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

Source: Nasdaq GlobeNewswire / 09 May 2022 17:15:14 America/New_York

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

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

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