Executive Summary

Q4 2024 delivered sequential and year-over-year improvement: net income to common rose to $2.65M and diluted EPS to $0.12 (vs $0.10 in Q3 and $0.02 in Q4’23); net interest margin expanded 15 bps QoQ to 2.80% on higher net interest income and lower efficiency ratio .
Balance sheet growth remained strong: net loans reached $2.29B (+20.61% YoY) and deposits reached $1.88B (+25.02% YoY); borrowings fell to $596.1M (vs $684.4M at YE’23), enhancing funding mix .
Management highlighted strategic catalysts: launch of PonceDirect digital bank, “significant traction” in SBA lending, and execution of an ECIP repurchase option agreement with U.S. Treasury; deep-impact lending stands at 79% over 10 quarters (vs 60% requirement) and could support continued 0.50% preferred dividend rate next year if >400% of base is achieved .
No formal quantitative guidance was issued for revenue/EPS; a Q4 press release and 8-K focused on capital, lending mix, and ECIP milestones. No earnings call transcript was available in the document catalog; estimates comparisons were unavailable due to SPGI access limits .

What Went Well and What Went Wrong

What Went Well

Continued profitability and margin expansion: NIM rose to 2.80% (vs 2.65% in Q3) and net interest income increased to $20.7M, driven by higher loan yields and improved deposit mix; efficiency ratio improved to 75.63% (vs 80.87% in Q3) .
Strong balance sheet growth with deposit inflows: deposits up $377.2M YoY to $1.88B; net loans up $390.7M YoY to $2.29B, supporting scale and NII trajectory .
Strategic progress and catalysts: “We launched our PonceDirect digital bank and gained significant traction with SBA loans… loans grew by 20.61% and deposits by 25.02%” (Carlos P. Naudon) . Executive Chair added confidence on ECIP repurchase pathway and maintaining a 0.50% preferred dividend rate contingent on achieving >400% of base lending metrics in the assessment period .

What Went Wrong

Higher credit costs and elevated nonperforming balances: provision for credit losses rose to $1.10M (vs $0.79M in Q3), and non-performing loans increased to 1.18% of total gross loans (vs 0.78% in Q3), largely in construction and multifamily categories .
Non-interest expense increased QoQ to $17.26M (vs $16.31M in Q3), led by higher professional fees, marketing, and other operating expense, partially offsetting revenue gains .
Non-interest income, while improving QoQ to $2.10M, remains modest and volatile, with contributions from late/prepayment charges and other income; grant income tailwinds in prior-year periods did not recur .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total interest & dividend income ($USD Millions)	$38.79	$41.29	$42.89
Net interest income ($USD Millions)	$17.90	$19.02	$20.73
Provision for credit losses ($USD Millions)	$(0.37)	$0.79	$1.10
Non-interest income ($USD Millions)	$2.26	$1.15	$2.10
Non-interest expense ($USD Millions)	$16.15	$16.31	$17.26
Net income ($USD Millions)	$3.19	$2.43	$2.93
Net income to common ($USD Millions)	$3.12	$2.15	$2.65
Diluted EPS ($)	$0.14	$0.10	$0.12
Net interest margin (%)	2.62%	2.65%	2.80%
Efficiency ratio (%)	80.09%	80.87%	75.63%
ROAA (%)	0.45%	0.33%	0.38%
ROAE (%)	2.59%	1.93%	2.30%

Segment/Loan Portfolio Mix (Amounts=$USD Millions; Percent of Gross Loans)

Category	Q2 2024 Amount	Q2 2024 %	Q3 2024 Amount	Q3 2024 %	Q4 2024 Amount	Q4 2024 %
1-4 family residential (Investor Owned)	$337.29	16.49%	$332.38	15.09%	$330.05	14.30%
1-4 family residential (Owner-Occupied)	$147.49	7.21%	$145.07	6.59%	$142.36	6.17%
Multifamily residential	$545.32	26.66%	$678.03	30.78%	$670.16	29.04%
Nonresidential properties	$337.58	16.51%	$383.28	17.40%	$389.90	16.89%
Construction & land	$641.88	31.39%	$631.46	28.67%	$733.66	31.79%
Business loans	$30.22	1.48%	$28.50	1.29%	$40.85	1.77%
Consumer loans	$5.31	0.26%	$4.02	0.18%	$1.04	0.04%
Total gross loans	$2,045.09	100.00%	$2,202.73	100.00%	$2,308.02	100.00%
Net loans	$2,022.17	—	$2,180.33	—	$2,286.60	—

KPIs and Asset Quality

KPI	Q2 2024	Q3 2024	Q4 2024
Allowance for credit losses on loans / total loans (%)	1.18%	1.09%	0.97%
NPLs / total gross loans (%)	0.89%	0.78%	1.18%
NPLs / total assets (%)	0.65%	0.57%	0.90%
Net charge-offs to avg loans (annualized) (%)	(0.10%)	(0.17%)	(0.45%)
Total deposits ($USD Billions)	$1.61B	$1.87B	$1.88B
Borrowings ($USD Millions)	$680.4	$580.4	$596.1

Versus Estimates

Metric	Q4 2024 Actual	Q4 2024 Consensus	Surprise
Diluted EPS ($)	$0.12	N/A (Unavailable due to SPGI limit)	N/A
Net interest income ($USD Millions)	$20.73	N/A (Unavailable due to SPGI limit)	N/A
Total interest & dividend income ($USD Millions)	$42.89	N/A (Unavailable due to SPGI limit)	N/A

Note: We attempted to retrieve Wall Street consensus via S&P Global for the current quarter, but access was unavailable at time of request (SPGI daily limit exceeded).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
ECIP preferred dividend rate	3Q 2025 – 2Q 2026	Not previously specified	Management “confident” in achieving >400% of base to maintain a 0.50% rate for another year	Introduced forward expectation
ECIP repurchase option	As early as 3Q 2026 (subject to conditions)	N/A	Agreement executed with U.S. Treasury; repurchase price based on dividend discount model and could be as low as 6.79% under certain assumptions	New strategic option
Revenue/EPS/OpEx/tax rate	N/A	N/A	No formal quantitative guidance provided in Q4 materials	Maintained (no guidance)
Dividends on preferred	Near-term assessment period	Began paying in Q2 2024	Expectation to sustain 0.50% if >400% base achieved	Maintained target

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available in the document catalog. Themes below reflect Q2/Q3/Q4 press releases and the 8-K investor presentation.

Topic	Previous Mentions (Q2 & Q3)	Current Period (Q4 2024)	Trend
Digital/technology	Modernization across infrastructure; improving efficiency; progress noted; headcount down 7% YoY	Launch of PonceDirect digital bank; continued tech adoption reducing expenses YoY	Positive execution
Funding/Deposits	Deposits +$98.5M QoQ in Q2; +$362.7M YTD by Q3; reduced borrowings and extended maturities	Deposits at $1.88B; borrowings lower vs YE’23; improved efficiency ratio	Strengthening funding mix
Interest-rate positioning	“Well positioned for a decline in interest rates” (Q3)	NIM expanded QoQ to 2.80%; asset yields increased (loan yield 6.27%)	Margin resilience
ECIP program	Proposed Treasury guidelines in Q3; qualification efforts drove loan growth	Agreement executed; deep-impact lending 79% over 10 quarters; path to repurchase and low dividend rate	Strategic catalyst advancing
SBA lending	Not highlighted in Q2/Q3	“Significant traction” in SBA loans	New growth vector
Asset quality	NPLs ~0.87–0.89% in Q2; 0.78% in Q3	NPLs 1.18%; higher provision and net charge-offs (annualized)	Deterioration QoQ

Management Commentary

“We launched our PonceDirect digital bank and gained significant traction with SBA loans… We have seen consistent profitability over the past several quarters as we continue to see increases both in net interest income as well as net interest margin, while expenses are down year on year.” — Carlos P. Naudon, President & CEO .
“We are working diligently to ensure that we will meet the conditions necessary to allow us to repurchase our ECIP preferred stock… our Deep Impact Lending over the last 10 consecutive quarters stands at 79%… we are confident that we will get to over 400% of our base and ensure another year of preferred dividends of 0.50%.” — Steven A. Tsavaris, Executive Chairman .
Investor presentation highlighted the executed ECIP repurchase option with potential per-share impact (illustrative assumptions) and earliest repurchase timing as 3Q 2026 contingent on qualification and market factors .

Q&A Highlights

No public Q4 2024 earnings call transcript was available in the document catalog; therefore, Q&A themes and clarifications were not accessible for synthesis .

Estimates Context

Wall Street consensus EPS and revenue estimates via S&P Global were unavailable at time of request due to SPGI daily limit; as a result, estimate comparisons and surprises cannot be determined for Q4 2024 in this recap. We attempted retrieval and could not access values [GetEstimates error].
Given the lack of published guidance, analysts may focus on NIM trajectory, deposit mix, and asset quality trends as primary drivers of forward estimate revisions .

Key Takeaways for Investors

Margin and earnings momentum: NIM expanded to 2.80% with net interest income up 8.97% QoQ; efficiency ratio improved to 75.63%, supporting earnings durability even without nonrecurring grant income .
Funding mix improving: deposits up +$377M YoY; borrowings lower vs YE’23, suggesting reduced funding cost pressure and potential for further NIM support if rates decline .
ECIP optionality is a catalyst: execution of the repurchase option and deep-impact lending metrics could unlock value (continued 0.50% preferred dividend rate next year and potential future repurchase), contingent on sustained lending mix .
Watch asset quality: NPLs rose to 1.18% and net charge-offs increased; concentration in construction/multifamily warrants monitoring as growth continues .
SBA and digital initiatives: Management flagged “significant traction” in SBA loans and launched PonceDirect, which may enhance fee income and improve operating leverage over time .
No formal guidance and no transcript: Position sizing should account for limited near-term disclosure on revenue/EPS/tax rate; focus on quarterly trends and ECIP milestones while awaiting future updates .
Near-term trading lens: Positive narrative around NIM and ECIP optionality vs. cautious stance on asset quality; any updates on credit costs or ECIP progress could be stock-moving catalysts .

Additional Q4 2024 relevant press release: company’s participation in a virtual bank conference on Dec 11, 2024 .

Ponce Financial Group, Inc. (PDLB)·Q4 2024 Earnings Summary