Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, Announces 2021 Fourth Quarter Results

Ponce Bank Mar 2, 2022 12:00:00 AM

YORK, March 02, 2022 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, (the “Company”) (NASDAQ: PDLB), the financial holding company for Ponce Bank (the “Bank”), reported net income of $15.0 million, or $0.90 per basic share and $0.89 per diluted share, for the fourth quarter of 2021, compared to net income of $2.1 million, or $0.12 per basic and diluted share, for the prior quarter and net income of $1.6 million, or $0.10 per basic and diluted share, for the fourth quarter of 2020.

Fourth Quarter Highlights

Net interest income of $16.8 million for the fourth quarter increased $1.3 million, or 8.7%, from the prior quarter and $5.1 million, or 43.8%, from the same quarter last year.

Income before income taxes of $19.2 million for the fourth quarter increased $15.9 million, or 470.4%, from the prior quarter and $17.1 million, or 810.2%, from the same quarter last year. Included in the fourth quarter was a net gain of $15.4 million resulting from the sale of real properties.

Average cost of interest-bearing deposits was 0.51% for the fourth quarter, a decrease from 0.58% for the prior quarter and from 0.94% for the same quarter last year.

Net interest margin was 4.51% for the fourth quarter, an increase from 4.13% for the prior quarter and from 3.78% for the same quarter last year.

Net interest rate spread was 4.32% for the fourth quarter, an increase from 3.92% for the prior quarter and from 3.50% for the same quarter last year.

Efficiency ratio was 44.10% for the fourth quarter compared to 78.89% for the prior quarter and 84.71% for the same quarter last year.

Non-performing loans of $11.4 million as of December 31, 2021 decreased $240,000 year-over-year and was 0.87% of total gross loans receivable at December 31, 2021.

Net loans receivable were $1.31 billion at December 31, 2021, an increase of $146.4 million, or 12.6%, from December 31, 2020.

Deposits were $1.20 billion at December 31, 2021, an increase of $175.1 million, or 17.0%, from December 31, 2020.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, President & CEO, stated that “2021 was truly a transformational year, thanks to the efforts of our people and the leadership of our Board of Directors: we raised over $132.0 million in additional capital through our conversion and reorganization; we realized approximately $20.0 million in net gain while freeing up approximately $40.0 million in investable funds through our sale-and-leaseback initiative; we provided $261.6 million in PPP loans to over 5,000 small businesses in our hard-hit communities; and we had record earnings. Now, as we consider additional capital from ECIP funding, we are poised to deliver further and farther on our core mission: using our resources to provide impactful financial services to underserved but deserving communities while building value for our stakeholders.”

Executive Chairman’s Comments

Steven A. Tsavaris, Executive Chairman, noted that “from our humble beginnings in the turbulent South Bronx over 60 years ago, we have survived and flourished. In 2021 we reached critical milestones: our strongest-ever capital position – and getting even stronger; our largest loan portfolio at $1.3 billion; our impeccable asset quality; and, our improved loan origination capabilities. Now, as Ponce Financial Group, we will continue to responsibly deploy our capital.”

Loan Payment Deferrals

As of December 31, 2021, four loans in the amount of $8.0 million remained in forbearance as a result of renewed forbearance. Of the four loans receiving renewed forbearance, one loan in the amount of $6.6 million is related to construction real estate, two loans, totaling $1.0 million are related to one-to-four family residential real estate and one loan in the amount of $391,000 is related to non-residential properties. All of these loans had been performing in accordance with their contractual obligations prior to the granting of the initial forbearance.

Results of Operations Summary

Net income for the three months ended December 31, 2021 was $15.0 million, compared to $2.1 million of net income for the three months ended September 30, 2021 and $1.6 million of net income for the three months ended December 31, 2020.

The $12.9 million increase in net income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was due substantially to an increase of $15.9 million in non-interest income primarily resulting from an increase of $15.4 million in gains, net of expenses, on sale of real properties. The increase in net income was also attributable to an increase of $1.3 million in net interest income, offset by increases of $2.9 million in provision for income taxes, $1.1 million in non-interest expense and $301,000 in provision for loan losses.

The $13.4 million increase in net income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was due substantially to an increase of $14.4 million in non-interest income primarily resulting from an increase of $15.4 million in gains, net of expenses, on sale of real properties, offset by a $1.5 million decrease in income on sale of mortgage loans. The increase in net income was also attributable to an increase of $5.1 million in net interest income, offset by increases of $3.8 million in provision for income taxes, $1.9 million in non-interest expense and $467,000 in provision for loan losses.

Net income for the year ended December 31, 2021 was $25.4 million, compared to $3.9 million of net income for the year ended December 31, 2020. The change from the year ended December 31, 2020 is primarily due to a $21.4 million increase in non-interest income resulting from increases of $16.1 million in gains, net of expenses, on sale of real properties, $2.1 million in loan origination fees and $1.1 million in sale of mortgage loans. The increase in net income was also attributable to a $16.9 million increase in net interest income, offset by increases of $9.6 million in non-interest expense, $6.8 million in provision for income taxes and a $274,000 in provision for loan losses.

Net interest income for the three months ended December 31, 2021 was $16.8 million, an increase of $1.3 million, or 8.7%, compared to the three months ended September 30, 2021 and an increase of $5.1 million, or 43.8%, compared to the three months ended December 31, 2020. The increase of $1.3 million in net interest income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was attributable to an increase of $1.2 million in interest and dividend income and a decrease of $115,000 in interest expense. The increase of $5.1 million in net interest income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was attributable to an increase of $4.3 million in interest and dividend income and a decrease of $769,000 in interest expense.

Net interest income for the year ended December 31, 2021 was $58.8 million, an increase of $16.9 million, or 40.2%, compared to the year ended December 31, 2020. The increase in net interest income was attributable to an increase of $13.8 million in interest and dividend income and a decrease of $3.1 million in interest expense.

Net interest margin was 4.51% for the three months ended December 31, 2021, an increase of 38 basis points from 4.13% for the three months ended September 30, 2021 and an increase of 73 basis points from 3.78% for the three months ended December 31, 2020.

Net interest rate spread increased by 40 basis points to 4.32% for the three months ended December 31, 2021 from 3.92% for the three months ended September 30, 2021 and increased by 82 basis points from 3.50% for the three months ended December 31, 2020. The increase in the net interest rate spread for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was primarily due to an increase in the average yields on interest-earning assets of 35 basis points to 5.01% for the three months ended December 31, 2021 from 4.66% for the three months ended September 30, 2021, and a decrease on the average rates on interest-bearing liabilities of 5 basis points to 0.69% for the three months ended December 31, 2021 from 0.74% for the three months ended September 30, 2021. The increase in the net interest rate spread for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was primarily due to an increase in the average yields on interest-earning assets of 38 basis points to 5.01% for the three months ended December 31, 2021 from 4.63% for the three months ended December 31, 2020 and by a decrease on the average rates on interest-bearing liabilities of 44 basis points to 0.69% for the three months ended December 31, 2021 from 1.13% for the three months ended December 31, 2020.

Non-interest income increased $15.9 million to $19.2 million for the three months ended December 31, 2021 from $3.2 million for the three months ended September 30, 2021 and increased $14.4 million from $4.8 million for the three months ended December 31, 2020. Excluding the $15.4 million gain, net of expense, from sale of real properties, non-interest income increased $504,000 to $3.7 million for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 and decreased $1.1 million compared to the three months ended December 31, 2020.

The increase of $15.9 million in non-interest income for the three months ended December 31, 2021 compared to the three months ended September 30, 2021 was due to increases of $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, $261,000 in loan origination fees, $131,000 in brokerage commissions, $119,000 in income on sale of mortgage loans, $12,000 in other non-interest income and $7,000 in late and prepayment charges offset by a decrease of $26,000 in service charges and fees.

The increase of $14.4 million in non-interest income for the three months ended December 31, 2021 compared to the three months ended December 31, 2020 was primarily due to increases of $15.4 million in gain, net of expenses, from the sale of real properties recognized in the fourth quarter of 2021, $255,000 in late and prepayment charges, $230,000 in loan origination fees, $205,000 in service charges and fees, offset by decreases of $1.5 million in income on sale of mortgage, $243,000 in other non-interest income, and $54,000 in brokerage commissions.

Non-interest income increased $21.4 million to $34.6 million for the year ended December 31, 2021 from $13.2 million for the year ended December 31, 2020. The increase in non-interest income for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily due to increases of $16.1 million in gain, net of expenses, from the sale of real properties, $2.1 million in loan origination fees and $1.1 million on sale of mortgage loans. Other increases include $849,000 in late and prepayment charges, $765,000 in service charges and fees, $350,000 in brokerage commissions and $92,000 in other non-interest income. Excluding the $16.1 million increase in gain, net of expense, from the sale of real properties, non-interest income increased $5.3 million to $14.4 million for the year ended December 31, 2021 compared to $9.1 million for the year ended December 31, 2020.

Non-interest expense increased $1.1 million, or 7.6%, to $15.9 million for the three months ended December 31, 2021, from $14.7 million for the three months ended September 30, 2021 and increased $1.9 million from $14.0 million for the three months ended December 31, 2020.

The increase of $1.1 million in non-interest expense for the three months ended December 31, 2021, compared to the three months ended September 30, 2021, was attributable to an increase of $532,000 in compensation and benefits, primarily attributable to $700,000 of ESOP expenses attributable to an additional 48,250 shares to be released as of December 31, 2021, offset by decreases of $102,000 in bonuses and $111,000 in employer’s portion of social security. Other increases in non-interest expense were $353,000 in other operating expenses, $336,000 in direct loan expenses, $158,000 in occupancy and equipment, offset by a decrease of $146,000 in data processing expenses.

The increase of $1.9 million in non-interest expense for the three months ended December 31, 2021, compared to the three months ended December 31, 2020 primarily reflects increases of $433,000 in direct loan expenses, $432,000 in other operating expenses, $321,000 in occupancy and equipment, $193,000 in data processing expenses, $167,000 in office supplies, telephone and postage, $167,000 in professional fees and $113,000 in compensation and benefits. The $113,000 increase in compensation and benefits was primarily attributable to $748,000 of ESOP expenses of which $700,000 was attributable to an additional 48,250 shares to be released as of December 31, 2021, offset by decreases of $463,000 in bonuses and $109,000 in employer’s portion of social security.

Non-interest expense increased $9.6 million, or 20.2%, to $57.1 million for the year ended December 31, 2021, compared to $47.5 million for the year ended December 31, 2020. The increase in non-interest expense for the year ended December 31, 2021, compared to the year ended December 31, 2020 was attributable to increases of $2.4 million in direct loan expenses, $1.8 million in occupancy and equipment, $1.6 million in professional fees, primarily due to an increase in consulting expenses related to a third-party service provider that provided loan origination services related to PPP loans and $1.2 million in compensation and benefits. Other increases in non-interest expense include $1.2 million in other operating expenses, $878,000 in data processing expenses, $655,000 in office supplies, telephone and postage and $113,000 in regulatory dues, offset by a decrease of $282,000 in marketing and promotional expenses. The $1.2 million increase in compensation and benefits was primarily attributable to $867,000 of ESOP expenses of which $700,000 was attributable to an additional 48,250 shares to be released as of December 31, 2021 and $334,000 in bonuses.

Balance Sheet Summary

Total assets increased $298.3 million, or 22.0%, to $1.65 billion at December 31, 2021 from $1.36 billion at December 31, 2020. The increase in total assets is attributable to increases of $146.4 million in net loans receivable, including $51.4 million net increase in PPP loans, $95.8 million in available-for-sale securities, $81.8 million in cash and cash equivalents, $7.5 million in other assets and $966,000 in accrued interest receivable. The increase in total assets was reduced by decreases of $19.6 million in mortgage loans held for sale, at fair value, $12.4 million, net, in premises and equipment, $836,000 in deferred tax assets, $809,000 in held-to-maturity securities, $425,000 in FHLBNY stock, and $249,000 in placement with banks.

Total liabilities increased $268.6 million, or 22.5%, to $1.46 billion at December 31, 2021 from $1.20 billion at December 31, 2020. The increase in total liabilities was mainly attributable to increases of $175.1 million in deposits, of which $122.0 million were related to conversion and reorganization, $638,000 in advance payments by borrowers for taxes and insurance and $168,000 in accrued interest payable, offset by decreases of $14.9 million in warehouse lines of credit, $11.0 million in advances from FHLBNY and others, $2.0 in other liabilities and $1.5 million of mortgage loan fundings payable.

Total stockholders’ equity increased $29.7 million, or 18.6%, to $189.3 million at December 31, 2021 from $159.5 million at December 31, 2020. This increase in stockholders’ equity was mainly attributable to $25.4 million in net income, $3.1 million in net treasury stock activity, related to PDL Community Bancorp, $1.4 million related to share-based compensation and $1.3 million related to the Company’s ESOP, offset by $1.6 million related to unrealized loss on available-for-sale securities.

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

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, is the financial 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 PDL Community Bancorp’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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

ASSETS

Cash and due from banks:

Cash

98,954

29,365

32,541

13,551

26,936

Interest-bearing deposits in banks

54,940

33,673

33,551

76,571

45,142

Total cash and cash equivalents

153,894

63,038

66,092

90,122

72,078

Available-for-sale securities, at fair value

113,346

104,358

48,536

30,929

17,498

Held-to-maturity securities, at amortized cost

934

1,437

1,720

1,732

1,743

Placement with banks

2,490

2,739

Mortgage loans held for sale, at fair value

15,836

13,930

15,308

13,725

35,406

Loans receivable, net

1,305,078

1,302,238

1,343,578

1,230,458

1,158,640

Accrued interest receivable

12,362

13,360

13,134

12,547

11,396

Premises and equipment, net

19,617

34,081

34,057

33,625

32,045

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

6,001

6,156

6,057

6,426

Deferred tax assets

3,820

4,826

5,493

4,569

4,656

Other assets

20,132

14,793

10,837

7,204

12,604

Total assets

1,653,510

1,560,552

1,547,650

1,433,707

1,355,231

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits

1,204,716

1,249,261

1,236,161

1,138,546

1,029,579

Accrued interest payable

228

238

Advance payments by borrowers for taxes and insurance

7,657

9,118

7,682

9,264

7,019

Advances from the FHLBNY and others

106,255

109,255

117,255

Warehouse lines of credit

15,090

11,261

13,084

11,664

29,961

Mortgage loan fundings payable

—

1,136

743

676

1,483

Second step liabilities

122,000

—

Other liabilities

8,308

9,396

8,780

3,032

10,330

Total liabilities

1,464,254

1,386,665

1,375,760

1,272,503

1,195,687

Commitments and contingencies

Stockholders' Equity:

Preferred stock, $0.01 par value; 10,000,000 shares authorized

—

Common stock, $0.01 par value; 50,000,000 shares authorized

185

Treasury stock, at cost

(13,687

)

(15,069

)

(15,069

)

(19,285

)

(18,114

)

Additional paid-in-capital

85,601

86,360

85,956

85,470

85,105

Retained earnings

122,956

107,977

105,925

99,993

97,541

Accumulated other comprehensive income

(1,456

)

(621

)

(41

)

135

Unearned compensation ─ ESOP

(4,343

)

(4,945

)

(5,066

)

(5,187

)

(5,308

)

Total stockholders' equity

189,256

173,887

171,890

161,204

159,544

Total liabilities and stockholders' equity

1,653,510

1,560,552

1,547,650

1,433,707

1,355,231

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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Interest and dividend income:

Interest on loans receivable

18,013

16,991

15,603

14,925

14,070

Interest on deposits due from banks

Interest and dividend on securities and FHLBNY stock

632

425

239

250

233

Total interest and dividend income

18,652

17,425

15,844

15,177

14,313

Interest expense:

Interest on certificates of deposit

907

1,010

1,108

1,219

1,422

Interest on other deposits

309

354

382

448

Interest on borrowings

654

621

622

684

769

Total interest expense

1,870

1,985

2,112

2,285

2,639

Net interest income

16,782

15,440

13,732

12,892

11,674

Provision for loan losses

873

572

586

686

406

Net interest income after provision for loan losses

15,909

14,868

13,146

12,206

11,268

Non-interest income:

Service charges and fees

468

494

366

329

263

Brokerage commissions

401

270

430

223

455

Late and prepayment charges

336

329

298

244

Income on sale of mortgage loans

1,294

1,175

1,288

1,508

2,748

Loan origination

886

625

971

539

656

Gain on sale of real property

15,431

—

4,176

663

—

Other

353

341

812

387

596

Total non-interest income

19,169

3,234

8,341

3,893

4,799

Non-interest expense:

Compensation and benefits

6,959

6,427

4,212

5,664

6,846

Occupancy and equipment

3,007

2,849

2,838

2,634

2,686

Data processing expenses

771

917

733

594

578

Direct loan expenses

1,032

696

1,151

1,009

599

Insurance and surety bond premiums

149

147

143

146

166

Office supplies, telephone and postage

552

626

467

409

385

Professional fees

1,700

1,765

2,902

1,262

1,533

Marketing and promotional expenses

—

Directors fees

Regulatory dues

120

Other operating expenses

1,466

1,113

958

1,030

1,034

Total non-interest expense

15,854

14,732

13,641

12,915

13,955

Income before income taxes

19,224

3,370

7,846

3,184

2,112

Provision for income taxes

4,245

1,318

1,914

732

484

Net income

14,979

2,052

5,932

2,452

1,628

Earnings per share:

Basic

0.90

0.12

0.35

0.15

0.10

Diluted

0.89

0.12

0.35

0.15

0.10

Weighted average shares outstanding:

Basic

16,864,929

16,823,731

16,737,037

16,548,196

16,558,576

Diluted

16,924,785

16,914,833

16,773,606

16,548,196

16,558,576

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 Years Ended December 31,

2021

2020

Variance $

Variance %

Interest and dividend income:

Interest on loans receivable

65,532

52,389

13,143

25.09

Interest on deposits due from banks

(64

)

(76.19

Interest and dividend on securities and FHLBNY stock

1,546

866

680

78.52

Total interest and dividend income

67,098

53,339

13,759

25.80

Interest expense:

Interest on certificates of deposit

4,244

6,576

(2,332

)

(35.46

Interest on other deposits

1,427

2,174

(747

)

(34.36

Interest on borrowings

2,581

2,619

(38

)

(1.45

Total interest expense

8,252

11,369

(3,117

)

(27.42

Net interest income

58,846

41,970

16,876

40.21

Provision for loan losses

2,717

2,443

274

11.22

Net interest income after provision for loan losses

56,129

39,527

16,602

42.00

Non-interest income:

Service charges and fees

1,657

892

765

85.76

Brokerage commissions

1,324

974

350

35.93

Late and prepayment charges

1,207

358

849

237.15

Income on sale of mortgage loans

5,265

4,120

1,145

27.79

Loan origination

3,021

925

2,096

226.59

Gain on sale of real property

20,270

4,177

16,093

385.28

Other

1,893

1,801

5.11

Total non-interest income

34,637

13,247

21,390

161.47

Non-interest expense:

Compensation and benefits

23,262

22,053

1,209

5.48

Occupancy and equipment

11,328

9,564

1,764

18.44

Data processing expenses

3,015

2,137

878

41.09

Direct loan expenses

3,888

1,447

2,441

168.69

Insurance and surety bond premiums

585

553

5.79

Office supplies, telephone and postage

2,054

1,399

655

46.82

Professional fees

7,629

6,049

1,580

26.12

Marketing and promotional expenses

206

488

(282

)

(57.79

Directors fees

285

276

3.26

Regulatory dues

323

210

113

53.81

Other operating expenses

4,567

3,363

1,204

35.80

Total non-interest expense

57,142

47,539

9,603

20.20

Income before income taxes

33,624

5,235

28,389

542.29

Provision for income taxes

8,209

1,382

6,827

493.99

Net income

25,415

3,853

21,562

559.62

Earnings per share:

Basic

1.52

0.23

N/A

Diluted

1.51

0.23

N/A

Weighted average shares outstanding:

Basic

16,744,561

16,673,193

N/A

Diluted

16,791,443

16,682,584

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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Performance Ratios:

Return on average assets (1)

3.69

0.52

1.59

0.72

0.50

Return on average equity (1)

31.46

4.59

13.95

6.16

4.03

Net interest rate spread (1) (2)

4.32

3.92

3.60

3.76

3.50

Net interest margin (1) (3)

4.51

4.13

3.84

4.00

3.78

Non-interest expense to average assets (1)

3.90

3.72

3.65

3.82

4.29

Efficiency ratio (4)

44.10

78.89

61.80

76.94

84.71

Average interest-earning assets to average interest-bearing liabilities

138.10

138.89

140.13

133.25

132.04

Average equity to average assets

11.71

11.27

11.37

11.77

12.44

Capital Ratios:

Total capital to risk weighted assets (bank only)

17.23

16.15

16.08

15.80

15.95

Tier 1 capital to risk weighted assets (bank only)

15.98

14.90

14.83

14.54

14.70

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

15.98

14.90

14.83

14.54

14.70

Tier 1 capital to average assets (bank only)

10.95

9.98

10.22

10.78

11.19

Asset Quality Ratios:

Allowance for loan losses as a percentage of total loans

1.24

1.21

1.16

1.24

1.27

Allowance for loan losses as a percentage of nonperforming loans

142.90

157.17

175.63

126.07

127.28

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

(0.18

(0.13

(0.07

(0.02

0.03

Non-performing loans as a percentage of total gross loans

0.87

0.77

0.66

0.99

1.00

Non-performing loans as a percentage of total assets

0.69

0.65

0.58

0.86

Total non-performing assets as a percentage of total assets

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

1.07

1.05

1.01

1.32

1.35

Other:

Number of offices

Number of full-time equivalent employees

217

230

231

236

227

(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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Mortgage loans:

1-4 family residential

Investor Owned

317,304

24.01

319,346

24.14

325,409

23.83

317,895

25.51

319,596

27.27

Owner-Occupied

96,947

7.33

97,493

7.37

98,839

7.24

99,985

8.02

98,795

8.43

Multifamily residential

348,300

26.34

317,575

24.01

318,579

23.33

315,078

25.28

307,411

26.23

Nonresidential properties

239,691

18.13

211,075

15.96

211,181

15.46

215,340

17.28

218,929

18.68

Construction and land

134,651

10.19

133,130

10.07

125,265

9.17

119,339

9.57

105,858

9.03

Total mortgage loans

1,136,893

86.00

1,078,619

81.55

1,079,273

79.02

1,067,637

85.66

1,050,589

89.64

Non-mortgage loans:

Business loans (1)

150,512

11.38

207,859

15.72

253,935

18.59

142,135

11.40

94,947

8.10

Consumer loans (2)

34,693

2.62

36,095

2.73

32,576

2.39

36,706

2.94

26,517

2.26

Total non-mortgage loans

185,205

14.00

243,954

18.45

286,511

20.98

178,841

14.34

121,464

10.36

Total loans, gross

1,322,098

100.00

1,322,573

100.00

1,365,784

100.00

1,246,478

100.00

1,172,053

100.00

Net deferred loan origination costs

(668

)

(4,327

)

(6,331

)

(512

)

1,457

Allowance for losses on loans

(16,352

)

(16,008

)

(15,875

)

(15,508

)

(14,870

)

Loans, net

1,305,078

1,302,238

1,343,578

1,230,458

1,158,640

(1)

As of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, business loans include $136.8 million, $195.9 million, $241.5 million, $132.5 million, and $85.3 million, respectively, of PPP loans.

(2)

As of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, consumer loans include $33.9 million, $35.5 million, $32.0 million, $35.9 million and $25.5 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain Technologies, LLC.

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

Deposits

As of

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Demand (1)

274,956

22.83

297,777

23.85

320,404

25.91

242,255

21.28

189,855

18.44

Interest-bearing deposits:

NOW/IOLA accounts

35,280

2.93

28,025

2.24

28,996

2.35

32,235

2.83

39,296

3.82

Money market accounts

186,893

15.51

199,758

15.99

172,925

13.99

157,271

13.81

136,258

13.23

Reciprocal deposits

143,221

11.89

147,226

11.79

151,443

12.25

137,402

12.07

131,363

12.76

Savings accounts

134,887

11.20

142,851

11.43

130,430

10.55

130,211

11.44

125,820

12.22

Total NOW, money market, reciprocal and savings accounts

500,281

41.53

517,860

41.45

483,794

39.14

457,119

40.15

432,737

42.03

Certificates of deposit of $250K or more

78,454

6.51

70,996

5.68

74,941

6.06

77,418

6.80

78,435

7.62

Brokered certificates of deposit (2)

79,320

6.58

83,505

6.68

83,506

6.76

86,004

7.55

52,678

5.12

Listing service deposits (2)

66,411

5.51

66,340

5.31

66,518

5.38

61,133

5.37

39,476

3.83

All other certificates of deposit less than $250K

205,294

17.04

212,783

17.03

206,998

16.75

214,617

18.85

236,398

22.96

Total certificates of deposit

429,479

35.64

433,624

34.70

431,963

34.95

439,172

38.57

406,987

39.53

Total interest-bearing deposits

929,760

77.17

951,484

76.15

915,757

74.09

896,291

78.72

839,724

81.56

Total deposits

1,204,716

100.00

1,249,261

100.00

1,236,161

100.00

1,138,546

100.00

1,029,579

100.00

(1)

Included in demand deposits are deposits related to net PPP funding.

(2)

As of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021 and December 31, 2020, there were $29.0 million, $28.9 million, $28.9 million, $28.8 million and $27.0 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

December 31, 2021

September 31, 2021

June 30, 2021

March 31, 2021

December 31, 2020

(Dollars in thousands)

Non-accrual loans:

Mortgage loans:

1-4 family residential

Investor owned

3,349

1,669

1,983

2,907

2,808

Owner occupied

1,284

1,090

1,593

1,585

1,053

Multifamily residential

1,200

2,577

955

946

Nonresidential properties

2,163

1,388

1,408

3,761

3,776

Construction and land

917

922

—

Non-mortgage loans:

Business

—

Consumer

—

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

8,913

7,646

5,939

9,199

8,583

Non-accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

234

238

242

246

249

Owner occupied

2,196

2,200

2,199

2,195

2,197

Multifamily residential

—

Nonresidential properties

100

101

659

661

654

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total non-accruing troubled debt restructured loans

2,530

2,539

3,100

3,102

3,100

Total non-accrual loans

11,443

10,185

9,039

12,301

11,683

Total non-performing assets

11,443

10,185

9,039

12,301

11,683

Accruing troubled debt restructured loans:

Mortgage loans:

1-4 family residential

Investor owned

3,089

3,121

3,347

3,362

3,378

Owner occupied

2,374

2,396

2,431

2,466

2,505

Multifamily residential

—

Nonresidential properties

732

738

755

750

754

Construction and land

—

Non-mortgage loans:

Business

—

Consumer

—

Total accruing troubled debt restructured loans

6,195

6,255

6,533

6,578

6,637

Total non-performing assets and accruing troubled debt restructured loans

17,638

16,440

15,572

18,879

18,320

Total non-performing loans to total gross loans

0.87

0.77

0.66

0.99

1.00

Total non-performing assets to total assets

0.69

0.65

0.58

0.86

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

1.07

1.05

1.01

1.32

1.35

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

Average Balance Sheets

For the Three Months Ended December 31,

2021

2020

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate (1)

Balance

Interest

Yield/Rate (1)

(Dollars in thousands)

Interest-earning assets:

Loans (2)

1,320,635

18,013

5.41

1,164,323

14,070

4.81

Securities (3)

113,826

566

1.97

17,205

154

3.56

Other (4)

43,346

0.67

47,541

0.74

Total interest-earning assets

1,477,807

18,652

5.01

1,229,069

14,313

4.63

Non-interest-earning assets

134,798

63,771

Total assets

1,612,605

1,292,840

Interest-bearing liabilities:

NOW/IOLA

29,771

0.21

30,752

0.47

Money market

340,334

259

0.30

247,669

372

0.60

Savings

137,383

0.10

123,518

0.13

Certificates of deposit

433,571

907

0.83

391,107

1,422

1.45

Total deposits

941,059

1,215

0.51

793,046

1,869

0.94

Advance payments by borrowers

10,361

0.04

9,168

0.04

Borrowings

118,692

654

2.19

128,617

769

2.38

Total interest-bearing liabilities

1,070,112

1,870

0.69

930,831

2,639

1.13

Non-interest-bearing liabilities:

Non-interest-bearing demand

320,074

—

192,542

—

Other non-interest-bearing liabilities

33,506

—

8,623

—

Total non-interest-bearing liabilities

353,580

—

201,165

—

Total liabilities

1,423,692

1,870

1,131,996

2,639

Total equity

188,913

160,844

Total liabilities and total equity

1,612,605

0.69

1,292,840

1.13

Net interest income

16,782

11,674

Net interest rate spread (5)

4.32

3.50

Net interest-earning assets (6)

407,695

298,238

Net interest margin (7)

4.51

3.78

Average interest-earning assets to interest-bearing liabilities

138.10

132.04

(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 Years Ended December 31,

2021

2020

Average

Outstanding

Average

Outstanding

Average

Balance

Interest

Yield/Rate

Balance

Interest

Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans (1)

1,312,505

65,532

4.99

1,068,785

52,389

4.90

Securities (2)

62,908

1,267

2.01

16,473

515

3.13

Other (3)

51,156

299

0.58

53,683

435

0.81

Total interest-earning assets

1,426,569

67,098

4.70

1,138,941

53,339

4.68

Non-interest-earning assets

89,152

56,415

Total assets

1,515,721

1,195,356

Interest-bearing liabilities:

NOW/IOLA

30,851

109

0.35

29,792

153

0.51

Money market

310,611

1,168

0.38

207,454

1,869

0.90

Savings

133,244

146

0.11

118,956

148

0.12

Certificates of deposit

430,164

4,244

0.99

379,276

6,576

1.73

Total deposits

904,870

5,667

0.63

735,478

8,746

1.19

Advance payments by borrowers

10,106

0.04

8,463

0.05

Borrowings

121,319

2,581

2.13

121,193

2,619

2.16

Total interest-bearing liabilities

1,036,295

8,252

0.80

865,134

11,369

1.31

Non-interest-bearing liabilities:

Non-interest-bearing demand

287,008

—

164,555

—

Other non-interest-bearing liabilities

17,763

—

6,603

—

Total non-interest-bearing liabilities

304,771

—

171,158

—

Total liabilities

1,341,066

8,252

1,036,292

11,369

Total equity

174,655

159,064

Total liabilities and total equity

1,515,721

0.80

1,195,356

1.31

Net interest income

58,846

41,970

Net interest rate spread (4)

3.90

3.37

Net interest-earning assets (5)

390,274

273,807

Net interest margin (6)

4.13

3.69

Average interest-earning assets to

interest-bearing liabilities

137.66

131.65

(1)

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

(2)

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

(3)

Includes FHLBNY demand account and FHLBNY stock dividends.

(4)

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.

(5)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6)

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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

Other Data

Common shares issued

18,463,028

Less treasury shares

1,037,041

1,132,086

1,135,086

1,444,776

1,337,059

Common shares outstanding at end of period

17,425,987

17,330,942

17,327,942

17,018,252

17,125,969

Book value per share

10.86

10.03

9.92

9.47

9.32

Tangible book value per share

10.86

10.03

9.92

9.47

9.32

Contact:

Frank Perez

frank.perez@poncebank.net

718-931-9000

Source: Ponce Financial Group, Inc.

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Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, Announces 2021 Fourth Quarter Results

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