Ponce Financial Group, Inc. Reports Third Quarter 2022 Results

Rhea-AI Summary

Ponce Financial Group (NASDAQ: PDLB) reported a net loss of $14.7 million or $0.64 per diluted share for Q3 2022, compared to net income of $771,000 in Q2 2022. The loss was primarily due to $17.5 million in pre-tax charges related to Grain Technologies, Inc., including loan write-offs. Despite this, net interest income rose to $17.6 million, a 14.06% increase year-over-year, supported by a growing securities portfolio. Total assets grew by 30.53% to $2.16 billion, with stockholders' equity surging 164.55% to $500.7 million, bolstered by capital from the U.S. Treasury.

Positive

• Net interest income increased to $17.6 million, up 14.06% year-over-year.
• Total assets rose 30.53% to $2.16 billion.
• Stockholders' equity increased 164.55% to $500.7 million.

Negative

• Reported a net loss of $14.7 million compared to a profit in the previous quarter.
• Pre-tax charges of $17.5 million significantly impacted results.
• Non-interest income decreased by 51.24% from the prior year.

NEW YORK, Oct. 28, 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”), today announced results for the third quarter of 2022.

Third Quarter Highlights (Compared to Prior Periods):

• Net loss of ($14.7) million or ($0.64) per diluted share, for the three months ended September 30, 2022, as compared to net income of $771,000, or $0.03 per diluted share for the three months ended June 30, 2022 and net income of $2.1 million, or $0.12 per diluted share for the three months ended September 30, 2021.
• Included in the ($14.7) million 2022 third quarter results are $17.5 million of pre-tax charges related to Grain Technologies, Inc. (“Grain”) inclusive of the following: $7.9 million in additional write-offs of the receivable for loans put back to Grain; $8.6 million increase in provision for loan loss reserves/unused commitments to Grain-originated microloan portfolio and write-off of $1.0 million equity investment in Grain. In addition to pre-tax charges related to Grain, the Company also recognized a one-time $436,000 loss on equipment sales as it moved to implement ATMs as a service.
• Net interest income of $17.6 million for the 2022 third quarter increased $2.1 million, or 13.71%, from the prior quarter and $2.2 million, or 14.06%, from the same quarter last year, largely due to increases in the Company's securities portfolio.
• Net interest margin was 3.62% for the 2022 third quarter, a decrease from 4.10% for the prior quarter and from 4.13% for the same quarter last year. The reduction was largely attributable to an increase of lower yielding securities in the Company's portfolio and to an increase in the cost of funds.
• Securities totaled $626.3 million as of September 30, 2022, an increase of $512.0 million from December 31, 2021.
• Net loans receivable were $1.39 billion as of September 30, 2022, an increase of $87.5 million, or 6.70%, from December 31, 2021. The increase of $87.5 million was attributable to a $199.5 million net increase in non-PPP loans partially offset by a $112.0 million decrease in PPP loans.
• Deposits were $1.35 billion as of September 30, 2022, an increase of 12.16%, from December 31, 2021.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “Last quarter we announced the purchase of $225 million of preferred stock by the U.S. Department of the Treasury, resulting in the company having $500 million in stockholders' equity with which to add value for our stakeholders – our communities, customers, employees and shareholders. In the third quarter, we continued to implement our capital leveraging strategy by growing our securities portfolio. Moving forward, given the significant volatility in interest rates, we will be taking a more measured approach to putting our excess capital to work. Through continued investments in our people, technology and customers and utilizing our strong capital base, we are focused on management's goal to more than double the size of our loan business over the next several years.”

Mr. Naudon continued, “Our reported results this quarter, were impacted by additional action we took to more aggressively ring fence our overall exposure to Grain, recognizing pre-tax charges totaling $17.5 million as we moved to put ourselves in a position to minimize future losses from the microloan portfolio. Importantly, we remain well capitalized as we evaluate all means of delivering value to our stakeholders, including using all available capital management tools. As we grow our business, we will continue to leverage our existing partnerships, our strong core loan growth, and our status as a nationally recognized MDI and CDFI lending institution that has a strong asset growth capacity.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman, added, “This quarter, we continued the growth in our more traditional and focused areas of lending, including both qualified and non-qualified mortgages, the latter of which represents an important area of focus for Ponce. This portfolio continues to show resiliency in a challenging economic environment. With our abundant capital base and balance sheet liquidity, we are focused on significant growth opportunities across the historic communities we have served for over six decades in the New York City area, as well as expanding opportunities in other similarly underserved communities.”

Selected performance metrics are as follows (refer to “Key Metrics” for additional information):

Performance Ratios (Annualized):	For the Three Months Ended,
	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021
Return on average assets	(2.85%)	0.18%	(1.60%)	3.69%	0.52%
Return on average stockholders’ equity	(11.25%)	1.01%	(10.06%)	31.46%	4.59%
Net interest rate spread	3.12%	3.86%	4.48%	4.32%	3.92%
Net interest margin	3.62%	4.10%	4.68%	4.51%	4.13%
Non-interest expense to average assets	4.91%	3.84%	6.59%	3.90%	3.72%
Efficiency ratio	132.46%	93.77%	143.50%	44.10%	78.89%
Average interest-earning assets to average interest- bearing liabilities	161.30%	151.98%	145.54%	138.10%	138.89%
Average equity to average assets	25.31%	17.66%	15.92%	11.71%	11.27%

Capital Ratios (Annualized):	For the Three Months Ended,
	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021
Total Capital to risk weighted assets	33.39%	36.00%	23.27%	17.23%	16.15%
Tier 1 Capital to risk weighted assets	32.13%	34.75%	22.02%	15.98%	14.90%
Common equity Tier 1 capital to risk-weighted assets	32.13%	34.75%	22.02%	15.98%	14.90%
Tier 1 capital to average assets	22.91%	28.79%	14.88%	10.95%	9.98%

Asset Quality Ratios (Annualized):	For the Three Months Ended,
	September 30, 2022	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021
Allowance for loan losses as a percentage of total loans	1.77%	1.31%	1.28%	1.24%	1.21%
Allowance for loan losses as a percentage of nonperforming loans	118.43%	94.05%	106.84%	142.90%	157.17%
Net (charge-offs) recoveries to average outstanding loans	(0.52%)	(0.05%)	(0.22%)	(0.18%)	(0.13%)
Non-performing loans as a percentage of total gross loans	1.50%	1.39%	1.20%	0.87%	0.77%
Non-performing loans as a percentage of total assets	0.98%	0.91%	0.99%	0.69%	0.65%
Total non-performing assets as a percentage of total assets	0.98%	0.91%	0.99%	0.69%	0.65%

Summary of Results of Operations

Net loss for the nine months ended September 30, 2022, was ($20.8) million compared to net income of $10.4 million for the nine months ended September 30, 2021. This variance was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation this year, gains on property sales last year versus a loss on equipment sale this year, higher compensation and occupancy expenses and a reduction on the income on sale of mortgage loans.

Net Interest Income and Net Margin

Net interest income for the nine months ended September 30, 2022, was $50.4 million compared to $42.1 million for the nine months ended September 30, 2021. This increase is largely explained by the increase in the securities and loan portfolios.

Net interest margin was 4.09% for the nine months ended September 30, 2022 compared to 3.99% for the same period last year, an increase of 10bps. The increase in net interest margin was a result of an increase in net interest-earning assets as well as higher yields. 

Non-interest Income

Non-interest income for the three months ended September 30, 2022, was $1.6 million, a decrease of $602,000, or 27.63%, compared to the three months ended June 30, 2022 and a decrease of $1.7 million, or 51.24%, compared to the three months ended September 30, 2021.

The $602,000 decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended June 30, 2022 was impacted by a one-time $436,000 loss on sale of equipment and a decrease of $174,000 in loan origination fees.

The $1.7 million decrease in non-interest income for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 was attributable to a decrease of $1.1 million in income on sale of mortgage loans, a one-time $436,000 loss on sale of equipment, and decreases of $220,000 in late and prepayment charges and $103,000 in loan origination fees, offset by an increase of $173,000 in other non-interest income.

Non-interest income for the nine months ended September 30, 2022, decreased $9.5 million, or 61.33%, to $6.0 million compared to $15.5 million for the nine months ended September 30, 2021. The decrease is due to the loss on sale of equipment this year versus gains on sale of property last year and reductions in income on sale of mortgage loans, late and prepayment charges and loan origination fees.

Non-interest Expense

Non-interest expense for the three months ended September 30, 2022, was $25.4 million, an increase of $8.8 million, or 53.41%, compared to the three months ended June 30, 2022 and of $10.7 million, or 72.52%, compared to the three months ended September 30, 2021. The $8.8 million increase from the three months ended June 30, 2022 was mainly attributable to the Grain write-off and write-down and to a lesser extent, the increases in other operating expenses, compensation and benefits and occupancy and equipment. These factors also explain the $10.7 million increase in non-interest expense versus the same quarter last year.

Non-interest expense for the nine months ended September 30, 2022, was $70.1 million, an increase of $28.8 million or 69.68%, compared to the nine months ended September 30, 2021. The $28.8 million increase in non-interest expense was attributable to the $18.5 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $5.1 million in compensation and benefits, $1.7 million in occupancy and equipment expenses, $421,000 in data processing expenses and $396,000 in other operating expenses. These items were partially offset by decreases of $1.6 million in professional fees and $823,000 in direct loan expenses.

Balance Sheet Summary

Total assets increased $504.8 million, or 30.53%, to $2.16 billion as of September 30, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $493.4 million resulting from the purchases in held-to-maturity securities utilizing the $225.0 million received from the issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program. The increase in total assets is further impacted by an increase of $87.5 million in net loans receivable (inclusive of a $112.0 million net decrease in PPP loans), partially offset by a decrease of $91.4 million in cash and equivalents.

Total liabilities increased $193.3 million, or 13.20%, to $1.66 billion as of September 30, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $180.1 million in advances from FHLBNY and $146.5 million in deposits, offset by a decrease of $122.0 million in subscription liabilities related to the conversion of the mutual holding company to a stock company held as of December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022.

Total stockholders’ equity increased $311.4 million, or 164.55%, to $500.7 million as of September 30, 2022, from $189.3 million as of December 31, 2021. This increase in stockholders’ equity was largely attributable to the $225.0 million issuance of preferred stock to the U.S. Department of the Treasury pursuant to its Emergency Capital Investment Program and the $118.0 million received as a result of the sale of common stock in the conversion of the mutual holding company to a stock company.

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, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers’ ability to service and repay Ponce Bank’s loans; anticipated losses with respect to the Company's investment in Grain; 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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
ASSETS
Cash and due from banks:
Cash	$	37,235			$	53,544			$	32,168			$	98,954			$	29,365
Interest-bearing deposits in banks		25,286				221,262				37,127				54,940				33,673
Total cash and cash equivalents		62,521				274,806				69,295				153,894				63,038
Available-for-sale securities, at fair value		131,977				140,044				154,799				113,346				104,358
Held-to-maturity securities, at amortized cost		494,297				211,517				927				934				1,437
Placement with banks		2,490				2,490				2,490				2,490				2,490
Mortgage loans held for sale, at fair value		3,357				9,234				7,972				15,836				13,930
Loans receivable, net		1,392,553				1,324,320				1,300,446				1,305,078				1,302,238
Accrued interest receivable		14,063				13,255				12,799				12,362				13,360
Premises and equipment, net		17,759				18,945				19,279				19,617				34,081
Federal Home Loan Bank of New York stock (FHLBNY), at cost		14,272				16,429				5,420				6,001				6,001
Deferred tax assets		13,822				9,658				7,440				3,820				4,826
Other assets		11,170				21,585				13,730				20,132				14,793
Total assets	$	2,158,281			$	2,042,283			$	1,594,597			$	1,653,510			$	1,560,552
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,351,189			$	1,148,728			$	1,181,165			$	1,204,716			$	1,249,261
Accrued interest payable		854				158				223				228				238
Advance payments by borrowers for taxes and insurance		10,589				8,668				10,161				7,657				9,118
Advances from the FHLBNY and others		286,375				334,375				93,375				106,255				106,255
Warehouse lines of credit		—				—				753				15,090				11,261
Mortgage loan fundings payable		—				—				—				—				1,136
Mutual holding company conversion subscription liabilities		—				—				—				122,000				—
Other liabilities		8,591				32,272				9,341				8,308				9,396
Total liabilities		1,657,598				1,524,201				1,295,018				1,464,254				1,386,665
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000				225,000				—				—				—
Common stock, $0.01 par value; 200,000,000  shares authorized		247				247				247				185				185
Treasury stock, at cost		—				—				—				(13,687	)			(15,069	)
Additional paid-in-capital		206,092				205,669				205,243				85,601				86,360
Retained earnings		102,169				116,907				116,136				122,956				107,977
Accumulated other comprehensive loss		(18,420	)			(15,032	)			(7,035	)			(1,456	)			(621	)
Unearned compensation ─ ESOP		(14,405	)			(14,709	)			(15,012	)			(4,343	)			(4,945	)
Total stockholders' equity		500,683				518,082				299,579				189,256				173,887
Total liabilities and stockholders' equity	$	2,158,281			$	2,042,283			$	1,594,597			$	1,653,510			$	1,560,552

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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
Interest and dividend income:
Interest on loans receivable	$	17,058			$	16,057			$	18,200			$	18,013			$	16,991
Interest on deposits due from banks		346				132				36				7				9
Interest and dividend on securities and FHLBNY stock		4,230				978				782				632				425
Total interest and dividend income		21,634				17,167				19,018				18,652				17,425
Interest expense:
Interest on certificates of deposit		687				677				803				907				1,010
Interest on other deposits		1,543				521				284				309				354
Interest on borrowings		1,793				481				593				654				621
Total interest expense		4,023				1,679				1,680				1,870				1,985
Net interest income		17,611				15,488				17,338				16,782				15,440
Provision for loan losses		9,330				817				1,258				873				572
Net interest income after provision for loan losses		8,281				14,671				16,080				15,909				14,868
Non-interest income:
Service charges and fees		464				445				440				468				494
Brokerage commissions		288				214				338				401				270
Late and prepayment charges		109				193				58				336				329
Income on sale of mortgage loans		116				200				418				1,294				1,175
Loan origination		522				696				625				886				625
(Loss) gain on sale of premises and equipment		(436	)			—				—				15,431				—
Other		514				431				347				353				341
Total non-interest income		1,577				2,179				2,226				19,169				3,234
Non-interest expense:
Compensation and benefits		7,377				6,911				7,125				6,959				6,427
Occupancy and equipment		3,611				3,237				3,192				3,007				2,849
Data processing expenses		994				824				847				771				917
Direct loan expenses		654				505				874				1,032				696
Insurance and surety bond premiums		297				156				147				149				147
Office supplies, telephone and postage		369				406				405				552				626
Professional fees		1,251				1,748				1,334				1,700				1,765
Contribution to the Ponce De Leon Foundation		—				—				4,995				—				—
Grain write-off and write-down		8,881				1,500				8,074				—				—
Marketing and promotional expenses		214				52				71				69				51
Directors fees		89				96				71				80				67
Regulatory assessment		99				71				83				69				74
Other operating expenses		1,580				1,061				856				1,466				1,113
Total non-interest expense		25,416				16,567				28,074				15,854				14,732
(Loss) income before income taxes		(15,558	)			283				(9,768	)			19,224				3,370
(Benefit) provision for income taxes		(820	)			(488	)			(2,948	)			4,245				1,318
Net (loss) income	$	(14,738	)		$	771			$	(6,820	)		$	14,979			$	2,052
(Loss) earnings per common share:
Basic	$	(0.64	)		$	0.03			$	(0.31	)		$	0.90			$	0.12
Diluted	$	(0.64	)		$	0.03			$	(0.31	)		$	0.89			$	0.12
Weighted average common shares outstanding:
Basic		23,094,859				23,056,559				21,721,113				16,864,929				16,823,731
Diluted		23,094,859				23,128,911				21,721,113				16,924,785				16,914,833

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 Nine Months Ended September 30,
		2022				2021				Variance $				Variance %
Interest and dividend income:
Interest on loans receivable		$	51,315			$	47,519			$	3,796				7.99	%
Interest on deposits due from banks			514				13				501				3,853.85	%
Interest and dividend on securities and FHLBNY stock			5,990				914				5,076				555.36	%
Total interest and dividend income			57,819				48,446				9,373				19.35	%
Interest expense:
Interest on certificates of deposit			2,167				3,337				(1,170	)			(35.06	%)
Interest on other deposits			2,348				1,118				1,230				110.02	%
Interest on borrowings			2,867				1,927				940				48.78	%
Total interest expense			7,382				6,382				1,000				15.67	%
Net interest income			50,437				42,064				8,373				19.91	%
Provision for loan losses			11,405				1,844				9,561				518.49	%
Net interest income after provision for loan losses			39,032				40,220				(1,188	)			(2.95	%)
Non-interest income:
Service charges and fees			1,349				1,189				160				13.46	%
Brokerage commissions			840				923				(83	)			(8.99	%)
Late and prepayment charges			360				871				(511	)			(58.67	%)
Income on sale of mortgage loans			734				3,971				(3,237	)			(81.52	%)
Loan origination			1,843				2,135				(292	)			(13.68	%)
(Loss) gain on sale of premises and equipment			(436	)			4,812				(5,248	)			(109.06	%)
Other			1,292				1,567				(275	)			(17.55	%)
Total non-interest income			5,982				15,468				(9,486	)			(61.33	%)
Non-interest expense:
Compensation and benefits			21,413				16,303				5,110				31.34	%
Occupancy and equipment			10,040				8,321				1,719				20.66	%
Data processing expenses			2,665				2,244				421				18.76	%
Direct loan expenses			2,033				2,856				(823	)			(28.82	%)
Insurance and surety bond premiums			600				436				164				37.61	%
Office supplies, telephone and postage			1,180				1,502				(322	)			(21.44	%)
Professional fees			4,333				5,929				(1,596	)			(26.92	%)
Contribution to the Ponce De Leon Foundation			4,995				—				4,995				—	%
Grain write-off and write-down			18,455				—				18,455				—	%
Marketing and promotional expenses			337				137				200				145.99	%
Directors fees			256				205				51				24.88	%
Regulatory assessment			253				254				(1	)			(0.39	%)
Other operating expenses			3,497				3,101				396				12.77	%
Total non-interest expense			70,057				41,288				28,769				69.68	%
(Loss) income before income taxes			(25,043	)			14,400				(39,443	)			(273.91	%)
(Benefit) provision for income taxes			(4,256	)			3,964				(8,220	)			(207.37	%)
Net (loss) income		$	(20,787	)		$	10,436			$	(31,223	)			(299.19	%)
(Loss) earnings per common share:
Basic		$	(0.92	)		$	0.62			N/A				N/A
Diluted		$	(0.92	)		$	0.62			N/A				N/A
Weighted average common shares outstanding:
Basic			22,524,477				16,703,997			N/A				N/A
Diluted			22,524,477				16,746,554			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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
Performance Ratios:
Return on average assets (1)		(2.85	%)			0.18	%			(1.60	%)			3.69	%			0.52	%
Return on average equity (1)		(11.25	%)			1.01	%			(10.06	%)			31.46	%			4.59	%
Net interest rate spread (1) (2)		3.12	%			3.86	%			4.48	%			4.32	%			3.92	%
Net interest margin (1) (3)		3.62	%			4.10	%			4.68	%			4.51	%			4.13	%
Non-interest expense to average assets (1)		4.91	%			3.84	%			6.59	%			3.90	%			3.72	%
Efficiency ratio (4)		132.46	%			93.77	%			143.50	%			44.10	%			78.89	%
Average interest-earning assets to average interest- bearing liabilities		161.30	%			151.98	%			145.54	%			138.10	%			138.89	%
Average equity to average assets		25.31	%			17.66	%			15.92	%			11.71	%			11.27	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		33.39	%			36.00	%			23.27	%			17.23	%			16.15	%
Tier 1 capital to risk weighted assets (Bank only)		32.13	%			34.75	%			22.02	%			15.98	%			14.90	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		32.13	%			34.75	%			22.02	%			15.98	%			14.90	%
Tier 1 capital to average assets (Bank only)		22.91	%			28.79	%			14.88	%			10.95	%			9.98	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		1.77	%			1.31	%			1.28	%			1.24	%			1.21	%
Allowance for loan losses as a percentage of nonperforming loans		118.43	%			94.05	%			106.84	%			142.90	%			157.17	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.52	%)			(0.05	%)			(0.22	%)			(0.18	%)			(0.13	%)
Non-performing loans as a percentage of total gross loans		1.50	%			1.39	%			1.20	%			0.87	%			0.77	%
Non-performing loans as a percentage of total assets		0.98	%			0.91	%			0.99	%			0.69	%			0.65	%
Total non-performing assets as a percentage of total assets		0.98	%			0.91	%			0.99	%			0.69	%			0.65	%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets		1.18	%			1.16	%			1.32	%			1.07	%			1.05	%
Other:
Number of offices		18				18				18				19				19
Number of full-time equivalent employees		257				253				223				217				230

^{(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

		September 30, 2022																December 31, 2021
						Gross				Gross												Gross				Gross
		Amortized				Unrealized				Unrealized								Amortized				Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value				Cost				Gains				Losses				Fair Value
		(in thousands)																(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds		$	2,984			$	—			$	(325	)		$	2,659			$	2,981			$	—			$	(47	)		$	2,934
Corporate Bonds			25,833				—				(2,475	)			23,358				21,243				144				(203	)			21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			45,727				—				(6,362	)			39,365				18,845				—				(497	)			18,348
FHLMC Certificates			11,614				—				(1,821	)			9,793				—				—				—				—
FNMA Certificates			68,840				—				(12,166	)			56,674				71,930				—				(1,231	)			70,699
GNMA Certificates			129				—				(1	)			128				175				6				—				181
Total available-for-sale securities		$	155,127			$	—			$	(23,150	)		$	131,977			$	115,174			$	150			$	(1,978	)		$	113,346
Held-to-Maturity Securities:
U.S. Agency Bonds		$	25,000			$	—			$	(308	)		$	24,692			$	—			$	—			$	—			$	—
Corporate Bonds			80,500				—				(3,242	)			77,258				—				—				—				—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)			227,257				—				(5,184	)			222,073				—				—				—				—
FHLMC Certificates			4,146				—				(272	)			3,874				934				—				(20	)			914
FNMA Certificates			135,178				—				(6,076	)			129,102				—				—				—				—
SBA Certificates			22,216				87				—				22,303				—				—				—				—
Total held-to-maturity securities		$	494,297			$	87			$	(15,082	)		$	479,302			$	934			$	—			$	(20	)		$	914

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

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

		As of
		September 30,								June 30,								March 31,								December 31,								September 30,
		2022								2022								2022								2021								2021
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned		$	336,667				23.79	%		$	321,671				24.02	%		$	323,442				24.59	%		$	317,304				24.01	%		$	319,346				24.14	%
Owner-Occupied			112,749				7.97	%			100,048				7.47	%			95,234				7.24	%			96,947				7.33	%			97,493				7.37	%
Multifamily residential			421,917				29.81	%			396,470				29.60	%			368,133				27.98	%			348,300				26.34	%			317,575				24.01	%
Nonresidential properties			282,642				19.97	%			279,877				20.90	%			251,893				19.14	%			239,691				18.13	%			211,075				15.96	%
Construction and land			197,437				13.95	%			165,425				12.35	%			144,881				11.01	%			134,651				10.19	%			133,130				10.07	%
Total mortgage loans			1,351,412				95.49	%			1,263,491				94.34	%			1,183,583				89.96	%			1,136,893				86.00	%			1,078,619				81.55	%
Non-mortgage loans:
Business loans (1)			41,398				2.92	%			45,720				3.41	%			100,253				7.62	%			150,512				11.38	%			207,859				15.72	%
Consumer loans (2)			22,563				1.59	%			30,198				2.25	%			31,899				2.42	%			34,693				2.62	%			36,095				2.73	%
Total non-mortgage loans			63,961				4.51	%			75,918				5.66	%			132,152				10.04	%			185,205				14.00	%			243,954				18.45	%
Total loans, gross			1,415,373				100.00	%			1,339,409				100.00	%			1,315,735				100.00	%			1,322,098				100.00	%			1,322,573				100.00	%
Net deferred loan origination costs			2,288								2,446								1,604								(668	)							(4,327	)
Allowance for losses on loans			(25,108	)							(17,535	)							(16,893	)							(16,352	)							(16,008	)
Loans, net		$	1,392,553							$	1,324,320							$	1,300,446							$	1,305,078							$	1,302,238

^{(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, business loans include $24.7 million, $30.8 million, $86.0 million, $136.8 million and $195.9 million, respectively, of PPP loans.}

^{(2) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, consumer loans include $21.5 million, $28.3 million, $31.0 million, $33.9 million and $35.5 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 September 30, 2022
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-September 30, 2022)		$	25,467
Write-downs (year to date as of September 30, 2022)			(17,455	)
Cash receipts from Grain (inception-to-September 30, 2022)			(6,186	)
Grant/reserve			(1,826	)
Net receivable as of September 30, 2022		$	—
Microloan receivables
Grain originated loans receivable as of September 30, 2022		$	21,507
Allowance for loan losses as of September 30, 2022 *			(8,213	)
Microloans, net of allowance for loan losses as of September 30, 2022		$	13,294
Investments
Investment in Grain as of June 30, 2022		$	1,000
Investment in Grain write-off in Q3 2022			(1,000	)
Investment in Grain as of September 30, 2022			—
Total exposure to Grain as of September 30, 2022		$	13,294

* Includes $460,000 for allowance for unused commitments on the $15.3 million of unused commitments available to Grain borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions

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

	For the Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
	(Dollars in thousands)
Allowance for loan losses at beginning of the period	$	17,535			$	16,893			$	16,352			$	16,008			$	15,875
Provision for loan losses		9,330				817				1,258				873				572
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		(1,799	)			(450	)			(751	)			(560	)			(510	)
Total charge-offs		(1,799	)			(450	)			(751	)			(598	)			(510	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—				156				—				8				—
Owner occupied		39				—				—				45				—
Multifamily residences		—				—				—				—				—
Nonresidential properties		—				—				—				—				—
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		1				91				2				15				69
Consumer		2				28				32				1				2
Total recoveries		42				275				34				69				71
Net (charge-offs) recoveries		(1,757	)			(175	)			(717	)			(529	)			(439	)
Allowance for loan losses at end of the period	$	25,108			$	17,535			$	16,893			$	16,352			$	16,008

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

		As of
		September 30,								June 30,								March 31,								December 31,								September 30,
		2022								2022								2022								2021								2021
		Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent				Amount				Percent
		(Dollars in thousands)
Demand		$	288,654				21.37	%		$	284,462				24.77	%		$	281,132				23.81	%		$	274,956				22.83	%		$	297,777				23.85	%
Interest-bearing deposits:
NOW/IOLA accounts			28,799				2.13	%			28,597				2.49	%			33,010				2.79	%			35,280				2.93	%			28,025				2.24	%
Money market accounts			360,293				26.66	%			181,156				15.77	%			169,847				14.38	%			186,893				15.51	%			199,758				15.99	%
Reciprocal deposits			162,858				12.05	%			151,264				13.17	%			160,510				13.59	%			143,221				11.89	%			147,226				11.79	%
Savings accounts			140,055				10.37	%			139,244				12.12	%			133,966				11.34	%			134,887				11.20	%			142,851				11.43	%
Total NOW, money market, reciprocal and savings accounts			692,005				51.21	%			500,261				43.55	%			497,333				42.10	%			500,281				41.53	%			517,860				41.45	%
Certificates of deposit of $250K or more			61,900				4.58	%			65,157				5.67	%			75,130				6.36	%			78,454				6.51	%			70,996				5.68	%
Brokered certificates of deposit (1)			98,760				7.31	%			62,650				5.45	%			79,282				6.71	%			79,320				6.58	%			83,505				6.68	%
Listing service deposits (1)			40,964				3.03	%			48,953				4.26	%			53,876				4.56	%			66,411				5.51	%			66,340				5.31	%
All other certificates of deposit less than $250K			168,906				12.50	%			187,245				16.30	%			194,412				16.46	%			205,294				17.04	%			212,783				17.03	%
Total certificates of deposit			370,530				27.42	%			364,005				31.68	%			402,700				34.09	%			429,479				35.64	%			433,624				34.70	%
Total interest-bearing deposits			1,062,535				78.63	%			864,266				75.23	%			900,033				76.19	%			929,760				77.17	%			951,484				76.15	%
Total deposits		$	1,351,189				100.00	%		$	1,148,728				100.00	%		$	1,181,165				100.00	%		$	1,204,716				100.00	%		$	1,249,261				100.00	%

^{(1) As of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, there were $13.8 million, $18.5 million, $19.0 million, $29.0 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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	5,902			$	3,460			$	3,596			$	3,349			$	1,669
Owner occupied		971				1,140				962				1,284				1,090
Multifamily residential		—				—				—				1,200				2,577
Nonresidential properties		778				1,162				1,166				2,163				1,388
Construction and land		10,660				10,817				7,567				917				922
Non-mortgage loans:
Business		359				—				—				—				—
Consumer		—				—				—				—				—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)	$	18,670			$	16,579			$	13,291			$	8,913			$	7,646
Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	221			$	224			$	230			$	234			$	238
Owner occupied		2,215				1,746				2,192				2,196				2,200
Multifamily residential		—				—				—				—				—
Nonresidential properties		95				96				98				100				101
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total non-accruing troubled debt restructured loans		2,531				2,066				2,520				2,530				2,539
Total non-accrual loans	$	21,201			$	18,645			$	15,811			$	11,443			$	10,185
Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,228			$	2,246			$	2,269			$	3,089			$	3,121
Owner occupied		1,254				2,019				2,313				2,374				2,396
Multifamily residential		—				—				—				—				—
Nonresidential properties		715				725				726				732				738
Construction and land		—				—				—				—				—
Non-mortgage loans:
Business		—				—				—				—				—
Consumer		—				—				—				—				—
Total accruing troubled debt restructured loans	$	4,197			$	4,990			$	5,308			$	6,195			$	6,255
Total non-performing assets and accruing troubled debt restructured loans	$	25,398			$	23,635			$	21,119			$	17,638			$	16,440
Total non-performing loans to total gross loans		1.50	%			1.39	%			1.20	%			0.87	%			0.77	%
Total non-performing assets to total assets		0.98	%			0.91	%			0.99	%			0.69	%			0.65	%
Total non-performing assets and accruing troubled debt restructured loans to total assets		1.18	%			1.16	%			1.32	%			1.07	%			1.05	%

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

	For the Three Months Ended September 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)	$	1,379,029			$	17,058			4.91%		$	1,356,130			$	16,991			4.97%
Securities (3)		492,337				4,153			3.35%			72,960				355			1.93%
Other (4)		57,646				423			2.91%			53,182				79			0.59%
Total interest-earning assets		1,929,012				21,634			4.45%			1,482,272				17,425			4.66%
Non-interest-earning assets		124,738										90,110
Total assets	$	2,053,750									$	1,572,382
Interest-bearing liabilities:
NOW/IOLA	$	29,939			$	13			0.17%		$	30,221			$	23			0.30%
Money market		409,947				1,471			1.42%			323,840				294			0.36%
Savings		141,200				57			0.16%			137,078				36			0.10%
Certificates of deposit		353,822				687			0.77%			448,191				1,010			0.89%
Total deposits		934,908				2,228			0.95%			939,330				1,363			0.58%
Advance payments by borrowers		10,918				2			0.07%			10,061				1			0.04%
Borrowings		250,112				1,793			2.84%			117,824				621			2.09%
Total interest-bearing liabilities		1,195,938				4,023			1.33%			1,067,215				1,985			0.74%
Non-interest-bearing liabilities:
Non-interest-bearing demand		321,556				—						317,727				—
Other non-interest-bearing liabilities		16,377				—						10,154				—
Total non-interest-bearing liabilities		337,933				—						327,881				—
Total liabilities		1,533,871				4,023						1,395,096				1,985
Total equity		519,879										177,286
Total liabilities and total equity	$	2,053,750							1.33%		$	1,572,382							0.74%
Net interest income					$	17,611									$	15,440
Net interest rate spread (5)									3.12%										3.92%
Net interest-earning assets (6)	$	733,074									$	415,057
Net interest margin (7)									3.62%										4.13%
Average interest-earning assets to interest-bearing liabilities									161.30%										138.89%

^{(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 Nine Months Ended September 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)	$	1,341,151			$	51,315				5.12	%		$	1,309,765			$	47,519				4.85	%
Securities (3)		263,421				5,778				2.93	%			45,749				701				2.05	%
Other (4)		45,940				726				2.11	%			53,425				226				0.57	%
Total interest-earning assets		1,650,512				57,819				4.68	%			1,408,939				48,446				4.60	%
Non-interest-earning assets		187,333												73,493
Total assets	$	1,837,845											$	1,482,432
Interest-bearing liabilities:
NOW/IOLA	$	31,769			$	43				0.18	%		$	31,215			$	93				0.40	%
Money market		356,576				2,180				0.82	%			300,594				909				0.40	%
Savings		137,808				120				0.12	%			131,849				113				0.11	%
Certificates of deposit		386,446				2,167				0.75	%			428,653				3,337				1.04	%
Total deposits		912,599				4,510				0.66	%			892,311				4,452				0.67	%
Advance payments by borrowers		11,033				5				0.06	%			10,020				3				0.04	%
Borrowings		152,084				2,867				2.52	%			122,203				1,927				2.11	%
Total interest-bearing liabilities		1,075,716				7,382				0.92	%			1,024,534				6,382				0.83	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		350,871				—								275,865				—
Other non-interest-bearing liabilities		43,606				—								12,182				—
Total non-interest-bearing liabilities		394,477				—								288,047				—
Total liabilities		1,470,193				7,382								1,312,581				6,382
Total equity		367,652												169,851
Total liabilities and total equity	$	1,837,845								0.92	%		$	1,482,432								0.83	%
Net interest income					$	50,437											$	42,064
Net interest rate spread (5)										3.76	%											3.77	%
Net interest-earning assets (6)	$	574,796											$	384,405
Net interest margin (7)										4.09	%											3.99	%
Average interest-earning assets to
interest-bearing liabilities										153.43	%											137.52	%

^{(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
	September 30,				June 30,				March 31,				December 31,				September 30,
	2022				2022				2022				2021				2021
Other Data
Common shares issued		24,728,460				24,724,274				24,724,274				18,463,028				18,463,028
Less treasury shares		—				—				—				1,037,041				1,132,086
Common shares outstanding at end of period		24,728,460				24,724,274				24,724,274				17,425,987				17,330,942
Book value per common share	$	11.15			$	11.85			$	12.12			$	10.86			$	10.03
Tangible book value per common share	$	11.15			$	11.85			$	12.12			$	10.86			$	10.03

Contact:
Frank Perez
frank.perez@poncebank.net
718-931-9000

FAQ

What were the financial results for PDLB in Q3 2022?

Ponce Financial Group reported a net loss of $14.7 million for Q3 2022.

How did PDLB's net interest income change in Q3 2022?

Net interest income increased to $17.6 million, a rise of 14.06% year-over-year.

What charges negatively affected PDLB's Q3 2022 results?

The company faced $17.5 million in pre-tax charges related to Grain Technologies.

What is the current stockholders' equity for PDLB?

As of September 30, 2022, PDLB's stockholders' equity was $500.7 million.

How did PDLB's total assets change in Q3 2022?

Total assets increased by 30.53% to $2.16 billion as of September 30, 2022.