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

Rhea-AI Summary

Ponce Financial Group, Inc. (NASDAQ: PDLB) reported a significant rise in financial performance for Q4 2021, with net income soaring to $15.0 million, compared to $2.1 million in Q3 2021 and $1.6 million in Q4 2020. This increase was largely driven by a $15.4 million gain from the sale of real properties. Net interest income also rose by 43.8% year-over-year to $16.8 million, reflecting improved interest rates. Total assets increased by 22.0% to $1.65 billion, and stockholders’ equity grew by 18.6% to $189.3 million. As of December 31, 2021, non-performing loans slightly decreased to $11.4 million.

Positive

• Net income increased to $15.0 million in Q4 2021, a 610% rise from Q3 2021.
• Net interest income rose by 43.8% year-over-year to $16.8 million.
• Total assets increased by 22.0% to $1.65 billion.
• Stockholders’ equity grew by 18.6% to $189.3 million.

Negative

• Non-interest expense increased by $1.1 million, or 7.6%, in Q4 2021 compared to Q3 2021.
• Loan payment deferrals totaled $8.0 million as of December 31, 2021.

NEW 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				2,490				2,739				2,739				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				6,001				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				55				66				60
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				106,255				109,255				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				185				185				185				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	)			28				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		7				9				2				2				10
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				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				81
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		69				51				48				38				—
Directors fees		80				67				69				69				69
Regulatory dues		69				74				120				60				59
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			20				84				(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				92				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				32				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				9				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				N/A
Diluted		$	1.51			$	0.23			N/A				N/A
Weighted average shares outstanding:
Basic			16,744,561				16,673,193			N/A				N/A
Diluted			16,791,443				16,682,584			N/A				N/A

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

	At or for the Three Months Ended
	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	%			0.86	%
Total non-performing assets as a percentage of total assets		0.69	%			0.65	%			0.58	%			0.86	%			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	19				19				19				20				20
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				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	%			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													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				73			0.67		%				47,541				89			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			$	16			0.21		%			$	30,752			$	36			0.47	%
Money market		340,334				259			0.30		%				247,669				372			0.60	%
Savings		137,383				33			0.10		%				123,518				39			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				1			0.04		%				9,168				1			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												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				4				0.04	%			8,463				4				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				18,463,028				18,463,028				18,463,028				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

FAQ

What were Ponce Financial Group's net income results for Q4 2021?

Ponce Financial Group reported a net income of $15.0 million for Q4 2021.

How did Ponce Financial Group's net interest income perform in Q4 2021?

Net interest income increased by 43.8% year-over-year to $16.8 million in Q4 2021.

What is the total asset growth for Ponce Financial Group as of December 31, 2021?

Total assets increased by 22.0% to $1.65 billion as of December 31, 2021.

What is the status of non-performing loans for Ponce Financial Group?

As of December 31, 2021, non-performing loans were $11.4 million.

What financial challenges did Ponce Financial Group face in Q4 2021?

Non-interest expense rose by $1.1 million, and loan payment deferrals amounted to $8.0 million.