• Ponce Financial Group, Inc. Reports Fourth Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 30 Jan 2023 16:19:05   America/New_York

    NEW YORK, Jan. 30, 2023 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the fourth quarter of 2022.

    Fourth Quarter Highlights (Compared to Prior Periods):

    • Net loss of ($9.2) million or ($0.40) per diluted share, for the three months ended December 31, 2022, as compared to net loss of ($14.7) million, or ($0.64) per diluted share for the three months ended September 30, 2022 and net income of $15.0 million, or $0.89 per diluted share for the three months ended December 31, 2021.
    • Included in the ($9.2) million 2022 fourth quarter results is a  $10.4 million increase in net provision for loan loss reserves/unused commitments to our Grain-originated microloan portfolio, as well as a reversal of $0.8 million of loan origination income that had been taken upfront (as opposed to deferred over the life of the loan).
    • Net interest income of $16.2 million  for the fourth quarter of 2022 decreased $1.4 million, or 8.21%, from the prior quarter and $0.6 million, or 3.67%, from the same quarter last year, largely due to an increase in funding costs driven by the significant increase in interest rates during the quarter.
    • Net interest margin was 2.98% for the fourth quarter of 2022, a decrease from 3.62% for the prior quarter and from 4.51% for the same quarter last year. The reduction was largely attributable to an increase of lower yielding securities in the Company's portfolio and to an increase in the cost of funds.
    • Securities totaled $640.3 million as of  December 31, 2022, an increase of $526.0 million, or 460.31%, from December 31, 2021.
    • Net loans receivable were $1.49 billion as of  December 31, 2022, an increase of $188.0 million, or 14.41%, from December 31, 2021. The increase of $188.0 million was attributable to a $304.8 million net increase in non-PPP loans partially offset by a $116.7 million decrease in PPP loans.
    • Deposits were $1.25 billion as of December 31, 2022, an increase of $47.7 million, or 3.96%, from December 31, 2021.

    President and Chief Executive Officer’s Comments

    Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “We took action this quarter, within applicable guidelines, to further reduce future exposure to our consumer microloan program with Grain by reducing available credit lines for many borrowers. Grain unused credit line exposure was reduced from $15.3 million at the end of the third quarter of 2022 to $0.4 million at the end of the fourth quarter of 2022. We also increased our allowance for loan losses for this portfolio to $15.4 million, leaving us with total possible remaining exposure, inclusive of unused commitments, of $3.2 million at year-end, down from previous exposure of $28.6 million at the end of the third quarter. We also retained $1.4 million of security deposits from Grain borrowers, which may be available to offset the remaining exposure. While we are winding down our partnership with Grain, we will continue to explore and foster other partnerships, to invest in our people and in efficiency enhancing technologies and to use all available capital management tools to deliver value to our stakeholders as a nationally recognized MDI and CDFI institution.

    Mr. Naudon continued, “Looking to the coming year, we are focused on successfully navigating a dramatically changed environment compared to a year ago in terms of credit costs and economic uncertainty. We are keenly aware, as many others in our industry have pointed out, that the road ahead will continue to be more volatile as we navigate through this necessary adjustment from an extended period of ultra-low interest rates. Fortunately for Ponce, during 2022 we significantly increased our capital base, both due to the second-step conversion as well as the $225 million sale of our perpetual preferred stock to the U.S. Department of the Treasury, as evidenced by our strong capital ratios. Our financial strength provides significant capacity for future growth, but we will be patient and judicious in deploying this capital while at the same time making use of our strength to support underserved but not undeserving members of our communities.”

    Executive Chairman’s Comment

    Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman, added, “Despite a challenging environment, we were able to add almost $200 million to our loan portfolio across most categories during the quarter. We saw healthy growth in our multi-family loan and non-qualified mortgage portfolios. The loan portfolio, excluding Grain originations, continues to show great resiliency and continues to enjoy low LTVs”.

    Selected performance metrics are as follows (refer to “Key Metrics” for additional information):

      At or for the Three Months Ended
    		 
      December 31,
    		 September 30,
    		 June 30,
    		 March 31,
    		 December 31,
    		 
    Performance Ratios (Annualized): 2022
    		 2022
    		 2022
    		 2022
    		 2021
    		 
    Return on average assets (1)  (1.62%)  (2.80%)  0.17%  (1.55%)  3.69% 
    Return on average equity (1)  (7.28%)  (11.25%)  1.01%  (10.06%)  31.46% 
    Net interest rate spread (1) (2)  2.14%  3.12%  3.86%  4.48%  4.32% 
    Net interest margin (1) (3)  2.98%  3.62%  4.10%  4.68%  4.51% 
    Non-interest expense to average assets (1)  2.78%  4.83%  3.73%  6.39%  3.90% 
    Efficiency ratio (4)  94.95%  132.46%  93.77%  143.50%  44.10% 
    Average interest-earning assets to average interest- bearing liabilities  151.73%  161.30%  151.98%  145.54%  138.10% 
    Average equity to average assets  22.32%  24.90%  17.32%  15.76%  11.71% 


      At or for the Three Months Ended
    		 
      December 31,
    		 September 30,
    		 June 30,
    		 March 31,
    		 December 31,
    		 
    Capital Ratios (Annualized): 2022
    		 2022
    		 2022
    		 2022
    		 2021
    		 
    Total capital to risk weighted assets (Bank only)  30.53%  33.39%  36.00%  23.27%  17.23% 
    Tier 1 capital to risk weighted assets (Bank only)  29.26%  32.13%  34.75%  22.02%  15.98% 
    Common equity Tier 1 capital to risk-weighted assets (Bank only)  29.26%  32.13%  34.75%  22.02%  15.98% 
    Tier 1 capital to average assets (Bank only)  20.47%  22.91%  28.79%  14.88%  10.95% 


      At or for the Three Months Ended
    		 
      December 31,
    		 September 30,
    		 June 30,
    		 March 31,
    		 December 31,
    		 
    Asset Quality Ratios (Annualized): 2022
    		 2022
    		 2022
    		 2022
    		 2021
    		 
    Allowance for loan losses as a percentage of total loans  2.27%  1.77%  1.31%  1.28%  1.24% 
    Allowance for loan losses as a percentage of nonperforming loans  252.33%  118.43%  94.05%  106.84%  142.90% 
    Net (charge-offs) recoveries to average outstanding loans (1)  (0.85%)  (0.52%)  (0.05%)  (0.22%)  (0.18%) 
    Non-performing loans as a percentage of total gross loans  0.90%  1.50%  1.39%  1.20%  0.87% 
    Non-performing loans as a percentage of total assets  0.59%  0.97%  0.90%  0.97%  0.69% 
    Total non-performing assets as a percentage of total assets  0.59%  0.97%  0.90%  0.97%  0.69% 
    Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets  0.78%  1.16%  1.14%  1.30%  1.07% 
    1. Annualized where appropriate.
    2. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
    3. Net interest margin represents net interest income divided by average total interest-earning assets.
    4. Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

    Summary of Results of Operations

    Net loss for the year ended December 31, 2022, was ($30.0) million compared to net income of $25.4 million for the year ended December 31, 2021. This variance was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation this year, gains on property sales last year versus a loss on equipment sale this year, higher compensation and occupancy expenses and a reduction on the income on sale of mortgage loans.

    Net Interest Income and Net Margin

    Net interest income for the year ended December 31, 2022, was $66.6 million compared to $58.8 million for the year ended December 31, 2021. This increase is largely explained by the increases in the securities and loan portfolios.

    Net interest margin was 3.75% for the year ended December 31, 2022 compared to 4.13% for the same period last year, a decrease of 38bps. The decrease in net interest margin was a result of an increase in the cost of funds driven by higher interest rates as well as a higher proportion of investment securities within interest-earning assets. These securities offer lower yields versus traditional loans. 

    Non-interest Income

    Non-interest income for the three months ended December 31, 2022, was $0.4 million, a decrease of $1.1 million, or 72.29%, compared to the three months ended September 30, 2022 and a decrease of $18.7 million, or 97.72%, compared to the three months ended December 31, 2021.

    The $1.1 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended September 30, 2022 was impacted by the reversal of loan origination income that had been taken upfront (as opposed to deferred) as well as lower income on sale of mortgage loans.

    The $18.7 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 was attributable to the non-recurring  $15.4 million gains on sale of property last year, a $1.4 million reduction in  loan origination fees and a $1.3 million reduction in income on sale of mortgage loans.

    Non-interest income for the year ended December 31, 2022, decreased $28.2 million, or 81.47%, to $6.4 million compared to $34.6 million for the year ended December 31, 2021. The decrease is primarily due to $20.3 million gains on sale of property last year versus a loss on sale of equipment of $0.4 million, a $4.5 million reduction in income on sale of mortgage loans and a $1.7 million reduction in  loan origination fees this year.

    Non-interest Expense

    Non-interest expense for the three months ended December 31, 2022, was $15.8 million, a decrease of  $9.7 million, or 37.97%, compared to the three months ended September 30, 2022 and  $0.1 million, or 0.56%, compared to the three months ended December 31, 2021. The $9.7 million decrease from the three months ended September 30, 2022 was mainly attributable to the Grain write-off and write-down in the third quarter and to a lesser extent, a decrease in compensation and benefits expense as we reduced the bonus accrual during the fourth quarter. The $0.1 million decrease from the three months ended December 31, 2021 was attributable to a decrease of $0.6 million in direct loan expense, a $0.5 million recovery of Grain charge-offs and a decrease of $0.5 million in compensation and benefits expense, offset by increases of $0.9 million in occupancy and equipment, mainly due to rental expenses incurred after the sale of property during 2021 and $0.3 million in data processing expenses.

    Non-interest expense for the year ended December 31, 2022, was $85.8 million, an increase of $28.7 million or 50.19%, compared to $57.1 million the year ended December 31, 2021. The $28.7 million increase in non-interest expense was attributable to the $17.9 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $4.7 million in compensation and benefits expense, $2.6 million in occupancy and equipment expenses, $0.8 million in data processing expenses, $0.5 million in other operating expenses, $0.4 million in marketing and promotional expenses and $0.3 million in insurance and surety bond premiums. These items were partially offset by decreases of $1.7 million in professional fees, $1.4 million in direct loan expenses and $0.5 million in office supplies, telephone and postage.

    Balance Sheet Summary

    Total assets increased $658.5 million, or 39.82%, to $2.31 billion as of December 31, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $509.9 million resulting from the purchases in held-to-maturity securities utilizing the $225.0 million received from the issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program. The increase in total assets is further impacted by increases of $188.0 million in net loans receivable (inclusive of a $116.7 million net decrease in PPP loans), $33.4 million in right of use assets, $18.7 million in Federal Home Loan Bank of New York stock, $16.2 million resulting from the purchase of available-for-sale securities and $12.3 million in deferred tax assets. These increases are partially offset by decreases of $99.5 million in cash and equivalents, $13.9 million in mortgage loans held for sale, at fair value and $6.2 million in other assets.

    Total liabilities increased $355.0 million, or 24.25%, to $1.82 billion as of December 31, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $411.1 million in advances from FHLBNY, $47.7 million in deposits, and $34.5 million in operating lease liabilities, offset by decreases of $122.0 million in subscription liabilities related to the conversion of the mutual holding company to a stock company held as of December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022 and $15.1 million in warehouse lines of credit.

    Total stockholders’ equity increased $303.4 million, or 160.34%, to $492.7 million as of December 31, 2022, from $189.3 million as of December 31, 2021. This increase in stockholders’ equity was largely attributable to the $225.0 million issuance of preferred stock to the U.S. Department of the Treasury pursuant to its Emergency Capital Investment Program and the $118.0 million received as a result of the sale of common stock in the conversion of the mutual holding company to a stock company.

    About Ponce Financial Group, Inc.

    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, is the holding company for Ponce Bank. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank’s business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those funds, together with funds generated from operations and borrowings, in mortgage loans, consisting of 1-4 family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

    Forward Looking Statements

    Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; anticipated losses with respect to the Company's investment in Grain; the anticipated impact of the COVID-19 pandemic and Ponce Bank’s attempts at mitigation; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank’s market area; Ponce Bank’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Consolidated Statements of Financial Condition
    (Dollars in thousands, except for share data)

                   
     As of 
     December 31,  September 30,  June 30,  March 31,  December 31, 
     2022  2022  2022  2022  2021 
    ASSETS              
    Cash and due from banks:              
    Cash$34,074  $37,235  $53,544  $32,168  $98,954 
    Interest-bearing deposits in banks 20,286   25,286   221,262   37,127   54,940 
    Total cash and cash equivalents 54,360   62,521   274,806   69,295   153,894 
    Available-for-sale securities, at fair value 129,505   131,977   140,044   154,799   113,346 
    Held-to-maturity securities, at amortized cost 510,820   494,297   211,517   927   934 
    Placement with banks 1,494   2,490   2,490   2,490   2,490 
    Mortgage loans held for sale, at fair value 1,979   3,357   9,234   7,972   15,836 
    Loans receivable, net 1,493,127   1,392,553   1,324,320   1,300,446   1,305,078 
    Accrued interest receivable 15,049   14,063   13,255   12,799   12,362 
    Premises and equipment, net 17,446   17,759   18,945   19,279   19,617 
    Right of use assets 33,423   34,121   34,416   35,179   — 
    Federal Home Loan Bank of New York stock (FHLBNY), at cost 24,661   14,272   16,429   5,420   6,001 
    Deferred tax assets 16,137   13,822   9,658   7,440   3,820 
    Other assets 13,988   11,170   21,585   13,730   20,132 
    Total assets$2,311,989  $2,192,402  $2,076,699  $1,629,776  $1,653,510 
    LIABILITIES AND STOCKHOLDERS' EQUITY              
    Liabilities:              
    Deposits$1,252,412  $1,351,189  $1,148,728  $1,181,165  $1,204,716 
    Operating lease liabilities 34,532   35,081   35,217   35,821   — 
    Accrued interest payable 1,390   854   158   223   228 
    Advance payments by borrowers for taxes and insurance 9,724   10,589   8,668   10,161   7,657 
    Advances from the FHLBNY and others 517,375   286,375   334,375   93,375   106,255 
    Warehouse lines of credit —   —   —   753   15,090 
    Mutual holding company conversion subscription liabilities —   —   —   —   122,000 
    Other liabilities 3,856   7,631   31,471   8,699   8,308 
    Total liabilities 1,819,289   1,691,719   1,558,617   1,330,197   1,464,254 
    Commitments and contingencies              
    Stockholders' Equity:              
    Preferred stock, $0.01 par value; 100,000,000 shares authorized 225,000   225,000   225,000   —   — 
    Common stock, $0.01 par value; 200,000,000  shares authorized 249   247   247   247   185 
    Treasury stock, at cost (2)  —   —   —   (13,687)
    Additional paid-in-capital 206,508   206,092   205,669   205,243   85,601 
    Retained earnings 92,955   102,169   116,907   116,136   122,956 
    Accumulated other comprehensive loss (17,860)  (18,420)  (15,032)  (7,035)  (1,456)
    Unearned compensation ─ ESOP (14,150)  (14,405)  (14,709)  (15,012)  (4,343)
    Total stockholders' equity 492,700   500,683   518,082   299,579   189,256 
    Total liabilities and stockholders' equity$2,311,989  $2,192,402  $2,076,699  $1,629,776  $1,653,510 


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Consolidated Statements of Operations
    (Dollars in thousands, except per share data)

     Three Months Ended 
     December 31,  September 30,  June 30,  March 31,  December 31, 
     2022  2022  2022  2022  2021 
    Interest and dividend income:              
    Interest on loans receivable$18,550  $17,058  $16,057  $18,200  $18,013 
    Interest on deposits due from banks 199   346   132   36   7 
    Interest and dividend on securities and FHLBNY stock 6,184   4,230   978   782   632 
    Total interest and dividend income 24,933   21,634   17,167   19,018   18,652 
    Interest expense:              
    Interest on certificates of deposit 1,310   687   677   803   907 
    Interest on other deposits 4,125   1,543   521   284   309 
    Interest on borrowings 3,332   1,793   481   593   654 
    Total interest expense 8,767   4,023   1,679   1,680   1,870 
    Net interest income 16,166   17,611   15,488   17,338   16,782 
    Provision for loan losses 12,641   9,330   817   1,258   873 
    Net interest income after provision for loan losses 3,525   8,281   14,671   16,080   15,909 
    Non-interest income:              
    Service charges and fees 481   464   445   440   468 
    Brokerage commissions 180   288   214   338   401 
    Late and prepayment charges 263   109   193   58   336 
    Income on sale of mortgage loans 7   116   200   418   1,294 
    Loan origination(1) (557)  522   696   625   886 
    (Loss) gain on sale of premises and equipment —   (436)  —   —   15,431 
    Other 63   514   431   347   353 
    Total non-interest income 437   1,577   2,179   2,226   19,169 
    Non-interest expense:              
    Compensation and benefits 6,501   7,377   6,911   7,125   6,959 
    Occupancy and equipment 3,928   3,611   3,237   3,192   3,007 
    Data processing expenses 1,114   994   824   847   771 
    Direct loan expenses 454   654   505   874   1,032 
    Insurance and surety bond premiums 270   297   156   147   149 
    Office supplies, telephone and postage 375   369   406   405   552 
    Professional fees 1,571   1,251   1,748   1,334   1,700 
    Contribution to the Ponce De Leon Foundation —   —   —   4,995   — 
    Grain write-off and write-down (515)  8,881   1,500   8,074   — 
    Marketing and promotional expenses 256   214   52   71   69 
    Directors fees 112   89   96   71   80 
    Regulatory assessment 84   99   71   83   69 
    Other operating expenses 1,615   1,580   1,061   856   1,466 
    Total non-interest expense 15,765   25,416   16,567   28,074   15,854 
    (Loss) income before income taxes (11,803)  (15,558)  283   (9,768)  19,224 
    (Benefit) provision for income taxes (2,589)  (820)  (488)  (2,948)  4,245 
    Net (loss) income$(9,214) $(14,738) $771  $(6,820) $14,979 
    (Loss) earnings per common share:              
    Basic$(0.40) $(0.64) $0.03  $(0.31) $0.90 
    Diluted$(0.40) $(0.64) $0.03  $(0.31) $0.89 
    Weighted average common shares outstanding:              
    Basic 23,168,097   23,094,859   23,056,559   21,721,113   16,864,929 
    Diluted 23,168,097   23,094,859   23,128,911   21,721,113   16,924,785 
    1. Amounts for the quarterly period ended December 31, 2022 include the reversal of $0.8 million of loan origination income that had been taken upfront in prior quarters of 2022 (as opposed to deferred over the life of ‎the loan)‎.


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Consolidated Statements of Operations
    (Dollars in thousands, except per share data)

      For the Years Ended December 31, 
      2022  2021  Variance $  Variance % 
    Interest and dividend income:            
    Interest on loans receivable $69,865  $65,532  $4,333   6.61%
    Interest on deposits due from banks  713   20   693   3,465.00%
    Interest and dividend on securities and FHLBNY stock  12,174   1,546   10,628   687.45%
    Total interest and dividend income  82,752   67,098   15,654   23.33%
    Interest expense:            
    Interest on certificates of deposit  3,477   4,244   (767)  (18.07%)
    Interest on other deposits  6,473   1,427   5,046   353.61%
    Interest on borrowings  6,199   2,581   3,618   140.18%
    Total interest expense  16,149   8,252   7,897   95.70%
    Net interest income  66,603   58,846   7,757   13.18%
    Provision for loan losses  24,046   2,717   21,329   785.02%
    Net interest income after provision for loan losses  42,557   56,129   (13,572)  (24.18%)
    Non-interest income:            
    Service charges and fees  1,830   1,657   173   10.44%
    Brokerage commissions  1,020   1,324   (304)  (22.96%)
    Late and prepayment charges  623   1,207   (584)  (48.38%)
    Income on sale of mortgage loans  741   5,265   (4,524)  (85.93%)
    Loan origination  1,286   3,021   (1,735)  (57.43%)
    (Loss) gain on sale of premises and equipment  (436)  20,270   (20,706)  (102.15%)
    Other  1,355   1,893   (538)  (28.42%)
    Total non-interest income  6,419   34,637   (28,218)  (81.47%)
    Non-interest expense:            
    Compensation and benefits  27,914   23,262   4,652   20.00%
    Occupancy and equipment  13,968   11,328   2,640   23.31%
    Data processing expenses  3,779   3,015   764   25.34%
    Direct loan expenses  2,487   3,888   (1,401)  (36.03%)
    Insurance and surety bond premiums  870   585   285   48.72%
    Office supplies, telephone and postage  1,555   2,054   (499)  (24.29%)
    Professional fees  5,904   7,629   (1,725)  (22.61%)
    Contribution to the Ponce De Leon Foundation  4,995   —   4,995   —%
    Grain write-off and write-down  17,940   —   17,940   —%
    Marketing and promotional expenses  593   206   387   187.86%
    Directors fees  368   285   83   29.12%
    Regulatory assessment  337   323   14   4.33%
    Other operating expenses  5,112   4,567   545   11.93%
    Total non-interest expense  85,822   57,142   28,680   50.19%
    (Loss) income before income taxes  (36,846)  33,624   (70,470)  (209.58%)
    (Benefit) provision for income taxes  (6,845)  8,209   (15,054)  (183.38%)
    Net (loss) income $(30,001) $25,415  $(55,416)  (218.04%)
    (Loss) earnings per common share:            
    Basic $(1.32) $1.52  $(2.84)  (187.11%)
    Diluted $(1.32) $1.51  $(2.84)  (187.35%)
    Weighted average common shares outstanding:            
    Basic  22,690,943   16,744,561   5,946,382   35.51%
    Diluted  22,690,943   16,791,443   5,899,500   35.13%


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Key Metrics

     At or for the Three Months Ended
    		 
     December 31,  September 30,  June 30,  March 31,  December 31,  
     2022  2022  2022  2022  2021  
    Performance Ratios:               
    Return on average assets (1) (1.62%)  (2.80%)  0.17%  (1.55%)  3.69% 
    Return on average equity (1) (7.28%)  (11.25%)  1.01%  (10.06%)  31.46% 
    Net interest rate spread (1) (2) 2.14%  3.12%  3.86%  4.48%  4.32% 
    Net interest margin (1) (3) 2.98%  3.62%  4.10%  4.68%  4.51% 
    Non-interest expense to average assets (1) 2.78%  4.83%  3.73%  6.39%  3.90% 
    Efficiency ratio (4) 94.95%  132.46%  93.77%  143.50%  44.10% 
    Average interest-earning assets to average interest- bearing liabilities 151.73%  161.30%  151.98%  145.54%  138.10% 
    Average equity to average assets 22.32%  24.90%  17.32%  15.76%  11.71% 
    Capital Ratios:               
    Total capital to risk weighted assets (Bank only) 30.53%  33.39%  36.00%  23.27%  17.23% 
    Tier 1 capital to risk weighted assets (Bank only) 29.26%  32.13%  34.75%  22.02%  15.98% 
    Common equity Tier 1 capital to risk-weighted assets (Bank only) 29.26%  32.13%  34.75%  22.02%  15.98% 
    Tier 1 capital to average assets (Bank only) 20.47%  22.91%  28.79%  14.88%  10.95% 
    Asset Quality Ratios:               
    Allowance for loan losses as a percentage of total loans 2.27%  1.77%  1.31%  1.28%  1.24% 
    Allowance for loan losses as a percentage of nonperforming loans 252.33%  118.43%  94.05%  106.84%  142.90% 
    Net (charge-offs) recoveries to average outstanding loans (1) (0.85%)  (0.52%)  (0.05%)  (0.22%)  (0.18%) 
    Non-performing loans as a percentage of total gross loans 0.90%  1.50%  1.39%  1.20%  0.87% 
    Non-performing loans as a percentage of total assets 0.59%  0.97%  0.90%  0.97%  0.69% 
    Total non-performing assets as a percentage of total assets 0.59%  0.97%  0.90%  0.97%  0.69% 
    Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets 0.78%  1.16%  1.14%  1.30%  1.07% 
    Other:               
    Number of offices 18   18   18   18   19  
    Number of full-time equivalent employees 253   257   253   223   217  
                    
    1. Annualized where appropriate.
    2. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
    3. Net interest margin represents net interest income divided by average total interest-earning assets.
    4. Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Securities Portfolio

      December 31, 2022  December 31, 2021 
         Gross  Gross        Gross  Gross    
      Amortized  Unrealized  Unrealized     Amortized  Unrealized  Unrealized    
      Cost  Gains  Losses  Fair Value  Cost  Gains  Losses  Fair Value 
      (in thousands)  (in thousands) 
    Available-for-Sale Securities:                        
    U.S. Government Bonds $2,985  $—  $(296) $2,689  $2,981  $—  $(47) $2,934 
    Corporate Bonds  25,824   —   (2,465)  23,359   21,243   144   (203)  21,184 
    Mortgage-Backed Securities:                        
    Collateralized Mortgage Obligations(1)  44,503   —   (6,726)  37,777   18,845   —   (497)  18,348 
    FHLMC Certificates  11,310   —   (1,676)  9,634   —   —   —   — 
    FNMA Certificates  67,199   —   (11,271)  55,928   71,930   —   (1,231)  70,699 
    GNMA Certificates  122   —   (4)  118   175   6   —   181 
    Total available-for-sale securities $151,943  $—  $(22,438) $129,505  $115,174  $150  $(1,978) $113,346 
                             
    Held-to-Maturity Securities:                        
    U.S. Agency Bonds $35,000  $—  $(380) $34,620  $—  $—  $—  $— 
    Corporate Bonds  82,500   57   (3,819)  78,738   —   —   —   — 
    Mortgage-Backed Securities:                        
    Collateralized Mortgage Obligations(1)  235,479   192   (5,558)  230,113   —   —   —   — 
    FHLMC Certificates  4,120   —   (268)  3,852   934   —   (20)  914 
    FNMA Certificates  131,918   —   (5,227)  126,691   —   —   —   — 
    SBA Certificates  21,803   34   —   21,837   —   —   —   — 
    Total held-to-maturity securities $510,820  $283  $(15,252) $495,851  $934  $—  $(20) $914 
    1. Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Loan Portfolio

      As of 
      December 31,  September 30,  June 30,  March 31,  December 31, 
      2022  2022  2022  2022  2021 
      Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
      (Dollars in thousands) 
    Mortgage loans:                              
    1-4 family residential                              
    Investor Owned $343,968   22.54% $336,667   23.79% $321,671   24.02% $323,442   24.59% $317,304   24.01%
    Owner-Occupied  134,878   8.84%  112,749   7.97%  100,048   7.47%  95,234   7.24%  96,947   7.33%
    Multifamily residential  494,667   32.42%  421,917   29.81%  396,470   29.60%  368,133   27.98%  348,300   26.34%
    Nonresidential properties  308,043   20.19%  282,642   19.97%  279,877   20.90%  251,893   19.14%  239,691   18.13%
    Construction and land  185,018   12.13%  197,437   13.95%  165,425   12.35%  144,881   11.01%  134,651   10.19%
    Total mortgage loans  1,466,574   96.12%  1,351,412   95.49%  1,263,491   94.34%  1,183,583   89.96%  1,136,893   86.00%
    Non-mortgage loans:                              
    Business loans (1)  39,965   2.62%  41,398   2.92%  45,720   3.41%  100,253   7.62%  150,512   11.38%
    Consumer loans (2)  19,129   1.26%  22,563   1.59%  30,198   2.25%  31,899   2.42%  34,693   2.62%
    Total non-mortgage loans  59,094   3.88%  63,961   4.51%  75,918   5.66%  132,152   10.04%  185,205   14.00%
    Total loans, gross  1,525,668   100.00%  1,415,373   100.00%  1,339,409   100.00%  1,315,735   100.00%  1,322,098   100.00%
                                   
    Net deferred loan origination costs  2,051      2,288      2,446      1,604      (668)   
    Allowance for losses on loans  (34,592)     (25,108)     (17,535)     (16,893)     (16,352)   
                                   
    Loans, net $1,493,127     $1,392,553     $1,324,320     $1,300,446     $1,305,078    
    1. As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, business loans include $20.0 million, $24.7 million, $30.8 million, $86.0 million and $136.8 million, respectively, of PPP loans.
    2. As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, consumer loans include $18.2 million, $21.5 million, $28.3 million, $31.0 million and $33.9 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Grain Loan Exposure

    Grain Technologies, Inc. ("Grain") Total Exposure as of December 31, 2022 
    (in thousands) 
    Receivable from Grain   
    Microloans originated - put back to Grain (inception-to-December 31, 2022) $25,467 
    Write-downs, net of recoveries (year to date as of December 31, 2022)  (17,455)
    Cash receipts from Grain (inception-to-December 31, 2022)  (6,186)
    Grant/reserve  (1,826)
    Net receivable as of December 31, 2022 $— 
    Microloan receivables from Grain Borrowers   
    Grain originated loans receivable as of December 31, 2022 $18,158 
    Allowance for loan losses as of December 31, 2022(1)  (15,415)
    Microloans, net of allowance for loan losses as of December 31, 2022 $2,743 
    Investments   
    Investment in Grain $1,000 
    Investment in Grain write-off in Q3 2022  (1,000)
    Investment in Grain as of December 31, 2022  — 
    Total exposure to Grain as of December 31, 2022 $2,743 
    1. Includes $0.03 million for allowance for unused commitments on the $0.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.4 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.

    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Allowance for Loan Losses

     For the Three Months Ended 
     December 31,  September 30,  June 30,  March 31,  December 31, 
     2022  2022  2022  2022  2021 
     (Dollars in thousands) 
    Allowance for loan losses at beginning of the period$25,108  $17,535  $16,893  $16,352  $16,008 
    Provision for loan losses 12,641   9,330   817   1,258   873 
    Charge-offs:              
    Mortgage loans:              
    1-4 family residences              
    Investor owned —   —   —   —   — 
    Owner occupied —   —   —   —   — 
    Multifamily residences —   —   —   —   (38)
    Nonresidential properties —   —   —   —   — 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   —   —   —   — 
    Consumer (3,659)  (1,799)  (450)  (751)  (560)
    Total charge-offs (3,659)  (1,799)  (450)  (751)  (598)
    Recoveries:              
    Mortgage loans:              
    1-4 family residences              
    Investor owned —   —   156   —   8 
    Owner occupied —   39   —   —   45 
    Multifamily residences —   —   —   —   — 
    Nonresidential properties —   —   —   —   — 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   1   91   2   15 
    Consumer 502   2   28   32   1 
    Total recoveries 502   42   275   34   69 
    Net (charge-offs) recoveries (3,157)  (1,757)  (175)  (717)  (529)
    Allowance for loan losses at end of the period$34,592  $25,108  $17,535  $16,893  $16,352 


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Deposits

      As of 
      December 31,  September 30,  June 30,  March 31,  December 31, 
      2022  2022  2022  2022  2021 
      Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
      (Dollars in thousands) 
    Demand $289,149   23.08% $288,654   21.37% $284,462   24.77% $281,132   23.81% $274,956   22.83%
    Interest-bearing deposits:                              
    NOW/IOLA accounts  24,349   1.94%  28,799   2.13%  28,597   2.49%  33,010   2.79%  35,280   2.93%
    Money market accounts  317,815   25.38%  360,293   26.66%  181,156   15.77%  169,847   14.38%  186,893   15.51%
    Reciprocal deposits  114,049   9.11%  162,858   12.05%  151,264   13.17%  160,510   13.59%  143,221   11.89%
    Savings accounts  130,432   10.41%  140,055   10.37%  139,244   12.12%  133,966   11.34%  134,887   11.20%
    Total NOW,  money market, reciprocal and savings accounts  586,645   46.84%  692,005   51.21%  500,261   43.55%  497,333   42.10%  500,281   41.53%
    Certificates of deposit of $250K or more  70,113   5.60%  61,900   4.58%  65,157   5.67%  75,130   6.36%  78,454   6.51%
    Brokered certificates of deposit(1)  98,754   7.89%  98,760   7.31%  62,650   5.45%  79,282   6.71%  79,320   6.58%
    Listing service deposits(1)  35,813   2.86%  40,964   3.03%  48,953   4.26%  53,876   4.56%  66,411   5.51%
    All other certificates of deposit less than $250K  171,938   13.73%  168,906   12.50%  187,245   16.30%  194,412   16.46%  205,294   17.04%
    Total certificates of deposit  376,618   30.08%  370,530   27.42%  364,005   31.68%  402,700   34.09%  429,479   35.64%
    Total interest-bearing deposits  963,263   76.92%  1,062,535   78.63%  864,266   75.23%  900,033   76.19%  929,760   77.17%
    Total deposits $1,252,412   100.00% $1,351,189   100.00% $1,148,728   100.00% $1,181,165   100.00% $1,204,716   100.00%
    1. As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021,  there were $13.6 million, $13.8 million, $18.5 million, $19.0 million, and $29.0 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.

    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Nonperforming Assets

     As of Three Months Ended 
     December 31,  September 30,  June 30,  March 31,  December 31, 
     2022  2022  2022  2022  2021 
     (Dollars in thousands) 
    Non-accrual loans:              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$2,844  $5,902  $3,460  $3,596  $3,349 
    Owner occupied 961   971   1,140   962   1,284 
    Multifamily residential —   —   —   —   1,200 
    Nonresidential properties —   778   1,162   1,166   2,163 
    Construction and land 7,567   10,660   10,817   7,567   917 
    Non-mortgage loans:              
    Business —   359   —   —   — 
    Consumer —   —   —   —   — 
    Total non-accrual loans (not including non-accruing troubled debt restructured loans)$11,372  $18,670  $16,579  $13,291  $8,913 
                   
    Non-accruing troubled debt restructured loans:              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$217  $221  $224  $230  $234 
    Owner occupied 2,027   2,215   1,746   2,192   2,196 
    Multifamily residential —   —   —   —   — 
    Nonresidential properties 93   95   96   98   100 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   —   —   —   — 
    Consumer —   —   —   —   — 
    Total non-accruing troubled debt restructured loans 2,337   2,531   2,066   2,520   2,530 
    Total non-accrual loans$13,709  $21,201  $18,645  $15,811  $11,443 
                   
    Accruing troubled debt restructured loans:              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$2,207  $2,228  $2,246  $2,269  $3,089 
    Owner occupied 1,328   1,254   2,019   2,313   2,374 
    Multifamily residential —   —   —   —   — 
    Nonresidential properties 708   715   725   726   732 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   —   —   —   — 
    Consumer —   —   —   —   — 
    Total accruing troubled debt restructured loans$4,243  $4,197  $4,990  $5,308  $6,195 
    Total non-performing assets and accruing troubled debt restructured loans$17,952  $25,398  $23,635  $21,119  $17,638 
    Total non-performing loans to total gross loans 0.90%  1.50%  1.39%  1.20%  0.87%
    Total non-performing assets to total assets 0.59%  0.97%  0.90%  0.97%  0.69%
    Total non-performing assets and accruing troubled debt restructured loans to total assets 0.78%  1.16%  1.14%  1.30%  1.07%


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Average Balance Sheets

     For the Three Months Ended December 31,
     2022
    		 2021
     Average       Average      
     Outstanding     Average Outstanding     Average
     Balance  Interest  Yield/Rate(1) Balance  Interest  Yield/Rate (1)
     (Dollars in thousands)
    Interest-earning assets:               
    Loans(2)$1,478,308  $18,550  4.98% $1,320,635  $18,013  5.41%
    Securities(3) 636,457   5,931  3.70%  113,826   566  1.97%
    Other(4) 38,879   452  4.61%  43,346   73  0.67%
    Total interest-earning assets 2,153,644   24,933  4.59%  1,477,807   18,652  5.01%
    Non-interest-earning assets 96,051        134,798      
    Total assets$2,249,695       $1,612,605      
    Interest-bearing liabilities:               
    NOW/IOLA$25,349  $22  0.34% $29,771  $16  0.21%
    Money market 503,286   4,095  3.23%  340,334   259  0.30%
    Savings 139,115   8  0.02%  137,383   33  0.10%
    Certificates of deposit 368,895   1,310  1.41%  433,571   907  0.83%
    Total deposits 1,036,645   5,435  2.08%  941,059   1,215  0.51%
    Advance payments by borrowers 12,942   —  0.00%  10,361   1  0.04%
    Borrowings 369,832   3,332  3.57%  118,692   654  2.19%
    Total interest-bearing liabilities 1,419,419   8,767  2.45%  1,070,112   1,870  0.69%
    Non-interest-bearing liabilities:               
    Non-interest-bearing demand 325,616   —     320,074   —   
    Other non-interest-bearing liabilities 2,424   —     33,506   —   
    Total non-interest-bearing liabilities 328,040   —     353,580   —   
    Total liabilities 1,747,459   8,767     1,423,692   1,870   
    Total equity 502,236        188,913      
    Total liabilities and total equity$2,249,695     2.45% $1,612,605     0.69%
    Net interest income   $16,166       $16,782   
    Net interest rate spread(5)      2.14%       4.32%
    Net interest-earning assets(6)$734,225       $407,695      
    Net interest margin(7)      2.98%       4.51%
    Average interest-earning assets to interest-bearing liabilities      151.73%       138.10%
    1. Annualized where appropriate.
    2. Loans include loans and mortgage loans held for sale, at fair value.
    3. Securities include available-for-sale securities and held-to-maturity securities.
    4. Includes FHLBNY demand account and FHLBNY stock dividends.
    5. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
    6. Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    7. Net interest margin represents net interest income divided by average total interest-earning assets.


    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Average Balance Sheets

     For the Years Ended December 31, 
     2022  2021 
     Average        Average       
     Outstanding     Average  Outstanding     Average 
     Balance  Interest  Yield/Rate(1)  Balance  Interest  Yield/Rate 
     (Dollars in thousands) 
    Interest-earning assets:                 
    Loans(2)$1,375,723  $69,865   5.08% $1,312,505  $65,532   4.99%
    Securities(3) 357,446   11,709   3.28%  62,908   1,267   2.01%
    Other(4) 44,160   1,178   2.67%  51,156   299   0.58%
    Total interest-earning assets 1,777,329   82,752   4.66%  1,426,569   67,098   4.70%
    Non-interest-earning assets 164,324         89,152       
    Total assets$1,941,653        $1,515,721       
    Interest-bearing liabilities:                 
    NOW/IOLA$30,151  $65   0.22% $30,851  $109   0.35%
    Money market 393,555   6,275   1.59%  310,611   1,168   0.38%
    Savings 138,137   128   0.09%  133,244   146   0.11%
    Certificates of deposit 382,022   3,477   0.91%  430,164   4,244   0.99%
    Total deposits 943,865   9,945   1.05%  904,870   5,667   0.63%
    Advance payments by borrowers 11,514   5   0.04%  10,106   4   0.04%
    Borrowings 206,969   6,199   3.00%  121,319   2,581   2.13%
    Total interest-bearing liabilities 1,162,348   16,149   1.39%  1,036,295   8,252   0.80%
    Non-interest-bearing liabilities:                 
    Non-interest-bearing demand 344,505   —      287,008   —    
    Other non-interest-bearing liabilities 33,225   —      17,763   —    
    Total non-interest-bearing liabilities 377,730   —      304,771   —    
    Total liabilities 1,540,078   16,149      1,341,066   8,252    
    Total equity 401,575         174,655       
    Total liabilities and total equity$1,941,653      1.39% $1,515,721      0.80%
    Net interest income   $66,603        $58,846    
    Net interest rate spread(5)       3.27%        3.90%
    Net interest-earning assets(6)$614,981        $390,274       
    Net interest margin(7)       3.75%        4.13%
    Average interest-earning assets to                 
    interest-bearing liabilities       152.91%        137.66%
    1. Annualized where appropriate.
    2. Loans include loans and mortgage loans held for sale, at fair value.
    3. Securities include available-for-sale securities and held-to-maturity securities.
    4. Includes FHLBNY demand account and FHLBNY stock dividends.
    5. Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
    6. Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    7. Net interest margin represents net interest income divided by average total interest-earning assets.

    Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, and Subsidiaries
    Other Data

     As of 
     December 31,  September 30,  June 30,  March 31,  December 31, 
     2022  2022  2022  2022  2021 
    Other Data              
    Common shares issued 24,859,353   24,728,460   24,724,274   24,724,274   18,463,028 
    Less treasury shares —   —   —   —   1,037,041 
    Common shares outstanding at end of period 24,859,353   24,728,460   24,724,274   24,724,274   17,425,987 
                   
    Book value per common share$10.77  $11.15  $11.85  $12.12  $10.86 
    Tangible book value per common share$10.77  $11.15  $11.85  $12.12  $10.86 

    Contact:
    Frank Perez
    Frank.perez@poncebank.net
    718-931-9000

     


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