Executive Summary

Q1 2024 delivered a clean improvement in core profitability: net income rose to $2.41m with diluted EPS of $0.11, up from $0.02 in Q4 2023, on higher net interest income, better efficiency, and modest benefit for credit losses; net interest margin ticked up to 2.71% (+5 bps QoQ) while the efficiency ratio improved to 82.6% from 96.8% in Q4 .
Loans and deposits grew sequentially (+$85.5m loans; +$78.2m deposits), while asset quality remained stable (NPLs to loans 0.87% vs 0.89% in Q4); capital levels remain strong (Bank total capital ratio 22.79%) .
Management highlighted strengthening capital/liquidity and cost actions (headcount -7% YoY) and disclosed a $1.0m interest income recovery on a previously nonperforming construction loan that aided NII in the quarter .
Post-quarter, the Bank exceeded ECIP qualified-lending targets, reducing the preferred dividend rate on $225m ECIP securities from 2.0% to 0.50% through June 2025, a one-year annualized savings of $3.375m—supportive to forward EPS and capital accretion .
Estimates context: S&P Global consensus was unavailable via our feed; third-party sources indicated a material beat (EPS $0.11 vs -$0.03 consensus; revenue $20.53m vs $18.80m), with the surprise primarily from stronger NII and lower expenses; treat non-SPGI benchmarks as directional only .

What Went Well and What Went Wrong

What Went Well

NII and NIM inflected: net interest income rose to $18.8m (+9.5% QoQ) and NIM to 2.71% (+5 bps QoQ) on loan growth and a $1.0m recovery on a previously nonperforming construction loan .
Operating efficiency improved: efficiency ratio fell to 82.56% from 96.83% in Q4 on $0.9m lower non-interest expense QoQ (notably compensation, contingencies, and professional fees) .
Balance sheet momentum with solid credit: loans +$85.5m QoQ; deposits +$78.2m QoQ; NPLs/loans improved to 0.87% (from 0.89%); CEO emphasized strong capital/liquidity (book value per share $11.29; liquidity + FHLB capacity ~$724.1m ≈ 1.7x uninsured deposits) .
- CEO: “Net interest income grew for the fourth quarter in a row… Book value per share is now $11.29… total capital ratio at Ponce Bank stands at 23.33%... liquid assets plus borrowing capacity… $724.1 million, approximately 1.7 times… uninsured deposits” .

What Went Wrong

Funding costs still elevated: total interest expense rose to $20.8m, up from $17.8m in Q4, reflecting ongoing deposit and borrowing cost pressure amid higher rates .
YoY NIM compression persists (2.71% vs 2.75% a year ago) due to higher cost of funds; efficiency remains above 80%, indicating more room for cost leverage .
Credit expense noise: while Q1 showed a small net benefit for credit losses (-$0.18m), consumer charge-offs persist (consumer charge-offs $1.30m offset by $0.12m recoveries), and Grain microloan tail continues to run-off (remaining exposure $0.86m) .

Financial Results

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$22.17 = NII $16.54 + Non-int $5.63	$18.48 = NII $17.20 + Non-int $1.29	$20.53 = NII $18.82 + Non-int $1.71
Net Income ($USD Millions)	$2.59	$0.52	$2.41
Diluted EPS ($)	$0.12	$0.02	$0.11
Net Interest Income ($USD Millions)	$16.54	$17.20	$18.82
Net Interest Margin (%)	2.58%	2.66%	2.71%
Efficiency Ratio (%)	78.11%	96.83%	82.56%
Non-interest Income ($USD Millions)	$5.63	$1.29	$1.71
Non-interest Expense ($USD Millions)	$17.32	$17.90	$16.95
(Benefit)/Provision for Credit Losses ($USD Millions)	$0.54	$(0.38)	$(0.18)

KPIs and Balance Sheet

Loans and Deposits
- Net Loans Receivable ($B): Q3 $1.79 ; Q4 $1.90 ; Q1 $1.98
- Deposits ($B): Q3 $1.40 ; Q4 $1.51 ; Q1 $1.59
Capital and Asset Quality
- Bank Total Capital Ratio (%): Q3 25.10 ; Q4 23.30 ; Q1 22.79
- NPLs/Total Gross Loans (%): Q3 0.89 ; Q4 0.89 ; Q1 0.87
- ACL on Loans/Total Loans (%): Q3 1.51 ; Q4 1.36 ; Q1 1.23

Loan Portfolio Mix (Gross)

Category	Q4 2023 Amount ($m)	Q4 Mix (%)	Q1 2024 Amount ($m)	Q1 Mix (%)
1-4 Family Residential (Investor)	343.7	17.89%	339.3	16.92%
1-4 Family Residential (Owner)	152.3	7.93%	150.8	7.52%
Multifamily Residential	550.6	28.65%	545.8	27.22%
Nonresidential Properties	342.3	17.81%	327.4	16.32%
Construction & Land	503.9	26.22%	608.7	30.35%
Business + Consumer	28.7	1.50%	33.4	1.67%
Total Gross Loans	1,921.6	100.00%	2,005.4	100.00%

Deposits Mix

Category	Q4 2023 ($m, %)	Q1 2024 ($m, %)
Demand	$243.4 (16.14%)	$191.5 (12.07%)
Interest-bearing (NOW/MM/Recip/Savings)	$663.4 (44.00%)	$766.0 (48.31%)
CDs (Total)	$600.8 (39.86%)	$628.3 (39.62%)
Total Deposits	$1,507.6 (100%)	$1,585.8 (100%)

Notes:

“Revenue” shown equals net interest income + total non-interest income, consistent with banking presentation .
CEO cited total capital ratio 23.33%, while Key Metrics table shows 22.79% for Q1; we anchor on Key Metrics for standardized reporting and note the minor variance (likely timing/methodology) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ECIP Preferred Dividend Rate on $225m	Through June 2025	2.0%	0.50%	Reduced; annualized dividend savings ~$3.375m for one year
Financial Guidance (revenue, margins, OpEx, tax, etc.)	2024/Q2 onward	N/A	No formal quantitative guidance disclosed	Maintained “no guidance” posture

Earnings Call Themes & Trends

Transcript for Q1 2024 was not available in our document set; themes below triangulate press release commentary across quarters.

Topic	Q3 2023 (Press Release)	Q4 2023 (Press Release)	Q1 2024 (Press Release)	Trend
Net Interest Margin trajectory	NIM 2.58%; pressure from higher funding costs	NIM 2.66%; +8 bps QoQ	NIM 2.71%; +5 bps QoQ	Gradual improvement QoQ amid rate pressures
Liquidity vs uninsured deposits	Liquidity + FHLB capacity ~$695m; >2x uninsured deposits ~$334m	~$778.8m; ~2x uninsured deposits ~$389.4m	~$724.1m; ~1.7x uninsured deposits ~$416.9m	Strong coverage; modest step down in ratio as uninsured deposits grew
Credit and Grain microloans	Grain recoveries and reduced expense; NPL metrics improving	Continued consumer charge-offs but improving allowances/NPLs	Small net benefit for credit losses; Grain exposure down to ~$0.86m	Tail risk shrinking; charge-offs persist at lower scale
Loan/deposit growth	Loans +$294m YTD; deposits +$149m YTD	Loans and deposits each +>$100m in Q4	Loans +$85.5m QoQ; deposits +$78.2m QoQ	Consistent growth with prudent underwriting
Cost actions/efficiency	Expense normalization vs 2022; efficiency 78%	Efficiency deteriorated to 96.8% on lower non-interest income	Efficiency improved to 82.6%; headcount -7% YoY	Re-focusing on cost discipline
Capital management/hedging	Strong capital; no hedging detail	Added SOFR pay-fixed swaps ($150m 2yr; $100m 3yr)	Capital ratios remain high; CET1 proxy strong	Proactive IRR management continues

Management Commentary

CEO Carlos P. Naudon: “Despite the challenging operating environment, we continue to make progress: net interest income grew for the fourth quarter in a row, and net interest margin grew for the second quarter in a row… Book value per share is now $11.29… total capital ratio at Ponce Bank stands at 23.33%… liquid assets plus borrowing capacity… $724.1 million, approximately 1.7 times… uninsured deposits of $416.9 million.”
Executive Chairman Steven A. Tsavaris: “We continue to grow both loans and deposits while maintaining credit quality… our prudent approach might result in lower growth in the coming quarters as we prioritize sound underwriting practices and balance sheet management over loan growth.”
Q4 hedging update for context: “Entered into two pay fixed, receiver SOFR swaps… $150 million for 2 years and $100 million for 3 years” to better manage interest rate risk .
ECIP achievement (post-quarter): “Qualified lending… totaled $1.162 billion… reduces the dividend… from 2.0% to 0.50%… resulting in a one-year annualized savings of $3.375 million” .

Q&A Highlights

No Q1 2024 earnings call transcript was available in our document library; we found no transcript to extract Q&A themes from. The press release indicates the reporting of results but does not include a Q&A section .

Estimates Context

S&P Global consensus: Unavailable via our data feed at this time (SPGI request limit reached).
Third-party snapshot (directional): EPS actual $0.11 vs consensus -$0.03; revenue $20.53m vs $18.80m—both beats; use with caution as non-SPGI sources may differ in methodology .
Implication: Street may need to lift near-term NII/NIM assumptions given sequential NIM expansion, the $1.0m interest recovery boost, and expense control; medium-term EPS run-rate could benefit from ECIP dividend reduction through mid-2025 .

Key Takeaways for Investors

Core earnings quality improved: sequential NIM expansion, higher NII, and better efficiency drove a clean EPS step-up to $0.11; asset quality held steady with low NPLs .
Funding pressure persists but appears manageable: total interest expense rose QoQ; however, deposit growth and hedging actions support NIM resilience into 2024 .
Liquidity and capital are robust: liquidity sources ≈1.7x uninsured deposits and total capital ratio ~23% provide flexibility for growth and rate volatility .
Operating discipline is gaining traction: efficiency ratio down to 82.6% and headcount -7% YoY; continued focus on cost and technology should support further operating leverage .
Grain microloan tail risk continues to diminish: remaining exposure ~$0.86m; charge-offs/recoveries trending down, reducing a source of earnings volatility .
ECIP dividend reduction is a tangible 2024–mid-2025 tailwind: ~ $3.375m annualized preferred dividend savings boosts earnings capacity and capital formation .
Near-term setup: Absent unforeseen credit costs, continued NIM stabilization, expense discipline, and ECIP savings are upside catalysts; watch funding costs, construction loan performance, and deposit mix migration for risk.

Appendix: Source Documents

8-K (Item 2.02) Q1 2024 press release and financials .
8-K (Item 2.02) Q4 2023 press release and financials .
8-K (Item 2.02) Q3 2023 press release and financials .
ECIP press release (June 20, 2024) .
Estimates beats from third-party outlets (non-SPGI) .

Disclosure: S&P Global consensus data was unavailable via our feed for this period; third-party estimate figures are included for directional context only.

Ponce Financial Group, Inc. (PDLB)·Q1 2024 Earnings Summary