NEW YORK, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the "Company") (NASDAQ:PDLB), the holding company for Ponce Bank (the "Bank"), today announced results for the fourth quarter of 2023.

Fourth Quarter 2023 Highlights (Compared to Prior Periods):

Net income of $0.5 million, or $0.02 per diluted share for the three months ended December 31, 2023, as compared to net income of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023 and net loss of ($9.2) million, or ($0.40) per diluted share for the three months ended December 31, 2022.
Included in the $0.5 million of net income for the fourth quarter of 2023 results is $35.0 million in interest and dividend income and $1.3 million in non-interest income, offset by $17.9 million in non-interest expense and $17.8 million in interest expense.
Net interest income of $17.2 million for the fourth quarter of 2023 increased $0.7 million, or 3.96%, from the prior quarter and increased $1.0 million, or 6.38%, from the same quarter last year.
Net interest margin was 2.66% for the fourth quarter of 2023, increased from 2.58% for the prior quarter and decreased from 2.97% for the same quarter last year.

Full Year 2023 Highlights (Compared to 2022):

Net income of $3.4 million, or $0.15 per diluted share for the year ended December 31, 2023, as compared to a net loss of ($30.0) million, or ($1.32) per diluted share for the year ended December 31, 2022.
Net interest income for the year ended December 31, 2023 was $65.3 million, decreased $1.3 million, or 2.01%, compared to $66.6 million for the year ended December 31, 2022.
Non-interest income for the year ended December 31, 2023 was $10.2 million, increased $3.8 million, or 59.26%, compared to $6.4 million for the year ended December 31, 2022.
Non-interest expense for the year ended December 31, 2023 was $68.7 million, decreased $17.2 million, or 19.99%, compared to $85.8 million for the year ended December 31, 2022.
Net interest margin was 2.66% for the year ended December 31, 2023, decreased from 3.66% for the same period last year.
Cash and equivalents were $139.2 million as of December 31, 2023, increased $84.8 million, or 156.05%, from December 31, 2022, as we decided to keep ample sources of liquidity at hand while taking advantage of the positive spread between our interest bearing overnight deposits at the Fed and borrowing costs under the Bank Term Funding Program ("BTFP").
Securities totaled $581.7 million as of December 31, 2023, decreased $58.7 million, or 9.16%, from December 31, 2022 primarily due to a call on one of the securities amounting to $10.0 million and regular principal payments.
Net loans receivable were $1.90 billion as of December 31, 2023, increased $402.8 million, or 26.97%, from December 31, 2022.
Deposits were $1.51 billion as of December 31, 2023, increased $255.2 million, or 20.38%, from December 31, 2022.

President and Chief Executive Officer's Comments

Carlos P. Naudon, Ponce Financial Group's President and CEO, stated "We were pleased to see continued improvement during the quarter: Net interest income grew for the third quarter in a row and, despite the challenging operating environment, net interest income was also up quarter over quarter. Book value per share was $11.20 at year-end, up $0.21 quarter over quarter and up $0.43 versus last year. Total equity per share now stands at $20.66. Additionally, in order to better manage our interest risk, during the fourth quarter, we entered into two pay fixed, receiver SOFR swaps, one with notional amount of $150 million for 2 years and one with notional amount of $100 million for 3 years.

We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 23.30%, well in excess of regulatory requirements. In terms of liquidity, our liquid assets plus borrowing capacity at the Federal Home Loan Bank of New York ("FHLBNY") stands at $778.8 million, two times of our uninsured deposits of $389.4 million.

We remain committed to the communities we serve, our Minority Depository Institution ("MDI")/Community Development Financial Institutions ("CDFI") status and continuing to invest in our people and in technology to improve our efficiency".

Executive Chairman's Comment

Steven A. Tsavaris, Ponce Financial Group's Executive Chairman added "We were able to grow both loans and deposits by over $100 million this quarter. We continue to see resiliency of our client base, but we'll prioritize sound underwriting practices and balance sheet management even at the expense of loan growth."

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

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Performance Ratios (Annualized):	2023			2023			2023			2023			2022
Return on average assets (1)		0.08	%		0.39	%		(0.01	%)		0.06	%		(1.62	%)
Return on average equity (1)		0.42	%		2.11	%		(0.07	%)		0.27	%		(7.28	%)
Net interest rate spread (1) (2)		1.63	%		1.58	%		1.66	%		1.78	%		2.13	%
Net interest margin (1) (3)		2.66	%		2.58	%		2.65	%		2.75	%		2.97	%
Non-interest expense to average assets (1)		2.66	%		2.58	%		2.65	%		2.79	%		2.78	%
Efficiency ratio (4)		96.83	%		78.11	%		96.15	%		95.88	%		94.95	%
Average interest-earning assets to average interest- bearing liabilities		137.49	%		137.92	%		141.14	%		148.20	%		152.30	%
Average equity to average assets		18.25	%		18.32	%		19.21	%		20.91	%		22.32	%

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Capital Ratios (Annualized):	2023			2023			2023			2023			2022
Total capital to risk weighted assets (Bank only)		23.30	%		25.10	%		26.30	%		27.54	%		30.53	%
Tier 1 capital to risk weighted assets (Bank only)		22.05	%		23.85	%		25.05	%		26.28	%		29.26	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		22.05	%		23.85	%		25.05	%		26.28	%		29.26	%
Tier 1 capital to average assets (Bank only)		17.49	%		17.51	%		17.95	%		19.51	%		20.47	%

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Asset Quality Ratios (Annualized):	2023			2023			2023			2023			2022
Allowance for loan losses as a percentage of total loans		1.36	%		1.51	%		1.64	%		1.77	%		2.27	%
Allowance for loan losses as a percentage of nonperforming loans		152.99	%		169.49	%		167.06	%		149.73	%		252.33	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.24	%)		(0.34	%)		(0.41	%)		(0.57	%)		(0.85	%)
Non-performing loans as a percentage of total gross loans		0.89	%		0.89	%		0.98	%		1.18	%		0.90	%
Non-performing loans as a percentage of total assets		0.62	%		0.62	%		0.63	%		0.76	%		0.59	%
Total non-performing assets as a percentage of total assets		0.62	%		0.62	%		0.63	%		0.76	%		0.59	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets ⁽⁵⁾		0.81	%		0.82	%		0.83	%		0.93	%		0.78	%

^{(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.}

^{(5)   For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For the period in 2022, the balances only include troubled debt restructurings.}

Summary of Results of Operations

Net income for the three months ended December 31, 2023 was $0.5 million compared to net income of $2.6 million for the three months ended September 30, 2023 and a net loss of ($9.2) million for the three months ended December 31, 2022. The decrease of net income for the three months ended December 31, 2023 compared to the three months ended September 30, 2023 was attributed mainly to a decrease in non-interest income and an increase in non-interest expense, partially offset by a decrease in provision for income taxes and, increases in a benefit for credit losses and net interest income. The increase of net income for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 was largely due to increases in benefit for credit losses, net interest income and non-interest income, partially offset by increases in provision for income taxes and non-interest expense.

Net income for the year ended December 31, 2023 was $3.4 million compared to a net loss of ($30.0) million for the year ended December 31, 2022. The increase in net income was attributable to an increase in benefit for credit losses and a decrease in non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes and a decrease in net interest income.

Net Interest Income and Net Margin

Net interest income for the three months ended December 31, 2023, increased $0.7 million, or 3.96%, to $17.2 million compared to $16.5 million for the three months ended September 30, 2023 and increased $1.0 million, or 6.38%, compared to $16.2 million for the three months ended December 31, 2022.

Net interest margin was 2.66% for the three months ended December 31, 2023 compared to 2.58% for the prior quarter, an increase of 8bps and 2.97% for the same period last year, a decrease of 31bps. The decrease in net interest margin for the three months ended December 31, 2023 when compared to the same period last year was a result of an increase in the cost of funds driven by higher interest rates.

Non-interest Income

Non-interest income for the three months ended December 31, 2023, was $1.3 million, a decrease of $4.3 million, or 77.16%, compared to the three months ended September 30, 2023 and an increase of $0.8 million, or 194.05%, compared to the three months ended December 31, 2022.

The $4.3 million decrease in non-interest income for the three months ended December 31, 2023 compared to the three months ended September 30, 2023 was largely attributable to a grant of $3.7 million received in the third quarter of 2023 from the U.S. Treasury, partially offset by a smaller grant of $0.4 million received in the fourth quarter of 2023 from the U.S. Treasury. The decrease in non-interest income was also impacted by decreases of $0.6 million in other non-interest income and $0.5 million in late and prepayment charges.

Non-interest income for the year ended December 31, 2023, was $10.2 million, an increase of $3.8 million, or 59.26%, compared to $6.4 million for the year ended December 31, 2022. The $3.8 million increase from the year ended December 31, 2022 was attributable to two grants totaled $4.2 million received from the U.S. Treasury and an increase of $1.7 million in late and prepayment charges, partially offset by decreases of $1.3 million in loan origination and $0.9 million in brokerage commission.

Non-interest Expense

Non-interest expense for the three months ended December 31, 2023, was $17.9 million, an increase of $0.6 million, or 3.36%, compared to $17.3 million for the three months ended September 30, 2023 and an increase of $2.1 million, or 13.52%, compared to $15.8 million for the three months ended December 31, 2022.

The $2.1 million increase from the three months ended December 31, 2022 was mainly attributable to increases of $1.8 million in compensation and benefits, $0.9 million in provision for contingencies and $0.5 million in professional fees, partially offset by a decrease of $0.9 million in other operating expense.

Non-interest expense for the year ended December 31, 2023 was $68.7 million, a decrease of $17.2 million, or 19.99%, compared to $85.8 million for the year ended December 31, 2022. The $17.2 million decrease of non-interest expense from the year ended December 31, 2022 was attributable to $17.9 million Grain consumer microloan write-off during 2022 compared with $1.5 million of Grain consumer microloan recoveries recognized during the current period. The decrease in non-interest expense was also impacted by a $5.0 million contribution to the Ponce De Leon Foundation during 2022, partially offset by increases of $2.8 million in compensation and benefits, $2.2 million in provision for contingencies, $1.3 million in data processing expenses and $1.2 million in professional fees.

Balance Sheet Summary

Total assets increased $438.7 million, or 18.98%, to $2.75 billion as of December 31, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $402.8 million in net loans receivable, $84.8 million in cash and cash equivalents, $10.7 million in other assets and $8.0 million in mortgage loans held for sale, partially offset by decreases of $49.1 million in held-to-maturity securities, $9.6 million in available-for-sale securities and $5.3 million in Federal Home Loan Bank of New York stock.

Total liabilities increased $440.0 million, or 24.19%, to $2.26 billion as of December 31, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $255.2 million in deposits, $167.0 million in borrowings, $10.6 million in accrued interest payable and $8.0 million in other liabilities.

Total stockholders' equity decreased $1.3 million, or 0.26%, to $491.4 million as of December 31, 2023, from $492.7 million as of December 31, 2022. This decrease in stockholders' equity was largely attributable to $11.0 million in share repurchases during 2023 and $2.2 million in other comprehensive loss, offset by $3.4 million in net income, $1.9 million impact to additional paid in capital as a result of share-based compensation, $1.1 million as a result of implementation of CECL and $1.1 million from release of ESOP shares.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc. 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; 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. and Subsidiaries

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)

	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
ASSETS
Cash and due from banks:
Cash	$	28,930		$	26,046		$	31,162		$	26,951		$	31,977
Interest-bearing deposits		110,260			90,966			212,627			157,736			22,383
Total cash and cash equivalents		139,190			117,012			243,789			184,687			54,360
Available-for-sale securities, at fair value		119,902			116,753			123,720			128,320			129,505
Held-to-maturity securities, at amortized cost ⁽¹⁾		461,748			471,065			481,952			491,649			510,820
Placement with banks		249			996			996			1,245			1,494
Mortgage loans held for sale, at fair value		9,980			14,103			10,070			2,987			1,979
Loans receivable, net		1,895,886			1,787,607			1,695,047			1,614,428			1,493,127
Accrued interest receivable		18,010			16,624			16,054			15,435			15,049
Premises and equipment, net		16,053			16,453			16,856			17,215			17,446
Right of use assets		31,272			32,110			32,435			33,147			33,423
Federal Home Loan Bank of New York stock (FHLBNY), at cost		19,377			18,870			19,195			19,209			24,661
Deferred tax assets		14,332			15,984			15,924			15,413			16,137
Other assets		24,723			16,286			15,919			15,799			13,988
Total assets	$	2,750,722		$	2,623,863		$	2,671,957		$	2,539,534		$	2,311,989
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,507,620		$	1,401,132		$	1,442,013		$	1,336,877		$	1,252,412
Operating lease liabilities		32,684			33,459			33,716			34,308			34,532
Accrued interest payable		11,965			8,385			4,704			1,767			1,390
Advance payments by borrowers for taxes and insurance		10,778			13,743			12,402			14,902			9,724
Borrowings		684,421			675,100			682,100			648,375			517,375
Other liabilities		11,859			6,986			6,540			7,264			3,856
Total liabilities		2,259,327			2,138,805			2,181,475			2,043,493			1,819,289
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000			225,000			225,000			225,000			225,000
Common stock, $0.01 par value; 200,000,000 shares authorized		249			249			249			249			249
Treasury stock, at cost		(9,747	)		(10,975	)		(5,202	)		(2	)		(2	)
Additional paid-in-capital		207,106			207,626			207,287			206,883			206,508
Retained earnings		97,420			96,902			94,312			94,399			92,955
Accumulated other comprehensive loss		(15,649	)		(20,468	)		(17,597	)		(16,629	)		(17,860	)
Unearned compensation ─ ESOP		(12,984	)		(13,276	)		(13,567	)		(13,859	)		(14,150	)
Total stockholders' equity		491,395			485,058			490,482			496,041			492,700
Total liabilities and stockholders' equity	$	2,750,722		$	2,623,863		$	2,671,957		$	2,539,534		$	2,311,989

^{(1) Included for the quarterly period ended December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023 were $0.4 million, $0.6 million, $0.9 million and $0.8 million, respectively, related to the allowance for credit loss on held-to-maturity securities.}

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
Interest and dividend income:
Interest on loans receivable	$	27,814		$	25,276		$	23,015		$	19,700		$	18,550
Interest on deposits due from banks		990			1,969			1,817			197			199
Interest and dividend on securities and FHLBNY stock		6,146			6,261			6,223			6,459			6,184
Total interest and dividend income		34,950			33,506			31,055			26,356			24,933
Interest expense:
Interest on certificates of deposit		5,103			4,362			3,881			3,225			1,786
Interest on other deposits		5,706			5,639			4,413			2,812			3,649
Interest on borrowings		6,944			6,963			6,479			5,074			3,332
Total interest expense		17,753			16,964			14,773			11,111			8,767
Net interest income		17,197			16,542			16,282			15,245			16,166
(Benefit) provision for credit losses		(375	)		535			987			(174	)		12,641
Net interest income after provision (benefit) for credit losses		17,572			16,007			15,295			15,419			3,525
Non-interest income:
Service charges and fees		498			516			481			491			481
Brokerage commissions		13			17			35			15			180
Late and prepayment charges		365			899			372			729			263
Income on sale of mortgage loans		244			173			82			99			7
Loan origination ⁽¹⁾		—			—			—			—			(557	)
Grant income		438			3,718			—			—			—
Other		(273	)		304			522			485			63
Total non-interest income		1,285			5,627			1,492			1,819			437
Non-interest expense:
Compensation and benefits		8,262			7,566			7,425			7,446			6,501
Occupancy and equipment		3,686			3,588			3,724			3,570			3,928
Data processing expenses		1,101			1,582			1,208			1,192			1,114
Direct loan expenses		497			369			345			412			454
Provision for contingencies		418			391			517			985			(440	)
Insurance and surety bond premiums		250			255			248			265			270
Office supplies, telephone and postage		294			301			489			399			375
Professional fees		2,040			1,693			1,904			1,455			1,571
Grain (recoveries) and write-off		(152	)		(69	)		(346	)		(914	)		(515	)
Marketing and promotional expenses		146			248			303			128			256
Directors fees and regulatory assessment		173			169			160			155			196
Other operating expenses		1,182			1,223			1,112			1,268			2,055
Total non-interest expense		17,897			17,316			17,089			16,361			15,765
Income (loss) before income taxes		960			4,318			(302	)		877			(11,803	)
Provision (benefit) for income taxes		442			1,728			(215	)		546			(2,589	)
Net income (loss)	$	518		$	2,590		$	(87	)	$	331		$	(9,214	)
Earnings (loss) per common share:
Basic	$	0.02		$	0.12		$	(0.00	)	$	0.01		$	(0.40	)
Diluted	$	0.02		$	0.12		$	(0.00	)	$	0.01		$	(0.40	)
Weighted average common shares outstanding:
Basic		22,224,945			22,272,076			23,208,168			23,293,013			23,168,097
Diluted		22,406,102			22,349,217			23,208,168			23,324,532			23,168,097

^{(1) Amounts for the quarterly period ended December 31, 2022 include the reversal of $0.8 million of loan origination income that had been taken upfront in prior quarters of 2022 (as opposed to deferred over the life of ‎the loan)‎.}

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

	For the Years Ended December 31,
	2023			2022			Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	95,805		$	69,865		$	25,940			37.13	%
Interest on deposits due from banks		4,973			713			4,260			597.48	%
Interest and dividend on securities and FHLBNY stock		25,089			12,174			12,915			106.09	%
Total interest and dividend income		125,867			82,752			43,115			52.10	%
Interest expense:
Interest on certificates of deposit		16,571			4,148			12,423			299.49	%
Interest on other deposits		18,570			5,802			12,768			220.06	%
Interest on borrowings		25,460			6,199			19,261			310.71	%
Total interest expense		60,601			16,149			44,452			275.26	%
Net interest income		65,266			66,603			(1,337	)		(2.01	%)
Provision for credit losses		973			24,046			(23,073	)		(95.95	%)
Net interest income after provision for credit losses		64,293			42,557			21,736			51.08	%
Non-interest income:
Service charges and fees		1,986			1,830			156			8.52	%
Brokerage commissions		80			1,020			(940	)		(92.16	%)
Late and prepayment charges		2,365			623			1,742			279.61	%
Income on sale of mortgage loans		598			741			(143	)		(19.30	%)
Loan origination		—			1,286			(1,286	)		(100.00	%)
Grant income		4,156			—			4,156			—	%
Loss on sale of premises and equipment		—			(436	)		436			(100.00	%)
Other		1,038			1,355			(317	)		(23.39	%)
Total non-interest income		10,223			6,419			3,804			59.26	%
Non-interest expense:
Compensation and benefits		30,699			27,914			2,785			9.98	%
Occupancy and equipment		14,568			13,968			600			4.30	%
Data processing expenses		5,083			3,779			1,304			34.51	%
Direct loan expenses		1,623			2,487			(864	)		(34.74	%)
Provision for contingencies		2,311			126			2,185			1,734.13	%
Insurance and surety bond premiums		1,018			870			148			17.01	%
Office supplies, telephone and postage		1,483			1,555			(72	)		(4.63	%)
Professional fees		7,092			5,904			1,188			20.12	%
Contribution to the Ponce De Leon Foundation		—			4,995			(4,995	)		(100.00	%)
Grain (recoveries) and write-off		(1,481	)		17,940			(19,421	)		(108.26	%)
Marketing and promotional expenses		825			593			232			39.12	%
Directors fees and regulatory assessment		657			705			(48	)		(6.81	%)
Other operating expenses		4,785			4,986			(201	)		(4.03	%)
Total non-interest expense		68,663			85,822			(17,159	)		(19.99	%)
Income (loss) before income taxes		5,853			(36,846	)		42,699			(115.89	%)
Provision (benefit) for income taxes		2,501			(6,845	)		9,346			(136.54	%)
Net income (loss)	$	3,352		$	(30,001	)	$	33,353			(111.17	%)
Earnings (loss) per common share:
Basic	$	0.15		$	(1.32	)	$	1.47			(111.15	%)
Diluted	$	0.15		$	(1.32	)	$	1.47			(111.11	%)
Weighted average common shares outstanding:
Basic		22,745,317			22,690,943			54,374			0.24	%
Diluted		22,822,313			22,690,943			131,370			0.58	%

Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2023			2023			2023			2023			2022
Performance Ratios:
Return on average assets (1)		0.08	%		0.39	%		(0.01	%)		0.06	%		(1.62	%)
Return on average equity (1)		0.42	%		2.11	%		(0.07	%)		0.27	%		(7.28	%)
Net interest rate spread (1) (2)		1.63	%		1.58	%		1.66	%		1.78	%		2.13	%
Net interest margin (1) (3)		2.66	%		2.58	%		2.65	%		2.75	%		2.97	%
Non-interest expense to average assets (1)		2.66	%		2.58	%		2.65	%		2.79	%		2.78	%
Efficiency ratio (4)		96.83	%		78.11	%		96.15	%		95.88	%		94.95	%
Average interest-earning assets to average interest- bearing liabilities		137.49	%		137.92	%		141.14	%		148.20	%		152.30	%
Average equity to average assets		18.25	%		18.32	%		19.21	%		20.91	%		22.32	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		23.30	%		25.10	%		26.30	%		27.54	%		30.53	%
Tier 1 capital to risk weighted assets (Bank only)		22.05	%		23.85	%		25.05	%		26.28	%		29.26	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		22.05	%		23.85	%		25.05	%		26.28	%		29.26	%
Tier 1 capital to average assets (Bank only)		17.49	%		17.51	%		17.95	%		19.51	%		20.47	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.36	%		1.51	%		1.64	%		1.77	%		2.27	%
Allowance for credit losses on loans as a percentage of nonperforming loans		152.99	%		169.49	%		167.06	%		149.73	%		252.33	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.24	%)		(0.34	%)		(0.41	%)		(0.57	%)		(0.85	%)
Non-performing loans as a percentage of total gross loans		0.89	%		0.89	%		0.98	%		1.18	%		0.90	%
Non-performing loans as a percentage of total assets		0.62	%		0.62	%		0.63	%		0.76	%		0.59	%
Total non-performing assets as a percentage of total assets		0.62	%		0.62	%		0.63	%		0.76	%		0.59	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets (5)		0.81	%		0.82	%		0.83	%		0.93	%		0.78	%
Other:
Number of offices		18			19			19			19			19
Number of full-time equivalent employees		237			243			244			251			253

Ponce Financial Group, Inc. and Subsidiaries

Securities Portfolio

	December 31, 2023										December 31, 2022
				Gross		Gross							Gross		Gross
	Amortized			Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost			Gains		Losses			Value		Cost		Gains		Losses			Value
	(in thousands)										(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,990		$	—	$	(206	)	$	2,784	$	2,985	$	—	$	(296	)	$	2,689
Corporate Bonds		25,790			—		(2,122	)		23,668		25,824		—		(2,465	)		23,359
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		39,375			—		(6,227	)		33,148		44,503		—		(6,726	)		37,777
FHLMC Certificates		10,163			—		(1,482	)		8,681		11,310		—		(1,676	)		9,634
FNMA Certificates		61,359			—		(9,842	)		51,517		67,199		—		(11,271	)		55,928
GNMA Certificates		104			—		—			104		122		—		(4	)		118
Total available-for-sale securities	$	139,781		$	—	$	(19,879	)	$	119,902	$	151,943	$	—	$	(22,438	)	$	129,505

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(181	)	$	24,819	$	35,000	$	—	$	(380	)	$	34,620
Corporate Bonds		82,500			—		(2,691	)		79,809		82,500		57		(3,819	)		78,738
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		212,093			104		(5,170	)		207,027		235,479		192		(5,558	)		230,113
FHLMC Certificates		3,897			—		(244	)		3,653		4,120		—		(268	)		3,852
FNMA Certificates		118,944			—		(4,088	)		114,856		131,918		—		(5,227	)		126,691
SBA Certificates		19,712			166		—			19,878		21,803		34		—			21,837
Allowance for Credit Losses		(398	)		—		—			—		—		—		—			—
Total held-to-maturity securities	$	461,748		$	270	$	(12,374	)	$	450,042	$	510,820	$	283	$	(15,252	)	$	495,851

^{(1) Comprised of Federal Home Loan Mortgage Corporation ("FHLMC"), Federal National Mortgage Association ("FNMA") and Ginnie Mae ("GNMA") issued securities.}

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

	December 31,
	2023			2022
Beginning balance	$	—		$	—
CECL adoption		662			—
Provision for credit losses		(264	)		—
Allowance for credit losses on securities	$	398		$	—

Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

	As of
	December 31,						September 30,						June 30,						March 31,						December 31,
	2023						2023						2023						2023						2022
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	343,689			17.89	%	$	347,082			19.13	%	$	351,754			20.43	%	$	354,559			21.60	%	$	343,968			22.54	%
Owner-Occupied		152,311			7.93	%		151,866			8.37	%		154,116			8.94	%		149,481			9.10	%		134,878			8.84	%
Multifamily residential		550,559			28.65	%		553,694			30.52	%		550,033			31.94	%		553,430			33.71	%		494,667			32.42	%
Nonresidential properties		342,343			17.81	%		321,472			17.71	%		317,416			18.43	%		314,560			19.17	%		308,043			20.19	%
Construction and land		503,925			26.22	%		411,383			22.67	%		315,843			18.34	%		235,157			14.33	%		185,018			12.13	%
Total mortgage loans		1,892,827			98.50	%		1,785,497			98.40	%		1,689,162			98.08	%		1,607,187			97.91	%		1,466,574			96.12	%
Non-mortgage loans:
Business loans (1)		19,779			1.03	%		18,416			1.02	%		21,041			1.22	%		19,890			1.21	%		39,965			2.62	%
Consumer loans (2)		8,966			0.47	%		10,416			0.58	%		11,958			0.70	%		14,227			0.88	%		19,129			1.26	%
Total non-mortgage loans		28,745			1.50	%		28,832			1.60	%		32,999			1.92	%		34,117			2.09	%		59,094			3.88	%
Total loans, gross		1,921,572			100.00	%		1,814,329			100.00	%		1,722,161			100.00	%		1,641,304			100.00	%		1,525,668			100.00	%
Net deferred loan origination costs		468						692						1,059						2,099						2,051
Allowance for credit losses on loans		(26,154	)					(27,414	)					(28,173	)					(28,975	)					(34,592	)
Loans, net	$	1,895,886					$	1,787,607					$	1,695,047					$	1,614,428					$	1,493,127

^{(1) As of December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, business loans include $1.0 million, $1.1 million, $3.2 million, $3.6 million and $20.0 million, respectively, of PPP loans.}

^{(2) As of December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, consumer loans include $8.0 million, $9.3 million, $11.2 million, $13.4 million and $18.2 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.}

Ponce Financial Group, Inc. and Subsidiaries

Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of December 31, 2023
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-December 31, 2023)	$	24,104
Write-downs, net of recoveries (inception-to-date as of December 31, 2023)		(15,459	)
Cash receipts from Grain (inception-to-December 31, 2023)		(6,819	)
Grant/reserve		(1,826	)
Net receivable as of December 31, 2023	$	—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of December 31, 2023	$	7,985
Allowance for credit losses on loans as of December 31, 2023 ⁽¹⁾		(7,026	)
Microloans, net of allowance for credit losses on loans as of December 31, 2023	$	959
Investments
Investment in Grain	$	1,000
Investment in Grain write-off in Q3 2022		(1,000	)
Investment in Grain as of December 31, 2023		—
Total exposure related to Grain as of December 31, 2023 ⁽²⁾	$	959

^{(1) Includes $0.3 million for allowance for unused commitments on the $2.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.6 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.}

^{(2) Total remaining exposure to Grain borrowers. These loans are now serviced by the Bank.}

On November 1, 2023, Ponce Financial Group, Inc. and Grain signed a Perpetual Software License Agreement in order for the Bank to assume the servicing of the remaining Grain loans. In order to facilitate the transfer of the servicing responsibilities to the Bank, Grain granted the Bank a perpetual right and license to use the Grain software, including the source code to service the remaining loans.

Ponce Financial Group, Inc. and Subsidiaries

Allowance for Credit Losses on Loans

	For the Three Months Ended
	December 31,			September 30,		June 30,		March 31,			December 31,
	2023			2023		2023		2023			2022
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	27,414		$	28,173	$	28,975	$	34,592		$	25,108
Provision (benefit) for credit losses on loans		(126	)		750		934		(321	)		12,641
Adoption of CECL		—			—		—		(3,090	)		—
Charge-offs: