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

PDLB

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 offices 18 19 19 19 20
Number of full-time equivalent employees 223 217 230 231 236

(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



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