Regulatory Capital Requirements

9 Months Ended

Sep. 30, 2023

Disclosure Of Regulatory Capital Requirements [Abstract]

Note 15. Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal Reserve Board, the OCC and the U.S. Department of Housing and Urban Development. Failure to meet minimum capital requirements can initiate certain

mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s operations and financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation require the maintenance of minimum amounts and ratios (set forth in the table below) of total risk-based and Tier 1 capital to risk-weighted assets (as defined), common equity Tier 1 capital (as defined), and Tier 1 capital to adjusted total assets (as defined) adjusted total assets (as defined). As of September 30, 2023 and December 31, 2022, the applicable capital adequacy requirements specified below have been met.

The below minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions including dividend payments and certain discretionary bonus payments to executive officers. The applicable capital buffer for the Bank was 17.10% at September 30, 2023 and 22.53% at December 31, 2022.

The most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain minimum total risk-based, common equity risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There were no conditions or events since then that have changed the Bank's category.

The Company's and the Bank’s actual capital amounts and ratios as of September 30, 2023 and December 31, 2022 as compared to regulatory requirements are as follows:


									To Be Well
									Capitalized Under
						For Capital			Prompt Corrective
	Actual					Adequacy Purposes			Action Provisions
	Amount		Ratio			Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
September 30, 2023
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	530,056		27.07	%	$	156,624	8.00%	$	195,780		10.00	%
Tier 1 Capital to Risk-Weighted Assets		505,508		25.82	%		117,468	6.00%		156,624		8.00	%
Common Equity Tier 1 Capital Ratio		505,508		25.82	%		88,101	4.50%		127,257		6.50	%
Tier 1 Capital to Total Assets		505,508		19.90	%		101,597	4.00%		126,996		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	488,108		25.10	%	$	155,543	8.00%	$	194,429		10.00	%
Tier 1 Capital to Risk-Weighted Assets		463,727		23.85	%		116,657	6.00%		155,543		8.00	%
Common Equity Tier 1 Capital Ratio		463,727		23.85	%		87,493	4.50%		126,379		6.50	%
Tier 1 Capital to Total Assets		463,727		17.51	%		105,950	4.00%		132,437		5.00	%


											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2022
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	530,241		33.72	%	$	125,791		8.00	%	$	157,238		10.00	%
Tier 1 Capital to Risk-Weighted Assets		510,537		32.47	%		94,343		6.00	%		125,791		8.00	%
Common Equity Tier 1 Capital Ratio		510,537		32.47	%		70,757		4.50	%		102,205		6.50	%
Tier 1 Capital to Total Assets		510,537		26.29	%		77,665		4.00	%		97,082		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	476,519		30.53	%	$	124,883		8.00	%	$	156,104		10.00	%
Tier 1 Capital to Risk-Weighted Assets		456,816		29.26	%		93,662		6.00	%		124,883		8.00	%
Common Equity Tier 1 Capital Ratio		456,816		29.26	%		70,247		4.50	%		101,468		6.50	%
Tier 1 Capital to Total Assets		456,816		20.47	%		89,264		4.00	%		111,580		5.00	%

Ponce Bank, through its Mortgage World division, is subject to various net worth requirements in connection with lending agreements that Ponce Bank has entered with purchase facility lenders. Failure to maintain minimum capital requirements could result in the Bank’s Mortgage World division being unable to originate and service loans, and, therefore, could have a direct material effect on the Company’s consolidated financial statements.

The Bank's minimum net worth requirements as of September 30, 2023 and December 31, 2022 are reflected below:


	Minimum
	Requirement
	(in thousands)
September 30, 2023
HUD	$	1,000


	Minimum
	Requirement
	(in thousands)
December 31, 2022
HUD	$	1,000

As of September 30, 2023 and December 31, 2022, the Bank was in compliance with the applicable minimum capital requirements specified above.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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