Ponce Financial Group, Inc. Reports Third Quarter 2022 Results


NEW YORK, Oct. 28, 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”), today announced results for the third quarter of 2022.

Third Quarter Highlights (Compared to Prior Periods):

  • Net loss of ($14.7) million or ($0.64) per diluted share, for the three months ended September 30, 2022, as compared to net income of $771,000, or $0.03 per diluted share for the three months ended June 30, 2022 and net income of $2.1 million, or $0.12 per diluted share for the three months ended September 30, 2021.
  • Included in the ($14.7) million 2022 third quarter results are $17.5 million of pre-tax charges related to Grain Technologies, Inc. (“Grain”) inclusive of the following: $7.9 million in additional write-offs of the receivable for loans put back to Grain; $8.6 million increase in provision for loan loss reserves/unused commitments to Grain-originated microloan portfolio and write-off of $1.0 million equity investment in Grain. In addition to pre-tax charges related to Grain, the Company also recognized a one-time $436,000 loss on equipment sales as it moved to implement ATMs as a service.
  • Net interest income of $17.6 million for the 2022 third quarter increased $2.1 million, or 13.71%, from the prior quarter and $2.2 million, or 14.06%, from the same quarter last year, largely due to increases in the Company's securities portfolio.
  • Net interest margin was 3.62% for the 2022 third quarter, a decrease from 4.10% for the prior quarter and from 4.13% 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 $626.3 million as of September 30, 2022, an increase of $512.0 million from December 31, 2021.
  • Net loans receivable were $1.39 billion as of September 30, 2022, an increase of $87.5 million, or 6.70%, from December 31, 2021. The increase of $87.5 million was attributable to a $199.5 million net increase in non-PPP loans partially offset by a $112.0 million decrease in PPP loans.
  • Deposits were $1.35 billion as of September 30, 2022, an increase of 12.16%, from December 31, 2021.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “Last quarter we announced the purchase of $225 million of preferred stock by the U.S. Department of the Treasury, resulting in the company having $500 million in stockholders' equity with which to add value for our stakeholders – our communities, customers, employees and shareholders. In the third quarter, we continued to implement our capital leveraging strategy by growing our securities portfolio. Moving forward, given the significant volatility in interest rates, we will be taking a more measured approach to putting our excess capital to work. Through continued investments in our people, technology and customers and utilizing our strong capital base, we are focused on management's goal to more than double the size of our loan business over the next several years.”

Mr. Naudon continued, “Our reported results this quarter, were impacted by additional action we took to more aggressively ring fence our overall exposure to Grain, recognizing pre-tax charges totaling $17.5 million as we moved to put ourselves in a position to minimize future losses from the microloan portfolio. Importantly, we remain well capitalized as we evaluate all means of delivering value to our stakeholders, including using all available capital management tools. As we grow our business, we will continue to leverage our existing partnerships, our strong core loan growth, and our status as a nationally recognized MDI and CDFI lending institution that has a strong asset growth capacity.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman, added, “This quarter, we continued the growth in our more traditional and focused areas of lending, including both qualified and non-qualified mortgages, the latter of which represents an important area of focus for Ponce. This portfolio continues to show resiliency in a challenging economic environment. With our abundant capital base and balance sheet liquidity, we are focused on significant growth opportunities across the historic communities we have served for over six decades in the New York City area, as well as expanding opportunities in other similarly underserved communities.”

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

 Performance Ratios (Annualized):For the Three Months Ended,
September 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Return on average assets (2.85%)0.18%(1.60%)3.69%0.52%
Return on average stockholders’ equity(11.25%)1.01%(10.06%)31.46%4.59%
Net interest rate spread 3.12%3.86%4.48%4.32%3.92%
Net interest margin 3.62%4.10%4.68%4.51%4.13%
Non-interest expense to average assets 4.91%3.84%6.59%3.90%3.72%
Efficiency ratio 132.46%93.77%143.50%44.10%78.89%
Average interest-earning assets to average interest- bearing liabilities 161.30%151.98%145.54%138.10%138.89%
Average equity to average assets 25.31%17.66%15.92%11.71%11.27%


 Capital Ratios (Annualized):For the Three Months Ended,
September 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Total Capital to risk weighted assets 33.39%36.00%23.27%17.23%16.15%
Tier 1 Capital to risk weighted assets 32.13%34.75%22.02%15.98%14.90%
Common equity Tier 1 capital to risk-weighted assets 32.13%34.75%22.02%15.98%14.90%
Tier 1 capital to average assets 22.91%28.79%14.88%10.95%9.98%


 Asset Quality Ratios (Annualized):For the Three Months Ended,
September 30, 2022June 30, 2022March 31, 2022December 31, 2021September 30, 2021
Allowance for loan losses as a percentage of total loans 1.77%1.31%1.28%1.24%1.21%
Allowance for loan losses as a percentage of nonperforming loans118.43%94.05%106.84%142.90%157.17%
Net (charge-offs) recoveries to average outstanding loans (0.52%)(0.05%)(0.22%)(0.18%)(0.13%)
Non-performing loans as a percentage of total gross loans 1.50%1.39%1.20%0.87%0.77%
Non-performing loans as a percentage of total assets 0.98%0.91%0.99%0.69%0.65%
Total non-performing assets as a percentage of total assets 0.98%0.91%0.99%0.69%0.65%


Summary of Results of Operations

Net loss for the nine months ended September 30, 2022, was ($20.8) million compared to net income of $10.4 million for the nine months ended September 30, 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 nine months ended September 30, 2022, was $50.4 million compared to $42.1 million for the nine months ended September 30, 2021. This increase is largely explained by the increase in the securities and loan portfolios.

Net interest margin was 4.09% for the nine months ended September 30, 2022 compared to 3.99% for the same period last year, an increase of 10bps. The increase in net interest margin was a result of an increase in net interest-earning assets as well as higher yields. 

Non-interest Income

Non-interest income for the three months ended September 30, 2022, was $1.6 million, a decrease of $602,000, or 27.63%, compared to the three months ended June 30, 2022 and a decrease of $1.7 million, or 51.24%, compared to the three months ended September 30, 2021.

The $602,000 decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended June 30, 2022 was impacted by a one-time $436,000 loss on sale of equipment and a decrease of $174,000 in loan origination fees.

The $1.7 million decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was attributable to a decrease of $1.1 million in income on sale of mortgage loans, a one-time $436,000 loss on sale of equipment, and decreases of $220,000 in late and prepayment charges and $103,000 in loan origination fees, offset by an increase of $173,000 in other non-interest income.

Non-interest income for the nine months ended September 30, 2022, decreased $9.5 million, or 61.33%, to $6.0 million compared to $15.5 million for the nine months ended September 30, 2021. The decrease is due to the loss on sale of equipment this year versus gains on sale of property last year and reductions in income on sale of mortgage loans, late and prepayment charges and loan origination fees.

Non-interest Expense

Non-interest expense for the three months ended September 30, 2022, was $25.4 million, an increase of $8.8 million, or 53.41%, compared to the three months ended June 30, 2022 and of $10.7 million, or 72.52%, compared to the three months ended September 30, 2021. The $8.8 million increase from the three months ended June 30, 2022 was mainly attributable to the Grain write-off and write-down and to a lesser extent, the increases in other operating expenses, compensation and benefits and occupancy and equipment. These factors also explain the $10.7 million increase in non-interest expense versus the same quarter last year.

Non-interest expense for the nine months ended September 30, 2022, was $70.1 million, an increase of $28.8 million or 69.68%, compared to the nine months ended September 30, 2021. The $28.8 million increase in non-interest expense was attributable to the $18.5 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $5.1 million in compensation and benefits, $1.7 million in occupancy and equipment expenses, $421,000 in data processing expenses and $396,000 in other operating expenses. These items were partially offset by decreases of $1.6 million in professional fees and $823,000 in direct loan expenses.

Balance Sheet Summary

Total assets increased $504.8 million, or 30.53%, to $2.16 billion as of September 30, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $493.4 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 an increase of $87.5 million in net loans receivable (inclusive of a $112.0 million net decrease in PPP loans), partially offset by a decrease of $91.4 million in cash and equivalents.

Total liabilities increased $193.3 million, or 13.20%, to $1.66 billion as of September 30, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $180.1 million in advances from FHLBNY and $146.5 million in deposits, offset by a decrease 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.

Total stockholders’ equity increased $311.4 million, or 164.55%, to $500.7 million as of September 30, 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 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
ASSETS              
Cash and due from banks:              
Cash$37,235  $53,544  $32,168  $98,954  $29,365 
Interest-bearing deposits in banks 25,286   221,262   37,127   54,940   33,673 
Total cash and cash equivalents 62,521   274,806   69,295   153,894   63,038 
Available-for-sale securities, at fair value 131,977   140,044   154,799   113,346   104,358 
Held-to-maturity securities, at amortized cost 494,297   211,517   927   934   1,437 
Placement with banks 2,490   2,490   2,490   2,490   2,490 
Mortgage loans held for sale, at fair value 3,357   9,234   7,972   15,836   13,930 
Loans receivable, net 1,392,553   1,324,320   1,300,446   1,305,078   1,302,238 
Accrued interest receivable 14,063   13,255   12,799   12,362   13,360 
Premises and equipment, net 17,759   18,945   19,279   19,617   34,081 
Federal Home Loan Bank of New York stock (FHLBNY), at cost 14,272   16,429   5,420   6,001   6,001 
Deferred tax assets 13,822   9,658   7,440   3,820   4,826 
Other assets 11,170   21,585   13,730   20,132   14,793 
Total assets$2,158,281  $2,042,283  $1,594,597  $1,653,510  $1,560,552 
LIABILITIES AND STOCKHOLDERS' EQUITY              
Liabilities:              
Deposits$1,351,189  $1,148,728  $1,181,165  $1,204,716  $1,249,261 
Accrued interest payable 854   158   223   228   238 
Advance payments by borrowers for taxes and insurance 10,589   8,668   10,161   7,657   9,118 
Advances from the FHLBNY and others 286,375   334,375   93,375   106,255   106,255 
Warehouse lines of credit       753   15,090   11,261 
Mortgage loan fundings payable             1,136 
Mutual holding company conversion subscription liabilities          122,000    
Other liabilities 8,591   32,272   9,341   8,308   9,396 
Total liabilities 1,657,598   1,524,201   1,295,018   1,464,254   1,386,665 
Commitments and contingencies              
Stockholders' Equity:              
Preferred stock, $0.01 par value; 100,000,000 shares authorized 225,000   225,000          
Common stock, $0.01 par value; 200,000,000  shares authorized 247   247   247   185   185 
Treasury stock, at cost          (13,687)  (15,069)
Additional paid-in-capital 206,092   205,669   205,243   85,601   86,360 
Retained earnings 102,169   116,907   116,136   122,956   107,977 
Accumulated other comprehensive loss (18,420)  (15,032)  (7,035)  (1,456)  (621)
Unearned compensation ─ ESOP (14,405)  (14,709)  (15,012)  (4,343)  (4,945)
Total stockholders' equity 500,683   518,082   299,579   189,256   173,887 
Total liabilities and stockholders' equity$2,158,281  $2,042,283  $1,594,597  $1,653,510  $1,560,552 
                    

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 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
Interest and dividend income:              
Interest on loans receivable$17,058  $16,057  $18,200  $18,013  $16,991 
Interest on deposits due from banks 346   132   36   7   9 
Interest and dividend on securities and FHLBNY stock 4,230   978   782   632   425 
Total interest and dividend income 21,634   17,167   19,018   18,652   17,425 
Interest expense:              
Interest on certificates of deposit 687   677   803   907   1,010 
Interest on other deposits 1,543   521   284   309   354 
Interest on borrowings 1,793   481   593   654   621 
Total interest expense 4,023   1,679   1,680   1,870   1,985 
Net interest income 17,611   15,488   17,338   16,782   15,440 
Provision for loan losses 9,330   817   1,258   873   572 
Net interest income after provision for loan losses 8,281   14,671   16,080   15,909   14,868 
Non-interest income:              
Service charges and fees 464   445   440   468   494 
Brokerage commissions 288   214   338   401   270 
Late and prepayment charges 109   193   58   336   329 
Income on sale of mortgage loans 116   200   418   1,294   1,175 
Loan origination 522   696   625   886   625 
(Loss) gain on sale of premises and equipment (436)        15,431    
Other 514   431   347   353   341 
Total non-interest income 1,577   2,179   2,226   19,169   3,234 
Non-interest expense:              
Compensation and benefits 7,377   6,911   7,125   6,959   6,427 
Occupancy and equipment 3,611   3,237   3,192   3,007   2,849 
Data processing expenses 994   824   847   771   917 
Direct loan expenses 654   505   874   1,032   696 
Insurance and surety bond premiums 297   156   147   149   147 
Office supplies, telephone and postage 369   406   405   552   626 
Professional fees 1,251   1,748   1,334   1,700   1,765 
Contribution to the Ponce De Leon Foundation       4,995       
Grain write-off and write-down 8,881   1,500   8,074       
Marketing and promotional expenses 214   52   71   69   51 
Directors fees 89   96   71   80   67 
Regulatory assessment 99   71   83   69   74 
Other operating expenses 1,580   1,061   856   1,466   1,113 
Total non-interest expense 25,416   16,567   28,074   15,854   14,732 
(Loss) income before income taxes (15,558)  283   (9,768)  19,224   3,370 
(Benefit) provision for income taxes (820)  (488)  (2,948)  4,245   1,318 
Net (loss) income$(14,738) $771  $(6,820) $14,979  $2,052 
(Loss) earnings per common share:              
Basic$(0.64) $0.03  $(0.31) $0.90  $0.12 
Diluted$(0.64) $0.03  $(0.31) $0.89  $0.12 
Weighted average common shares outstanding:              
Basic 23,094,859   23,056,559   21,721,113   16,864,929   16,823,731 
Diluted 23,094,859   23,128,911   21,721,113   16,924,785   16,914,833 
                    

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 Nine Months Ended September 30, 
  2022  2021  Variance $  Variance % 
Interest and dividend income:            
Interest on loans receivable $51,315  $47,519  $3,796   7.99%
Interest on deposits due from banks  514   13   501   3,853.85%
Interest and dividend on securities and FHLBNY stock  5,990   914   5,076   555.36%
Total interest and dividend income  57,819   48,446   9,373   19.35%
Interest expense:            
Interest on certificates of deposit  2,167   3,337   (1,170)  (35.06%)
Interest on other deposits  2,348   1,118   1,230   110.02%
Interest on borrowings  2,867   1,927   940   48.78%
Total interest expense  7,382   6,382   1,000   15.67%
Net interest income  50,437   42,064   8,373   19.91%
Provision for loan losses  11,405   1,844   9,561   518.49%
Net interest income after provision for loan losses  39,032   40,220   (1,188)  (2.95%)
Non-interest income:            
Service charges and fees  1,349   1,189   160   13.46%
Brokerage commissions  840   923   (83)  (8.99%)
Late and prepayment charges  360   871   (511)  (58.67%)
Income on sale of mortgage loans  734   3,971   (3,237)  (81.52%)
Loan origination  1,843   2,135   (292)  (13.68%)
(Loss) gain on sale of premises and equipment  (436)  4,812   (5,248)  (109.06%)
Other  1,292   1,567   (275)  (17.55%)
Total non-interest income  5,982   15,468   (9,486)  (61.33%)
Non-interest expense:            
Compensation and benefits  21,413   16,303   5,110   31.34%
Occupancy and equipment  10,040   8,321   1,719   20.66%
Data processing expenses  2,665   2,244   421   18.76%
Direct loan expenses  2,033   2,856   (823)  (28.82%)
Insurance and surety bond premiums  600   436   164   37.61%
Office supplies, telephone and postage  1,180   1,502   (322)  (21.44%)
Professional fees  4,333   5,929   (1,596)  (26.92%)
Contribution to the Ponce De Leon Foundation  4,995      4,995   %
Grain write-off and write-down  18,455      18,455   %
Marketing and promotional expenses  337   137   200   145.99%
Directors fees  256   205   51   24.88%
Regulatory assessment  253   254   (1)  (0.39%)
Other operating expenses  3,497   3,101   396   12.77%
Total non-interest expense  70,057   41,288   28,769   69.68%
(Loss) income before income taxes  (25,043)  14,400   (39,443)  (273.91%)
(Benefit) provision for income taxes  (4,256)  3,964   (8,220)  (207.37%)
Net (loss) income $(20,787) $10,436  $(31,223)  (299.19%)
(Loss) earnings per common share:            
Basic $(0.92) $0.62  N/A  N/A 
Diluted $(0.92) $0.62  N/A  N/A 
Weighted average common shares outstanding:            
Basic  22,524,477   16,703,997  N/A  N/A 
Diluted  22,524,477   16,746,554  N/A  N/A 
               

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

 At or for the Three Months Ended 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
Performance Ratios:              
Return on average assets (1) (2.85%)  0.18%  (1.60%)  3.69%  0.52%
Return on average equity (1) (11.25%)  1.01%  (10.06%)  31.46%  4.59%
Net interest rate spread (1) (2) 3.12%  3.86%  4.48%  4.32%  3.92%
Net interest margin (1) (3) 3.62%  4.10%  4.68%  4.51%  4.13%
Non-interest expense to average assets (1) 4.91%  3.84%  6.59%  3.90%  3.72%
Efficiency ratio (4) 132.46%  93.77%  143.50%  44.10%  78.89%
Average interest-earning assets to average interest- bearing liabilities 161.30%  151.98%  145.54%  138.10%  138.89%
Average equity to average assets 25.31%  17.66%  15.92%  11.71%  11.27%
Capital Ratios:              
Total capital to risk weighted assets (Bank only) 33.39%  36.00%  23.27%  17.23%  16.15%
Tier 1 capital to risk weighted assets (Bank only) 32.13%  34.75%  22.02%  15.98%  14.90%
Common equity Tier 1 capital to risk-weighted assets (Bank only) 32.13%  34.75%  22.02%  15.98%  14.90%
Tier 1 capital to average assets (Bank only) 22.91%  28.79%  14.88%  10.95%  9.98%
Asset Quality Ratios:              
Allowance for loan losses as a percentage of total loans 1.77%  1.31%  1.28%  1.24%  1.21%
Allowance for loan losses as a percentage of nonperforming loans 118.43%  94.05%  106.84%  142.90%  157.17%
Net (charge-offs) recoveries to average outstanding loans (1) (0.52%)  (0.05%)  (0.22%)  (0.18%)  (0.13%)
Non-performing loans as a percentage of total gross loans 1.50%  1.39%  1.20%  0.87%  0.77%
Non-performing loans as a percentage of total assets 0.98%  0.91%  0.99%  0.69%  0.65%
Total non-performing assets as a percentage of total assets 0.98%  0.91%  0.99%  0.69%  0.65%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets 1.18%  1.16%  1.32%  1.07%  1.05%
Other:              
Number of offices 18   18   18   19   19 
Number of full-time equivalent employees 257   253   223   217   230 
               

(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

  September 30, 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 $2,984  $  $(325) $2,659  $2,981  $  $(47) $2,934 
Corporate Bonds  25,833      (2,475)  23,358   21,243   144   (203)  21,184 
Mortgage-Backed Securities:                        
Collateralized Mortgage Obligations (1)  45,727      (6,362)  39,365   18,845      (497)  18,348 
FHLMC Certificates  11,614      (1,821)  9,793             
FNMA Certificates  68,840      (12,166)  56,674   71,930      (1,231)  70,699 
GNMA Certificates  129      (1)  128   175   6      181 
Total available-for-sale securities $155,127  $  $(23,150) $131,977  $115,174  $150  $(1,978) $113,346 
                         
Held-to-Maturity Securities:                        
U.S. Agency Bonds $25,000  $  $(308) $24,692  $  $  $  $ 
Corporate Bonds  80,500      (3,242)  77,258             
Mortgage-Backed Securities:                        
Collateralized Mortgage Obligations (1)  227,257      (5,184)  222,073             
FHLMC Certificates  4,146      (272)  3,874   934      (20)  914 
FNMA Certificates  135,178      (6,076)  129,102             
SBA Certificates  22,216   87      22,303             
Total held-to-maturity securities $494,297  $87  $(15,082) $479,302  $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 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2022  2022  2022  2021  2021 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Mortgage loans:                              
1-4 family residential                              
Investor Owned $336,667   23.79% $321,671   24.02% $323,442   24.59% $317,304   24.01% $319,346   24.14%
Owner-Occupied  112,749   7.97%  100,048   7.47%  95,234   7.24%  96,947   7.33%  97,493   7.37%
Multifamily residential  421,917   29.81%  396,470   29.60%  368,133   27.98%  348,300   26.34%  317,575   24.01%
Nonresidential properties  282,642   19.97%  279,877   20.90%  251,893   19.14%  239,691   18.13%  211,075   15.96%
Construction and land  197,437   13.95%  165,425   12.35%  144,881   11.01%  134,651   10.19%  133,130   10.07%
Total mortgage loans  1,351,412   95.49%  1,263,491   94.34%  1,183,583   89.96%  1,136,893   86.00%  1,078,619   81.55%
Non-mortgage loans:                              
Business loans (1)  41,398   2.92%  45,720   3.41%  100,253   7.62%  150,512   11.38%  207,859   15.72%
Consumer loans (2)  22,563   1.59%  30,198   2.25%  31,899   2.42%  34,693   2.62%  36,095   2.73%
Total non-mortgage loans  63,961   4.51%  75,918   5.66%  132,152   10.04%  185,205   14.00%  243,954   18.45%
Total loans, gross  1,415,373   100.00%  1,339,409   100.00%  1,315,735   100.00%  1,322,098   100.00%  1,322,573   100.00%
                               
Net deferred loan origination costs  2,288      2,446      1,604      (668)     (4,327)   
Allowance for losses on loans  (25,108)     (17,535)     (16,893)     (16,352)     (16,008)   
                               
Loans, net $1,392,553     $1,324,320     $1,300,446     $1,305,078     $1,302,238    

(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, business loans include $24.7 million, $30.8 million, $86.0 million, $136.8 million and $195.9 million, respectively, of PPP loans.

(2) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, consumer loans include $21.5 million, $28.3 million, $31.0 million, $33.9 million and $35.5 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 September 30, 2022 
(in thousands) 
Receivable from Grain   
Microloans originated - put back to Grain (inception-to-September 30, 2022) $25,467 
Write-downs (year to date as of September 30, 2022)  (17,455)
Cash receipts from Grain (inception-to-September 30, 2022)  (6,186)
Grant/reserve  (1,826)
Net receivable as of September 30, 2022 $ 
Microloan receivables   
Grain originated loans receivable as of September 30, 2022 $21,507 
Allowance for loan losses as of September 30, 2022 *  (8,213)
Microloans, net of allowance for loan losses as of September 30, 2022 $13,294 
Investments   
Investment in Grain as of June 30, 2022 $1,000 
Investment in Grain write-off in Q3 2022  (1,000)
Investment in Grain as of September 30, 2022   
Total exposure to Grain as of September 30, 2022 $13,294 


* Includes $460,000 for allowance for unused commitments on the $15.3 million of unused commitments available to Grain borrowers reported in other liabilities 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 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
 (Dollars in thousands) 
Allowance for loan losses at beginning of the period$17,535  $16,893  $16,352  $16,008  $15,875 
Provision for loan losses 9,330   817   1,258   873   572 
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 (1,799)  (450)  (751)  (560)  (510)
Total charge-offs (1,799)  (450)  (751)  (598)  (510)
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   69 
Consumer 2   28   32   1   2 
Total recoveries 42   275   34   69   71 
Net (charge-offs) recoveries (1,757)  (175)  (717)  (529)  (439)
Allowance for loan losses at end of the period$25,108  $17,535  $16,893  $16,352  $16,008 
                    


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

  As of 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2022  2022  2022  2021  2021 
  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
  (Dollars in thousands) 
Demand $288,654   21.37% $284,462   24.77% $281,132   23.81% $274,956   22.83% $297,777   23.85%
Interest-bearing deposits:                              
NOW/IOLA accounts  28,799   2.13%  28,597   2.49%  33,010   2.79%  35,280   2.93%  28,025   2.24%
Money market accounts  360,293   26.66%  181,156   15.77%  169,847   14.38%  186,893   15.51%  199,758   15.99%
Reciprocal deposits  162,858   12.05%  151,264   13.17%  160,510   13.59%  143,221   11.89%  147,226   11.79%
Savings accounts  140,055   10.37%  139,244   12.12%  133,966   11.34%  134,887   11.20%  142,851   11.43%
Total NOW, money market, reciprocal and savings accounts  692,005   51.21%  500,261   43.55%  497,333   42.10%  500,281   41.53%  517,860   41.45%
Certificates of deposit of $250K or more  61,900   4.58%  65,157   5.67%  75,130   6.36%  78,454   6.51%  70,996   5.68%
Brokered certificates of deposit (1)  98,760   7.31%  62,650   5.45%  79,282   6.71%  79,320   6.58%  83,505   6.68%
Listing service deposits (1)  40,964   3.03%  48,953   4.26%  53,876   4.56%  66,411   5.51%  66,340   5.31%
All other certificates of deposit less than $250K  168,906   12.50%  187,245   16.30%  194,412   16.46%  205,294   17.04%  212,783   17.03%
Total certificates of deposit  370,530   27.42%  364,005   31.68%  402,700   34.09%  429,479   35.64%  433,624   34.70%
Total interest-bearing deposits  1,062,535   78.63%  864,266   75.23%  900,033   76.19%  929,760   77.17%  951,484   76.15%
Total deposits $1,351,189   100.00% $1,148,728   100.00% $1,181,165   100.00% $1,204,716   100.00% $1,249,261   100.00%

(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, there were $13.8 million, $18.5 million, $19.0 million, $29.0 million, and $28.9 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 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
 (Dollars in thousands) 
Non-accrual loans:              
Mortgage loans:              
1-4 family residential              
Investor owned$5,902  $3,460  $3,596  $3,349  $1,669 
Owner occupied 971   1,140   962   1,284   1,090 
Multifamily residential          1,200   2,577 
Nonresidential properties 778   1,162   1,166   2,163   1,388 
Construction and land 10,660   10,817   7,567   917   922 
Non-mortgage loans:              
Business 359             
Consumer              
Total non-accrual loans (not including non-accruing troubled debt restructured loans)$18,670  $16,579  $13,291  $8,913  $7,646 
               
Non-accruing troubled debt restructured loans:              
Mortgage loans:              
1-4 family residential              
Investor owned$221  $224  $230  $234  $238 
Owner occupied 2,215   1,746   2,192   2,196   2,200 
Multifamily residential              
Nonresidential properties 95   96   98   100   101 
Construction and land              
Non-mortgage loans:              
Business              
Consumer              
Total non-accruing troubled debt restructured loans 2,531   2,066   2,520   2,530   2,539 
Total non-accrual loans$21,201  $18,645  $15,811  $11,443  $10,185 
               
Accruing troubled debt restructured loans:              
Mortgage loans:              
1-4 family residential              
Investor owned$2,228  $2,246  $2,269  $3,089  $3,121 
Owner occupied 1,254   2,019   2,313   2,374   2,396 
Multifamily residential              
Nonresidential properties 715   725   726   732   738 
Construction and land              
Non-mortgage loans:              
Business              
Consumer              
Total accruing troubled debt restructured loans$4,197  $4,990  $5,308  $6,195  $6,255 
Total non-performing assets and accruing troubled debt restructured loans$25,398  $23,635  $21,119  $17,638  $16,440 
Total non-performing loans to total gross loans 1.50%  1.39%  1.20%  0.87%  0.77%
Total non-performing assets to total assets 0.98%  0.91%  0.99%  0.69%  0.65%
Total non-performing assets and accruing troubled debt restructured loans to total assets 1.18%  1.16%  1.32%  1.07%  1.05%
                    

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

 For the Three Months Ended September 30,
 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)$1,379,029  $17,058  4.91% $1,356,130  $16,991  4.97%
Securities (3) 492,337   4,153  3.35%  72,960   355  1.93%
Other (4) 57,646   423  2.91%  53,182   79  0.59%
Total interest-earning assets 1,929,012   21,634  4.45%  1,482,272   17,425  4.66%
Non-interest-earning assets 124,738        90,110      
Total assets$2,053,750       $1,572,382      
Interest-bearing liabilities:               
NOW/IOLA$29,939  $13  0.17% $30,221  $23  0.30%
Money market 409,947   1,471  1.42%  323,840   294  0.36%
Savings 141,200   57  0.16%  137,078   36  0.10%
Certificates of deposit 353,822   687  0.77%  448,191   1,010  0.89%
Total deposits 934,908   2,228  0.95%  939,330   1,363  0.58%
Advance payments by borrowers 10,918   2  0.07%  10,061   1  0.04%
Borrowings 250,112   1,793  2.84%  117,824   621  2.09%
Total interest-bearing liabilities 1,195,938   4,023  1.33%  1,067,215   1,985  0.74%
Non-interest-bearing liabilities:               
Non-interest-bearing demand 321,556        317,727      
Other non-interest-bearing liabilities 16,377        10,154      
Total non-interest-bearing liabilities 337,933        327,881      
Total liabilities 1,533,871   4,023     1,395,096   1,985   
Total equity 519,879        177,286      
Total liabilities and total equity$2,053,750     1.33% $1,572,382     0.74%
Net interest income   $17,611       $15,440   
Net interest rate spread (5)      3.12%       3.92%
Net interest-earning assets (6)$733,074       $415,057      
Net interest margin (7)      3.62%       4.13%
Average interest-earning assets to interest-bearing liabilities      161.30%       138.89%
                

(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 Nine Months Ended September 30, 
 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)$1,341,151  $51,315   5.12% $1,309,765  $47,519   4.85%
Securities (3) 263,421   5,778   2.93%  45,749   701   2.05%
Other (4) 45,940   726   2.11%  53,425   226   0.57%
Total interest-earning assets 1,650,512   57,819   4.68%  1,408,939   48,446   4.60%
Non-interest-earning assets 187,333         73,493       
Total assets$1,837,845        $1,482,432       
Interest-bearing liabilities:                 
NOW/IOLA$31,769  $43   0.18% $31,215  $93   0.40%
Money market 356,576   2,180   0.82%  300,594   909   0.40%
Savings 137,808   120   0.12%  131,849   113   0.11%
Certificates of deposit 386,446   2,167   0.75%  428,653   3,337   1.04%
Total deposits 912,599   4,510   0.66%  892,311   4,452   0.67%
Advance payments by borrowers 11,033   5   0.06%  10,020   3   0.04%
Borrowings 152,084   2,867   2.52%  122,203   1,927   2.11%
Total interest-bearing liabilities 1,075,716   7,382   0.92%  1,024,534   6,382   0.83%
Non-interest-bearing liabilities:                 
Non-interest-bearing demand 350,871         275,865       
Other non-interest-bearing liabilities 43,606         12,182       
Total non-interest-bearing liabilities 394,477         288,047       
Total liabilities 1,470,193   7,382      1,312,581   6,382    
Total equity 367,652         169,851       
Total liabilities and total equity$1,837,845      0.92% $1,482,432      0.83%
Net interest income   $50,437        $42,064    
Net interest rate spread (5)       3.76%        3.77%
Net interest-earning assets (6)$574,796        $384,405       
Net interest margin (7)       4.09%        3.99%
Average interest-earning assets to                 
interest-bearing liabilities       153.43%        137.52%
                    

(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 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2022  2022  2022  2021  2021 
Other Data              
Common shares issued 24,728,460   24,724,274   24,724,274   18,463,028   18,463,028 
Less treasury shares          1,037,041   1,132,086 
Common shares outstanding at end of period 24,728,460   24,724,274   24,724,274   17,425,987   17,330,942 
               
Book value per common share$11.15  $11.85  $12.12  $10.86  $10.03 
Tangible book value per common share$11.15  $11.85  $12.12  $10.86  $10.03 
                    

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