Ponce Financial (PDLB) - 2025 Q2 - Quarterly Results

Executive Summary & Business Overview Ponce Financial Group, Inc. reported strong financial results for Q2 and H1 2025, driven by increased net income, improved net interest margin, and strategic growth initiatives - Ponce Financial Group, Inc. (NASDAQ: PDLB) reported its second quarter 2025 results on July 25, 2025[1] Earnings Announcement & Highlights The company announced robust Q2 and H1 2025 financial performance, characterized by significant increases in net income and diluted EPS, alongside improved net interest income and margin Second Quarter 2025 Highlights Q2 2025 net income available to common stockholders reached $5.8 million, or $0.25 per diluted share, with net interest income growing by 36.43% year-over-year and net interest margin improving to 3.27% Second Quarter 2025 Key Financial Highlights | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Q2 2024 (Millions) | QoQ Change (%) | YoY Change (%) | | :--------------------------------------- | :----------------- | :----------------- | :----------------- | :------------- | :------------- | | Net Income Available to Common Stockholders | $5.8 | $5.7 | $3.1 | 1.75% | 87.10% | | Diluted EPS | $0.25 | $0.25 | $0.14 | 0.00% | 78.57% | | Net Interest Income | $24.4 | $22.2 | $17.9 | 10.01% | 36.43% | | Net Interest Margin | 3.27% | 2.98% | 2.62% | +29 bps | +65 bps | - Key components of Q2 2025 net income included $45.9 million in interest and dividend income and $2.1 million in non-interest income, offset by $21.4 million in interest expense, $16.9 million in non-interest expense, $1.9 million in provision for income taxes, $1.6 million in provision for credit losses, and $0.3 million in preferred dividends[5] Six Months 2025 Highlights For H1 2025, net income available to common stockholders more than doubled to $11.5 million, or $0.50 per diluted share, supported by a 26.96% increase in net interest income and a 12.01% rise in non-interest income Six Months 2025 Key Financial Highlights | Metric | H1 2025 (Millions) | H1 2024 (Millions) | YoY Change ($M) | YoY Change (%) | | :--------------------------------------- | :----------------- | :----------------- | :-------------- | :------------- | | Net Income Available to Common Stockholders | $11.5 | $5.5 | $6.0 | 109.09% | | Diluted EPS | $0.50 | $0.25 | $0.25 | 100.00% | | Net Interest Income | $46.6 | $36.7 | $9.9 | 26.96% | | Non-interest Income | $4.4 | $4.0 | $0.5 | 12.01% | | Non-interest Expense | $33.8 | $33.4 | $0.3 | 0.99% | - Balance sheet growth included a 7.53% increase in net loans receivable to $2.46 billion and an 8.35% increase in deposits to $2.04 billion as of June 30, 2025, compared to December 31, 2024[5] Management Commentary Management emphasized strategic execution for prudent growth and profitability, highlighting improved net interest margin, reduced borrowing costs, and progress on ECIP commitments President and CEO's Comments The President and CEO highlighted the doubling of diluted EPS for H1 2025, driven by increased net interest and non-interest income, stable non-interest expenses, and a 29 basis point increase in net interest margin - Diluted earnings per share for the six months ended June 30, 2025, doubled to $0.50 from the same period last year[4] - Net interest margin increased by 29 basis points compared to the prior quarter, attributed to high-yielding construction loans and decreasing borrowing costs[4] - Non-performing loans decreased during the quarter[4] Executive Chairman's Comment The Executive Chairman reported securing the lowest preferred stock dividend rate under ECIP for another year and exceeding deep impact lending targets for preferred stock buyback conditions - Secured another year of the lowest possible preferred stock dividend of 0.50% under the U.S. Treasury's Emergency Capital Investment Program (ECIP)[6] - Achieved 69% of the goal to qualify for the 0.50% rate for the next dividend period, with three quarters remaining[6] - Maintained 80% deep impact lending after 12 quarters, surpassing the 60% cumulative target required over 16 quarters to buy back preferred stock[6] About Ponce Financial Group, Inc. Ponce Financial Group, Inc. is the holding company for Ponce Bank, a Minority Depository Institution and Community Development Financial Institution, primarily engaged in deposit-taking and investing in diverse loan and securities portfolios - Ponce Bank operates as a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender[30] - The Bank's primary business involves taking deposits and investing in a diverse portfolio of mortgage loans (1-4 family, multifamily, nonresidential, construction, and land), as well as business and consumer loans[30] - Ponce Bank also invests in U.S. Government and federal agency securities, government-sponsored enterprise securities, mortgage-backed securities, corporate bonds, and Federal Home Loan Bank stock[30] Financial Performance Analysis This section analyzes the Company's operational results, focusing on net income, net interest income, non-interest income, non-interest expense, and credit quality for the reported periods Summary of Results of Operations The Company's operational results for Q2 and H1 2025 showed increased net income, primarily driven by higher net interest income, despite fluctuations in provisions for credit losses and income taxes Net Income Net income for Q2 2025 slightly increased QoQ and significantly rose YoY, while H1 2025 net income more than doubled compared to the prior year Net Income Overview (in millions) | Period | Net Income | | :----------------- | :--------- | | Q2 2025 | $6.1 | | Q1 2025 | $6.0 | | Q2 2024 | $3.2 | | H1 2025 | $12.1 | | H1 2024 | $5.6 | - The $0.1 million QoQ increase in net income was mainly due to a $2.2 million increase in net interest income and a $0.1 million decrease in provision for income taxes, partially offset by a $1.9 million increase in provision for credit losses and a $0.3 million decrease in non-interest income[10] - The $6.5 million YoY increase in H1 2025 net income was primarily driven by a $9.9 million increase in net interest income and a $0.5 million increase in non-interest income, partially offset by higher provisions for credit losses ($2.2 million), income taxes ($1.4 million), and non-interest expense ($0.3 million)[12] Net Interest Income and Net Interest Margin Net interest income demonstrated robust growth, increasing by 10.01% QoQ and 36.43% YoY in Q2 2025, with net interest margin expanding significantly to 3.27% Net Interest Income and Margin (in millions, except margin) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :---------------------- | :------ | :------ | :------ | :------ | :------ | | Net Interest Income | $24.4 | $22.2 | $17.9 | $46.6 | $36.7 | | Net Interest Margin | 3.27% | 2.98% | 2.62% | 3.12% | 2.67% | - The QoQ increase in net interest income was due to a $1.9 million increase in total interest and dividend income and a $0.3 million decrease in total interest expense[14] - The YoY increase in Q2 net interest income was driven by a $7.0 million increase in total interest and dividend income, partially offset by a $0.5 million increase in total interest expense[14] Non-interest Income Non-interest income decreased QoQ and YoY in Q2 2025 due to lower SBA loan sales, but increased YoY for H1 2025, largely from higher grant income and SBA loan sales Non-interest Income (in millions) | Period | Non-interest Income | | :----------------- | :------------------ | | Q2 2025 | $2.1 | | Q1 2025 | $2.4 | | Q2 2024 | $2.3 | | H1 2025 | $4.4 | | H1 2024 | $4.0 | - The QoQ decrease in non-interest income was mainly due to decreases in income on sale of SBA loans ($0.4 million), late and prepayment charges ($0.2 million), and other non-interest income ($0.2 million), partially offset by an increase in grant income ($0.4 million)[18] - The YoY increase for the six months was largely attributable to increases in grant income ($0.4 million), income on sale of SBA loans ($0.4 million), and late and prepayment charges ($0.4 million), offset by decreases in other non-interest income ($0.6 million) and income on the sale of mortgage loans ($0.3 million)[20] Non-interest Expense Non-interest expense remained flat QoQ in Q2 2025 but slightly increased YoY, with the H1 2025 increase driven by higher occupancy, equipment, and data processing costs, partially offset by reduced direct loan expenses Non-interest Expense (in millions) | Period | Non-interest Expense | | :----------------- | :------------------- | | Q2 2025 | $16.9 | | Q1 2025 | $16.9 | | Q2 2024 | $16.6 | | H1 2025 | $33.8 | | H1 2024 | $33.4 | - The $0.2 million YoY increase in Q2 non-interest expense was mainly due to increases in occupancy and equipment ($0.3 million), data processing expenses ($0.2 million), marketing and promotional expenses ($0.1 million), and federal deposit insurance and regulatory assessment ($0.1 million), partially offset by a decrease in direct loan expenses ($0.4 million)[22] - The $0.3 million YoY increase for the six months was mainly attributable to increases in occupancy and equipment ($0.6 million), other operating expense ($0.4 million), and data processing expenses ($0.2 million), partially offset by decreases in direct loan expenses ($0.7 million) and professional fees ($0.4 million)[23] Credit Quality Total non-performing assets and accruing modifications decreased QoQ but increased YoY, with the Company recording a provision for credit losses in Q2 and H1 2025 Credit Quality Metrics (in millions) | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :------------------------------------------------------------------ | :----------- | :----------- | :----------- | | Total non-performing assets and accruing modifications | $28.5 | $32.0 | $23.2 | | Provision (benefit) for credit losses on loans (Q2) | $1.6 | ($0.3) | ($0.6) | | Provision (benefit) for credit losses on loans (H1) | $1.3 | N/A | ($0.7) | - The $1.6 million credit loss provision in Q2 2025 consisted of $1.3 million charged on the funded portion and $0.3 million on the unfunded portion of loans[25] - For the six months ended June 30, 2025, a credit loss provision of $1.3 million was recorded, comprising $2.1 million on the funded portion and a $0.8 million benefit on the unfunded portion of loans[26] Financial Position Analysis This section analyzes the Company's balance sheet, including assets, liabilities, and stockholders' equity, as well as key financial metrics and ratios Balance Sheet Summary As of June 30, 2025, total assets, liabilities, and stockholders' equity increased, reflecting growth in net loans receivable and deposits, alongside a reduction in borrowings Assets Total assets increased by 3.75% to $3.15 billion as of June 30, 2025, primarily driven by a significant increase in net loans receivable, partially offset by decreases in securities and cash Asset Changes (in millions) | Asset Category | Jun 30, 2025 | Dec 31, 2024 | Change ($M) | Change (%) | | :------------------------- | :----------- | :----------- | :---------- | :--------- | | Total Assets | $3,153.9 | $3,039.9 | $114.0 | 3.75% | | Net Loans Receivable | $2,458.7 | $2,286.6 | $172.1 | 7.53% | | Held-to-maturity securities | $336.9 | $367.9 | ($31.0) | -8.43% | | Cash and cash equivalents | $126.6 | $139.8 | ($13.2) | -9.44% | - The increase in total assets was largely attributable to increases of $172.1 million in net loans receivable, $1.7 million in other assets, and $1.4 million in accrued interest receivable[27] - These increases were partially offset by decreases of $31.1 million in held-to-maturity securities, $13.2 million in cash and cash equivalents, $8.4 million in available-for-sale securities, $5.0 million in mortgage loans held for sale, and $2.6 million in Federal Home Loan Bank of New York stock[27] Liabilities Total liabilities grew by 3.88% to $2.63 billion as of June 30, 2025, primarily driven by a significant increase in deposits, while borrowings decreased Liability Changes (in millions) | Liability Category | Jun 30, 2025 | Dec 31, 2024 | Change ($M) | Change (%) | | :------------------------- | :----------- | :----------- | :---------- | :--------- | | Total Liabilities | $2,632.8 | $2,534.4 | $98.4 | 3.88% | | Deposits | $2,042.2 | $1,884.9 | $157.3 | 8.35% | | Borrowings | $536.1 | $596.1 | ($60.0) | -10.07% | - The increase in total liabilities was largely attributable to an increase of $157.3 million in deposits, $0.6 million in advance payments by borrowers for taxes and insurance, and $0.4 million in accrued interest payable[28] - These increases were partially offset by decreases of $60.0 million in borrowings and $0.2 million in operating lease liabilities[28] Stockholders' Equity Total stockholders' equity increased by 3.08% to $521.1 million as of June 30, 2025, primarily due to net income and other comprehensive income, partially offset by preferred share dividends Stockholders' Equity Changes (in millions) | Equity Category | Jun 30, 2025 | Dec 31, 2024 | Change ($M) | Change (%) | | :------------------------- | :----------- | :----------- | :---------- | :--------- | | Total Stockholders' Equity | $521.1 | $505.5 | $15.6 | 3.08% | - The $15.6 million increase in stockholders' equity was largely attributable to $12.1 million in net income, $2.3 million in other comprehensive income, $1.0 million impact to additional paid-in capital as a result of share-based compensation, and $0.9 million from release of ESOP shares[29] - These positive contributions were offset by $0.6 million in dividends on preferred shares[29] Key Financial Metrics & Ratios This section presents key performance, capital, and asset quality ratios, along with other operational data, reflecting the Company's financial health and efficiency Performance Ratios Performance ratios for Q2 2025 indicated improved profitability and efficiency, with increases in Return on Average Assets and Net Interest Margin, and a decrease in the Efficiency Ratio Performance Ratios (Three Months Ended) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :------------ | | Return on average assets | 0.79% | 0.77% | 0.45% | | Return on common equity | 7.88% | 7.97% | 4.60% | | Net interest margin | 3.27% | 2.98% | 2.62% | | Non-interest expense to average assets | 2.18% | 2.19% | 2.28% | | Efficiency ratio | 63.69% | 68.70% | 80.09% | Capital Ratios Capital ratios for Ponce Financial Group and Ponce Bank remained strong as of June 30, 2025, demonstrating a well-capitalized position with minor period-over-period fluctuations Capital Ratios (Three Months Ended) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------------- | :------------ | :------------- | :------------ | | Total capital to risk-weighted assets (Ponce Financial Group) | 22.65% | 22.84% | 23.86% | | Common equity Tier 1 capital to risk-weighted assets (Ponce Financial Group) | 12.49% | 12.51% | 12.71% | | Tier 1 capital to total assets (Ponce Financial Group) | 17.13% | 16.84% | 17.88% | | Total capital to risk-weighted assets (Bank only) | 21.22% | 21.38% | 22.47% | | Common equity Tier 1 capital to risk-weighted assets (Bank only) | 20.15% | 20.35% | 21.24% | | Tier 1 capital to total assets (Bank only) | 15.99% | 15.61% | 16.70% | Asset Quality Ratios Asset quality ratios showed a slight increase in the allowance for credit losses on loans as a percentage of nonperforming loans, while non-performing loans as a percentage of total assets decreased QoQ Asset Quality Ratios (Three Months Ended) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------------- | :------------ | :------------- | :------------ | | Allowance for credit losses on loans as a percentage of total loans | 0.97% | 0.96% | 1.18% | | Allowance for credit losses on loans as a percentage of nonperforming loans | 101.01% | 84.15% | 130.28% | | Net (charge-offs) recoveries to average outstanding loans | (0.04%) | (0.04%) | (0.10%) | | Non-performing loans as a percentage of total assets | 0.76% | 0.88% | 0.65% | Other Operational Data The Company reported a decrease in the number of offices and full-time equivalent employees over the past year Other Operational Data (Three Months Ended) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :------------ | | Number of offices | 17 | 18 | 18 | | Number of full-time equivalent employees | 206 | 211 | 227 | Consolidated Financial Statements This section presents the Company's consolidated financial statements, including balance sheets, statements of operations, and detailed breakdowns of loans, allowance for credit losses, deposits, and nonperforming assets Consolidated Statements of Financial Condition The consolidated balance sheet as of June 30, 2025, shows increases in total assets, liabilities, and stockholders' equity, driven by growth in loans and deposits Consolidated Statements of Financial Condition (Dollars in thousands) | ASSETS | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Total cash and cash equivalents | $126,639 | $129,893 | $139,839 | $103,166 | | Available-for-sale securities, at fair value | $96,562 | $103,570 | $104,970 | $113,125 | | Held-to-maturity securities, at amortized cost | $336,879 | $358,024 | $367,938 | $442,113 | | Loans receivable, net | $2,458,712 | $2,370,931 | $2,286,599 | $2,022,173 | | Total assets | $3,153,869 | $3,089,836 | $3,039,938 | $2,842,007 | | LIABILITIES | | | | | | Deposits | $2,042,209 | $2,004,947 | $1,884,864 | $1,606,097 | | Borrowings | $536,100 | $521,100 | $596,100 | $680,421 | | Total liabilities | $2,632,781 | $2,575,950 | $2,534,438 | $2,344,350 | | STOCKHOLDERS' EQUITY | | | | | | Total stockholders' equity | $521,088 | $513,886 | $505,500 | $497,657 | Consolidated Statements of Operations (Three Months Ended) The consolidated statements of operations for Q2 2025 reveal significant year-over-year growth in net interest income and net income available to common stockholders, despite increased provision for credit losses Consolidated Statements of Operations (Three Months Ended, Dollars in thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Total interest and dividend income | $45,860 | $43,997 | $42,886 | $41,293 | $38,792 | | Total interest expense | $21,434 | $21,794 | $22,156 | $22,270 | $20,888 | | Net interest income | $24,426 | $22,203 | $20,730 | $19,023 | $17,904 | | Provision (benefit) for credit losses | $1,626 | ($285) | $897 | $537 | ($867) | | Total non-interest income | $2,060 | $2,381 | $2,097 | $1,151 | $2,258 | | Total non-interest expense | $16,869 | $16,888 | $17,465 | $16,566 | $16,640 | | Net income | $6,100 | $5,959 | $2,933 | $2,433 | $3,192 | | Net income available to common stockholders | $5,818 | $5,678 | $2,651 | $2,152 | $3,117 | | Diluted EPS | $0.25 | $0.25 | $0.12 | $0.10 | $0.14 | Consolidated Statements of Operations (Six Months Ended) For H1 2025, the consolidated statements of operations demonstrate substantial year-over-year growth in net income and diluted EPS, attributed to increased interest and dividend income and effective expense management Consolidated Statements of Operations (Six Months Ended, Dollars in thousands) | Metric | H1 2025 | H1 2024 | Variance ($) | Variance (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total interest and dividend income | $89,857 | $78,458 | $11,399 | 14.53% | | Total interest expense | $43,228 | $41,731 | $1,497 | 3.59% | | Net interest income | $46,629 | $36,727 | $9,902 | 26.96% | | Provision (benefit) for credit losses | $1,341 | ($883) | $2,224 | (251.87%) |\ | Total non-interest income | $4,441 | $3,965 | $476 | 12.01% | | Total non-interest expense | $33,757 | $33,426 | $331 | 0.99% | | Net income | $12,059 | $5,606 | $6,453 | 115.11% | | Net income available to common stockholders | $11,496 | $5,531 | $5,965 | 107.85% | | Diluted EPS | $0.50 | $0.25 | $0.25 | 100.00% | Loans Receivable excluding Mortgage Loans Held for Sale The loan portfolio shows continued growth, with total gross loans increasing to $2.48 billion as of June 30, 2025, and construction and land loans representing the largest and fastest-growing segment Loans Receivable (Dollars in thousands) | Loan Type | June 30, 2025 Amount | June 30, 2025 Percent | December 31, 2024 Amount | December 31, 2024 Percent | June 30, 2024 Amount | June 30, 2024 Percent | | :------------------------- | :------------------- | :-------------------- | :----------------------- | :------------------------ | :------------------- | :-------------------- | | 1-4 family residential Investor Owned | $317,488 | 12.78% | $330,053 | 14.30% | $337,292 | 16.49% | | Multifamily residential | $693,670 | 27.96% | $670,159 | 29.04% | $545,323 | 26.66% | | Nonresidential properties | $404,512 | 16.30% | $389,898 | 16.89% | $337,583 | 16.51% | | Construction and land | $883,462 | 35.59% | $733,660 | 31.79% | $641,879 | 31.39% | | Business loans | $47,372 | 1.91% | $40,849 | 1.77% | $30,222 | 1.48% | | Total loans, gross | $2,482,206 | 100.00% | $2,308,020 | 100.00% | $2,045,089 | 100.00% | - Construction and land loans increased from $733.7 million (31.79% of total) at December 31, 2024, to $883.5 million (35.59% of total) at June 30, 2025[38] Allowance for Credit Losses on Loans The allowance for credit losses on loans increased to $24.1 million at June 30, 2025, reflecting provisions made during the period, with net charge-offs primarily from non-mortgage loans Allowance for Credit Losses on Loans (Dollars in thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Allowance for credit losses on loans at beginning of the period | $22,974 | $22,502 | $23,966 | $24,664 | | Provision (benefit) for credit losses on loans | $1,348 | $731 | $1,090 | ($120) | | Total charge-offs | ($222) | ($263) | ($2,697) | ($747) | | Total recoveries | $0 | $4 | $143 | $264 | | Net (charge-offs) recoveries | ($222) | ($259) | ($2,554) | ($483) | | Allowance for credit losses on loans at end of the period | $24,100 | $22,974 | $22,502 | $24,061 | - Net charge-offs for Q2 2025 were $222 thousand, primarily from business loans[40] Deposits Total deposits increased to $2.04 billion as of June 30, 2025, with interest-bearing deposits forming the majority, and money market accounts and certificates of deposit being the largest components Deposits (Dollars in thousands) | Deposit Type | June 30, 2025 Amount | June 30, 2025 Percent | December 31, 2024 Amount | December 31, 2024 Percent | June 30, 2024 Amount | June 30, 2024 Percent | | :------------------------------- | :------------------- | :-------------------- | :----------------------- | :------------------------ | :------------------- | :-------------------- | | Demand | $197,671 | 9.68% | $169,178 | 8.98% | $178,125 | 11.09% | | NOW/IOLA accounts | $63,626 | 3.12% | $62,616 | 3.32% | $81,178 | 5.05% | | Money market accounts | $790,939 | 38.73% | $636,219 | 33.75% | $502,255 | 31.27% | | Reciprocal deposits | $136,693 | 6.69% | $130,677 | 6.93% | $109,945 | 6.85% | | Savings accounts | $102,759 | 5.03% | $105,870 | 5.62% | $109,694 | 6.83% | | Certificates of deposit of $250K or more | $220,671 | 10.81% | $204,293 | 10.84% | $189,683 | 11.82% | | All other certificates of deposit less than $250K | $454,179 | 22.24% | $474,104 | 25.15% | $331,242 | 20.62% | | Total deposits | $2,042,209 | 100.00% | $1,884,864 | 100.00% | $1,606,097 | 100.00% | Nonperforming Assets Total non-performing assets decreased QoQ to $23.86 million but increased compared to June 30, 2024. Non-accrual loans, particularly in multifamily residential and construction and land categories, constitute the largest portion Nonperforming Assets (Dollars in thousands) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Total non-accrual loans | $23,150 | $26,592 | $26,631 | $17,744 | | Total non-accruing modifications to borrowers experiencing financial difficulty | $708 | $710 | $714 | $725 | | Total non-performing assets | $23,858 | $27,302 | $27,345 | $18,469 | | Total accruing modifications to borrowers experiencing financial difficulty | $4,649 | $4,683 | $4,736 | $4,708 | | Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty | $28,507 | $31,985 | $32,081 | $23,177 | | Total non-performing assets to total assets | 0.76% | 0.88% | 0.90% | 0.65% | - Non-accrual loans in the construction and land category decreased from $14.16 million at March 31, 2025, to $8.91 million at June 30, 2025[43] Average Balance Sheets (Three Months Ended) The average balance sheet for Q2 2025 shows increased average interest-earning assets and net interest income compared to Q2 2024, accompanied by an improved net interest margin and spread Average Balance Sheets (Three Months Ended June 30, Dollars in thousands) | Metric | 2025 Average Outstanding Balance | 2025 Interest | 2025 Average Yield/Rate | 2024 Average Outstanding Balance | 2024 Interest | 2024 Average Yield/Rate | | :--------------------------------------------- | :------------------------------- | :------------ | :---------------------- | :------------------------------- | :------------ | :---------------------- | | Total interest-earning assets | $2,999,823 | $45,860 | 6.13% | $2,744,077 | $38,792 | 5.69% | | Total interest-bearing liabilities | $2,345,758 | $21,434 | 3.66% | $2,115,219 | $20,888 | 3.97% | | Net interest income | N/A | $24,426 | N/A | N/A | $17,904 | N/A | | Net interest rate spread | N/A | N/A | 2.47% | N/A | N/A | 1.72% | | Net interest margin | N/A | N/A | 3.27% | N/A | N/A | 2.62% | Average Balance Sheets (Six Months Ended) The average balance sheet for H1 2025 indicates increased average interest-earning assets and net interest income compared to H1 2024, with an improved net interest margin and spread Average Balance Sheets (Six Months Ended June 30, Dollars in thousands) | Metric | 2025 Average Outstanding Balance | 2025 Interest | 2025 Average Yield/Rate | 2024 Average Outstanding Balance | 2024 Interest | 2024 Average Yield/Rate | | :--------------------------------------------- | :------------------------------- | :------------ | :---------------------- | :------------------------------- | :------------ | :---------------------- | | Total interest-earning assets | $3,011,353 | $89,857 | 6.02% | $2,769,002 | $78,458 | 5.70% | | Total interest-bearing liabilities | $2,363,176 | $43,228 | 3.69% | $2,134,808 | $41,731 | 3.93% | | Net interest income | N/A | $46,629 | N/A | N/A | $36,727 | N/A | | Net interest rate spread | N/A | N/A | 2.33% | N/A | N/A | 1.77% | | Net interest margin | N/A | N/A | 3.12% | N/A | N/A | 2.67% | Other Data Other key data points indicate a stable number of common shares issued, with slight variations in outstanding shares and consistent growth in book value and tangible book value per common share Other Data (As of) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Common shares issued | 24,886,711 | 24,886,711 | 24,886,711 | 24,886,711 | | Common shares outstanding at end of period | 23,984,800 | 23,966,191 | 23,961,214 | 23,811,732 | | Book value per common share | $12.34 | $12.05 | $11.71 | $11.45 | | Tangible book value per common share | $12.34 | $12.05 | $11.71 | $11.45 | Forward-Looking Statements This section contains standard forward-looking statements, cautioning readers that actual results may differ materially from projections due to various risks and uncertainties, and the Company disclaims any obligation to update these statements - Statements identified by words such as 'believes,' 'expects,' 'anticipates,' and similar expressions are forward-looking and subject to significant risks and uncertainties[31] - Factors that could cause actual results to differ include adverse capital and debt market conditions, changes in interest rates, competitive pressures, general economic conditions, changes in U.S. trade policies, fluctuations in real estate values, and changes in government regulation[31] - Readers are cautioned not to place undue reliance on these statements, and the Company disclaims any obligation to publicly update or revise them, except as required by law[31]