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

Ponce Bank May 9, 2022 12:00:00 AM

YORK, May 09, 2022 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), reported a net loss of ($6.8 million), or ($0.31) per basic and diluted share, for the first quarter of 2022, compared to net income of $15.0 million, or $0.90 per basic and $0.89 per diluted share, for the prior quarter and net income of $2.5 million, or $0.15 per basic and diluted share, for the first quarter of 2021.

First Quarter Highlights

Net interest income of $17.3 million for the first quarter increased $556,000, or 3.3%, from the prior quarter and $4.4 million, or 34.5%, from the same quarter last year.

Loss before taxes was ($9.8 million) for the first quarter of 2022 as compared to income before taxes of $19.2 million for the prior quarter and $3.2 million for the same quarter last year. Included in the first quarter of 2022 is a net loss of ($8.1 million) resulting from a $6.3 million write-off and $1.7 million in additional reserves relating to the Bank’s lending relationship with Grain Technologies, Inc. (“Grain”). Included in the fourth quarter of 2021 was a net gain of $15.4 million resulting from the sale of real properties.

Average cost of interest-bearing deposits was 0.49% for the first quarter, a decrease from 0.51% for the prior quarter and from 0.77% for the same quarter last year.

Net interest margin was 4.68% for the first quarter, an increase from 4.51% for the prior quarter and from 4.00% for the same quarter last year.

Net interest rate spread was 4.48% for the first quarter, an increase from 4.32% for the prior quarter and from 3.76% for the same quarter last year.

Efficiency ratio was 143.50% for the first quarter compared to 44.10% for the prior quarter and 76.94% for the same quarter last year.

Non-performing loans of $15.8 million as of March 31, 2022 increased $3.5 million year-over-year and was 1.20% of total gross loans receivable at March 31, 2022.

Net loans receivable were $1.30 billion at March 31, 2022, a decrease of $4.6 million, or 0.4%, from December 31, 2021.

Deposits were $1.18 billion at March 31, 2022, a decrease of $23.6 million, or 2.0%, from December 31, 2021.

Mortgage World’s business is now conducted as a division of Ponce Bank.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, President and CEO, stated that, “The reported net loss of $6.8 million for the first quarter of 2022, the beginning of our life as a fully publicly traded company, reflects $13.1 million in one-time pre-tax events; a $5.0 million contribution to the Ponce De Leon Foundation as part of our conversion and reorganization and an aggregate of $8.1 million write-off and write-down of the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud. Although we are confident that Grain will grow from a pre-profit startup to a solid company, the write-off and write-down reflect the current economic conditions and regulatory requirements, notwithstanding Grain’s success in raising capital and its targeting low and low-to-moderate income communities and underserved people. Additionally, we maintain an allowance for loan losses which at March 31, 2022 amounted to $1.5 million, or 4.8%, specifically for the $31.0 million microloans portfolio. We continue to view our microloan portfolio as important to our mission and are pleased that, as an MDI and CDFI, we have been able to provide over 54,000 new customers a reasonably priced alternative to otherwise high-cost, predatory lending options. We are also encouraged that our net interest income after provision for loan losses continues to improve quarter-over-quarter since the first quarter of 2021 and that, excluding the noted one-time events, our operating expenses remain consistent with our growth. From April 1, 2021 to March 31, 2022, we grew the Company by 11.2% while our capital increased by 85.8%, positioning us well for the challenges of tomorrow.”

Executive Chairman’s Comments

Steven A. Tsavaris, Executive Chairman, noted that “we are pleased that we have been able to offset the effects on our loan portfolio due to reductions in PPP loans as they are forgiven by increasing the origination of our traditional loans, augmented by increased lending in non-qualified mortgages – a clear benefit of our being a CDFI and MDI. We look forward to the closing of our announced ECIP capital funding from the U.S. Treasury.”

Results of Operations Summary

Net loss for the three months ended March 31, 2022 was ($6.8 million), compared to $15.0 million of net income for the three months ended December 31, 2021 and $2.5 million of net income for the three months ended March 31, 2021.

The ($6.8 million) net loss for the three months ended March 31, 2022 compared to $15.0 million of net income for the three months ended December 31, 2021 was attributable to a decrease of $16.9 million in non-interest income quarter to quarter and an increase of $12.2 million in non-interest expense quarter to quarter. The $12.2 million increase in non-interest expense was the result of the write-off and write-down related to Grain of $8.1 million and a contribution to the Ponce De Leon Foundation of $5.0 million, and an increase of $385,000 in provision for loan losses, offset by $3.0 million in benefit for income taxes, rather than a $4.2 million provision for income taxes quarter to quarter.

The ($6.8 million) net loss for the three months ended March 31, 2022 compared to $2.5 million of net income for the three months ended March 31, 2021 was due to an increase of $15.2 million in non-interest expense, a decrease of $1.7 million in non-interest income and an increase of $572,000 in provision for loan losses. The net loss was offset by increases of $4.4 million in net interest income and a $3.0 million benefit for income taxes, rather than a $732,000 provision for income taxes quarter to quarter.

Net interest income for the three months ended March 31, 2022 was $17.3 million, an increase of $556,000, or 3.3%, compared to the three months ended December 31, 2021 and an increase of $4.4 million, or 34.5%, compared to the three months ended March 31, 2021. The increase of $556,000 in net interest income for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was attributable to an increase of $366,000 in interest and dividend income and a decrease of $190,000 in interest expense. The increase of $4.4 million in net interest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was attributable to an increase of $3.8 million in interest and dividend income and a decrease of $605,000 in interest expense.

Net interest margin was 4.68% for the three months ended March 31, 2022, an increase of 17 basis points from 4.51% for the three months ended December 31, 2021 and an increase of 68 basis points from 4.00% for the three months ended March 31, 2021.

Net interest rate spread increased by 16 basis points to 4.48% for the three months ended March 31, 2022 from 4.32% for the three months ended December 31, 2021 and increased by 72 basis points from 3.76% for the three months ended March 31, 2021. The increase in the net interest rate spread for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was primarily due to an increase in the average yield on interest-earning assets of 13 basis points to 5.14% for the three months ended March 31, 2022 from 5.01% for the three months ended December 31, 2021, and a decrease in the average rate on interest-bearing liabilities of 3 basis points to 0.66% for the three months ended March 31, 2022 from 0.69% for the three months ended December 31, 2021. The increase in the net interest rate spread for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to an increase in the average yield on interest-earning assets of 44 basis points to 5.14% for the three months ended March 31, 2022 from 4.70% for the three months ended March 31, 2021 and a decrease in the average rates on interest-bearing liabilities of 28 basis points to 0.66% for the three months ended March 31, 2022 from 0.94% for the three months ended March 31, 2021.

Non-interest income decreased $16.9 million to $2.2 million for the three months ended March 31, 2022 from $19.2 million for the three months ended December 31, 2021 and decreased $1.7 million from $3.9 million for the three months ended March 31, 2021. Excluding the $15.4 million gain, net of expense, from sale of real properties during the three months ended December 31, 2021, non-interest income decreased $1.5 million to $2.2 million for the three months ended March 31, 2022 compared to $3.7 million for the three months ended December 31, 2021.

The decrease of $16.9 million in non-interest income for the three months ended March 31, 2022 compared to the three months ended December 31, 2021 was due to the absence of the one-time $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, and decreases of $876,000 in income on sale of mortgage loans, $425,000 in loan origination fees, $278,000 in late and prepayment charges, $63,000 in brokerage commissions and $28,000 in service charges and fees, offset by an increase of $158,000 in other non-interest income.

The decrease of $1.7 million in non-interest income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was due to decreases of $1.1 million in income on sale of mortgage loans, $663,000, net of expenses, from the sale of real properties recognized in the first quarter of 2021, $186,000 in late and prepayment charges and $78,000 in loan origination fees, offset by increases of $124,000 in other non-interest income, $115,000 in brokerage commissions and $111,000 in service charges and fees.

Non-interest expense increased $12.2 million, or 77.1%, to $28.1 million for the three months ended March 31, 2022 from $15.9 million for the three months ended December 31, 2021 and increased $15.2 million, or 117.4%, from $12.9 million for the three months ended March 31, 2021.

The increase of $12.2 million in non-interest expense for the three months ended March 31, 2022, compared to the three months ended December 31, 2021, was attributable to an aggregate $8.1 million write-off and write down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization, and increases of $185,000 in occupancy and equipment, $166,000 in compensation and benefits and $76,000 in data processing expenses, offset by decreases of $610,000 in other operating expenses, $366,000 in professional fees, $158,000 in direct loan expenses and $147,000 in office supplies, telephone and postage.

The increase of $15.2 million in non-interest expense for the three months ended March 31, 2022, compared to the three months ended March 31, 2021 was attributable to an aggregate $8.1 million in write-off and write-down related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $5.0 million in contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization, and increases of $1.5 million in compensation and benefits, $558,000 in occupancy and equipment, $253,000 in data processing expenses, $72,000 in professional fees and $33,000 in marketing and promotional expense, offset by decreases of $174,000 in other operating expenses and $135,000 in direct loan expenses.

Balance Sheet Summary

Total assets decreased $58.9 million, or 3.6%, to $1.59 billion at March 31, 2022 from $1.65 billion at December 31, 2021. The decrease in total assets is attributable to decreases of $84.6 million in cash and cash equivalents, $7.9 million in mortgage loans held for sale, at fair value, $6.4 million in other assets, $4.6 million in net loans receivable (inclusive of $50.8 million net decrease in PPP loans), $581,000 in FHLBNY stock and $338,000, net, in premises and equipment. The decrease in total assets was reduced by increases of $41.5 million in available-for-sale securities, $3.6 million in deferred tax assets and $437,000 in accrued interest receivable.

Total liabilities decreased $169.2 million, or 11.6%, to $1.30 billion at March 31, 2022 from $1.46 billion at December 31, 2021. The decrease in total liabilities was mainly attributable to decreases of $122.0 million in second-step liabilities held pending the closing of the conversion and reorganization on January 27, 2022, $23.6 million in deposits, $14.3 million in warehouse lines of credit and $12.9 million in advances from FHLBNY, offset by increases of $2.5 million in advance payments by borrowers for taxes and insurance and $1.0 million in other liabilities.

Total stockholders’ equity increased $110.3 million, or 58.3%, to $299.6 million at March 31, 2022 from $189.3 million at December 31, 2021. This increase in stockholders’ equity was mainly attributable to $118.0 million as a result of the sale of equity in the second-step conversion and reorganization, $4.0 million contribution to the Ponce De Leon Foundation, $366,000 in Employee Stock Ownership Plan shares committed to be released and $351,000 in share-based compensation offset by $6.8 million in net loss and $5.6 million in other comprehensive loss.

Pursuant to the conversion and reorganization, PDL Community Bancorp treasury stock was extinguished on January 27, 2022. Ponce Financial Group, Inc. currently has no treasury stock.

About Ponce Financial Group, Inc.

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

Forward Looking Statements

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

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

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

ASSETS

Cash and due from banks:

Cash

32,168

98,954

29,365

32,541

13,551

Interest-bearing deposits in banks

37,127

54,940

33,673

33,551

76,571

Total cash and cash equivalents

69,295

153,894

63,038

66,092

90,122

Available-for-sale securities, at fair value

154,799

113,346

104,358

48,536

30,929

Held-to-maturity securities, at amortized cost

927

934

1,437

1,720

1,732

Placement with banks

2,490

2,739

Mortgage loans held for sale, at fair value

7,972

15,836

13,930

15,308

13,725

Loans receivable, net

1,300,446

1,305,078

1,302,238

1,343,578

1,230,458

Accrued interest receivable

12,799

12,362

13,360

13,134

12,547

Premises and equipment, net

19,279

19,617

34,081

34,057

33,625

Federal Home Loan Bank of New York stock (FHLBNY), at cost

5,420

6,001

6,156

6,057

Deferred tax assets

7,440

3,820

4,826

5,493

4,569

Other assets

13,730

20,132

14,793

10,837

7,204

Total assets

1,594,597

1,653,510

1,560,552

1,547,650

1,433,707

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits

1,181,165

1,204,716

1,249,261

1,236,161

1,138,546

Accrued interest payable

223

228

238

Advance payments by borrowers for taxes and insurance

10,161

7,657

9,118

7,682

9,264

Advances from the FHLBNY and others

93,375

106,255

109,255

Warehouse lines of credit

753

15,090

11,261

13,084

11,664

Mortgage loan fundings payable

—

1,136

743

676

Second-step liabilities

—

122,000

—

Other liabilities

9,341

8,308

9,396

8,780

3,032

Total liabilities

1,295,018

1,464,254

1,386,665

1,375,760

1,272,503

Commitments and contingencies

Stockholders' Equity:

Preferred stock, $0.01 par value; 100,000,000 shares authorized

—

Common stock, $0.01 par value; 200,000,000 shares authorized

247

185

Treasury stock, at cost

—

(13,687

)

(15,069

)

(15,069

)

(19,285

)

Additional paid-in-capital

205,243

85,601

86,360

85,956

85,470

Retained earnings

116,136

122,956

107,977

105,925

99,993

Accumulated other comprehensive income

(7,035

)

(1,456

)

(621

)

(41

)

Unearned compensation ─ ESOP

(15,012

)

(4,343

)

(4,945

)

(5,066

)

(5,187

)

Total stockholders' equity

299,579

189,256

173,887

171,890

161,204

Total liabilities and stockholders' equity

1,594,597

1,653,510

1,560,552

1,547,650

1,433,707

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

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

Interest and dividend income:

Interest on loans receivable

18,200

18,013

16,991

15,603

14,925

Interest on deposits due from banks

Interest and dividend on securities and FHLBNY stock

782

632

425

239

250

Total interest and dividend income

19,018

18,652

17,425

15,844

15,177

Interest expense:

Interest on certificates of deposit

803

907

1,010

1,108

1,219

Interest on other deposits

284

309

354

382

Interest on borrowings

593

654

621

622

684

Total interest expense

1,680

1,870

1,985

2,112

2,285

Net interest income

17,338

16,782

15,440

13,732

12,892

Provision for loan losses

1,258

873

572

586

686

Net interest income after provision for loan losses

16,080

15,909

14,868

13,146

12,206

Non-interest income:

Service charges and fees

440

468

494

366

329

Brokerage commissions

338

401

270

430

223

Late and prepayment charges

336

329

298

244

Income on sale of mortgage loans

418

1,294

1,175

1,288

1,508

Loan origination

461

886

625

971

539

Gain on sale of real property

—

15,431

—

4,176

663

Other

511

353

341

812

387

Total non-interest income

2,226

19,169

3,234

8,341

3,893

Non-interest expense:

Compensation and benefits

7,125

6,959

6,427

4,212

5,664

Occupancy and equipment

3,192

3,007

2,849

2,838

2,634

Data processing expenses

847

771

917

733

594

Direct loan expenses

874

1,032

696

1,151

1,009

Insurance and surety bond premiums

147

149

147

143

146

Office supplies, telephone and postage

405

552

626

467

409

Professional fees

1,334

1,700

1,765

2,902

1,262

Contribution to the Ponce De Leon Foundation

4,995

—

Grain write-off and write-down

8,074

—

Marketing and promotional expenses

Directors fees

Regulatory dues

120

Other operating expenses

856

1,466

1,113

958

1,030

Total non-interest expense

28,074

15,854

14,732

13,641

12,915

(Loss) income before income taxes

(9,768

)

19,224

3,370

7,846

3,184

(Benefit) provision for income taxes

(2,948

)

4,245

1,318

1,914

732

Net (loss) income

(6,820

)

14,979

2,052

5,932

2,452

(Loss) earnings per share:

Basic

(0.31

)

0.90

0.12

0.35

0.15

Diluted

(0.31

)

0.89

0.12

0.35

0.15

Weighted average shares outstanding:

Basic

21,721,113

16,864,929

16,823,731

16,737,037

16,548,196

Diluted

21,721,113

16,924,785

16,914,833

16,773,606

16,548,196

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

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

Quarter Ended March 31,

2022

2021

Variance $

Variance %

Interest and dividend income:

Interest on loans receivable

18,200

14,925

3,275

21.94

Interest on deposits due from banks

Interest and dividend on securities and FHLBNY stock

782

250

532

212.80

Total interest and dividend income

19,018

15,177

3,841

25.31

Interest expense:

Interest on certificates of deposit

803

1,219

(416

)

(34.13

Interest on other deposits

284

382

(98

)

(25.65

Interest on borrowings

593

684

(91

)

(13.30

Total interest expense

1,680

2,285

(605

)

(26.48

Net interest income

17,338

12,892

4,446

34.49

Provision for loan losses

1,258

686

572

83.38

Net interest income after provision for loan losses

16,080

12,206

3,874

31.74

Non-interest income:

Service charges and fees

440

329

111

33.74

Brokerage commissions

338

223

115

51.57

Late and prepayment charges

244

(186

)

(76.23

Income on sale of mortgage loans

418

1,508

(1,090

)

(72.28

Loan origination

461

539

(78

)

(14.47

Gain on sale of real property

—

663

(663

)

(100.00

Other

511

387

124

32.04

Total non-interest income

2,226

3,893

(1,667

)

(42.82

Non-interest expense:

Compensation and benefits

7,125

5,664

1,461

25.79

Occupancy and equipment

3,192

2,634

558

21.18

Data processing expenses

847

594

253

42.59

Direct loan expenses

874

1,009

(135

)

(13.38

Insurance and surety bond premiums

147

146

0.68

Office supplies, telephone and postage

405

409

)

(0.98

Professional fees

1,334

1,262

5.71

Contribution to the Ponce De Leon Foundation

4,995

—

4,995

—

Grain write-off and write-down

8,074

—

8,074

—

Marketing and promotional expenses

86.84

Directors fees

2.90

Regulatory dues

38.33

Other operating expenses

856

1,030

(174

)

(16.89

Total non-interest expense

28,074

12,915

15,159

117.38

(Loss) income before income taxes

(9,768

)

3,184

(12,952

)

(406.78

(Benefit) provision for income taxes

(2,948

)

732

(3,680

)

Net (loss) income

(6,820

)

2,452

(9,272

)

(378.14

(Loss) earnings per share:

Basic

(0.31

)

0.15

N/A

Diluted

(0.31

)

0.15

N/A

Weighted average shares outstanding:

Basic

21,721,113

16,548,196

N/A

Diluted

21,721,113

16,548,196

N/A

* Represents more than 500%

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

Key Metrics

At or for the Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

Performance Ratios:

Return on average assets (1)

(1.60

3.69

0.52

1.59

0.72

Return on average equity (1)

(10.06

31.46

4.59

13.95

6.16

Net interest rate spread (1) (2)

4.48

4.32

3.92

3.60

3.76

Net interest margin (1) (3)

4.68

4.51

4.13

3.84

4.00

Non-interest expense to average assets (1)

6.59

3.90

3.72

3.65

3.82

Efficiency ratio (4)

143.50

44.10

78.89

61.80

76.94

Average interest-earning assets to average interest- bearing liabilities

145.54

138.10

138.89

140.13

133.25

Average equity to average assets

15.92

11.71

11.27

11.37

11.77

Capital Ratios:

Total capital to risk weighted assets (bank only)

23.27

17.23

16.15

16.08

15.80

Tier 1 capital to risk weighted assets (bank only)

22.02

15.98

14.90

14.83

14.54

Common equity Tier 1 capital to risk-weighted assets (bank only)

22.02

15.98

14.90

14.83

14.54

Tier 1 capital to average assets (bank only)

14.88

10.95

9.98

10.22

10.78

Asset Quality Ratios:

Allowance for loan losses as a percentage of total loans

1.28

1.24

1.21

1.16

1.24

Allowance for loan losses as a percentage of nonperforming loans

106.84

142.90

157.17

175.63

126.07

Net (charge-offs) recoveries to average outstanding loans (1)

(0.22

(0.18

(0.13

(0.07

(0.02

Non-performing loans as a percentage of total gross loans

1.20

0.87

0.77

0.66

0.99

Non-performing loans as a percentage of total assets

0.99

0.69

0.65

0.58

0.86

Total non-performing assets as a percentage of total assets

0.99

0.69

0.65

0.58

0.86

Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets

1.32

1.07

1.05

1.01

1.32

Other:

Number of offices

Number of full-time equivalent employees

223

217

230

231

236

(1) Annualized where appropriate.

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

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

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

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

Loan Portfolio

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Mortgage loans:

1-4 family residential

Investor Owned

323,442

24.59

317,304

24.01

319,346

24.14

325,409

23.83

317,895

25.51

Owner-Occupied

95,234

7.24

96,947

7.33

97,493

7.37

98,839

7.24

99,985

8.02

Multifamily residential

368,133

27.98

348,300

26.34

317,575

24.01

318,579

23.33

315,078

25.28

Nonresidential properties

251,893

19.14

239,691

18.13

211,075

15.96

211,181

15.46

215,340

17.28

Construction and land

144,881

11.01

134,651

10.19

133,130

10.07

125,265

9.17

119,339

9.57

Total mortgage loans

1,183,583

89.96

1,136,893

86.00

1,078,619

81.55

1,079,273

79.02

1,067,637

85.66

Non-mortgage loans:

Business loans (1)

100,253

7.62

150,512

11.38

207,859

15.72

253,935

18.59

142,135

11.40

Consumer loans (2)

31,899

2.42

34,693

2.62

36,095

2.73

32,576

2.39

36,706

2.94

Total non-mortgage loans

132,152

10.04

185,205

14.00

243,954

18.45

286,511

20.98

178,841

14.34

Total loans, gross

1,315,735

100.00

1,322,098

100.00

1,322,573

100.00

1,365,784

100.00

1,246,478

100.00

Net deferred loan origination costs

1,604

(668

)

(4,327

)

(6,331

)

(512

)

Allowance for losses on loans

(16,893

)

(16,352

)

(16,008

)

(15,875

)

(15,508

)

Loans, net

1,300,446

1,305,078

1,302,238

1,343,578

1,230,458

(1) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, business loans include $86.0 million, $136.8 million, $195.9 million, $241.5 million, and $132.5 million, respectively, of PPP loans.

(2) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, consumer loans include $31.0 million, $33.9 million, $35.5 million, $32.0 million and $35.9 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.

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

Allowance for Loan Losses

For the Three Months Ended

March

December

September

June

March

2022

2021

(Dollars in thousands)

Allowance for loan losses at beginning of the period

16,352

16,008

15,875

15,508

14,870

Provision for loan losses

1,258

873

572

586

686

Charge-offs:

Mortgage loans:

1-4 family residences

Investor owned

—

Owner occupied

—

Multifamily residences

—

(38

)

—

Nonresidential properties

—

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

(751

)

(560

)

(510

)

(222

)

(50

)

Total charge-offs

(751

)

(598

)

(510

)

(222

)

(50

)

Recoveries:

Mortgage loans:

1-4 family residences

Investor owned

—

Owner occupied

—

Multifamily residences

—

Nonresidential properties

—

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

Total recoveries

Net (charge-offs) recoveries

(717

)

(529

)

(439

)

(219

)

(48

)

Allowance for loan losses at end of the period

16,893

16,352

16,008

15,875

15,508

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

Deposits

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Demand (1)

281,132

23.81

274,956

22.83

297,777

23.85

320,404

25.91

242,255

21.28

Interest-bearing deposits:

NOW/IOLA accounts

33,010

2.79

35,280

2.93

28,025

2.24

28,996

2.35

32,235

2.83

Money market accounts

169,847

14.38

186,893

15.51

199,758

15.99

172,925

13.99

157,271

13.81

Reciprocal deposits

160,510

13.59

143,221

11.89

147,226

11.79

151,443

12.25

137,402

12.07

Savings accounts

133,966

11.34

134,887

11.20

142,851

11.43

130,430

10.55

130,211

11.44

Total NOW, money market, reciprocal and savings accounts

497,333

42.10

500,281

41.53

517,860

41.45

483,794

39.14

457,119

40.15

Certificates of deposit of $250K or more

75,130

6.36

78,454

6.51

70,996

5.68

74,941

6.06

77,418

6.80

Brokered certificates of deposit (2)

79,282

6.71

79,320

6.58

83,505

6.68

83,506

6.76

86,004

7.55

Listing service deposits (2)

53,876

4.56

66,411

5.51

66,340

5.31

66,518

5.38

61,133

5.37

All other certificates of deposit less than $250K

194,412

16.46

205,294

17.04

212,783

17.03

206,998

16.75

214,617

18.85

Total certificates of deposit

402,700

34.09

429,479

35.64

433,624

34.70

431,963

34.95

439,172

38.57

Total interest-bearing deposits

900,033

76.19

929,760

77.17

951,484

76.15

915,757

74.09

896,291

78.72

Total deposits

1,181,165

100.00

1,204,716

100.00

1,249,261

100.00

1,236,161

100.00

1,138,546

100.00

(1) Included in demand deposits are deposits related to net PPP funding.

(2) As of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021 and March 31, 2021, there were $19.0 million, $29.0 million, $28.9 million, $28.9 million and $28.8 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.

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

Nonperforming Assets

As of Three Months Ended

March 31,

December 31,

September 31,

June 30,

March 31,

2022

2021

(Dollars in thousands)

Non-accrual loans:

Mortgage loans:

1-4 family residential

Investor owned

3,596

3,349

1,669

1,983

2,907

Owner occupied

962

1,284

1,090

1,593

1,585

Multifamily residential

—

1,200

2,577

955

946

Nonresidential properties

1,166

2,163

1,388

1,408

3,761

Construction and land

7,567

917

922

—

Non-mortgage loans:

Business

—

Consumer

—

Total non-accrual loans (not including non-accruing troubled debt restructured loans)

13,291

8,913

7,646

5,939

9,199

Non-accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

230

234

238

242

246

Owner occupied

2,192

2,196

2,200

2,199

2,195

Multifamily residential

—

Nonresidential properties

100

101

659

661

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total non-accruing troubled debt restructured loans

2,520

2,530

2,539

3,100

3,102

Total non-accrual loans

15,811

11,443

10,185

9,039

12,301

Accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

2,269

3,089

3,121

3,347

3,362

Owner occupied

2,313

2,374

2,396

2,431

2,466

Multifamily residential

—

Nonresidential properties

726

732

738

755

750

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total accruing troubled debt restructured loans

5,308

6,195

6,255

6,533

6,578

Total non-performing assets and accruing troubled debt restructured loans

21,119

17,638

16,440

15,572

18,879

Total non-performing loans to total gross loans

1.20

0.87

0.77

0.66

0.99

Total non-performing assets to total assets

0.99

0.69

0.65

0.58

0.86

Total non-performing assets and accruing troubled debt restructured loans to total assets

1.32

1.07

1.05

1.01

1.32

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

Average Balance Sheets

For the Three Months Ended March 31,

2022

2021

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

(Dollars in thousands)

Interest-earning assets:

Loans (2)

1,325,433

18,200

5.57

1,239,127

14,925

4.88

Securities (3)

138,095

717

2.11

22,516

176

3.17

Other (4)

38,253

101

1.07

46,581

0.66

Total interest-earning assets

1,501,781

19,018

5.14

1,308,224

15,177

4.70

Non-interest-earning assets

225,006

63,951

Total assets

1,726,787

1,372,175

Interest-bearing liabilities:

NOW/IOLA

33,083

0.20

33,085

0.47

Money market

319,806

235

0.30

277,104

304

0.44

Savings

135,404

0.10

126,961

0.12

Certificates of deposit

419,104

803

0.78

405,980

1,219

1.22

Total deposits

907,397

1,086

0.49

843,130

1,600

0.77

Advance payments by borrowers

9,808

0.04

8,899

0.05

Borrowings

114,688

593

2.10

129,755

684

2.14

Total interest-bearing liabilities

1,031,893

1,680

0.66

981,784

2,285

0.94

Non-interest-bearing liabilities:

Non-interest-bearing demand

372,433

—

215,116

—

Other non-interest-bearing liabilities

47,562

—

13,754

—

Total non-interest-bearing liabilities

419,995

—

228,870

—

Total liabilities

1,451,888

1,680

1,210,654

2,285

Total equity

274,899

161,521

Total liabilities and total equity

1,726,787

0.66

1,372,175

0.94

Net interest income

17,338

12,892

Net interest rate spread (5)

4.48

3.76

Net interest-earning assets (6)

469,888

326,440

Net interest margin (7)

4.68

4.00

Average interest-earning assets to interest-bearing liabilities

145.54

133.25

(1) Annualized where appropriate.

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

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

(4) Includes FHLBNY demand account and FHLBNY stock dividends.

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

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

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

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

Other Data

As of

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

Other Data

Common shares issued

24,724,274

18,463,028

Less treasury shares

—

1,037,041

1,132,086

1,135,086

1,444,776

Common shares outstanding at end of period

24,724,274

17,425,987

17,330,942

17,327,942

17,018,252

Book value per share

12.12

10.86

10.03

9.92

9.47

Tangible book value per share

12.12

10.86

10.03

9.92

9.47

Contact:

Frank Perez

frank.perez@poncebank.net

718-931-9000

Source: Ponce Financial Group, Inc.

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