NEW YORK, Oct. 28, 2022 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the "Company") (NASDAQ:PDLB), the holding company for Ponce Bank (the "Bank"), today announced results for the third quarter of 2022.

Third Quarter Highlights (Compared to Prior Periods):

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

President and Chief Executive Officer's Comments

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

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

Executive Chairman's Comment

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

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

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

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

Asset Quality Ratios (Annualized):	For the Three Months Ended,
Asset Quality Ratios (Annualized):	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021
Allowance for loan losses as a percentage of total loans	1.77%	1.31%	1.28%	1.24%	1.21%
Allowance for loan losses as a percentage of nonperforming loans	118.43%	94.05%	106.84%	142.90%	157.17%
Net (charge-offs) recoveries to average outstanding loans	(0.52%)	(0.05%)	(0.22%)	(0.18%)	(0.13%)
Non-performing loans as a percentage of total gross loans	1.50%	1.39%	1.20%	0.87%	0.77%
Non-performing loans as a percentage of total assets	0.98%	0.91%	0.99%	0.69%	0.65%
Total non-performing assets as a percentage of total assets	0.98%	0.91%	0.99%	0.69%	0.65%

Summary of Results of Operations

Net loss for the nine months ended September 30, 2022, was ($20.8) million compared to net income of $10.4 million for the nine months ended September 30, 2021. This variance was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation this year, gains on property sales last year versus a loss on equipment sale this year, higher compensation and occupancy expenses and a reduction on the income on sale of mortgage loans.

Net Interest Income and Net Margin

Net interest income for the nine months ended September 30, 2022, was $50.4 million compared to $42.1 million for the nine months ended September 30, 2021. This increase is largely explained by the increase in the securities and loan portfolios.

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

Non-interest Income

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

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

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

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

Non-interest Expense

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

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

Balance Sheet Summary

Total assets increased $504.8 million, or 30.53%, to $2.16 billion as of September 30, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $493.4 million resulting from the purchases in held-to-maturity securities utilizing the $225.0 million received from the issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program. The increase in total assets is further impacted by an increase of $87.5 million in net loans receivable (inclusive of a $112.0 million net decrease in PPP loans), partially offset by a decrease of $91.4 million in cash and equivalents.

Total liabilities increased $193.3 million, or 13.20%, to $1.66 billion as of September 30, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $180.1 million in advances from FHLBNY and $146.5 million in deposits, offset by a decrease of $122.0 million in subscription liabilities related to the conversion of the mutual holding company to a stock company held as of December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022.

Total stockholders' equity increased $311.4 million, or 164.55%, to $500.7 million as of September 30, 2022, from $189.3 million as of December 31, 2021. This increase in stockholders' equity was largely attributable to the $225.0 million issuance of preferred stock to the U.S. Department of the Treasury pursuant to its Emergency Capital Investment Program and the $118.0 million received as a result of the sale of common stock in the conversion of the mutual holding company to a stock company.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, is the holding company for Ponce Bank. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank's business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those funds, together with funds generated from operations and borrowings, in mortgage loans, consisting of 1-4 family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as "believes," "will," "would," "expects," "project," "may," "could," "developments," "strategic," "launching," "opportunities," "anticipates," "estimates," "intends," "plans," "targets" and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers' ability to service and repay Ponce Bank's loans; anticipated losses with respect to the Company's investment in Grain; the anticipated impact of the COVID-19 pandemic and Ponce Bank's attempts at mitigation; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank's market area; Ponce Bank's ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.'s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the "SEC"), which are available at the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

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

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)


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

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

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

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

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

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

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

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

Key Metrics

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

^{(1) Annualized where appropriate.}

^{(2) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.}

^{(3) Net interest margin represents net interest income divided by average total interest-earning assets.}

^{(4) Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.}

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

Securities Portfolio

	September 30, 2022									December 31, 2021
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
	(in thousands)									(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,984	$	—	$	(325	)	$	2,659	$	2,981	$	—	$	(47	)	$	2,934
Corporate Bonds		25,833		—		(2,475	)		23,358		21,243		144		(203	)		21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		45,727		—		(6,362	)		39,365		18,845		—		(497	)		18,348
FHLMC Certificates		11,614		—		(1,821	)		9,793		—		—		—			—
FNMA Certificates		68,840		—		(12,166	)		56,674		71,930		—		(1,231	)		70,699
GNMA Certificates		129		—		(1	)		128		175		6		—			181
Total available-for-sale securities	$	155,127	$	—	$	(23,150	)	$	131,977	$	115,174	$	150	$	(1,978	)	$	113,346

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000	$	—	$	(308	)	$	24,692	$	—	$	—	$	—		$	—
Corporate Bonds		80,500		—		(3,242	)		77,258		—		—		—			—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		227,257		—		(5,184	)		222,073		—		—		—			—
FHLMC Certificates		4,146		—		(272	)		3,874		934		—		(20	)		914
FNMA Certificates		135,178		—		(6,076	)		129,102		—		—		—			—
SBA Certificates		22,216		87		—			22,303		—		—		—			—
Total held-to-maturity securities	$	494,297	$	87	$	(15,082	)	$	479,302	$	934	$	—	$	(20	)	$	914

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

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

Loan Portfolio

	As of
	September 30,						June 30,						March 31,						December 31,						September 30,
	2022						2022						2022						2021						2021
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	336,667			23.79	%	$	321,671			24.02	%	$	323,442			24.59	%	$	317,304			24.01	%	$	319,346			24.14	%
Owner-Occupied		112,749			7.97	%		100,048			7.47	%		95,234			7.24	%		96,947			7.33	%		97,493			7.37	%
Multifamily residential		421,917			29.81	%		396,470			29.60	%		368,133			27.98	%		348,300			26.34	%		317,575			24.01	%
Nonresidential properties		282,642			19.97	%		279,877			20.90	%		251,893			19.14	%		239,691			18.13	%		211,075			15.96	%
Construction and land		197,437			13.95	%		165,425			12.35	%		144,881			11.01	%		134,651			10.19	%		133,130			10.07	%
Total mortgage loans		1,351,412			95.49	%		1,263,491			94.34	%		1,183,583			89.96	%		1,136,893			86.00	%		1,078,619			81.55	%
Non-mortgage loans:
Business loans (1)		41,398			2.92	%		45,720			3.41	%		100,253			7.62	%		150,512			11.38	%		207,859			15.72	%
Consumer loans (2)		22,563			1.59	%		30,198			2.25	%		31,899			2.42	%		34,693			2.62	%		36,095			2.73	%
Total non-mortgage loans		63,961			4.51	%		75,918			5.66	%		132,152			10.04	%		185,205			14.00	%		243,954			18.45	%
Total loans, gross		1,415,373			100.00	%		1,339,409			100.00	%		1,315,735			100.00	%		1,322,098			100.00	%		1,322,573			100.00	%

Net deferred loan origination costs		2,288						2,446						1,604						(668	)					(4,327	)
Allowance for losses on loans		(25,108	)					(17,535	)					(16,893	)					(16,352	)					(16,008	)

Loans, net	$	1,392,553					$	1,324,320					$	1,300,446					$	1,305,078					$	1,302,238

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

^{(2) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, consumer loans include $21.5 million, $28.3 million, $31.0 million, $33.9 million and $35.5 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.}

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

Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of September 30, 2022
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-September 30, 2022)	$	25,467
Write-downs (year to date as of September 30, 2022)		(17,455	)
Cash receipts from Grain (inception-to-September 30, 2022)		(6,186	)
Grant/reserve		(1,826	)
Net receivable as of September 30, 2022	$	—
Microloan receivables
Grain originated loans receivable as of September 30, 2022	$	21,507
Allowance for loan losses as of September 30, 2022 *		(8,213	)
Microloans, net of allowance for loan losses as of September 30, 2022	$	13,294
Investments
Investment in Grain as of June 30, 2022	$	1,000
Investment in Grain write-off in Q3 2022		(1,000	)
Investment in Grain as of September 30, 2022		—
Total exposure to Grain as of September 30, 2022	$	13,294

* Includes $460,000 for allowance for unused commitments on the $15.3 million of unused commitments available to Grain borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions

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

Allowance for Loan Losses

	For the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2022			2022			2022			2021			2021
	(Dollars in thousands)
Allowance for loan losses at beginning of the period	$	17,535		$	16,893		$	16,352		$	16,008		$	15,875
Provision for loan losses		9,330			817			1,258			873			572
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			(38	)		—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		(1,799	)		(450	)		(751	)		(560	)		(510	)
Total charge-offs		(1,799	)		(450	)		(751	)		(598	)		(510	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—			156			—			8			—
Owner occupied		39			—			—			45			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		1			91			2			15			69
Consumer		2			28			32			1			2
Total recoveries		42			275			34			69			71
Net (charge-offs) recoveries		(1,757	)		(175	)		(717	)		(529	)		(439	)
Allowance for loan losses at end of the period	$	25,108		$	17,535		$	16,893		$	16,352		$	16,008

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

Deposits

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

^{(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, there were $13.8 million, $18.5 million, $19.0 million, $29.0 million, and $28.9 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.}

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

Nonperforming Assets

	As of Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2022			2022			2022			2021			2021
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	5,902		$	3,460		$	3,596		$	3,349		$	1,669
Owner occupied		971			1,140			962			1,284			1,090
Multifamily residential		—			—			—			1,200			2,577
Nonresidential properties		778			1,162			1,166			2,163			1,388
Construction and land		10,660			10,817			7,567			917			922
Non-mortgage loans:
Business		359			—			—			—			—
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)	$	18,670		$	16,579		$	13,291		$	8,913		$	7,646

Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	221		$	224		$	230		$	234		$	238
Owner occupied		2,215			1,746			2,192			2,196			2,200
Multifamily residential		—			—			—			—			—
Nonresidential properties		95			96			98			100			101
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing troubled debt restructured loans		2,531			2,066			2,520			2,530			2,539
Total non-accrual loans	$	21,201		$	18,645		$	15,811		$	11,443		$	10,185

Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,228		$	2,246		$	2,269		$	3,089		$	3,121
Owner occupied		1,254			2,019			2,313			2,374			2,396
Multifamily residential		—			—			—			—			—
Nonresidential properties		715			725			726			732			738
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total accruing troubled debt restructured loans	$	4,197		$	4,990		$	5,308		$	6,195		$	6,255
Total non-performing assets and accruing troubled debt restructured loans	$	25,398		$	23,635		$	21,119		$	17,638		$	16,440
Total non-performing loans to total gross loans		1.50	%		1.39	%		1.20	%		0.87	%		0.77	%
Total non-performing assets to total assets		0.98	%		0.91	%		0.99	%		0.69	%		0.65	%
Total non-performing assets and accruing troubled debt restructured loans to total assets		1.18	%		1.16	%		1.32	%		1.07	%		1.05	%

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

Average Balance Sheets

	For the Three Months Ended September 30,
	2022					2021
	Average					Average
	Outstanding				Average	Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹)	Balance		Interest		Yield/Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	1,379,029	$	17,058	4.91%	$	1,356,130	$	16,991	4.97%
Securities ⁽³⁾		492,337		4,153	3.35%		72,960		355	1.93%
Other ⁽⁴⁾		57,646		423	2.91%		53,182		79	0.59%
Total interest-earning assets		1,929,012		21,634	4.45%		1,482,272		17,425	4.66%
Non-interest-earning assets		124,738					90,110
Total assets	$	2,053,750				$	1,572,382
Interest-bearing liabilities:
NOW/IOLA	$	29,939	$	13	0.17%	$	30,221	$	23	0.30%
Money market		409,947		1,471	1.42%		323,840		294	0.36%
Savings		141,200		57	0.16%		137,078		36	0.10%
Certificates of deposit		353,822		687	0.77%		448,191		1,010	0.89%
Total deposits		934,908		2,228	0.95%		939,330		1,363	0.58%
Advance payments by borrowers		10,918		2	0.07%		10,061		1	0.04%
Borrowings		250,112		1,793	2.84%		117,824		621	2.09%
Total interest-bearing liabilities		1,195,938		4,023	1.33%		1,067,215		1,985	0.74%
Non-interest-bearing liabilities:
Non-interest-bearing demand		321,556		—			317,727		—
Other non-interest-bearing liabilities		16,377		—			10,154		—
Total non-interest-bearing liabilities		337,933		—			327,881		—
Total liabilities		1,533,871		4,023			1,395,096		1,985
Total equity		519,879					177,286
Total liabilities and total equity	$	2,053,750			1.33%	$	1,572,382			0.74%
Net interest income			$	17,611				$	15,440
Net interest rate spread ⁽⁵⁾					3.12%					3.92%
Net interest-earning assets ⁽⁶⁾	$	733,074				$	415,057
Net interest margin⁽⁷⁾					3.62%					4.13%
Average interest-earning assets to interest-bearing liabilities					161.30%					138.89%

^{(1) Annualized where appropriate.}

^{(2) Loans include loans and mortgage loans held for sale, at fair value.}

^{(3) Securities include available-for-sale securities and held-to-maturity securities.}

^{(4) Includes FHLBNY demand account and FHLBNY stock dividends.}

^{(5) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.}

^{(6) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.}

^{(7) Net interest margin represents net interest income divided by average total interest-earning assets.}

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

Average Balance Sheets

	For the Nine Months Ended September 30,
	2022							2021
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾			Balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans⁽²⁾	$	1,341,151	$	51,315		5.12	%	$	1,309,765	$	47,519		4.85	%
Securities ⁽³⁾		263,421		5,778		2.93	%		45,749		701		2.05	%
Other ⁽⁴⁾		45,940		726		2.11	%		53,425		226		0.57	%
Total interest-earning assets		1,650,512		57,819		4.68	%		1,408,939		48,446		4.60	%
Non-interest-earning assets		187,333							73,493
Total assets	$	1,837,845						$	1,482,432
Interest-bearing liabilities:
NOW/IOLA	$	31,769	$	43		0.18	%	$	31,215	$	93		0.40	%
Money market		356,576		2,180		0.82	%		300,594		909		0.40	%
Savings		137,808		120		0.12	%		131,849		113		0.11	%
Certificates of deposit		386,446		2,167		0.75	%		428,653		3,337		1.04	%
Total deposits		912,599		4,510		0.66	%		892,311		4,452		0.67	%
Advance payments by borrowers		11,033		5		0.06	%		10,020		3		0.04	%
Borrowings		152,084		2,867		2.52	%		122,203		1,927		2.11	%
Total interest-bearing liabilities		1,075,716		7,382		0.92	%		1,024,534		6,382		0.83	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		350,871		—					275,865		—
Other non-interest-bearing liabilities		43,606		—					12,182		—
Total non-interest-bearing liabilities		394,477		—					288,047		—
Total liabilities		1,470,193		7,382					1,312,581		6,382
Total equity		367,652							169,851
Total liabilities and total equity	$	1,837,845				0.92	%	$	1,482,432				0.83	%
Net interest income			$	50,437						$	42,064
Net interest rate spread⁽⁵⁾						3.76	%						3.77	%
Net interest-earning assets ⁽⁶⁾	$	574,796						$	384,405
Net interest margin ⁽⁷⁾						4.09	%						3.99	%
Average interest-earning assets to
interest-bearing liabilities						153.43	%						137.52	%

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

Other Data

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
	2022		2022		2022		2021		2021
Other Data
Common shares issued		24,728,460		24,724,274		24,724,274		18,463,028		18,463,028
Less treasury shares		—		—		—		1,037,041		1,132,086
Common shares outstanding at end of period		24,728,460		24,724,274		24,724,274		17,425,987		17,330,942

Book value per common share	$	11.15	$	11.85	$	12.12	$	10.86	$	10.03
Tangible book value per common share	$	11.15	$	11.85	$	12.12	$	10.86	$	10.03

Contact:

Frank Perez

frank.perez@poncebank.net

718-931-9000

Ponce Financial Group, Inc. Reports Third Quarter 2022 Results