | Total deposits | $2,042,209 | $1,884,864 | $157,345 | 8.3% | | Demand | $197,671 | $169,178 | $28,493 | 16.8% | | Money market accounts | $790,939 | $636,219 | $154,720 | 24.3% | | Brokered certificates of deposit | $69,531 | $94,531 | $(25,000) | -26.4% | - The Company's reliance on wholesale funding and noncore funding remained within policy limitations[168](index=168&type=chunk) [Borrowings](index=53&type=section&id=Borrowings) Outstanding borrowings decreased by **$60 million** to **$536.1 million**, primarily due to FHLBNY advance reductions | Borrowing Type (in millions) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | FHLBNY term advances | $521.1 | $571.1 | $(50.0) | -8.8% | | FHLBNY overnight line of credit advance | $15.0 | $25.0 | $(10.0) | -40.0% | | Total outstanding borrowings | $536.1 | $596.1 | $(60.0) | -10.1% | [Stockholders' Equity](index=55&type=section&id=Stockholders%27%20Equity) Stockholders' equity increased by **$15.6 million** (**3.1%**) to **$521.1 million**, driven by net income and OCI | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :---------------- | :----- | :------- | | Total stockholders' equity | $521.1 | $505.5 | $15.6 | 3.1% | | Net income contribution | N/A | N/A | $12.1 | N/A | | Other comprehensive income contribution | N/A | N/A | $2.3 | N/A | | Dividends on preferred shares | N/A | N/A | $(0.6) | N/A | [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=56&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net income available to common stockholders increased by **86.7%** to **$5.8 million**, driven by net interest income [Overview](index=56&type=section&id=Overview) Net income available to common stockholders increased by **$2.7 million** to **$5.8 million**, driven by net interest income | Metric (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net income available to common stockholders | $5.8 | $3.1 | $2.7 | 86.7% | | Basic EPS | $0.26 | $0.14 | $0.12 | 85.7% | | Diluted EPS | $0.25 | $0.14 | $0.11 | 78.6% | | Net interest income increase | N/A | N/A | $6.5 | N/A | [Interest and Dividend Income](index=56&type=section&id=Interest%20and%20Dividend%20Income) Total interest and dividend income increased by **$7.1 million** (**18.2%**) to **$45.9 million**, driven by loan income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total interest and dividend income | $45,860 | $38,792 | $7,068 | 18.2% | | Interest on loans receivable | $40,291 | $31,281 | $9,010 | 28.8% | | Interest on securities | $4,246 | $5,486 | $(1,240) | -22.6% | | Interest on deposits due from banks | $807 | $1,542 | $(735) | -47.7% | [Interest Expense](index=57&type=section&id=Interest%20Expense) Total interest expense increased by **$0.5 million** (**2.6%**) to **$21.4 million**, mainly from higher deposit interest | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total interest expense | $21,434 | $20,888 | $546 | 2.6% | | Interest on certificates of deposit | $7,382 | $6,358 | $1,024 | 16.1% | | Interest on money market | $8,930 | $7,209 | $1,721 | 23.9% | | Interest on borrowings | $4,994 | $7,141 | $(2,147) | -30.1% | [Net Interest Income](index=57&type=section&id=Net%20Interest%20Income) Net interest income increased by **$6.5 million** to **$24.4 million**, driven by loan income and improved margin | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net interest income (in thousands) | $24,426 | $17,904 | $6,522 | 36.4% | | Net interest rate spread | 2.47% | 1.72% | 0.75% | 43.6% | | Net interest margin | 3.27% | 2.62% | 0.65% | 24.8% | [Non-Interest Income](index=59&type=section&id=Non-Interest%20Income) Non-interest income decreased by **$0.2 million** to **$2.1 million**, mainly from lower other non-interest income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total non-interest income | $2,060 | $2,258 | $(198) | -8.8% | | Grant income | $428 | $— | $428 | N/A | | Other non-interest income | $422 | $1,057 | $(635) | -60.1% | | Income on sale of mortgage loans | $169 | $274 | $(105) | -38.3% | [Non-Interest Expense](index=59&type=section&id=Non-Interest%20Expense) Non-interest expense increased by **$0.2 million** to **$16.9 million**, driven by occupancy, data processing, and marketing | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total non-interest expense | $16,869 | $16,640 | $229 | 1.4% | | Occupancy and equipment | $3,907 | $3,564 | $343 | 9.6% | | Data processing expenses | $1,188 | $1,013 | $175 | 17.3% | | Direct loan expenses | $241 | $633 | $(392) | -61.9% | | Marketing and promotional expenses | $266 | $145 | $121 | 83.4% | [Income Tax Provision](index=59&type=section&id=Income%20Tax%20Provision) The provision for income taxes increased by **$0.7 million** (**58.0%**) to **$1.9 million** for the three months | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Provision for income taxes | $1,891 | $1,197 | $694 | 58.0% | [Average Balance Sheets (Three Months)](index=60&type=section&id=Average%20Balance%20Sheets%20(Three%20Months)) Average interest-earning assets increased to **$3.00 billion**, with improved yield and lower liability rates | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Average interest-earning assets (in thousands) | $2,999,823 | $2,744,077 | $255,746 | | Average Yield on Interest-earning assets | 6.13% | 5.69% | 0.44% | | Average Rate on Interest-bearing liabilities | 3.66% | 3.97% | -0.31% | | Net interest rate spread | 2.47% | 1.72% | 0.75% | | Net interest margin | 3.27% | 2.62% | 0.65% | [Rate/Volume Analysis (Three Months)](index=62&type=section&id=Rate%2FVolume%20Analysis%20(Three%20Months)) Net interest income increase was primarily driven by interest rate changes, and to a lesser extent, volume changes | Change in Net Interest Income (in thousands) | Due to Volume | Due to Rate | Total Increase (Decrease) | | :------------------------------------------- | :------------ | :---------- | :------------------------ | | Total interest-earning assets | $4,709 | $2,359 | $7,068 | | Total interest-bearing liabilities | $2,941 | $(2,395) | $546 | | Change in net interest income | $1,768 | $4,754 | $6,522 | [Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=62&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Net income available to common stockholders more than doubled to **$11.5 million**, driven by net interest income [Overview](index=62&type=section&id=Overview) Net income available to common stockholders increased by **$6.0 million** to **$11.5 million**, driven by net interest income | Metric (in millions) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net income available to common stockholders | $11.5 | $5.5 | $6.0 | 107.8% | | Basic EPS | $0.51 | $0.25 | $0.26 | 104.0% | | Diluted EPS | $0.50 | $0.25 | $0.25 | 100.0% | | Net interest income increase | N/A | N/A | $9.9 | N/A | [Interest and Dividend Income](index=63&type=section&id=Interest%20and%20Dividend%20Income) Total interest and dividend income increased by **$11.4 million** (**14.5%**) to **$89.9 million**, driven by loan income | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total interest and dividend income | $89,857 | $78,458 | $11,399 | 14.5% | | Interest on loans receivable | $77,427 | $61,945 | $15,482 | 25.0% | | Interest on securities | $8,767 | $11,105 | $(2,338) | -21.1% | | Interest on deposits due from banks | $2,475 | $4,453 | $(1,978) | -44.4% | [Interest Expense](index=65&type=section&id=Interest%20Expense) Total interest expense increased by **$1.5 million** (**3.6%**) to **$43.2 million**, mainly from higher deposit interest | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total interest expense | $43,228 | $41,731 | $1,497 | 3.6% | | Interest on certificates of deposit | $15,136 | $12,738 | $2,398 | 18.8% | | Interest on money market | $17,341 | $13,501 | $3,840 | 28.4% | | Interest on borrowings | $10,480 | $15,064 | $(4,584) | -30.4% | [Net Interest Income](index=65&type=section&id=Net%20Interest%20Income) Net interest income increased by **$9.9 million** to **$46.6 million**, driven by loan income and improved margin | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | :------- | | Net interest income (in thousands) | $46,629 | $36,727 | $9,902 | 27.0% | | Net interest rate spread | 2.33% | 1.77% | 0.56% | 31.6% | | Net interest margin | 3.12% | 2.67% | 0.45% | 16.9% | - The Federal Reserve reduced the federal funds rate target range by **50 basis points** in September 2024, followed by two **25 basis point** cuts in November and December 2024, signaling a shift to bolster the economy[206](index=206&type=chunk) [Non-Interest Income](index=65&type=section&id=Non-Interest%20Income) Non-interest income increased by **$0.5 million** to **$4.4 million**, driven by SBA loan sales and grant income | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total non-interest income | $4,441 | $3,965 | $476 | 12.0% | | Income on sale of SBA loans | $404 | $— | $404 | N/A | | Grant income | $428 | $— | $428 | N/A | | Late and prepayment charges | $1,227 | $785 | $442 | 56.3% | | Other non-interest income | $1,025 | $1,622 | $(597) | -36.8% | | Income on sale of mortgage loans | $317 | $576 | $(259) | -45.0% | [Non-Interest Expense](index=67&type=section&id=Non-Interest%20Expense) Non-interest expense increased by **$0.3 million** to **$33.8 million**, driven by occupancy, operating, and data processing | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Total non-interest expense | $33,757 | $33,426 | $331 | 1.0% | | Occupancy and equipment | $7,820 | $7,231 | $589 | 8.1% | | Other operating expenses | $2,518 | $2,088 | $430 | 20.6% | | Direct loan expenses | $629 | $1,365 | $(736) | -53.9% | | Professional fees | $2,731 | $3,092 | $(361) | -11.7% | [Income Tax Provision](index=67&type=section&id=Income%20Tax%20Provision) The provision for income taxes increased by **$1.4 million** (**53.9%**) to **$3.9 million** for the six months | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (in thousands) | % Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Provision for income taxes | $3,913 | $2,543 | $1,370 | 53.9% | [Credit Quality](index=67&type=section&id=Credit%20Quality) Non-performing assets decreased by **$3.6 million** to **$28.5 million**, with a **$1.3 million** credit loss provision | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total non-performing assets and accruing modifications | $28.5 | $32.1 | $(3.6) | | Credit loss provision on loans (6 months) | $1.3 | $(0.7) | $2.0 | | Funded portion provision (6 months) | $2.1 | $(0.4) | $2.5 | | Unfunded portion benefit (6 months) | $(0.7) | $(0.3) | $(0.4) | [Average Balance Sheets (Six Months)](index=68&type=section&id=Average%20Balance%20Sheets%20(Six%20Months)) Average interest-earning assets increased to **$3.01 billion**, with improved yield and lower liability rates | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Average interest-earning assets (in thousands) | $3,011,353 | $2,769,002 | $242,351 | | Average Yield on Interest-earning assets | 6.02% | 5.70% | 0.32% | | Average Rate on Interest-bearing liabilities | 3.69% | 3.93% | -0.24% | | Net interest rate spread | 2.33% | 1.77% | 0.56% | | Net interest margin | 3.12% | 2.67% | 0.45% | [Rate/Volume Analysis (Six Months)](index=70&type=section&id=Rate%2FVolume%20Analysis%20(Six%20Months)) Net interest income increase was primarily driven by interest rate changes, and to a lesser extent, volume changes | Change in Net Interest Income (in thousands) | Due to Volume | Due to Rate | Total Increase (Decrease) | | :------------------------------------------- | :------------ | :---------- | :------------------------ | | Total interest-earning assets | $8,590 | $2,809 | $11,399 | | Total interest-bearing liabilities | $5,587 | $(4,090) | $1,497 | | Change in net interest income | $3,003 | $6,899 | $9,902 | [Management of Market Risk](index=70&type=section&id=Management%20of%20Market%20Risk) The Company manages interest rate risk through ALCO, using NII simulation and EVE models, indicating policy compliance - The ALCO is responsible for evaluating and managing interest rate risk, using a third-party modeling solution quarterly[222](index=222&type=chunk) | Rate Shift | Year 1 Forecast (in thousands) | Year 1 Change from Level | | :-------------------------------- | :----------------------------- | :----------------------- | | +400 bps | $96,600 | (7.66%) | | +100 bps | $103,260 | (1.30%) | | Level | $104,618 | — % | | -100 bps | $105,536 | 0.88% | | -400 bps | $105,020 | 0.38% | | Change in Interest Rates (basis points) | Estimated EVE (in thousands) | Estimated Increase (Decrease) in EVE Amount (in thousands) | Percent Change | | :-------------------------------------- | :--------------------------- | :------------------------------------------------------- | :------------- | | +400 | $432,100 | $(108,819) | (20.12%) | | +100 | $518,452 | $(22,467) | (4.15%) | | Level | $540,919 | — | — % | | -100 | $560,066 | $19,147 | 3.54% | | -400 | $610,908 | $69,989 | 12.94% | - Both Net Interest Income Simulation and Economic Value of Equity (EVE) models indicated compliance with Board-approved Interest Rate Risk Policy at June 30, 2025[227](index=227&type=chunk)[232](index=232&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains strong liquidity and capital, is 'well capitalized,' and generated positive operating cash flow - The Company and Bank met all regulatory capital requirements and were categorized as 'well capitalized' at June 30, 2025, and December 31, 2024[248](index=248&type=chunk) | Cash Flow Activity (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $19.3 | $(1.1) | | Net cash used in investing activities | $(129.2) | $(129.4) | | Net cash provided by financing activities | $96.8 | $94.5 | - Outstanding commitments to originate loans and extend credit totaled **$359.8 million** at June 30, 2025, and certificates of deposit maturing in 2025 totaled **$494.2 million**[249](index=249&type=chunk)[250](index=250&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item refers to market risk disclosures in Part I, Item 2, detailing strategies and models for interest rate risk [Item 4. Controls and Procedures](index=79&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal controls over financial reporting - The Company's disclosure controls and procedures were deemed effective as of June 30, 2025[256](index=256&type=chunk) - No material changes occurred in the Company's internal controls over financial reporting during the six months ended June 30, 2025[257](index=257&type=chunk) [PART II. OTHER INFORMATION](index=80&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, safety disclosures, other information, and exhibits [Item 1. Legal Proceedings](index=80&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not involved in any material legal proceedings that would significantly affect its financial condition - The Company is not involved in any material legal proceedings[260](index=260&type=chunk) [Item 1A. Risk Factors](index=80&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors in the 2024 Form 10-K and other SEC filings, with no material changes - No material changes have occurred in the Company's Risk Factors from those disclosed in its 2024 Form 10-K[261](index=261&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported for the period [Item 3. Defaults Upon Senior Securities](index=80&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported for the period [Item 4. Mine Safety Disclosures](index=80&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported for the period [Item 5. Other Information](index=80&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents and certifications [Signatures](index=82&type=section&id=Signatures) The report is duly signed by the President, CEO, Executive Vice President, and CFO on August 5, 2025

Core Insights - Ponce Financial Group reported strong Q2 2025 results, with GAAP EPS of $0.25, surpassing analyst estimates of $0.17, and reflecting a 78.6% year-over-year increase [1][2] - Net income for common stockholders rose to $5.8 million from $3.1 million in the same period last year, indicating robust financial performance [1][5] - The bank's net interest income reached $24.4 million, a 36.3% increase from $17.9 million in Q2 2024, driven by strong loan and deposit growth [2][5] Financial Metrics - The net interest margin improved to 3.27%, up from 2.62% in the prior-year quarter, reflecting better profitability on lending [2][6] - Non-interest expense was reported at $16.9 million, a slight increase of 1.8% year-over-year, while the efficiency ratio improved significantly to 63.7% from 80.1% in the prior-year quarter [2][8] - Return on common equity increased to 7.88%, up 3.28 percentage points from 4.60% in Q2 2024 [2] Business Overview and Strategy - Ponce Financial Group focuses on serving minority and immigrant communities, holding designations as a Minority Depository Institution and Community Development Financial Institution [3] - The bank's strategy emphasizes increasing core lending, expanding stable deposit relationships, and maintaining strong capital [4] - The lending portfolio is heavily concentrated in mortgage loans, particularly in construction and multifamily properties [3][7] Recent Developments - Total net loans receivable increased by 7.5% since year-end 2024, with deposits also rising significantly, up 8.4% since December 2024 [6][7] - Non-interest income was reported at $2.1 million, experiencing some volatility, with grant income providing partial offset [7] - The provision for credit losses rose to $1.6 million, indicating a cautious approach to potential credit risks [8] Capital and Regulatory Position - Capital levels remain strong, with total capital to risk-weighted assets at 22.65% as of Q2 2025, well above required minimums [9] - Management highlighted ongoing progress on regulatory commitments, which may provide access to favorable preferred stock dividends [10] Future Outlook - No formal forward-looking financial guidance was provided, but management emphasized resilience amid a turbulent banking environment [10] - Key areas to monitor include expense management, deposit and lending momentum, and asset quality metrics [11]