Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, Announces 2022 First Quarter Results

BRONX, New York, UNITED STATES


NEW YORK, May 09, 2022 (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”), reported a net loss of ($6.8 million), or ($0.31) per basic and diluted share, for the first quarter of 2022, compared to net income of $15.0 million, or $0.90 per basic and $0.89 per diluted share, for the prior quarter and net income of $2.5 million, or $0.15 per basic and diluted share, for the first quarter of 2021.

First Quarter Highlights

  • Net interest income of $17.3 million for the first quarter increased $556,000, or 3.3%, from the prior quarter and $4.4 million, or 34.5%, from the same quarter last year.
  • Loss before taxes was ($9.8 million) for the first quarter of 2022 as compared to income before taxes of $19.2 million for the prior quarter and $3.2 million for the same quarter last year. Included in the first quarter of 2022 is a net loss of ($8.1 million) resulting from a $6.3 million write-off and $1.7 million in additional reserves relating to the Bank’s lending relationship with Grain Technologies, Inc. (“Grain”). Included in the fourth quarter of 2021 was a net gain of $15.4 million resulting from the sale of real properties.
  • Average cost of interest-bearing deposits was 0.49% for the first quarter, a decrease from 0.51% for the prior quarter and from 0.77% for the same quarter last year.
  • Net interest margin was 4.68% for the first quarter, an increase from 4.51% for the prior quarter and from 4.00% for the same quarter last year.
  • Net interest rate spread was 4.48% for the first quarter, an increase from 4.32% for the prior quarter and from 3.76% for the same quarter last year.
  • Efficiency ratio was 143.50% for the first quarter compared to 44.10% for the prior quarter and 76.94% for the same quarter last year.
  • Non-performing loans of $15.8 million as of March 31, 2022 increased $3.5 million year-over-year and was 1.20% of total gross loans receivable at March 31, 2022.
  • Net loans receivable were $1.30 billion at March 31, 2022, a decrease of $4.6 million, or 0.4%, from December 31, 2021.
  • Deposits were $1.18 billion at March 31, 2022, a decrease of $23.6 million, or 2.0%, from December 31, 2021.
  • Mortgage World’s business is now conducted as a division of Ponce Bank.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, President and CEO, stated that, “The reported net loss of $6.8 million for the first quarter of 2022, the beginning of our life as a fully publicly traded company, reflects $13.1 million in one-time pre-tax events; a $5.0 million contribution to the Ponce De Leon Foundation as part of our conversion and reorganization and an aggregate of $8.1 million write-off and write-down of the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud. Although we are confident that Grain will grow from a pre-profit startup to a solid company, the write-off and write-down reflect the current economic conditions and regulatory requirements, notwithstanding Grain’s success in raising capital and its targeting low and low-to-moderate income communities and underserved people. Additionally, we maintain an allowance for loan losses which at March 31, 2022 amounted to $1.5 million, or 4.8%, specifically for the $31.0 million microloans portfolio. We continue to view our microloan portfolio as important to our mission and are pleased that, as an MDI and CDFI, we have been able to provide over 54,000 new customers a reasonably priced alternative to otherwise high-cost, predatory lending options. We are also encouraged that our net interest income after provision for loan losses continues to improve quarter-over-quarter since the first quarter of 2021 and that, excluding the noted one-time events, our operating expenses remain consistent with our growth. From April 1, 2021 to March 31, 2022, we grew the Company by 11.2% while our capital increased by 85.8%, positioning us well for the challenges of tomorrow.”

Executive Chairman’s Comments

Steven A. Tsavaris, Executive Chairman, noted that “we are pleased that we have been able to offset the effects on our loan portfolio due to reductions in PPP loans as they are forgiven by increasing the origination of our traditional loans, augmented by increased lending in non-qualified mortgages – a clear benefit of our being a CDFI and MDI. We look forward to the closing of our announced ECIP capital funding from the U.S. Treasury.”

Results of Operations Summary

Net loss for the three months ended March 31, 2022 was ($6.8 million), compared to $15.0 million of net income for the three months ended December 31, 2021 and $2.5 million of net income for the three months ended March 31, 2021.

The ($6.8 million) net loss for the three months ended March 31, 2022 compared to $15.0 million of net income for the three months ended December 31, 2021 was attributable to a decrease of $16.9 million in non-interest income quarter to quarter and an increase of $12.2 million in non-interest expense quarter to quarter. The $12.2 million increase in non-interest expense was the result of the write-off and write-down related to Grain of $8.1 million and a contribution to the Ponce De Leon Foundation of $5.0 million, and an increase of $385,000 in provision for loan losses, offset by $3.0 million in benefit for income taxes, rather than a $4.2 million provision for income taxes quarter to quarter.

The ($6.8 million) net loss for the three months ended March 31, 2022 compared to $2.5 million of net income for the three months ended March 31, 2021 was due to an increase of $15.2 million in non-interest expense, a decrease of $1.7 million in non-interest income and an increase of $572,000 in provision for loan losses. The net loss was offset by increases of $4.4 million in net interest income and a $3.0 million benefit for income taxes, rather than a $732,000 provision for income taxes quarter to quarter.

Net interest income for the three months ended March 31, 2022 was $17.3 million, an increase of $556,000, or 3.3%, compared to the three months ended December 31, 2021 and an increase of $4.4 million, or 34.5%, compared to the three months ended March 31, 2021. The increase of $556,000 in net interest income for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was attributable to an increase of $366,000 in interest and dividend income and a decrease of $190,000 in interest expense. The increase of $4.4 million in net interest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was attributable to an increase of $3.8 million in interest and dividend income and a decrease of $605,000 in interest expense.

Net interest margin was 4.68% for the three months ended March 31, 2022, an increase of 17 basis points from 4.51% for the three months ended December 31, 2021 and an increase of 68 basis points from 4.00% for the three months ended March 31, 2021. 

Net interest rate spread increased by 16 basis points to 4.48% for the three months ended March 31, 2022 from 4.32% for the three months ended December 31, 2021 and increased by 72 basis points from 3.76% for the three months ended March 31, 2021. The increase in the net interest rate spread for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was primarily due to an increase in the average yield on interest-earning assets of 13 basis points to 5.14% for the three months ended March 31, 2022 from 5.01% for the three months ended December 31, 2021, and a decrease in the average rate on interest-bearing liabilities of 3 basis points to 0.66% for the three months ended March 31, 2022 from 0.69% for the three months ended December 31, 2021. The increase in the net interest rate spread for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to an increase in the average yield on interest-earning assets of 44 basis points to 5.14% for the three months ended March 31, 2022 from 4.70% for the three months ended March 31, 2021 and a decrease in the average rates on interest-bearing liabilities of 28 basis points to 0.66% for the three months ended March 31, 2022 from 0.94% for the three months ended March 31, 2021.

Non-interest income decreased $16.9 million to $2.2 million for the three months ended March 31, 2022 from $19.2 million for the three months ended December 31, 2021 and decreased $1.7 million from $3.9 million for the three months ended March 31, 2021. Excluding the $15.4 million gain, net of expense, from sale of real properties during the three months ended December 31, 2021, non-interest income decreased $1.5 million to $2.2 million for the three months ended March 31, 2022 compared to $3.7 million for the three months ended December 31, 2021.

The decrease of $16.9 million in non-interest income for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was due to the absence of the one-time $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, and decreases of $876,000 in income on sale of mortgage loans, $425,000 in loan origination fees, $278,000 in late and prepayment charges, $63,000 in brokerage commissions and $28,000 in service charges and fees, offset by an increase of $158,000 in other non-interest income.

The decrease of $1.7 million in non-interest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was due to decreases of $1.1 million in income on sale of mortgage loans, $663,000, net of expenses, from the sale of real properties recognized in the first quarter of 2021, $186,000 in late and prepayment charges and $78,000 in loan origination fees, offset by increases of $124,000 in other non-interest income, $115,000 in brokerage commissions and $111,000 in service charges and fees.

Non-interest expense increased $12.2 million, or 77.1%, to $28.1 million for the three months ended March 31, 2022 from $15.9 million for the three months ended December 31, 2021 and increased $15.2 million, or 117.4%, from $12.9 million for the three months ended March 31, 2021.

The increase of $12.2 million in non-interest expense for the three months ended March 31, 2022, compared to the three months ended December 31, 2021, was attributable to an aggregate $8.1 million write-off and write down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization, and increases of $185,000 in occupancy and equipment, $166,000 in compensation and benefits and $76,000 in data processing expenses, offset by decreases of $610,000 in other operating expenses, $366,000 in professional fees, $158,000 in direct loan expenses and $147,000 in office supplies, telephone and postage.

The increase of $15.2 million in non-interest expense for the three months ended March 31, 2022, compared to the three months ended March 31, 2021 was attributable to an aggregate $8.1 million in write-off and write-down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $5.0 million in contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization, and increases of $1.5 million in compensation and benefits, $558,000 in occupancy and equipment, $253,000 in data processing expenses, $72,000 in professional fees and $33,000 in marketing and promotional expense, offset by decreases of $174,000 in other operating expenses and $135,000 in direct loan expenses.

Balance Sheet Summary

Total assets decreased $58.9 million, or 3.6%, to $1.59 billion at March 31, 2022 from $1.65 billion at December 31, 2021. The decrease in total assets is attributable to decreases of $84.6 million in cash and cash equivalents, $7.9 million in mortgage loans held for sale, at fair value, $6.4 million in other assets, $4.6 million in net loans receivable (inclusive of $50.8 million net decrease in PPP loans), $581,000 in FHLBNY stock and $338,000, net, in premises and equipment. The decrease in total assets was reduced by increases of $41.5 million in available-for-sale securities, $3.6 million in deferred tax assets and $437,000 in accrued interest receivable.

Total liabilities decreased $169.2 million, or 11.6%, to $1.30 billion at March 31, 2022 from $1.46 billion at December 31, 2021. The decrease in total liabilities was mainly attributable to decreases of $122.0 million in second-step liabilities held pending the closing of the conversion and reorganization on January 27, 2022, $23.6 million in deposits, $14.3 million in warehouse lines of credit and $12.9 million in advances from FHLBNY, offset by increases of $2.5 million in advance payments by borrowers for taxes and insurance and $1.0 million in other liabilities.

Total stockholders’ equity increased $110.3 million, or 58.3%, to $299.6 million at March 31, 2022 from $189.3 million at December 31, 2021. This increase in stockholders’ equity was mainly attributable to $118.0 million as a result of the sale of equity in the second-step conversion and reorganization, $4.0 million contribution to the Ponce De Leon Foundation, $366,000 in Employee Stock Ownership Plan shares committed to be released and $351,000 in share-based compensation offset by $6.8 million in net loss and $5.6 million in other comprehensive loss.

Pursuant to the conversion and reorganization, PDL Community Bancorp treasury stock was extinguished on January 27, 2022. Ponce Financial Group, Inc. currently has no treasury stock.

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. The Bank’s business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those deposits, 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 and construction and land, and, to a lesser extent, in business and consumer loans. The 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; 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 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2022  2021  2021  2021  2021 
ASSETS                   
Cash and due from banks:                   
Cash$32,168  $98,954  $29,365  $32,541  $13,551 
Interest-bearing deposits in banks 37,127   54,940   33,673   33,551   76,571 
Total cash and cash equivalents 69,295   153,894   63,038   66,092   90,122 
Available-for-sale securities, at fair value 154,799   113,346   104,358   48,536   30,929 
Held-to-maturity securities, at amortized cost 927   934   1,437   1,720   1,732 
Placement with banks 2,490   2,490   2,490   2,739   2,739 
Mortgage loans held for sale, at fair value 7,972   15,836   13,930   15,308   13,725 
Loans receivable, net 1,300,446   1,305,078   1,302,238   1,343,578   1,230,458 
Accrued interest receivable 12,799   12,362   13,360   13,134   12,547 
Premises and equipment, net 19,279   19,617   34,081   34,057   33,625 
Federal Home Loan Bank of New York stock (FHLBNY), at cost 5,420   6,001   6,001   6,156   6,057 
Deferred tax assets 7,440   3,820   4,826   5,493   4,569 
Other assets 13,730   20,132   14,793   10,837   7,204 
Total assets$1,594,597  $1,653,510  $1,560,552  $1,547,650  $1,433,707 
LIABILITIES AND STOCKHOLDERS' EQUITY                   
Liabilities:                   
Deposits$1,181,165  $1,204,716  $1,249,261  $1,236,161  $1,138,546 
Accrued interest payable 223   228   238   55   66 
Advance payments by borrowers for taxes and insurance 10,161   7,657   9,118   7,682   9,264 
Advances from the FHLBNY and others 93,375   106,255   106,255   109,255   109,255 
Warehouse lines of credit 753   15,090   11,261   13,084   11,664 
Mortgage loan fundings payable       1,136   743   676 
Second-step liabilities    122,000          
Other liabilities 9,341   8,308   9,396   8,780   3,032 
Total liabilities 1,295,018   1,464,254   1,386,665   1,375,760   1,272,503 
Commitments and contingencies                   
Stockholders' Equity:                   
Preferred stock, $0.01 par value; 100,000,000 shares authorized              
Common stock, $0.01 par value; 200,000,000 shares authorized 247   185   185   185   185 
Treasury stock, at cost    (13,687)  (15,069)  (15,069)  (19,285)
Additional paid-in-capital 205,243   85,601   86,360   85,956   85,470 
Retained earnings 116,136   122,956   107,977   105,925   99,993 
Accumulated other comprehensive income (7,035)  (1,456)  (621)  (41)  28 
Unearned compensation ─ ESOP (15,012)  (4,343)  (4,945)  (5,066)  (5,187)
Total stockholders' equity 299,579   189,256   173,887   171,890   161,204 
Total liabilities and stockholders' equity$1,594,597  $1,653,510  $1,560,552  $1,547,650  $1,433,707 

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 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2022  2021  2021  2021  2021 
Interest and dividend income:                   
Interest on loans receivable$18,200  $18,013  $16,991  $15,603  $14,925 
Interest on deposits due from banks 36   7   9   2   2 
Interest and dividend on securities and FHLBNY stock 782   632   425   239   250 
Total interest and dividend income 19,018   18,652   17,425   15,844   15,177 
Interest expense:                   
Interest on certificates of deposit 803   907   1,010   1,108   1,219 
Interest on other deposits 284   309   354   382   382 
Interest on borrowings 593   654   621   622   684 
Total interest expense 1,680   1,870   1,985   2,112   2,285 
Net interest income 17,338   16,782   15,440   13,732   12,892 
Provision for loan losses 1,258   873   572   586   686 
Net interest income after provision for loan losses 16,080   15,909   14,868   13,146   12,206 
Non-interest income:                   
Service charges and fees 440   468   494   366   329 
Brokerage commissions 338   401   270   430   223 
Late and prepayment charges 58   336   329   298   244 
Income on sale of mortgage loans 418   1,294   1,175   1,288   1,508 
Loan origination 461   886   625   971   539 
Gain on sale of real property    15,431      4,176   663 
Other 511   353   341   812   387 
Total non-interest income 2,226   19,169   3,234   8,341   3,893 
Non-interest expense:                   
Compensation and benefits 7,125   6,959   6,427   4,212   5,664 
Occupancy and equipment 3,192   3,007   2,849   2,838   2,634 
Data processing expenses 847   771   917   733   594 
Direct loan expenses 874   1,032   696   1,151   1,009 
Insurance and surety bond premiums 147   149   147   143   146 
Office supplies, telephone and postage 405   552   626   467   409 
Professional fees 1,334   1,700   1,765   2,902   1,262 
Contribution to the Ponce De Leon Foundation 4,995             
Grain write-off and write-down 8,074             
Marketing and promotional expenses 71   69   51   48   38 
Directors fees 71   80   67   69   69 
Regulatory dues 83   69   74   120   60 
Other operating expenses 856   1,466   1,113   958   1,030 
Total non-interest expense 28,074   15,854   14,732   13,641   12,915 
(Loss) income before income taxes (9,768)  19,224   3,370   7,846   3,184 
(Benefit) provision for income taxes (2,948)  4,245   1,318   1,914   732 
Net (loss) income$(6,820) $14,979  $2,052  $5,932  $2,452 
(Loss) earnings per share:                   
Basic$(0.31) $0.90  $0.12  $0.35  $0.15 
Diluted$(0.31) $0.89  $0.12  $0.35  $0.15 
Weighted average shares outstanding:                   
Basic 21,721,113   16,864,929   16,823,731   16,737,037   16,548,196 
Diluted 21,721,113   16,924,785   16,914,833   16,773,606   16,548,196 

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)

  Quarter Ended March 31, 
  2022  2021  Variance $  Variance % 
Interest and dividend income:                
Interest on loans receivable $18,200  $14,925  $3,275   21.94%
Interest on deposits due from banks  36   2   34  * 
Interest and dividend on securities and FHLBNY stock  782   250   532   212.80%
Total interest and dividend income  19,018   15,177   3,841   25.31%
Interest expense:                
Interest on certificates of deposit  803   1,219   (416)  (34.13%)
Interest on other deposits  284   382   (98)  (25.65%)
Interest on borrowings  593   684   (91)  (13.30%)
Total interest expense  1,680   2,285   (605)  (26.48%)
Net interest income  17,338   12,892   4,446   34.49%
Provision for loan losses  1,258   686   572   83.38%
Net interest income after provision for loan losses  16,080   12,206   3,874   31.74%
Non-interest income:                
Service charges and fees  440   329   111   33.74%
Brokerage commissions  338   223   115   51.57%
Late and prepayment charges  58   244   (186)  (76.23%)
Income on sale of mortgage loans  418   1,508   (1,090)  (72.28%)
Loan origination  461   539   (78)  (14.47%)
Gain on sale of real property     663   (663)  (100.00%)
Other  511   387   124   32.04%
Total non-interest income  2,226   3,893   (1,667)  (42.82%)
Non-interest expense:                
Compensation and benefits  7,125   5,664   1,461   25.79%
Occupancy and equipment  3,192   2,634   558   21.18%
Data processing expenses  847   594   253   42.59%
Direct loan expenses  874   1,009   (135)  (13.38%)
Insurance and surety bond premiums  147   146   1   0.68%
Office supplies, telephone and postage  405   409   (4)  (0.98%)
Professional fees  1,334   1,262   72   5.71%
Contribution to the Ponce De Leon Foundation  4,995      4,995   %
Grain write-off and write-down  8,074      8,074   %
Marketing and promotional expenses  71   38   33   86.84%
Directors fees  71   69   2   2.90%
Regulatory dues  83   60   23   38.33%
Other operating expenses  856   1,030   (174)  (16.89%)
Total non-interest expense  28,074   12,915   15,159   117.38%
(Loss) income before income taxes  (9,768)  3,184   (12,952)  (406.78%)
(Benefit) provision for income taxes  (2,948)  732   (3,680) * 
Net (loss) income $(6,820) $2,452  $(9,272)  (378.14%)
(Loss) earnings per share:                
Basic $(0.31) $0.15  N/A  N/A 
Diluted $(0.31) $0.15  N/A  N/A 
Weighted average shares outstanding:                
Basic  21,721,113   16,548,196  N/A  N/A 
Diluted  21,721,113   16,548,196  N/A  N/A 

* Represents more than 500%

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

 At or for the Three Months Ended 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2022  2021  2021  2021  2021 
Performance Ratios:                   
Return on average assets (1) (1.60%)  3.69%  0.52%  1.59%  0.72%
Return on average equity (1) (10.06%)  31.46%  4.59%  13.95%  6.16%
Net interest rate spread (1) (2) 4.48%  4.32%  3.92%  3.60%  3.76%
Net interest margin (1) (3) 4.68%  4.51%  4.13%  3.84%  4.00%
Non-interest expense to average assets (1) 6.59%  3.90%  3.72%  3.65%  3.82%
Efficiency ratio (4) 143.50%  44.10%  78.89%  61.80%  76.94%
Average interest-earning assets to average interest- bearing liabilities 145.54%  138.10%  138.89%  140.13%  133.25%
Average equity to average assets 15.92%  11.71%  11.27%  11.37%  11.77%
Capital Ratios:                   
Total capital to risk weighted assets (bank only) 23.27%  17.23%  16.15%  16.08%  15.80%
Tier 1 capital to risk weighted assets (bank only) 22.02%  15.98%  14.90%  14.83%  14.54%
Common equity Tier 1 capital to risk-weighted assets (bank only) 22.02%  15.98%  14.90%  14.83%  14.54%
Tier 1 capital to average assets (bank only) 14.88%  10.95%  9.98%  10.22%  10.78%
Asset Quality Ratios:                   
Allowance for loan losses as a percentage of total loans 1.28%  1.24%  1.21%  1.16%  1.24%
Allowance for loan losses as a percentage of nonperforming loans 106.84%  142.90%  157.17%  175.63%  126.07%
Net (charge-offs) recoveries to average outstanding loans (1) (0.22%)  (0.18%)  (0.13%)  (0.07%)  (0.02%)
Non-performing loans as a percentage of total gross loans 1.20%  0.87%  0.77%  0.66%  0.99%
Non-performing loans as a percentage of total assets 0.99%  0.69%  0.65%  0.58%  0.86%
Total non-performing assets as a percentage of total assets 0.99%  0.69%  0.65%  0.58%  0.86%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets 1.32%  1.07%  1.05%  1.01%  1.32%
Other:                   
Number of offices18  19  19  19  20 
Number of full-time equivalent employees223  217  230  231  236 
                    

(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
Loan Portfolio

  As of 
  March 31,  December 31,  September 30,  June 30,  March 31, 
  2022  2021  2021  2021  2021 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Mortgage loans:                                        
1-4 family residential                                        
Investor Owned $323,442   24.59% $317,304   24.01% $319,346   24.14% $325,409   23.83% $317,895   25.51%
Owner-Occupied  95,234   7.24%  96,947   7.33%  97,493   7.37%  98,839   7.24%  99,985   8.02%
Multifamily residential  368,133   27.98%  348,300   26.34%  317,575   24.01%  318,579   23.33%  315,078   25.28%
Nonresidential properties  251,893   19.14%  239,691   18.13%  211,075   15.96%  211,181   15.46%  215,340   17.28%
Construction and land  144,881   11.01%  134,651   10.19%  133,130   10.07%  125,265   9.17%  119,339   9.57%
Total mortgage loans  1,183,583   89.96%  1,136,893   86.00%  1,078,619   81.55%  1,079,273   79.02%  1,067,637   85.66%
Non-mortgage loans:                                        
Business loans (1)  100,253   7.62%  150,512   11.38%  207,859   15.72%  253,935   18.59%  142,135   11.40%
Consumer loans (2)  31,899   2.42%  34,693   2.62%  36,095   2.73%  32,576   2.39%  36,706   2.94%
Total non-mortgage loans  132,152   10.04%  185,205   14.00%  243,954   18.45%  286,511   20.98%  178,841   14.34%
Total loans, gross  1,315,735   100.00%  1,322,098   100.00%  1,322,573   100.00%  1,365,784   100.00%  1,246,478   100.00%
                                         
Net deferred loan origination costs  1,604       (668)      (4,327)      (6,331)      (512)    
Allowance for losses on loans  (16,893)      (16,352)      (16,008)      (15,875)      (15,508)    
                                         
Loans, net $1,300,446      $1,305,078      $1,302,238      $1,343,578      $1,230,458     

(1) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, business loans include $86.0 million, $136.8 million, $195.9 million, $241.5 million, and $132.5 million, respectively, of PPP loans.

(2) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, consumer loans include $31.0 million, $33.9 million, $35.5 million, $32.0 million and $35.9 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
Allowance for Loan Losses

  For the Three Months Ended 
  March  December  September  June  March 
  2022  2021  2021  2021  2021 
  (Dollars in thousands) 
Allowance for loan losses at beginning of the period $16,352  $16,008  $15,875  $15,508  $14,870 
Provision for loan losses  1,258   873   572   586   686 
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  (751)  (560)  (510)  (222)  (50)
Total charge-offs  (751)  (598)  (510)  (222)  (50)
Recoveries:                    
Mortgage loans:                    
1-4 family residences                    
Investor owned     8          
Owner occupied     45          
Multifamily residences               
Nonresidential properties               
Construction and land               
Non-mortgage loans:                    
Business  2   15   69       
Consumer  32   1   2   3   2 
Total recoveries  34   69   71   3   2 
Net (charge-offs) recoveries  (717)  (529)  (439)  (219)  (48)
Allowance for loan losses at end of the period $16,893  $16,352  $16,008  $15,875  $15,508 

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

  As of 
  March 31,  December 31,  September 30,  June 30,  March 31, 
  2022  2021  2021  2021  2021 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Demand (1) $281,132   23.81% $274,956   22.83% $297,777   23.85% $320,404   25.91% $242,255   21.28%
Interest-bearing deposits:                                        
NOW/IOLA accounts  33,010   2.79%  35,280   2.93%  28,025   2.24%  28,996   2.35%  32,235   2.83%
Money market accounts  169,847   14.38%  186,893   15.51%  199,758   15.99%  172,925   13.99%  157,271   13.81%
Reciprocal deposits  160,510   13.59%  143,221   11.89%  147,226   11.79%  151,443   12.25%  137,402   12.07%
Savings accounts  133,966   11.34%  134,887   11.20%  142,851   11.43%  130,430   10.55%  130,211   11.44%
Total NOW, money market, reciprocal and savings accounts  497,333   42.10%  500,281   41.53%  517,860   41.45%  483,794   39.14%  457,119   40.15%
Certificates of deposit of $250K or more  75,130   6.36%  78,454   6.51%  70,996   5.68%  74,941   6.06%  77,418   6.80%
Brokered certificates of deposit (2)  79,282   6.71%  79,320   6.58%  83,505   6.68%  83,506   6.76%  86,004   7.55%
Listing service deposits (2)  53,876   4.56%  66,411   5.51%  66,340   5.31%  66,518   5.38%  61,133   5.37%
All other certificates of deposit less than $250K  194,412   16.46%  205,294   17.04%  212,783   17.03%  206,998   16.75%  214,617   18.85%
Total certificates of deposit  402,700   34.09%  429,479   35.64%  433,624   34.70%  431,963   34.95%  439,172   38.57%
Total interest-bearing deposits  900,033   76.19%  929,760   77.17%  951,484   76.15%  915,757   74.09%  896,291   78.72%
Total deposits $1,181,165   100.00% $1,204,716   100.00% $1,249,261   100.00% $1,236,161   100.00% $1,138,546   100.00%

(1) Included in demand deposits are deposits related to net PPP funding.

(2) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, there were $19.0 million, $29.0 million, $28.9 million, $28.9 million and $28.8 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 
 March 31,  December 31,  September 31,  June 30,  March 31, 
 2022  2021  2021  2021  2021 
 (Dollars in thousands) 
Non-accrual loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$3,596  $3,349  $1,669  $1,983  $2,907 
Owner occupied 962   1,284   1,090   1,593   1,585 
Multifamily residential    1,200   2,577   955   946 
Nonresidential properties 1,166   2,163   1,388   1,408   3,761 
Construction and land 7,567   917   922       
Non-mortgage loans:                   
Business              
Consumer              
Total non-accrual loans (not including non-accruing troubled debt restructured loans)$13,291  $8,913  $7,646  $5,939  $9,199 
                    
Non-accruing troubled debt restructured loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$230  $234  $238  $242  $246 
Owner occupied 2,192   2,196   2,200   2,199   2,195 
Multifamily residential              
Nonresidential properties 98   100   101   659   661 
Construction and land              
Non-mortgage loans:                   
Business              
Consumer              
Total non-accruing troubled debt restructured loans 2,520   2,530   2,539   3,100   3,102 
Total non-accrual loans$15,811  $11,443  $10,185  $9,039  $12,301 
                    
Accruing troubled debt restructured loans:                   
Mortgage loans:                   
1-4 family residential                   
Investor owned$2,269  $3,089  $3,121  $3,347  $3,362 
Owner occupied 2,313   2,374   2,396   2,431   2,466 
Multifamily residential              
Nonresidential properties 726   732   738   755   750 
Construction and land              
Non-mortgage loans:                   
Business              
Consumer              
Total accruing troubled debt restructured loans$5,308  $6,195  $6,255  $6,533  $6,578 
Total non-performing assets and accruing troubled debt restructured loans$21,119  $17,638  $16,440  $15,572  $18,879 
Total non-performing loans to total gross loans 1.20%  0.87%  0.77%  0.66%  0.99%
Total non-performing assets to total assets 0.99%  0.69%  0.65%  0.58%  0.86%
Total non-performing assets and accruing troubled debt restructured loans to total assets 1.32%  1.07%  1.05%  1.01%  1.32%

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

 For the Three Months Ended March 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)$1,325,433  $18,200  5.57%  $1,239,127  $14,925  4.88%
Securities (3) 138,095   717  2.11%   22,516   176  3.17%
Other (4) 38,253   101  1.07%   46,581   76  0.66%
Total interest-earning assets 1,501,781   19,018  5.14%   1,308,224   15,177  4.70%
Non-interest-earning assets 225,006           63,951        
Total assets$1,726,787          $1,372,175        
Interest-bearing liabilities:                      
NOW/IOLA$33,083  $16  0.20%  $33,085  $38  0.47%
Money market 319,806   235  0.30%   277,104   304  0.44%
Savings 135,404   32  0.10%   126,961   39  0.12%
Certificates of deposit 419,104   803  0.78%   405,980   1,219  1.22%
Total deposits 907,397   1,086  0.49%   843,130   1,600  0.77%
Advance payments by borrowers 9,808   1  0.04%   8,899   1  0.05%
Borrowings 114,688   593  2.10%   129,755   684  2.14%
Total interest-bearing liabilities 1,031,893   1,680  0.66%   981,784   2,285  0.94%
Non-interest-bearing liabilities:                      
Non-interest-bearing demand 372,433          215,116       
Other non-interest-bearing liabilities 47,562          13,754       
Total non-interest-bearing liabilities 419,995          228,870       
Total liabilities 1,451,888   1,680       1,210,654   2,285    
Total equity 274,899           161,521        
Total liabilities and total equity$1,726,787      0.66%  $1,372,175      0.94%
Net interest income    $17,338          $12,892    
Net interest rate spread (5)        4.48%          3.76%
Net interest-earning assets (6)$469,888          $326,440        
Net interest margin (7)        4.68%          4.00%
Average interest-earning assets to interest-bearing liabilities        145.54%          133.25%

(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 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2022  2021  2021  2021  2021 
Other Data                   
Common shares issued 24,724,274   18,463,028   18,463,028   18,463,028   18,463,028 
Less treasury shares    1,037,041   1,132,086   1,135,086   1,444,776 
Common shares outstanding at end of period 24,724,274   17,425,987   17,330,942   17,327,942   17,018,252 
                    
Book value per share$12.12  $10.86  $10.03  $9.92  $9.47 
Tangible book value per share$12.12  $10.86  $10.03  $9.92  $9.47 

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