Overview of Ponce Financial’s Performance

Ponce Financial Group is the holding company for Ponce Bank, which operates as a community bank serving low and moderate income communities. Overall, Ponce Financial showed improved financial performance in the first quarter of 2024 compared to the same period in 2023:

• Net income was $2.4 million in Q1 2024, up significantly from $0.3 million in Q1 2023.
• Earnings per share was $0.11 in Q1 2024 versus $0.01 in Q1 2023.
• The increase in net income was driven by higher net interest income, partially offset by higher non-interest expense and income taxes.

Revenue Analysis

Interest Income and Net Interest Margin

• Total interest income rose 50.5% to $39.7 million in Q1 2024, primarily reflecting large increases in interest earned on loans and securities.
• Net interest margin declined slightly to 2.71% in Q1 2024 from 2.75% in Q1 2023, as growth in interest income was outpaced by even faster growth in interest expense.

Category	Q1 2024	Q1 2023	Change
Total Interest Income	$39.7 million	$26.4 million	+50.5%
Net Interest Margin	2.71%	2.75%	-4 basis points

Non-Interest Income

• Non-interest income decreased 6.2% to $1.7 million in Q1 2024.
• The decrease was mainly due to lower late and prepayment charges, partially offset by higher income from mortgage loans.

Category	Q1 2024	Q1 2023	Change
Non-Interest Income	$1.7 million	$1.8 million	-6.2%

Expense Analysis

• Non-interest expense rose 3.6% year-over-year to $17.0 million in Q1 2024.
• The increase was largely due to higher compensation, direct loan expenses and professional fees.

Category	Q1 2024	Q1 2023	Change
Non-Interest Expense	$17.0 million	$16.4 million	+3.6%

Loan and Deposit Growth

• Total loans grew 4.2% from December 2023 to $2.0 billion at March 2024, reflecting particular strength in construction lending.
• Total deposits were up 5.2% to $1.59 billion at March 2024 compared to December 2023.

Category	March 2024	December 2023	Change
Total Loans	$2.0 billion	$1.9 billion	+4.2%
Total Deposits	$1.59 billion	$1.51 billion	+5.2%

Credit Quality

• Ponce has exposure to higher risk microloans originated through fintech partnerships, but has established robust controls and allowance levels.
• Excluding fintech loans, overall portfolio credit metrics remain strong based on conservative underwriting.

Capital and Liquidity

• Ponce Financial maintains a strong capital position, with ratios well above regulatory minimums for well capitalized status.
• Liquidity also remains ample based on available borrowing capacity.

Key Initiatives

Ponce Financial is executing on Vision 2025 to enhance its presence in low and moderate income communities through:

• Digital transformation and fintech partnerships
• Expanded products, including small business lending
• Growth in new markets outside of New York

The recent $225 million capital investment from the U.S. Treasury will support Ponce’s community development mission.

Overall, Ponce Financial showed improved profitability in Q1 2024 while maintaining a solid financial foundation. Key areas to monitor will be net interest margin trends and credit performance of newer lending initiatives.