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

Third Quarter 2023 Highlights (Compared to Prior Periods):

Net income of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023, as compared to net loss of ($0.1) million, or $0.00 per diluted share for the three months ended June 30, 2023 and net loss of ($14.7) million, or ($0.64) per diluted share for the three months ended September 30, 2022.
Included in the $2.6 million of net income for the third quarter of 2023 results is $33.5 million in interest and dividend income and $5.6 million in non-interest income, offset by a $17.3 million in non-interest expense and $17.0 million in interest expense.
Net interest income of $16.5 million for the third quarter of 2023 increased $0.3 million, or 1.60%, from the prior quarter and decreased $1.1 million, or 6.07%, from the same quarter last year.
Net interest margin was 2.58% for the third quarter of 2023, decreased from 2.65% for the prior quarter and from 3.59% for the same quarter last year.
Cash and equivalents were $117.0 million as of September 30, 2023, an increase of $62.7 million, or 115.25%, 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 $587.8 million as of September 30, 2023, a decrease of $52.5 million, or 8.20%, from December 31, 2022 primarily due to a call on one of the securities amounting to $10.0 million, maturities on two securities amounting to $3.0 million and regular principal payments.
Net loans receivable were $1.79 billion as of September 30, 2023, an increase of $294.5 million, or 19.72%, from December 31, 2022.
Deposits were $1.40 billion as of September 30, 2023, an increase of $148.7 million, or 11.87%, from December 31, 2022.

President and Chief Executive Officer's Comments

Carlos P. Naudon, Ponce Financial Group's President and CEO, stated "During the quarter, we completed our share buyback program at a cost of $8.91 per share, almost a 20% discount to our book value at September 30, 2023. Despite the headwinds caused by the increase in interest rates, which impacts our AOCI and drives down our net interest margin, we were able to increase book value per share by 5 cents quarter over quarter as well as grow our net interest income for the second quarter in a row. As previously announced, in addition to the $3.7 million grant received this quarter, we have been informed that we will receive an additional grant of approximately $0.5 million from the Community Development Financial Institutions ("CDFI") fund in the fourth quarter of 2023.

We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 25.10% 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") stand at $695.0 million, more than two times of our uninsured deposits of $334.0 million.

We remain committed to the communities we serve, our Minority Depository Institution ("MDI")/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 "While the increase in rates continues to put pressure on our operations, we still see resiliency on our client base, strong credit conditions and loan demand. While our credit metrics continue to improve, we will be prudent on our underwriting 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
	September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (Annualized):	2023			2023			2023			2022			2022
Return on average assets (1)		0.39	%		(0.01	%)		0.06	%		(1.62	%)		(2.80	%)
Return on average equity (1)		2.11	%		(0.07	%)		0.27	%		(7.28	%)		(11.25	%)
Net interest rate spread (1) (2)		1.58	%		1.66	%		1.78	%		2.13	%		3.08	%
Net interest margin (1) (3)		2.58	%		2.65	%		2.75	%		2.97	%		3.59	%
Non-interest expense to average assets (1)		2.58	%		2.65	%		2.79	%		2.78	%		4.83	%
Efficiency ratio (4)		78.11	%		96.15	%		95.88	%		94.95	%		132.46	%
Average interest-earning assets to average interest- bearing liabilities		137.92	%		141.14	%		148.20	%		152.30	%		162.67	%
Average equity to average assets		18.32	%		19.21	%		20.91	%		22.32	%		24.90	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Capital Ratios (Annualized):	2023			2023			2023			2022			2022
Total capital to risk weighted assets (Bank only)		25.10	%		26.30	%		27.54	%		30.53	%		33.39	%
Tier 1 capital to risk weighted assets (Bank only)		23.85	%		25.05	%		26.28	%		29.26	%		32.13	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		23.85	%		25.05	%		26.28	%		29.26	%		32.13	%
Tier 1 capital to average assets (Bank only)		17.51	%		17.95	%		19.51	%		20.47	%		22.91	%

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Asset Quality Ratios (Annualized):	2023			2023			2023			2022			2022
Allowance for loan losses as a percentage of total loans		1.51	%		1.64	%		1.77	%		2.27	%		1.77	%
Allowance for loan losses as a percentage of nonperforming loans		169.49	%		167.06	%		149.73	%		252.33	%		118.43	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.34	%)		(0.41	%)		(0.57	%)		(0.85	%)		(0.52	%)
Non-performing loans as a percentage of total gross loans		0.89	%		0.98	%		1.18	%		0.90	%		1.50	%
Non-performing loans as a percentage of total assets		0.62	%		0.63	%		0.76	%		0.59	%		0.97	%
Total non-performing assets as a percentage of total assets		0.62	%		0.63	%		0.76	%		0.59	%		0.97	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets⁽⁵⁾		0.82	%		0.83	%		0.93	%		0.78	%		1.16	%

(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 periods in 2022, the balances only include troubled debt restructurings.

Summary of Results of Operations

Net income for the three months ended September 30, 2023 was $2.6 million compared to net loss of ($0.1) million for the three months ended June 30, 2023 and net loss of ($14.7) million for the three months ended September 30, 2022. The increase of net income for the three months ended September 30, 2023 compared to the three months ended June 30, 2023 was attributed mainly to increases in non-interest income and net interest income and a decrease in provision for credit loss, partially offset by increases provision for income taxes and non-interest expense. The increase of net income for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was largely due to decreases in provision for credit loss and 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 income for the nine months ended September 30, 2023 was $2.8 million compared to a net loss of ($20.8) million for the nine months ended September 30, 2022. The increase in net income was attributable to decreases in non-interest expense and provision for credit losses 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 September 30, 2023, increased $0.3 million, or 1.60%, to $16.5 million compared to $16.3 million for the three months ended June 30, 2023 and decreased $1.1 million, or 6.07%, compared to $17.6 million for the three months end September 30, 2022.

Net interest margin was 2.58% for the three months ended September 30, 2023 compared to 2.65% for the prior quarter, a decrease of 7bps and 3.59% for the same period last year, a decrease of 101bps. The decrease in net interest margin 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 September 30, 2023, was $5.6 million, an increase of $4.1 million, or 277.14%, compared to the three months ended June 30, 2023 and an increase of $4.1 million, or 256.82%, compared to the three months ended September 30, 2022.

The $4.1 million increase in non-interest income for the three months ended September 30, 2023 compared to the three months ended June 30, 2023 and the three months ended September 30, 2022 was largely attributable to a grant of $3.7 million received in the third quarter of 2023 from the U.S. Treasury as part of the CDFI Equitable Recovery Program and a $0.5 million assignment fee that was recognized in the third quarter of 2023.

Non-interest income for the nine months ended September 30, 2023, was $8.9 million, an increase of $3.0 million, or 49.41%, compared to $6.0 million for the nine months ended September 30, 2022. The $3.0 million increase from the nine months ended September 30, 2022 was attributable to a grant of $3.7 million received from the U.S. Treasury and an increase of $1.6 million in late and prepayment charges, partially offset by a decrease of $1.8 million in loan origination.

Non-interest Expense

Non-interest expense for the three months ended September 30, 2023, was $17.3 million, an increase of $0.2 million, or 1.33%, compared to $17.1 million for the three months ended June 30, 2023 and a decrease of $8.1 million, or 31.87%, compared to $25.4 million for the three months ended September 30, 2022.

The $8.1 million decrease from the three months ended September 30, 2022 was mainly attributable to $8.9 million of Grain consumer microloans write-offs during the third quarter of 2022 and a decrease of $0.3 million in direct loan expense, partially offset by increases of $0.6 million in data processing expenses and $0.4 million in professional fees.

Non-interest expense for the nine months ended September 30, 2023, was $50.8 million, a decrease of $19.3 million, or 27.54%, compared to the nine months ended September 30, 2022. The $19.3 million decrease of non-interest expense from the nine months ended September 30, 2022 was attributable to $18.5 million of Grain consumer microloan write-off during the corresponding period last year compared with $1.3 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 the corresponding period last year, partially offset by increases of $1.3 million in provision for contingencies, $1.3 million in data processing expenses, $1.0 million in compensation and benefits and $0.7 million in professional fees.

Balance Sheet Summary

Total assets increased $311.9 million, or 13.49%, to $2.62 billion as of September 30, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $294.5 million in net loans receivable, $62.7 million in cash and cash equivalents, $12.1 million in mortgage loans held for sale and $2.5 million in other assets, offset by decreases of $39.8 million in held-to-maturity securities, $12.8 million in available-for-sale securities, and $5.8 million in Federal Home Loan Bank of New York stock.

Total liabilities increased $319.5 million, or 17.56%, to $2.14 billion as of September 30, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $157.7 million in borrowings and $148.7 million in deposits.

Total stockholders' equity decreased $7.6 million, or 1.55%, to $485.1 million as of September 30, 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 and an increase of $2.6 million in other comprehensive loss, partially offset by increases of $2.8 million in net income, $1.2 million in share-based compensation, $1.1 million as a result of implementation of CECL and $0.8 million in ESOP.

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
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
ASSETS
Cash and due from banks:
Cash	$	26,046		$	31,162		$	26,951		$	31,977		$	34,007
Interest-bearing deposits		90,966			212,627			157,736			22,383			28,514
Total cash and cash equivalents		117,012			243,789			184,687			54,360			62,521
Available-for-sale securities, at fair value		116,753			123,720			128,320			129,505			131,977
Held-to-maturity securities, at amortized cost⁽¹⁾		471,065			481,952			491,649			510,820			494,297
Placement with banks		996			996			1,245			1,494			2,490
Mortgage loans held for sale, at fair value		14,103			10,070			2,987			1,979			3,357
Loans receivable, net		1,787,607			1,695,047			1,614,428			1,493,127			1,392,553
Accrued interest receivable		16,624			16,054			15,435			15,049			14,063
Premises and equipment, net		16,453			16,856			17,215			17,446			17,759
Right of use assets		32,110			32,435			33,147			33,423			34,121
Federal Home Loan Bank of New York stock (FHLBNY), at cost		18,870			19,195			19,209			24,661			14,272
Deferred tax assets		15,984			15,924			15,413			16,137			13,822
Other assets		16,286			15,919			15,799			13,988			11,170
Total assets	$	2,623,863		$	2,671,957		$	2,539,534		$	2,311,989		$	2,192,402
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,401,132		$	1,442,013		$	1,336,877		$	1,252,412		$	1,351,189
Operating lease liabilities		33,459			33,716			34,308			34,532			35,081
Accrued interest payable		8,385			4,704			1,767			1,390			854
Advance payments by borrowers for taxes and insurance		13,743			12,402			14,902			9,724			10,589
Borrowings		675,100			682,100			648,375			517,375			286,375
Other liabilities		6,986			6,540			7,264			3,856			7,631
Total liabilities		2,138,805			2,181,475			2,043,493			1,819,289			1,691,719
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			247
Treasury stock, at cost		(10,975	)		(5,202	)		(2	)		(2	)		—
Additional paid-in-capital		207,626			207,287			206,883			206,508			206,092
Retained earnings		96,902			94,312			94,399			92,955			102,169
Accumulated other comprehensive loss		(20,468	)		(17,597	)		(16,629	)		(17,860	)		(18,420	)
Unearned compensation ─ ESOP		(13,276	)		(13,567	)		(13,859	)		(14,150	)		(14,405	)
Total stockholders' equity		485,058			490,482			496,041			492,700			500,683
Total liabilities and stockholders' equity	$	2,623,863		$	2,671,957		$	2,539,534		$	2,311,989		$	2,192,402

(1) Included for the quarterly period ended September 30, 2023, June 30, 2023 and March 31, 2023 were $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
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
Interest and dividend income:
Interest on loans receivable	$	25,276		$	23,015		$	19,700		$	18,550		$	17,058
Interest on deposits due from banks		1,969			1,817			197			199			346
Interest and dividend on securities and FHLBNY stock		6,261			6,223			6,459			6,184			4,230
Total interest and dividend income		33,506			31,055			26,356			24,933			21,634
Interest expense:
Interest on certificates of deposit		4,362			3,881			3,225			1,786			855
Interest on other deposits		5,639			4,413			2,812			3,649			1,375
Interest on borrowings		6,963			6,479			5,074			3,332			1,793
Total interest expense		16,964			14,773			11,111			8,767			4,023
Net interest income		16,542			16,282			15,245			16,166			17,611
Provision (benefit) for credit losses		535			987			(174	)		12,641			9,330
Net interest income after provision (benefit) for credit losses		16,007			15,295			15,419			3,525			8,281
Non-interest income:
Service charges and fees		516			481			491			481			464
Brokerage commissions		17			35			15			180			288
Late and prepayment charges		899			372			729			263			109
Income on sale of mortgage loans		173			82			99			7			116
Loan origination⁽¹⁾		—			—			—			(557	)		522
Grant income		3,718			—			—			—			—
(Loss) gain on sale of premises and equipment		—			—			—			—			(436	)
Other		304			522			485			63			514
Total non-interest income		5,627			1,492			1,819			437			1,577
Non-interest expense:
Compensation and benefits		7,566			7,425			7,446			6,501			7,377
Occupancy and equipment		3,588			3,724			3,570			3,928			3,611
Data processing expenses		1,582			1,208			1,192			1,114			994
Direct loan expenses		369			345			412			454			654
Provision for contingencies		391			517			985			(440	)		519
Insurance and surety bond premiums		255			248			265			270			297
Office supplies, telephone and postage		301			489			399			375			369
Professional fees		1,693			1,904			1,455			1,571			1,251
Grain (recoveries) and write-off		(69	)		(346	)		(914	)		(515	)		8,881
Marketing and promotional expenses		248			303			128			256			214
Directors fees and regulatory assessment		169			160			155			196			188
Other operating expenses		1,223			1,112			1,268			2,055			1,061
Total non-interest expense		17,316			17,089			16,361			15,765			25,416
Income (loss) before income taxes		4,318			(302	)		877			(11,803	)		(15,558	)
Provision (benefit) for income taxes		1,728			(215	)		546			(2,589	)		(820	)
Net income (loss)	$	2,590		$	(87	)	$	331		$	(9,214	)	$	(14,738	)
Earnings (loss) per common share:
Basic	$	0.12		$	(0.00	)	$	0.01		$	(0.40	)	$	(0.64	)
Diluted	$	0.12		$	(0.00	)	$	0.01		$	(0.40	)	$	(0.64	)
Weighted average common shares outstanding:
Basic		22,272,076			23,208,168			23,293,013			23,168,097			23,094,859
Diluted		22,349,217			23,208,168			23,324,532			23,168,097			23,094,859

(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 Nine Months Ended September 30,
	2023			2022			Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	67,991		$	51,315		$	16,676			32.50	%
Interest on deposits due from banks		3,983			514			3,469			674.90	%
Interest and dividend on securities and FHLBNY stock		18,943			5,990			12,953			216.24	%
Total interest and dividend income		90,917			57,819			33,098			57.24	%
Interest expense:
Interest on certificates of deposit		11,468			2,361			9,107			385.73	%
Interest on other deposits		12,864			2,154			10,710			497.21	%
Interest on borrowings		18,516			2,867			15,649			545.83	%
Total interest expense		42,848			7,382			35,466			480.44	%
Net interest income		48,069			50,437			(2,368	)		(4.69	%)
Provision for credit losses		1,348			11,405			(10,057	)		(88.18	%)
Net interest income after provision for credit losses		46,721			39,032			7,689			19.70	%
Non-interest income:
Service charges and fees		1,488			1,349			139			10.30	%
Brokerage commissions		67			840			(773	)		(92.02	%)
Late and prepayment charges		2,000			360			1,640			455.56	%
Income on sale of mortgage loans		354			734			(380	)		(51.77	%)
Loan origination		—			1,843			(1,843	)		(100.00	%)
Grant income		3,718			—			3,718			—	%
(Loss) gain on sale of premises and equipment		—			(436	)		436			(100.00	%)
Other		1,311			1,292			19			1.47	%
Total non-interest income		8,938			5,982			2,956			49.41	%
Non-interest expense:
Compensation and benefits		22,437			21,413			1,024			4.78	%
Occupancy and equipment		10,882			10,040			842			8.39	%
Data processing expenses		3,982			2,665			1,317			49.42	%
Direct loan expenses		1,126			2,033			(907	)		(44.61	%)
Provision for contingencies		1,893			566			1,327			234.45	%
Insurance and surety bond premiums		768			600			168			28.00	%
Office supplies, telephone and postage		1,189			1,180			9			0.76	%
Professional fees		5,052			4,333			719			16.59	%
Contribution to the Ponce De Leon Foundation		—			4,995			(4,995	)		(100.00	%)
Grain (recoveries) and write-off		(1,329	)		18,455			(19,784	)		(107.20	%)
Marketing and promotional expenses		679			337			342			101.48	%
Directors fees and regulatory assessment		484			509			(25	)		(4.91	%)
Other operating expenses		3,603			2,931			672			22.93	%
Total non-interest expense		50,766			70,057			(19,291	)		(27.54	%)
Income (loss) before income taxes		4,893			(25,043	)		29,936			(119.54	%)
Provision (benefit) for income taxes		2,059			(4,256	)		6,315			(148.38	%)
Net income (loss)	$	2,834		$	(20,787	)	$	23,621			(113.63	%)
Earnings (loss) per common share:
Basic	$	0.12		$	(0.92	)	$	1.05			(113.40	%)
Diluted	$	0.12		$	(0.92	)	$	1.05			(113.37	%)
Weighted average common shares outstanding:
Basic		22,920,680			22,524,477			396,203			1.76	%
Diluted		22,962,956			22,524,477			438,479			1.95	%

Ponce Financial Group, Inc. and Subsidiaries

Key Metrics

	At or for the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022
Performance Ratios:
Return on average assets (1)		0.39	%		(0.01	%)		0.06	%		(1.62	%)		(2.80	%)
Return on average equity (1)		2.11	%		(0.07	%)		0.27	%		(7.28	%)		(11.25	%)
Net interest rate spread (1) (2)		1.58	%		1.66	%		1.78	%		2.13	%		3.08	%
Net interest margin (1) (3)		2.58	%		2.65	%		2.75	%		2.97	%		3.59	%
Non-interest expense to average assets (1)		2.58	%		2.65	%		2.79	%		2.78	%		4.83	%
Efficiency ratio (4)		78.11	%		96.15	%		95.88	%		94.95	%		132.46	%
Average interest-earning assets to average interest- bearing liabilities		137.92	%		141.14	%		148.20	%		152.30	%		162.67	%
Average equity to average assets		18.32	%		19.21	%		20.91	%		22.32	%		24.90	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		25.10	%		26.30	%		27.54	%		30.53	%		33.39	%
Tier 1 capital to risk weighted assets (Bank only)		23.85	%		25.05	%		26.28	%		29.26	%		32.13	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		23.85	%		25.05	%		26.28	%		29.26	%		32.13	%
Tier 1 capital to average assets (Bank only)		17.51	%		17.95	%		19.51	%		20.47	%		22.91	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.51	%		1.64	%		1.77	%		2.27	%		1.77	%
Allowance for credit losses on loans as a percentage of nonperforming loans		169.49	%		167.06	%		149.73	%		252.33	%		118.43	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.34	%)		(0.41	%)		(0.57	%)		(0.85	%)		(0.52	%)
Non-performing loans as a percentage of total gross loans		0.89	%		0.98	%		1.18	%		0.90	%		1.50	%
Non-performing loans as a percentage of total assets		0.62	%		0.63	%		0.76	%		0.59	%		0.97	%
Total non-performing assets as a percentage of total assets		0.62	%		0.63	%		0.76	%		0.59	%		0.97	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets⁽⁵⁾		0.82	%		0.83	%		0.93	%		0.78	%		1.16	%
Other:
Number of offices		19			19			19			19			19
Number of full-time equivalent employees		243			244			251			253			257

Ponce Financial Group, Inc. and Subsidiaries

Securities Portfolio

	September 30, 2023										December 31, 2022
				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	$	2,989		$	—	$	(276	)	$	2,713	$	2,985	$	—	$	(296	)	$	2,689
Corporate Bonds		25,799			—		(2,609	)		23,190		25,824		—		(2,465	)		23,359
Mortgage-Backed Securities:
Collateralized Mortgage Obligations⁽¹⁾		40,646			—		(7,657	)		32,989		44,503		—		(6,726	)		37,777
FHLMC Certificates		10,441			—		(1,904	)		8,537		11,310		—		(1,676	)		9,634
FNMA Certificates		62,771			—		(13,552	)		49,219		67,199		—		(11,271	)		55,928
GNMA Certificates		108			—		(3	)		105		122		—		(4	)		118
Total available-for-sale securities	$	142,754		$	—	$	(26,001	)	$	116,753	$	151,943	$	—	$	(22,438	)	$	129,505

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(504	)	$	24,496	$	35,000	$	—	$	(380	)	$	34,620
Corporate Bonds		82,500			—		(5,117	)		77,383		82,500		57		(3,819	)		78,738
Mortgage-Backed Securities:
Collateralized Mortgage Obligations⁽¹⁾		217,632			—		(12,198	)		205,434		235,479		192		(5,558	)		230,113
FHLMC Certificates		3,923			—		(358	)		3,565		4,120		—		(268	)		3,852
FNMA Certificates		121,940			—		(8,818	)		113,122		131,918		—		(5,227	)		126,691
SBA Certificates		20,717			147		—			20,864		21,803		34		—			21,837
Allowance for Credit Losses		(647	)		—		—			—		—		—		—			—
Total held-to-maturity securities	$	471,065		$	147	$	(26,995	)	$	444,864	$	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.

	September 30,			December 31,
	2023			2022
Beginning balance	$	—		$	—
CECL adoption		662			—
Provision for credit losses		(15	)		—
Allowance for credit losses on securities	$	647		$	—

Ponce Financial Group, Inc. and Subsidiaries

Loan Portfolio

	As of
	September 30,						June 30,						March 31,						December 31,						September 30,
	2023						2023						2023						2022						2022
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent

	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	347,082			19.13	%	$	351,754			20.43	%	$	354,559			21.60	%	$	343,968			22.54	%	$	336,667			23.79	%
Owner-Occupied		151,866			8.37	%		154,116			8.94	%		149,481			9.10	%		134,878			8.84	%		112,749			7.97	%
Multifamily residential		553,694			30.52	%		550,033			31.94	%		553,430			33.71	%		494,667			32.42	%		421,917			29.81	%
Nonresidential properties		321,472			17.71	%		317,416			18.43	%		314,560			19.17	%		308,043			20.19	%		282,642			19.97	%
Construction and land		411,383			22.67	%		315,843			18.34	%		235,157			14.33	%		185,018			12.13	%		197,437			13.95	%
Total mortgage loans		1,785,497			98.40	%		1,689,162			98.08	%		1,607,187			97.91	%		1,466,574			96.12	%		1,351,412			95.49	%
Non-mortgage loans:
Business loans (1)		18,416			1.02	%		21,041			1.22	%		19,890			1.21	%		39,965			2.62	%		41,398			2.92	%
Consumer loans (2)		10,416			0.58	%		11,958			0.70	%		14,227			0.88	%		19,129			1.26	%		22,563			1.59	%
Total non-mortgage loans		28,832			1.60	%		32,999			1.92	%		34,117			2.09	%		59,094			3.88	%		63,961			4.51	%
Total loans, gross		1,814,329			100.00	%		1,722,161			100.00	%		1,641,304			100.00	%		1,525,668			100.00	%		1,415,373			100.00	%
Net deferred loan origination costs		692						1,059						2,099						2,051						2,288
Allowance for credit losses on loans		(27,414	)					(28,173	)					(28,975	)					(34,592	)					(25,108	)
Loans, net	$	1,787,607					$	1,695,047					$	1,614,428					$	1,493,127					$	1,392,553

(1) As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, business loans include $1.1 million, $3.2 million, $3.6 million, $20.0 million and $24.7 million, respectively, of PPP loans.

(2) As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, consumer loans include $9.3 million, $11.2 million, $13.4 million, $18.2 million and $21.5 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 September 30, 2023
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-September 30, 2023)	$	24,255
Write-downs, net of recoveries (inception-to-date as of September 30, 2023)		(15,610	)
Cash receipts from Grain (inception-to-September 30, 2023)		(6,819	)
Grant/reserve		(1,826	)
Net receivable as of September 30, 2023	$	—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of September 30, 2023	$	9,318
Allowance for credit losses on loans as of September 30, 2023⁽¹⁾		(8,163	)
Microloans, net of allowance for credit losses on loans as of September 30, 2023	$	1,155
Investments
Investment in Grain	$	1,000
Investment in Grain write-off in Q3 2022		(1,000	)
Investment in Grain as of September 30, 2023		—
Total exposure to Grain as of September 30, 2023	$	1,155

(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.

Ponce Financial Group, Inc. and Subsidiaries

Allowance for Credit Losses on Loans

	For the Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2022			2022			2022

	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	28,173		$	28,975		$	34,592		$	25,108		$	17,535
Provision (benefit) for credit losses on loans		750			934			(321	)		12,641			9,330
Adoption of CECL		—			—			(3,090	)		—			—
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		(1,592	)		(1,931	)		(2,569	)		(3,659	)		(1,799	)
Total charge-offs		(1,592	)		(1,931	)		(2,569	)		(3,659	)		(1,799	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			39
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		3			—			—			—			1
Consumer		80			195			363			502			2
Total recoveries		83			195			363			502			42
Net (charge-offs) recoveries		(1,509	)		(1,736	)		(2,206	)		(3,157	)		(1,757	)
Allowance for credit losses on loans at end of the period	$	27,414		$	28,173		$	28,975		$	34,592		$	25,108

Ponce Financial Group, Inc. and Subsidiaries

Deposits

	As of
	September 30,					June 30,					March 31,					December 31,					September 30,
	2023					2023					2023					2022					2022
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent

	(Dollars in thousands)
Demand	$	265,862		18.98	%	$	266,545		18.48	%	$	282,741		21.15	%	$	289,149		23.08	%	$	288,654		21.37	%
Interest-bearing deposits:
NOW/IOLA accounts		22,519		1.61	%		22,754		1.57	%		21,735		1.63	%		24,349		1.94	%		28,799		2.13	%
Money market accounts		370,500		26.44	%		387,970		26.91	%		293,140		21.93	%		236,143		18.86	%		257,409		19.05	%
Reciprocal deposits		82,670		5.90	%		100,919		7.00	%		109,649		8.20	%		114,049		9.11	%		162,858		12.05	%
Savings accounts		117,870		8.41	%		119,635		8.30	%		127,731		9.55	%		130,432		10.41	%		140,055		10.37	%
Total NOW, money market, reciprocal and savings accounts		593,559		42.36	%		631,278		43.78	%		552,255		41.31	%		504,973		40.32	%		589,121		43.60	%
Certificates of deposit of $250K or more		122,353		8.73	%		120,043		8.32	%		113,955		8.52	%		106,336		8.49	%		114,016		8.43	%
Brokered certificates of deposit⁽¹⁾		98,729		7.05	%		98,729		6.85	%		98,754		7.39	%		98,754		7.89	%		98,760		7.31	%
Listing service deposits⁽¹⁾		15,180		1.08	%		20,258		1.40	%		28,417		2.13	%		35,813		2.86	%		40,964		3.03	%
All other certificates of deposit less than $250K		305,449		21.80	%		305,160		21.17	%		260,755		19.50	%		217,387		17.36	%		219,674		16.26	%
Total certificates of deposit		541,711		38.66	%		544,190		37.74	%		501,881		37.54	%		458,290		36.60	%		473,414		35.03	%
Total interest-bearing deposits		1,135,270		81.02	%		1,175,468		81.52	%		1,054,136		78.85	%		963,263		76.92	%		1,062,535		78.63	%
Total deposits	$	1,401,132		100.00	%	$	1,442,013		100.00	%	$	1,336,877		100.00	%	$	1,252,412		100.00	%	$	1,351,189		100.00	%

(1) As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, there were $0.3 million, $3.3 million, $9.5 million, $13.6 million and $13.8 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. and Subsidiaries

Borrowings

	September 30,							December 31,
	2023							2022
	Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate			Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate

	(Dollars in thousands)
Overnight line of credit advance	$	—	$	—		—	%	$	6,000	$	6,000		4.61	%

Term advances ending:
2023	$	—	$	—		—		$	178,375	$	178,375		4.32
2024		354,000		354,000		4.53			50,000		50,000		4.75
2025		50,000		50,000		4.41			50,000		50,000		4.41
2026		—		—		—			—		—		—
2027		212,000		212,000		3.44			183,000		183,000		3.25
Thereafter		59,100		59,100		3.43			50,000		50,000		3.35
	$	675,100	$	675,100		4.08	%	$	517,375	$	517,375		3.90	%

Ponce Financial Group, Inc. and Subsidiaries

Nonperforming Assets

	As of Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2023			2023			2023			2022			2022

	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	396		$	296		$	2,836		$	2,844		$	5,902
Owner occupied		1,685			2,363			2,245			961			971
Multifamily residential		1,444			1,435			—			—			—
Nonresidential properties		—			—			—			—			778
Construction and land		11,721			11,721			11,906			7,567			10,660
Non-mortgage loans:
Business		209			—			40			—			359
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty)⁽¹⁾	$	15,455		$	15,815		$	17,027		$	11,372		$	18,670

Non-accruing modifications to borrowers experiencing financial difficulty⁽¹⁾:
Mortgage loans:
1-4 family residential
Investor owned	$	270		$	209		$	213		$	217		$	221
Owner occupied		449			840			2,020			2,027			2,215
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			91			93			95
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing modifications to borrowers experiencing financial difficulty⁽¹⁾		719			1,049			2,324			2,337			2,531
Total non-accrual loans	$	16,174		$	16,864		$	19,351		$	13,709		$	21,201

Accruing modifications to borrowers experiencing financial difficulty (1):
Mortgage loans:
1-4 family residential
Investor owned	$	2,131		$	2,161		$	2,185		$	2,207		$	2,228
Owner occupied		2,335			2,353			1,310			1,328			1,254
Multifamily residential		—			—			—			—			—
Nonresidential properties		765			783			701			708			715
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total accruing modifications to borrowers experiencing financial difficulty⁽¹⁾	$	5,231		$	5,297		$	4,196		$	4,243		$	4,197
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty⁽¹⁾	$	21,405		$	22,161		$	23,547		$	17,952		$	25,398
Total non-performing loans to total gross loans		0.89	%		0.98	%		1.18	%		0.90	%		1.50	%
Total non-performing assets to total assets		0.62	%		0.63	%		0.76	%		0.59	%		0.97	%
Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets⁽¹⁾		0.82	%		0.83	%		0.93	%		0.78	%		1.16	%

(1) 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 periods in 2022, the balances only include troubled debt restructurings.

Ponce Financial Group, Inc. and Subsidiaries

Average Balance Sheets

	For the Three Months Ended September 30,
	2023						2022
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate⁽¹⁾		Balance		Interest		Yield/Rate⁽¹⁾

	(Dollars in thousands)
Interest-earning assets:
Loans⁽²⁾	$	1,777,585	$	25,276	5.64	%	$	1,379,029	$	17,058	4.91	%
Securities⁽³⁾		599,573		5,821	3.85	%		492,337		4,153	3.35	%
Other⁽⁴⁾⁽⁵⁾		169,570		2,409	5.64	%		74,055		423	2.27	%
Total interest-earning assets		2,546,728		33,506	5.22	%		1,945,421		21,634	4.41	%
Non-interest-earning assets⁽⁵⁾		111,771						108,329
Total assets	$	2,658,499					$	2,053,750
Interest-bearing liabilities:
NOW/IOLA	$	22,876	$	8	0.14	%	$	29,939	$	13	0.17	%
Money market		485,042		5,601	4.58	%		381,606		1,303	1.35	%
Savings		118,095		29	0.10	%		141,200		57	0.16	%
Certificates of deposit		527,302		4,362	3.28	%		382,163		855	0.89	%
Total deposits		1,153,315		10,000	3.44	%		934,908		2,228	0.95	%
Advance payments by borrowers		14,537		1	0.03	%		10,918		2	0.07	%
Borrowings		678,676		6,963	4.07	%		250,112		1,793	2.84	%
Total interest-bearing liabilities		1,846,528		16,964	3.64	%		1,195,938		4,023	1.33	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		278,358		—				321,556		—
Other non-interest-bearing liabilities		46,643		—				16,377		—
Total non-interest-bearing liabilities		325,001		—				337,933		—
Total liabilities		2,171,529		16,964				1,533,871		4,023
Total equity		486,970						519,879
Total liabilities and total equity	$	2,658,499			3.64	%	$	2,053,750			1.33	%
Net interest income			$	16,542					$	17,611
Net interest rate spread⁽⁶⁾					1.58	%					3.08	%
Net interest-earning assets⁽⁷⁾	$	700,200					$	749,483
Net interest margin⁽⁸⁾					2.58	%					3.59	%
Average interest-earning assets to interest-bearing liabilities					137.92	%					162.67	%

(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, FHLBNY stock dividends and FRB demand deposits.

(5)   FRB demand deposits for prior period have been reclassified for consistency.

(6)   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.

(7)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(8)   Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries

Average Balance Sheets

	For the Nine Months Ended September 30,
	2023						2022
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate⁽¹⁾		Balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans⁽²⁾	$	1,678,369	$	67,991	5.42	%	$	1,341,151	$	51,315	5.12	%
Securities⁽³⁾		614,987		17,627	3.83	%		263,421		5,778	2.93	%
Other⁽⁴⁾⁽⁵⁾		127,961		5,299	5.54	%		96,623		726	1.00	%
Total interest-earning assets		2,421,317		90,917	5.02	%		1,701,195		57,819	4.54	%
Non-interest-earning assets⁽⁵⁾		118,609						136,650
Total assets	$	2,539,926					$	1,837,845
Interest-bearing liabilities:
NOW/IOLA	$	22,828	$	25	0.15	%	$	31,769	$	43	0.18	%
Money market		403,171		12,745	4.23	%		344,361		1,986	0.77	%
Savings		123,218		88	0.10	%		137,808		120	0.12	%
Certificates of deposit		522,740		11,468	2.93	%		398,661		2,361	0.79	%
Total deposits		1,071,957		24,326	3.03	%		912,599		4,510	0.66	%
Advance payments by borrowers		14,814		6	0.05	%		11,033		5	0.06	%
Borrowings		617,912		18,516	4.01	%		152,084		2,867	2.52	%
Total interest-bearing liabilities		1,704,683		42,848	3.36	%		1,075,716		7,382	0.92	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		298,148		—				350,871		—
Other non-interest-bearing liabilities		43,864		—				43,606		—
Total non-interest-bearing liabilities		342,012		—				394,477		—
Total liabilities		2,046,695		42,848				1,470,193		7,382
Total equity		493,231						367,652
Total liabilities and total equity	$	2,539,926			3.36	%	$	1,837,845			0.92	%
Net interest income			$	48,069					$	50,437
Net interest rate spread⁽⁶⁾					1.66	%					3.62	%
Net interest-earning assets⁽⁷⁾	$	716,634					$	625,479
Net interest margin⁽⁸⁾					2.65	%					3.96	%
Average interest-earning assets to
interest-bearing liabilities					142.04	%					158.15	%

(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, FHLBNY stock dividends and FRB demand deposit.

(5) FRB demand deposits for prior period have been reclassified for consistency.

(6) 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.

(7) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(8) Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries

Other Data

	As of
	September 30,		June 30,		March 31,		December 31,		September 30,
	2023		2023		2023		2022		2022
Other Data
Common shares issued		24,886,711		24,886,711		24,865,476		24,861,329		24,728,460
Less treasury shares		1,233,111		617,924		1,976		1,976		—
Common shares outstanding at end of period		23,653,600		24,268,787		24,863,500		24,859,353		24,728,460

Book value per common share	$	10.99	$	10.94	$	10.90	$	10.77	$	11.15
Tangible book value per common share	$	10.99	$	10.94	$	10.90	$	10.77	$	11.15

Contact:

Frank Perez

frank.perez@poncebank.net

718-981-9000

Ponce Financial Group, Inc. Reports Third Quarter 2023 Results