Ponce Financial Group, Inc. Announces 2022 Second Quarter Results

Rhea-AI Summary

Ponce Financial Group, as the successor of PDL Community Bancorp (NASDAQ: PDLB), reported a net income of $771,000 ($0.03/share) for Q2 2022, recovering from a $6.8 million net loss in Q1 2022. Highlights include a $225 million preferred stock issuance to the U.S. Treasury and increased net loans receivable by $19.2 million. However, net interest income decreased by $1.9 million to $15.5 million. Total assets rose to $2.04 billion, while total stockholders’ equity surged by 173.75% to $518.1 million, primarily due to new capital infusion.

Positive

• Net income of $771,000 for Q2 2022, up from a net loss of $6.8 million in Q1 2022.
• Completed a $225 million preferred stock placement to the U.S. Treasury.
• Stockholders’ equity increased by 173.75% to $518.1 million.
• Increased net loans receivable by $19.2 million.

Negative

• Net interest income decreased by $1.9 million, a 10.67% decline from Q1 2022.
• Non-performing loans increased $9.6 million year-over-year to $18.6 million.

NEW YORK, July 29, 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 net income of $771,000, or $0.03 per basic and diluted share, for the second quarter of 2022, compared to a net loss of ($6.8 million), or ($0.31) per basic and diluted share, for the prior quarter and net income of $5.9 million, or $0.35 per basic and diluted share, for the second quarter of 2021.

Second Quarter Highlights

• Completed a private placement of $225.0 million of Senior Non-Cumulative Perpetual Preferred Stock, Series A, to the U.S. Department of Treasury pursuant to the Emergency Capital Investment Program.
• Net interest income of $15.5 million for the second quarter of 2022 decreased $1.9 million, or 10.67%, from the prior quarter due to a reduction in PPP fee amortization. Net interest income for the second quarter of 2022 increased $1.8 million, or 12.79%, from the same quarter last year.
• Income before taxes was $283,000 for the second quarter of 2022 as compared to a loss before taxes of ($9.8 million) for the prior quarter and income before taxes of $7.8 million for the same quarter last year. Included in the second quarter of 2022 is $1.5 million in additional write-offs of the receivable due from Grain Technologies, Inc. (“Grain”) for microloan originations put back to Grain. Included in the first quarter of 2022 is a $6.3 million write-off and $1.7 million in additional reserves for the receivable due from Grain for microloan originations put back to Grain.
• Average cost of interest-bearing deposits was 0.54% for the second quarter of 2022, an increase from 0.49% for the prior quarter and a decrease from 0.67% for the same quarter last year.
• Net interest margin was 4.10% for the second quarter of 2022, a decrease from 4.68% for the prior quarter and an increase from 3.84% for the same quarter last year.
• Net interest rate spread was 3.86% for the second quarter of 2022, a decrease from 4.48% for the prior quarter and an increase from 3.60% for the same quarter last year.
• Efficiency ratio was 93.77% for the second quarter of 2022 compared to 143.50% for the prior quarter and 61.80% for the same quarter last year.
• Non-performing loans of $18.6 million as of June 30, 2022 increased $9.6 million year-over-year and were 1.39% of total gross loans receivable at June 30, 2022. The increase was largely attributable to a completed $6.6 million condominium construction loan which is now in the selling phase and has sales under contracts.
• Net loans receivable were $1.32 billion at June 30, 2022, an increase of $19.2 million, or 1.47%, from December 31, 2021. The increase of $19.2 million was attributable to a $125.2 million increase in non-PPP loans partially offset by a $106.0 million decrease in PPP loans.
• Securities increased $210.6 million in held-to-maturity securities and by $26.7 million in available-for-sale securities from December 31, 2021. The increase in the securities portfolio is designed to increase interest income and enhance the diversification in interest-earning assets.
• Deposits were $1.15 billion at June 30, 2022, a decrease of $56.0 million, or 4.65%, from December 31, 2021.
• An Environmental, Social and Governance Committee was established; it is comprised of the Executive Management Team and is currently in the process of developing a materiality assessment in order to determine what issues, practices, and policies are most important to key stakeholders.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, President and CEO, stated that “we have raised additional equity capital of $328.8 million since December 31, 2021, giving us an unprecedented $518.1 million in stockholder’s equity with which to carry out our mission and add value to our stakeholders, which now includes the United States Treasury, as the holder of our preferred stock. We have begun the process of leveraging that capital, increasing our cash and securities portfolio to a combined $626.4 million from $268.2 million last year, positioning us for additional growing sources of interest income, a new strategic priority. We continue to assess the performance of our microloan portfolio and its strategic impact on our mission as an MDI and CDFI. We are balancing our need to acquire and retain talent necessary to grow our Company with our financial performance.”

Executive Chairman’s Comments

Steven A. Tsavaris, Executive Chairman, noted that “we continue to focus on growing our loan portfolio, net of PPP loans. We increased our net loans receivable by $19.2 million, or 1.47%, since December 31, 2021. Most telling, the reported growth masks the $125.2 million increase in non-PPP loans due to the concurrent $106.0 million reduction in PPP loans. The portfolio of mortgage loans has grown 17.1% year-over-year and 11.1% since December 31, 2021. Our loan growth reflects the resilience of rent stabilized housing, and its construction, in our communities, as well as the attractiveness of our non-qualified mortgages to business customers. We continue to be humbled by the retention of relationships after PPP loan forgivenesses.”

Summary of Results of Operations

Net income for the three months ended June 30, 2022 was $771,000, compared to ($6.8 million) of net loss for the three months ended March 31, 2022 and $5.9 million of net income for the three months ended June 30, 2021.

The $771,000 net income for the three months ended June 30, 2022, was a $7.6 million increase compared to the prior quarter. This increase was attributable to a decrease of $11.5 million in non-interest expense, offset by decreases of $2.5 million of benefit for income taxes and $1.9 million of net interest income. The $11.5 million decrease in non-interest expense reflects the lower write-down of Grain receivable and the nonrecurring contribution to the Ponce De Leon Foundation during the three months ended March 31, 2022.

The $771,000 net income for the three months ended June 30, 2022, was a $5.2 million reduction compared to the same quarter last year. This reduction was due to an increase of $2.9 million in non-interest expense, a decrease of $6.2 million in non-interest income and an increase of $231,000 in provision for loan losses, partially offset by an increase of $1.8 million in net interest income and a decrease of $2.4 million in provision for income taxes quarter over quarter.

The ($6.0 million) net loss for the six months ended June 30, 2022 is a $14.4 million decrease compared to the same period last year. This variance was largely due to an increase of $18.1 million in non-interest expense explained by the one-off expenses mentioned above as well as by an increase in compensation and benefits. Non-interest income was down by $7.8 million given the gain on sale of real property booked last year of $4.8 million coupled with a reduction in income on the sale of mortgage loans. Net interest income after provision for loan losses was up by $5.4 million on higher volumes.

Net interest income for the three months ended June 30, 2022 was $15.5 million, a decrease of $1.9 million, or 10.67%, compared to the three months ended March 31, 2022 and an increase of $1.8 million, or 12.79%, compared to the three months ended June 30, 2021. The decrease of $1.9 million in net interest income for the three months ended June 30, 2022 compared to the three months ended March 31, 2022 was due to a reduction in PPP fee amortization. The increase of $1.8 million in net interest income for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to higher average interest-earning assets of $81.6 million and higher net interest margin of 26bps.

Net interest income for the six months ended June 30, 2022 was $32.8 million, an increase of $6.2 million, or 23.29%, compared to the six months ended June 30, 2021. This increase was due to increases in average interest-earning assets of $137.3 million and net interest margin of 48bps.

Non-interest income of $2.2 million for both the three months ended June 30, 2022 and the three months ended March 31, 2022, decreased $6.2 million from $8.3 million for the three months ended June 30, 2021. Excluding the $4.2 million gain, net of expense, from sale of real properties during the three months ended June 30, 2021, non-interest income decreased $2.0 million from $4.2 million for the three months ended June 30, 2021 compared to $2.2 million for the three months ended June 30, 2022, largely due to decreases in income on mortgage loan sales and originations, reflecting both a slowdown in the secondary mortgage markets for refinances as well as the retention in portfolio of originated non-qualified mortgage loans.

The $2.2 million of non-interest income for both the three months ended June 30, 2022 and the three months ended March 31, 2022 was impacted by increases of $519,000 in other non-interest income and $135,000 in late and prepayment charges, offset by decreases of $364,000 in loan origination fees, $218,000 in income on sale of mortgage loans and $124,000 in brokerage commissions, quarter over quarter.

The decrease of $6.2 million in non-interest income for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was due to the absence of the one-time $4.2 million in gain, net of expenses, from the sale of real properties recognized during the three months ended June 30, 2021, combined with decreases of $1.1 million in income on sale of mortgage loans, $874,000 in loan origination fees, $216,000 in brokerage commissions and $105,000 in late and prepayment charges, offset by increases of $218,000 in other non-interest income and $79,000 in service charges and fees.

Non-interest income decreased $7.8 million to $4.4 million for the six months ended June 30, 2022 from $12.2 million for the six months ended June 30, 2021. The decrease of $7.8 million was due to a one-time $4.8 million gain, net of expenses, from the sale of real properties recognized during the six months ended June 30, 2021, combined with decreases of $2.2 million in income on sale of mortgage loans, $952,000 in loan origination fees, $291,000 in late and prepayment charges and $101,000 in brokerage commissions, offset by increases of $342,000 in other non-interest income and $190,000 in service charges and fees.

Non-interest expense decreased $11.5 million, or 40.98%, to $16.6 million for the three months ended June 30, 2022 from $28.1 million for the three months ended March 31, 2022 and increased $2.9 million, or 21.46%, from $13.6 million for the three months ended June 30, 2021.

The decrease of $11.5 million in non-interest expense for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, 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 in the first quarter of 2022 compared to an additional $1.5 million write-off and write-down in the second quarter of 2022, and a $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization during the first quarter of 2022. Other decreases in non-interest expense included $369,000 in direct loan expenses and $214,000 in compensation and benefits, offset by increases of $414,000 in professional fees and $205,000 in other operating expenses.

The increase of $2.9 million in non-interest expense for the three months ended June 30, 2022, compared to the three months ended June 30, 2021 is a result of increases of $2.7 million in compensation and benefits, $1.5 million in write-off and write-down in the second quarter of 2022 related to the receivable due from Grain for microloans originated by Grain and put back to Grain due to fraud, $399,000 in occupancy and equipment, $103,000 in other operating expenses and $91,000 in data processing expenses, offset by decreases of $1.2 million in professional fees and $646,000 in direct loan expenses. The $2.7 million increase of compensation and benefits related to nonrecurring expense amortization related to PPP loans and new hires.

Non-interest expense increased $18.1 million to $44.6 million for the six months ended June 30, 2022 from $26.6 million for the six months ended June 30, 2021. The increase in non-interest expense for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was attributable to an aggregate $9.6 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, a $5.0 million contribution to the Ponce De Leon Foundation in connection with the second-step conversion and reorganization during the first quarter of 2022. Other increases in non-interest expense included $4.1 million in compensation and benefits, $957,000 in occupancy and equipment reflecting rental expenses on facilities that were sold and leased back and $344,000 in data processing expenses, offset by decreases of $1.1 million in professional fees and $781,000 in direct loan expenses. The $4.1 million increase of compensation and benefits related to nonrecurring expense amortization related to PPP loans and new hires.

Summary of Balance Sheet

Total assets increased $388.8 million, or 23.51%, to $2.04 billion at June 30, 2022 from $1.65 billion at December 31, 2021. The increase in total assets is attributable to increases of $210.6 million in held-to-maturity securities and $120.9 million in cash and cash equivalents. Other increases in total assets are $26.7 million in available-for-sale securities, $19.2 million in net loans receivable (inclusive of $106.0 million net decrease in PPP loans), $10.4 million in FHLBNY stock, $5.8 million in deferred tax assets, $1.5 million in other assets and $893,000 in accrued interest receivable. The increase in total assets was reduced by decreases of $6.6 million in mortgage loans held for sale, at fair value and $672,000, net, in premises and equipment.

Total liabilities increased $59.9 million, or 4.09%, to $1.52 billion at June 30, 2022 from $1.46 billion at December 31, 2021. The increase in total liabilities was mainly attributable to increases of $228.1 million in advances from FHLBNY and $24.0 million in other liabilities offset by decreases of $122.0 million in second-step liabilities held at December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022, $56.0 million in deposits and $15.1 million in warehouse lines of credit.

Total stockholders’ equity increased $328.8 million, or 173.75%, to $518.1 million at June 30, 2022 from $189.3 million at December 31, 2021. This increase in stockholders’ equity was mainly attributable to the $225.0 million issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program, $118.0 million as a result of the sale of common stock in the second-step mutual conversion and reorganization, $4.0 million equity contribution to the Ponce De Leon Foundation, $756,000 in share-based compensation and $690,000 in Employee Stock Ownership Plan shares committed to be released offset by $13.6 million in accumulated other comprehensive loss and $6.0 million in net 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. 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 and 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; 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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
ASSETS
Cash and due from banks:
Cash	$	53,544			$	32,168			$	98,954			$	29,365			$	32,541
Interest-bearing deposits in banks		221,262				37,127				54,940				33,673				33,551
Total cash and cash equivalents		274,806				69,295				153,894				63,038				66,092
Available-for-sale securities, at fair value		140,044				154,799				113,346				104,358				48,536
Held-to-maturity securities, at amortized cost		211,517				927				934				1,437				1,720
Placement with banks		2,490				2,490				2,490				2,490				2,739
Mortgage loans held for sale, at fair value		9,234				7,972				15,836				13,930				15,308
Loans receivable, net		1,324,320				1,300,446				1,305,078				1,302,238				1,343,578
Accrued interest receivable		13,255				12,799				12,362				13,360				13,134
Premises and equipment, net		18,945				19,279				19,617				34,081				34,057
Federal Home Loan Bank of New York stock (FHLBNY), at cost		16,429				5,420				6,001				6,001				6,156
Deferred tax assets		9,658				7,440				3,820				4,826				5,493
Other assets		21,585				13,730				20,132				14,793				10,837
Total assets	$	2,042,283			$	1,594,597			$	1,653,510			$	1,560,552			$	1,547,650
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,148,728			$	1,181,165			$	1,204,716			$	1,249,261			$	1,236,161
Accrued interest payable		158				223				228				238				55
Advance payments by borrowers for taxes and insurance		8,668				10,161				7,657				9,118				7,682
Advances from the FHLBNY and others		334,375				93,375				106,255				106,255				109,255
Warehouse lines of credit		—				753				15,090				11,261				13,084
Mortgage loan fundings payable		—				—				—				1,136				743
Second-step liabilities		—				—				122,000				—				—
Other liabilities		32,272				9,341				8,308				9,396				8,780
Total liabilities		1,524,201				1,295,018				1,464,254				1,386,665				1,375,760
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000				—				—				—				—
Common stock, $0.01 par value; 200,000,000 shares authorized		247				247				185				185				185
Treasury stock, at cost		—				—				(13,687	)			(15,069	)			(15,069	)
Additional paid-in-capital		205,669				205,243				85,601				86,360				85,956
Retained earnings		116,907				116,136				122,956				107,977				105,925
Accumulated other comprehensive loss		(15,032	)			(7,035	)			(1,456	)			(621	)			(41	)
Unearned compensation ─ ESOP		(14,709	)			(15,012	)			(4,343	)			(4,945	)			(5,066	)
Total stockholders' equity		518,082				299,579				189,256				173,887				171,890
Total liabilities and stockholders' equity	$	2,042,283			$	1,594,597			$	1,653,510			$	1,560,552			$	1,547,650

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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
Interest and dividend income:
Interest on loans receivable	$	16,057			$	18,200			$	18,013			$	16,991			$	15,603
Interest on deposits due from banks		132				36				7				9				2
Interest and dividend on securities and FHLBNY stock		978				782				632				425				239
Total interest and dividend income		17,167				19,018				18,652				17,425				15,844
Interest expense:
Interest on certificates of deposit		677				803				907				1,010				1,108
Interest on other deposits		521				284				309				354				382
Interest on borrowings		481				593				654				621				622
Total interest expense		1,679				1,680				1,870				1,985				2,112
Net interest income		15,488				17,338				16,782				15,440				13,732
Provision for loan losses		817				1,258				873				572				586
Net interest income after provision for loan losses		14,671				16,080				15,909				14,868				13,146
Non-interest income:
Service charges and fees		445				440				468				494				366
Brokerage commissions		214				338				401				270				430
Late and prepayment charges		193				58				336				329				298
Income on sale of mortgage loans		200				418				1,294				1,175				1,288
Loan origination		97				461				886				625				971
Gain on sale of real property		—				—				15,431				—				4,176
Other		1,030				511				353				341				812
Total non-interest income		2,179				2,226				19,169				3,234				8,341
Non-interest expense:
Compensation and benefits		6,911				7,125				6,959				6,427				4,212
Occupancy and equipment		3,237				3,192				3,007				2,849				2,838
Data processing expenses		824				847				771				917				733
Direct loan expenses		505				874				1,032				696				1,151
Insurance and surety bond premiums		156				147				149				147				143
Office supplies, telephone and postage		406				405				552				626				467
Professional fees		1,748				1,334				1,700				1,765				2,902
Contribution to the Ponce De Leon Foundation		—				4,995				—				—				—
Grain write-off and write-down		1,500				8,074				—				—				—
Marketing and promotional expenses		52				71				69				51				48
Directors fees		96				71				80				67				69
Regulatory dues		71				83				69				74				120
Other operating expenses		1,061				856				1,466				1,113				958
Total non-interest expense		16,567				28,074				15,854				14,732				13,641
Income (loss) before income taxes		283				(9,768	)			19,224				3,370				7,846
(Benefit) provision for income taxes		(488	)			(2,948	)			4,245				1,318				1,914
Net income (loss)	$	771			$	(6,820	)		$	14,979			$	2,052			$	5,932
Earnings (loss) per common share:
Basic	$	0.03			$	(0.31	)		$	0.90			$	0.12			$	0.35
Diluted	$	0.03			$	(0.31	)		$	0.89			$	0.12			$	0.35
Weighted average common shares outstanding:
Basic		23,056,559				21,721,113				16,864,929				16,823,731				16,737,037
Diluted		23,128,911				21,721,113				16,924,785				16,914,833				16,773,606

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 Six Months Ended June 30,
		2022				2021				Variance $				Variance %
Interest and dividend income:
Interest on loans receivable		$	34,257			$	30,528			$	3,729				12.22	%
Interest on deposits due from banks			168				4				164			*
Interest and dividend on securities and FHLBNY stock			1,760				489				1,271				259.92	%
Total interest and dividend income			36,185				31,021				5,164				16.65	%
Interest expense:
Interest on certificates of deposit			1,480				2,327				(847	)			(36.40	%)
Interest on other deposits			805				764				41				5.37	%
Interest on borrowings			1,074				1,306				(232	)			(17.76	%)
Total interest expense			3,359				4,397				(1,038	)			(23.61	%)
Net interest income			32,826				26,624				6,202				23.29	%
Provision for loan losses			2,075				1,272				803				63.13	%
Net interest income after provision for loan losses			30,751				25,352				5,399				21.30	%
Non-interest income:
Service charges and fees			885				695				190				27.34	%
Brokerage commissions			552				653				(101	)			(15.47	%)
Late and prepayment charges			251				542				(291	)			(53.69	%)
Income on sale of mortgage loans			618				2,796				(2,178	)			(77.90	%)
Loan origination			558				1,510				(952	)			(63.05	%)
Gain on sale of real property			—				4,839				(4,839	)			(100.00	%)
Other			1,541				1,199				342				28.52	%
Total non-interest income			4,405				12,234				(7,829	)			(63.99	%)
Non-interest expense:
Compensation and benefits			14,036				9,876				4,160				42.12	%
Occupancy and equipment			6,429				5,472				957				17.49	%
Data processing expenses			1,671				1,327				344				25.92	%
Direct loan expenses			1,379				2,160				(781	)			(36.16	%)
Insurance and surety bond premiums			303				289				14				4.84	%
Office supplies, telephone and postage			811				876				(65	)			(7.42	%)
Professional fees			3,082				4,164				(1,082	)			(25.98	%)
Contribution to the Ponce De Leon Foundation			4,995				—				4,995				—	%
Grain write-off and write-down			9,574				—				9,574				—	%
Marketing and promotional expenses			123				86				37				43.02	%
Directors fees			167				138				29				21.01	%
Regulatory dues			154				180				(26	)			(14.44	%)
Other operating expenses			1,917				1,988				(71	)			(3.57	%)
Total non-interest expense			44,641				26,556				18,085				68.10	%
(Loss) income before income taxes			(9,485	)			11,030				(20,515	)			(185.99	%)
(Benefit) provision for income taxes			(3,436	)			2,646				(6,082	)			(229.86	%)
Net (loss) income		$	(6,049	)		$	8,384			$	(14,433	)			(172.15	%)
(Loss) earnings per common share:
Basic		$	(0.27	)		$	0.50			N/A				N/A
Diluted		$	(0.27	)		$	0.50			N/A				N/A
Weighted average common shares outstanding:
Basic			22,243,776				16,643,138			N/A				N/A
Diluted			22,243,776				16,661,423			N/A				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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
Performance Ratios:
Return on average assets (1)		0.18	%			(1.60	%)			3.69	%			0.52	%			1.59	%
Return on average equity (1)		1.01	%			(10.06	%)			31.46	%			4.59	%			13.95	%
Net interest rate spread (1) (2)		3.86	%			4.48	%			4.32	%			3.92	%			3.60	%
Net interest margin (1) (3)		4.10	%			4.68	%			4.51	%			4.13	%			3.84	%
Non-interest expense to average assets (1)		3.84	%			6.59	%			3.90	%			3.72	%			3.65	%
Efficiency ratio (4)		93.77	%			143.50	%			44.10	%			78.89	%			61.80	%
Average interest-earning assets to average interest- bearing liabilities		151.98	%			145.54	%			138.10	%			138.89	%			140.13	%
Average equity to average assets		17.66	%			15.92	%			11.71	%			11.27	%			11.37	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		36.00	%			23.27	%			17.23	%			16.15	%			16.08	%
Tier 1 capital to risk weighted assets (Bank only)		34.75	%			22.02	%			15.98	%			14.90	%			14.83	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		34.75	%			22.02	%			15.98	%			14.90	%			14.83	%
Tier 1 capital to average assets (Bank only)		28.79	%			14.88	%			10.95	%			9.98	%			10.22	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		1.31	%			1.28	%			1.24	%			1.21	%			1.16	%
Allowance for loan losses as a percentage of nonperforming loans		94.05	%			106.84	%			142.90	%			157.17	%			175.63	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.05	%)			(0.22	%)			(0.18	%)			(0.13	%)			(0.07	%)
Non-performing loans as a percentage of total gross loans		1.39	%			1.20	%			0.87	%			0.77	%			0.66	%
Non-performing loans as a percentage of total assets		0.91	%			0.99	%			0.69	%			0.65	%			0.58	%
Total non-performing assets as a percentage of total assets		0.91	%			0.99	%			0.69	%			0.65	%			0.58	%
Total non-performing assets, accruing loans past due 90 days or more, and accruing troubled debt restructured loans as a percentage of total assets		1.16	%			1.32	%			1.07	%			1.05	%			1.01	%
Other:
Number of offices	18				18				19				19				19
Number of full-time equivalent employees	253				223				217				230				231

(1)  Annualized where appropriate.
(2)  Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
(3)  Net interest margin represents net interest income divided by average total interest-earning assets.
(4)  Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

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

		June 30, 2022
						Gross				Gross
		Amortized				Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
		(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds		$	2,983			$	—			$	(264	)		$	2,719
Corporate Bonds			25,841				2				(1,812	)			24,031
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			47,252				—				(5,322	)			41,930
FHLMC Certificates			11,965				—				(1,513	)			10,452
FNMA Certificates			70,771								(10,003	)			60,768
GNMA Certificates			144				—				—				144
Total available-for-sale securities		$	158,956			$	2			$	(18,914	)		$	140,044
Held-to-Maturity Securities:
Corporate Bonds		$	79,000			$	7			$	—			$	79,007
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			62,422				—				(3	)			62,419
FHLMC Certificates			842				—				(128	)			714
FNMA Certificates			69,253				—				(41	)			69,212
Total held-to-maturity securities		$	211,517			$	7			$	(172	)		$	211,352

(1)  Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.

		December 31, 2021
						Gross				Gross
		Amortized				Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
		(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds		$	2,981			$	—			$	(47	)		$	2,934
Corporate Bonds			21,243				144				(203	)			21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			18,845				—				(497	)			18,348
FNMA Certificates			71,930				—				(1,231	)			70,699
GNMA Certificates			175				6				—				181
Total available-for-sale securities		$	115,174			$	150			$	(1,978	)		$	113,346
Held-to-Maturity Securities:
FHLMC Certificates		$	934			$	—			$	(20	)		$	914
Total held-to-maturity securities		$	934			$	—			$	(20	)		$	914

(1) Comprised of FHLMC, FNMA and GNMA issued securities.

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

		As of
		June 30,						March 31,						December 31,						September 30,						June 30,
		2022						2022						2021						2021						2021
		Amount				Percent		Amount				Percent		Amount				Percent		Amount				Percent		Amount				Percent
		(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned		$	321,671			24.02	%	$	323,442			24.59	%	$	317,304			24.01	%	$	319,346			24.14	%	$	325,409			23.83	%
Owner-Occupied			100,048			7.47	%		95,234			7.24	%		96,947			7.33	%		97,493			7.37	%		98,839			7.24	%
Multifamily residential			396,470			29.60	%		368,133			27.98	%		348,300			26.34	%		317,575			24.01	%		318,579			23.33	%
Nonresidential properties			279,877			20.90	%		251,893			19.14	%		239,691			18.13	%		211,075			15.96	%		211,181			15.46	%
Construction and land			165,425			12.35	%		144,881			11.01	%		134,651			10.19	%		133,130			10.07	%		125,265			9.17	%
Total mortgage loans			1,263,491			94.34	%		1,183,583			89.96	%		1,136,893			86.00	%		1,078,619			81.55	%		1,079,273			79.02	%
Non-mortgage loans:
Business loans (1)			45,720			3.41	%		100,253			7.62	%		150,512			11.38	%		207,859			15.72	%		253,935			18.59	%
Consumer loans (2)			30,198			2.25	%		31,899			2.42	%		34,693			2.62	%		36,095			2.73	%		32,576			2.39	%
Total non-mortgage loans			75,918			5.66	%		132,152			10.04	%		185,205			14.00	%		243,954			18.45	%		286,511			20.98	%
Total loans, gross			1,339,409			100.00	%		1,315,735			100.00	%		1,322,098			100.00	%		1,322,573			100.00	%		1,365,784			100.00	%
Net deferred loan origination costs			2,446						1,604						(668	)					(4,327	)					(6,331	)
Allowance for losses on loans			(17,535	)					(16,893	)					(16,352	)					(16,008	)					(15,875	)
Loans, net		$	1,324,320					$	1,300,446					$	1,305,078					$	1,302,238					$	1,343,578

(1)   As of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, business loans include $30.8 million, $86.0 million, $136.8 million, $195.9 million and $241.5 million, respectively, of PPP loans.
(2)  As of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021 and June 30, 2021, consumer loans include $28.3 million, $31.0 million, $33.9 million, $35.5 million and $32.0 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.

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

Grain Technologies, Inc. ("Grain") Total Exposure as of June 30, 2022
(Dollars in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-June 30, 2022)		$	20,449
Write-downs (year to date as of June 30, 2022)			(9,574	)
Cash receipts from Grain (inception-to-June 30, 2022)			(6,047	)
Grant/reserve			(1,826	)
Net receivable as of June 30, 2022		$	3,002
Microloan receivables
Grain originated loans receivable as of June 30, 2022		$	28,296
Allowance for loan losses as of June 30, 2022			(1,399	)
Microloans, net of allowance for loan losses as of June 30, 2022		$	26,897
Investments
Investment in Grain as of June 30, 2022		$	1,000
Total exposure to Grain		$	30,899

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

	For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
	(Dollars in thousands)
Allowance for loan losses at beginning of the period	$	16,893			$	16,352			$	16,008			$	15,875			$	15,508
Provision for loan losses		817				1,258				873				572				586
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		(450	)			(751	)			(560	)			(510	)			(222	)
Total charge-offs		(450	)			(751	)			(598	)			(510	)			(222	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		156				—				8				—				—
Owner occupied		—				—				45				—				—
Multifamily residences		—				—				—				—				—
Nonresidential properties		—				—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		91				2				15				69				—
Consumer		28				32				1				2				3
Total recoveries		275				34				69				71				3
Net (charge-offs) recoveries		(175	)			(717	)			(529	)			(439	)			(219	)
Allowance for loan losses at end of the period	$	17,535			$	16,893			$	16,352			$	16,008			$	15,875

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

		As of
		June 30,						March 31,						December 31,						September 30,						June 30,
		2022						2022						2021						2021						2021
		Amount				Percent		Amount				Percent		Amount				Percent		Amount				Percent		Amount				Percent
		(Dollars in thousands)
Demand		$	284,462			24.77	%	$	281,132			23.81	%	$	274,956			22.83	%	$	297,777			23.85	%	$	320,404			25.91	%
Interest-bearing deposits:
NOW/IOLA accounts			28,597			2.49	%		33,010			2.79	%		35,280			2.93	%		28,025			2.24	%		28,996			2.35	%
Money market accounts			181,156			15.77	%		169,847			14.38	%		186,893			15.51	%		199,758			15.99	%		172,925			13.99	%
Reciprocal deposits			151,264			13.17	%		160,510			13.59	%		143,221			11.89	%		147,226			11.79	%		151,443			12.25	%
Savings accounts			139,244			12.12	%		133,966			11.34	%		134,887			11.20	%		142,851			11.43	%		130,430			10.55	%
Total NOW, money market, reciprocal and savings accounts			500,261			43.55	%		497,333			42.10	%		500,281			41.53	%		517,860			41.45	%		483,794			39.14	%
Certificates of deposit of $250K or more			65,157			5.67	%		75,130			6.36	%		78,454			6.51	%		70,996			5.68	%		74,941			6.06	%
Brokered certificates of deposit (1)			62,650			5.45	%		79,282			6.71	%		79,320			6.58	%		83,505			6.68	%		83,506			6.76	%
Listing service deposits (1)			48,953			4.26	%		53,876			4.56	%		66,411			5.51	%		66,340			5.31	%		66,518			5.38	%
All other certificates of deposit less than $250K			187,245			16.30	%		194,412			16.46	%		205,294			17.04	%		212,783			17.03	%		206,998			16.75	%
Total certificates of deposit			364,005			31.68	%		402,700			34.09	%		429,479			35.64	%		433,624			34.70	%		431,963			34.95	%
Total interest-bearing deposits			864,266			75.23	%		900,033			76.19	%		929,760			77.17	%		951,484			76.15	%		915,757			74.09	%
Total deposits		$	1,148,728			100.00	%	$	1,181,165			100.00	%	$	1,204,716			100.00	%	$	1,249,261			100.00	%	$	1,236,161			100.00	%

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

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

	As of Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	3,460			$	3,596			$	3,349			$	1,669			$	1,983
Owner occupied		1,140				962				1,284				1,090				1,593
Multifamily residential		—				—				1,200				2,577				955
Nonresidential properties		1,162				1,166				2,163				1,388				1,408
Construction and land		10,817				7,567				917				922				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)	$	16,579			$	13,291			$	8,913			$	7,646			$	5,939
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	224			$	230			$	234			$	238			$	242
Owner occupied		1,746				2,192				2,196				2,200				2,199
Multifamily residential		—				—				—				—				—
Nonresidential properties		96				98				100				101				659
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total non-accruing troubled debt restructured loans		2,066				2,520				2,530				2,539				3,100
Total non-accrual loans	$	18,645			$	15,811			$	11,443			$	10,185			$	9,039
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,246			$	2,269			$	3,089			$	3,121			$	3,347
Owner occupied		2,019				2,313				2,374				2,396				2,431
Multifamily residential		—				—				—				—				—
Nonresidential properties		725				726				732				738				755
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total accruing troubled debt restructured loans	$	4,990			$	5,308			$	6,195			$	6,255			$	6,533
Total non-performing assets and accruing troubled debt restructured loans	$	23,635			$	21,119			$	17,638			$	16,440			$	15,572
Total non-performing loans to total gross loans		1.39	%			1.20	%			0.87	%			0.77	%			0.66	%
Total non-performing assets to total assets		0.91	%			0.99	%			0.69	%			0.65	%			0.58	%
Total non-performing assets and accruing troubled debt restructured loans to total assets		1.16	%			1.32	%			1.07	%			1.05	%			1.01	%

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

	For the Three Months Ended June 30,
	2022											2021
	Average											Average
	Outstanding								Average			Outstanding								Average
	Balance				Interest				Yield/Rate (1)			Balance				Interest				Yield/Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Loans (2)	$	1,318,400			$	16,057			4.89%			$	1,332,808			$	15,603			4.70%
Securities (3)		155,939				908			2.34%				41,218				170			1.65%
Other (4)		41,708				202			1.94%				60,439				71			0.47%
Total interest-earning assets		1,516,047				17,167			4.54%				1,434,465				15,844			4.43%
Non-interest-earning assets		213,355											66,240
Total assets	$	1,729,402										$	1,500,705
Interest-bearing liabilities:
NOW/IOLA	$	32,321			$	14			0.17%			$	30,370			$	32			0.42%
Money market		338,984				474			0.56%				300,326				311			0.42%
Savings		136,755				31			0.09%				131,397				38			0.12%
Certificates of deposit		387,129				677			0.70%				431,324				1,108			1.03%
Total deposits		895,189				1,196			0.54%				893,417				1,489			0.67%
Advance payments by borrowers		12,359				2			0.06%				11,086				1			0.04%
Borrowings		89,965				481			2.14%				119,162				622			2.09%
Total interest-bearing liabilities		997,513				1,679			0.68%				1,023,665				2,112			0.83%
Non-interest-bearing liabilities:
Non-interest-bearing demand		359,181				—							293,626				—
Other non-interest-bearing liabilities		67,220				—							12,848				—
Total non-interest-bearing liabilities		426,401				—							306,474				—
Total liabilities		1,423,914				1,679							1,330,139				2,112
Total equity		305,488											170,566
Total liabilities and total equity	$	1,729,402							0.68%			$	1,500,705							0.83%
Net interest income					$	15,488										$	13,732
Net interest rate spread (5)									3.86%											3.60%
Net interest-earning assets (6)	$	518,534										$	410,800
Net interest margin (7)									4.10%											3.84%
Average interest-earning assets to interest-bearing liabilities									151.98%											140.13%

(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 Six Months Ended June 30,
	2022											2021
	Average											Average
	Outstanding								Average			Outstanding								Average
	Balance				Interest				Yield/Rate (1)			Balance				Interest				Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans (2)	$	1,321,897			$	34,257			5.23%			$	1,286,226			$	30,528			4.79%
Securities (3)		147,066				1,625			2.23%				31,919				346			2.19%
Other (4)		39,990				303			1.53%				53,548				147			0.55%
Total interest-earning assets		1,508,953				36,185			4.84%				1,371,693				31,021			4.56%
Non-interest-earning assets		219,151											65,102
Total assets	$	1,728,104										$	1,436,795
Interest-bearing liabilities:
NOW/IOLA	$	32,700			$	30			0.19%			$	31,720			$	70			0.45%
Money market		329,448				709			0.43%				288,779				615			0.43%
Savings		136,084				63			0.09%				129,191				77			0.12%
Certificates of deposit		403,028				1,480			0.74%				418,722				2,327			1.12%
Total deposits		901,260				2,282			0.51%				868,412				3,089			0.72%
Advance payments by borrowers		11,091				3			0.05%				9,999				2			0.04%
Borrowings		102,258				1,074			2.12%				124,429				1,306			2.12%
Total interest-bearing liabilities		1,014,609				3,359			0.67%				1,002,840				4,397			0.88%
Non-interest-bearing liabilities:
Non-interest-bearing demand		365,771				—							254,588				—
Other non-interest-bearing liabilities		57,446				—							13,297				—
Total non-interest-bearing liabilities		423,217				—							267,885				—
Total liabilities		1,437,826				3,359							1,270,725				4,397
Total equity		290,278											166,070
Total liabilities and total equity	$	1,728,104							0.67%			$	1,436,795							0.88%
Net interest income					$	32,826										$	26,624
Net interest rate spread (5)									4.17%											3.68%
Net interest-earning assets (6)	$	494,344										$	368,853
Net interest margin (7)									4.39%											3.91%
Average interest-earning assets to
interest-bearing liabilities									148.72%											136.78%

(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
	June 30,				March 31,				December 31,				September 30,				June 30,
	2022				2022				2021				2021				2021
Other Data
Common shares issued		24,724,274				24,724,274				18,463,028				18,463,028				18,463,028
Less treasury shares		—				—				1,037,041				1,132,086				1,135,086
Common shares outstanding at end of period		24,724,274				24,724,274				17,425,987				17,330,942				17,327,942
Book value per common share	$	11.85			$	12.12			$	10.86			$	10.03			$	9.92
Tangible book value per common share	$	11.85			$	12.12			$	10.86			$	10.03			$	9.92

Contact:
Sergio Vaccaro
sergio.vaccaro@poncebank.net
718-931-9000

FAQ

What was PDLB's net income for the second quarter of 2022?

Ponce Financial Group reported a net income of $771,000 for Q2 2022.

How did PDLB perform compared to the first quarter of 2022?

PDLB's Q2 2022 net income improved significantly from a net loss of $6.8 million in Q1 2022.

What is the significance of the $225 million preferred stock issuance for PDLB?

The issuance strengthens PDLB's capital position and supports its growth strategy.

What changes occurred in PDLB's total assets?

Total assets increased by $388.8 million, or 23.51%, to $2.04 billion as of June 30, 2022.

How much did non-performing loans increase for PDLB?

Non-performing loans increased by $9.6 million year-over-year to $18.6 million.