Ponce Financial (US:PDLB)2024-11-07 21:25Microloans and Lending Programs - As of September 30, 2024, the Company had 8,428 microloans outstanding with an aggregate balance of $3.0 million, offset by a $2.6 million allowance for credit losses, resulting in a net microloan exposure of $0.5 million[127]. - The Company’s qualified lending under the Emergency Capital Investment Program (ECIP) totaled $1.162 billion from June 8, 2023, through March 31, 2024, reducing the dividend obligation on its Preferred Stock to 0.50% for quarterly dividends payable through June 2025[115]. - The Company received a $3.7 million grant from the U.S. Treasury as part of the CDFI Equitable Recovery Program to aid low and moderate-income communities[118]. - The Company opened its first representative office in Florida on June 1, 2024, to serve a large Hispanic community and customers with businesses in the state[123]. - The Company has written down a total of $15.3 million, net of recoveries, of microloans receivable since inception of the microloan arrangement[127]. - The Company has a total microloans exposure of $0.5 million, net of allowance for credit losses, excluding $1.5 million of security deposits by microloan borrowers[127]. - Microloans receivable from borrowers amounted to $3.033 million as of September 30, 2024, with an allowance for credit losses of $2.570 million[128]. - The Company has deployed a Fintech-based automated lending technology in partnership with LendingFront Technologies, enhancing loan origination efficiency[129]. Financial Performance and Income - Net income available to common stockholders decreased to $2.2 million for the three months ended September 30, 2024, down from $2.6 million in the same period of 2023, representing a decline of 15.4%[146]. - Earnings per share for the three months ended September 30, 2024, was $0.10, compared to $0.12 for the same period in 2023, a decrease of 16.7%[146]. - Interest and dividend income increased by $7.8 million, or 23.2%, to $41.3 million for the three months ended September 30, 2024, from $33.5 million in 2023[147]. - Net interest income rose by $2.5 million, or 15.0%, to $19.0 million for the three months ended September 30, 2024, compared to $16.5 million in 2023[147]. - Provision for credit losses increased by $0.3 million, or 47.5%, to $0.8 million for the three months ended September 30, 2024[147]. - Non-interest income decreased by $4.5 million, or 79.5%, to $1.2 million for the three months ended September 30, 2024, compared to $5.6 million in 2023[147]. - Net income available to common stockholders increased to $7.7 million for the nine months ended September 30, 2024, compared to $2.8 million for the same period in 2023, representing a 175% increase[163]. - Earnings per basic and diluted share rose to $0.34 for the nine months ended September 30, 2024, up from $0.12 in the prior year, marking a 183.3% increase[164]. - Net interest income increased by $7.7 million, contributing significantly to the overall rise in net income[163]. Asset and Deposit Growth - As of September 30, 2024, total consolidated assets increased by $265.2 million, or 9.6%, to $3.02 billion from $2.75 billion at December 31, 2023[137]. - Cash and cash equivalents rose by $16.6 million, or 11.9%, to $155.8 million at September 30, 2024, primarily due to a $362.7 million increase in net deposits[137]. - Total deposits increased by $362.7 million, or 24.1%, to $1,870.3 million as of September 30, 2024, from $1,507.6 million as of December 31, 2023[144]. - Total interest-bearing deposits rose by $365.1 million, or 27.6%, to $1,687.6 million as of September 30, 2024[144]. - The Company received total program deposits of $35.0 million from New York State's Banking Development District Program[122]. Loan Portfolio and Securities - Total gross loans receivable increased by $281.2 million, or 14.6%, reaching $2.2 billion as of September 30, 2024, up from $1.9 billion at December 31, 2023[140]. - The total mortgage loans reached $2.2 billion, representing 98.5% of total loans as of September 30, 2024[140]. - The weighted average loan-to-value ratio is reported at 57.2%, indicating a well-protected loan portfolio[140]. - The company’s commitments to grant new mortgage loans decreased by $102.1 million as of September 30, 2024, compared to December 31, 2023[142]. - The company’s available-for-sale securities decreased by $8.9 million to $127.1 million as of September 30, 2024, compared to $139.8 million at December 31, 2023[139]. - The total held-to-maturity securities amounted to $403.7 million, down from $461.7 million at December 31, 2023[139]. Interest Rate Management - The Company entered into two interest rate swap transactions with notional amounts of $150.0 million and $100.0 million, paying fixed rates of 4.885% and 4.62%, respectively[121]. - The Federal Reserve announced a decrease in the target range for the federal funds rate by 50 basis points to 4.75%-5.00% effective September 19, 2024, which may positively impact net interest income[153]. - The net interest margin increased by 7 basis points to 2.65% for the three months ended September 30, 2024, from 2.58% for the same period in 2023[152]. - The net interest rate spread increased by 10 basis points to 1.77% for the three months ended September 30, 2024, from 1.67% for the same period in 2023[151]. - The bank's interest rate risk management includes two interest rate swap transactions with notional amounts of $150 million and $100 million, paying fixed rates of 4.885% and 4.62% respectively[178]. Regulatory and Compliance - The company met all regulatory capital requirements, categorizing it as well capitalized as of September 30, 2024[191]. - Preferred stock dividends are set at a floor rate of 0.50% and a ceiling rate of 2.00%, based on certain lending targets[193]. - The liquidity position was enhanced by increasing cash and cash equivalents to meet unforeseen liquidity events[191]. Operational Efficiency - The Company signed a Perpetual Software License Agreement with Grain to assume servicing of remaining microloans[126]. - The company has grown from approximately $1.06 billion in assets at its IPO to $3.02 billion as of September 30, 2024, while diversifying its product offerings and investing in infrastructure[132]. - The bank's earnings simulation model indicates compliance with the Board of Directors approved Interest Rate Risk Policy as of September 30, 2024[180].