Ponce Financial Group, Inc. Reports First Quarter 2023 Results

Source: Nasdaq GlobeNewswire / 26 Apr 2023 16:55:26 America/New_York

NEW YORK, April 26, 2023 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the first quarter of 2023.

First Quarter 2023 Highlights (Compared to Prior Periods):

Net income of $0.3 million or $0.01 per diluted share, for the three months ended March 31, 2023, as compared to net loss of ($9.2) million, or ($0.40) per diluted share for the three months ended December 31, 2022 and net loss of ($6.8) million, or ($0.31) per diluted share for the three months ended March 31, 2022.
Included in the $0.3 million of net income for the first quarter of 2023 results is $15.2 million in net interest income and $1.8 million in non-interest income, offset by a $16.4 million in non-interest expense.
Net interest income of $15.2 million for the first quarter of 2023 decreased $0.9 million, or 5.70%, from the prior quarter and $2.1 million, or 12.07%, from the same quarter last year, largely due to an increase in funding costs driven by the significant increase in interest rates during the quarter.
Net interest margin was 2.75% for the first quarter of 2023, a decrease from 2.98% for the prior quarter and from 4.68% for the same quarter last year.
Cash and equivalents were $184.7 million as of March 31, 2023, an increase of $130.3 million, or 239.75%, from December 31,2022 as we were able to take advantage of borrowing rates below what we collect on our interest bearing overnight deposit with banks.
Securities totaled $620.0 million as of March 31, 2023, a decrease of $20.4 million, or 3.18%, from December 31, 2022 due to a call on one of the securities and changes in principal.
Net loans receivable were $1.61 billion as of March 31, 2023, an increase of $121.3 million, or 8.12%, from December 31, 2022.
Deposits were $1.34 billion as of March 31, 2023, an increase of $84.5 million, or 6.74%, from December 31, 2022.

President and Chief Executive Officer’s Comments

Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated, “Although the U.S. economy continues to show strength, we saw plenty of volatility as well as a continuation of rate increases during the quarter. Despite that backdrop we were able to grow our loan and deposit base while keeping plenty of liquidity available – our liquid assets (cash and equivalents plus unpledged securities) stand at $573 million, almost double the level of our uninsured deposits of approximately $317 million. Our capital levels continue to be industry leading and multiples of regulatory requirements. We were also able to regain profitability and grow our book value per share. During the quarter we implemented Current Expected Credit Losses ("CECL") which slightly reduced our allowance for credit losses but increased our reserve for contingent exposures (which are booked as operating expenses). On the quarterly provision, we booked a net recovery as the $1.5 million charge due to loan increases and the $0.1 million related to the investment portfolio, offset by recoveries on the micro consumer loan portfolio of $1.8 million as the portfolio paid off significantly during the quarter. We also booked $0.9 million in recoveries related to the micro consumer loan receivable given our cash collections during the quarter.

“While we continue to prepare for different scenarios and it’s reasonable to expect further volatility, we remain committed to invest in our people and in technology to make us more efficient. Our commitment is also to the communities we serve and to our MDI/CDFI status – as an example, we announced on April 17, 2023 that we were awarded a grant of $3.7 million from the U.S. Treasury as part of the CDFI Equitable Recovery Program.”

Executive Chairman’s Comment

Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added, “Despite a challenging environment, we were able to organically add over $140 million to our real estate loan portfolio across most categories during the quarter while reducing our exposure related to consumer micro loans. We achieved this growth, without sacrificing quality - we will never choose loan growth over safe and sound underwriting practices. Our prudence has served us well over the years and it will continue to do so for years to come.”

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

	At or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Performance Ratios (Annualized):	2023			2022			2022			2022			2022
Return on average assets (1)		0.06	%		(1.62	%)		(2.80	%)		0.17	%		(1.55	%)
Return on average equity (1)		0.27	%		(7.28	%)		(11.25	%)		1.01	%		(10.06	%)
Net interest rate spread (1) (2)		1.79	%		2.14	%		3.12	%		3.86	%		4.48	%
Net interest margin (1) (3)		2.75	%		2.98	%		3.62	%		4.10	%		4.68	%
Non-interest expense to average assets (1)		2.79	%		2.78	%		4.83	%		3.73	%		6.39	%
Efficiency ratio (4)		95.88	%		94.95	%		132.46	%		93.77	%		143.50	%
Average interest-earning assets to average interest- bearing liabilities		147.75	%		151.73	%		161.30	%		151.98	%		145.54	%
Average equity to average assets		20.91	%		22.32	%		24.90	%		17.32	%		15.76	%

	At or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Capital Ratios (Annualized):	2023			2022			2022			2022			2022
Total capital to risk weighted assets (Bank only)		27.54	%		30.53	%		33.39	%		36.00	%		23.27	%
Tier 1 capital to risk weighted assets (Bank only)		26.28	%		29.26	%		32.13	%		34.75	%		22.02	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		26.28	%		29.26	%		32.13	%		34.75	%		22.02	%
Tier 1 capital to average assets (Bank only)		19.51	%		20.47	%		22.91	%		28.79	%		14.88	%

	At or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Asset Quality Ratios (Annualized):	2023			2022			2022			2022			2022
Allowance for loan losses as a percentage of total loans		1.77	%		2.27	%		1.77	%		1.31	%		1.28	%
Allowance for loan losses as a percentage of nonperforming loans		149.73	%		252.33	%		118.43	%		94.05	%		106.84	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.57	%)		(0.85	%)		(0.52	%)		(0.05	%)		(0.22	%)
Non-performing loans as a percentage of total gross loans		1.18	%		0.90	%		1.50	%		1.39	%		1.20	%
Non-performing loans as a percentage of total assets		0.76	%		0.59	%		0.97	%		0.90	%		0.97	%
Total non-performing assets as a percentage of total assets		0.76	%		0.59	%		0.97	%		0.90	%		0.97	%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets		0.93	%		0.78	%		1.16	%		1.14	%		1.30	%

Annualized where appropriate.
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.
Net interest margin represents net interest income divided by average total interest-earning assets.
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

Summary of Results of Operations

Net income for the three months ended March 31, 2023, was $0.3 million compared to a net loss of ($9.2) million for the three months ended December 31, 2022 and net loss of ($6.8) million for the three months ended March 31, 2022. The increase of net income for the three months ended March 31, 2023 compared to the three months ended December 31, 2022 was attributed mainly to Grain Technology, Inc. ("Grain")’s net provision recovery this quarter versus a large Grain-related provision charge the prior quarter. The increase of net income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation in the first quarter of 2022.

Net Interest Income and Net Margin

Net interest income for the three months ended March 31, 2023, was $15.2 million compared to $16.2 million for the three months ended December 31, 2022 and $17.3 million for the three months end March 31, 2022. This decrease is largely explained by increases in interest expenses due to higher interest rates, offset by increases in interest and dividend income.

Net interest margin was 2.75% for the three months ended March 31, 2023 compared to 2.98% for the prior quarter, a decrease of 23bps and 4.68% for the same period last year, a decrease of 193bps. The decrease in net interest margin was a result of an increase in the cost of funds driven by higher interest rates.

Non-interest Income

Non-interest income for the three months ended March 31, 2023, was $1.8 million, an increase of $1.4 million, or 316.25%, compared to the three months ended December 31, 2022 and a decrease of $0.4 million, or 18.28%, compared to the three months ended March 31, 2022.

The $1.4 million increase in non-interest income for the three months ended March 31, 2023 compared to the three months ended December 31, 2022 was impacted by the reversal of loan origination income that had been taken upfront (as opposed to deferred) last quarter and increases in late and prepayment charges and other non-interest income this quarter.

The $0.4 million decrease in non-interest income for the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was attributable to decreases of $0.6 million in loan origination fees, $0.3 million in income on sale of mortgage loans and $0.3 million in brokerage commission, partially offset by increases of $0.7 million in late and prepayment charges and $0.1 million in other non-interest income.

Non-interest Expense

Non-interest expense for the three months ended March 31, 2023, was $16.4 million, an increase of $0.6 million, or 3.78%, compared to the three months ended December 31, 2022 and a decrease of $11.7 million, or 41.72%, compared to the three months ended March 31, 2022.

The $0.6 million increase from the three months ended December 31, 2022 was mainly attributable to increases of $1.4 million in provision for contingencies (mostly due to CECL implementation) and $0.9 million in compensation and benefits expense, offset by decreases of $0.8 million in other expenses, $0.4 million in Grain recoveries and $0.4 million in occupancy and equipment.

The $11.7 million decrease from the three months ended March 31, 2022 was attributable to a $9.0 million decrease in Grain write-off and write-down, as well as a $5.0 million contribution to the Ponce De Leon Foundation last year, partially offset by a higher provision for contingencies of $1.0 million (due to higher volumes and CECL implementation).

Balance Sheet Summary

Total assets increased $227.5 million, or 9.84%, to $2.54 billion as of March 31, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $130.3 million in cash and cash equivalents, $121.3 million in net loans receivable (inclusive of a $16.5 million net decrease in PPP loans) and $1.8 million in other assets, offset by decreases of $19.2 million in held-to-maturity securities and $5.5 million in Federal Home Loan Bank of New York stock.

Total liabilities increased $224.2 million, or 12.32%, to $2.04 billion as of March 31, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $131.0 million in borrowings and $84.5 million in deposits.

Total stockholders’ equity increased $3.3 million, or 0.68%, to $496.0 million as of March 31, 2023, from $492.7 million as of December 31, 2022. This increase in stockholders’ equity was largely attributable to $1.2 million in other comprehensive income related to improved valuation of securities, $1.1 million as a result of implementation of CECL, $0.4 million in share-based compensation, $0.3 million in net income and $0.3 million in ESOP.

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; 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. and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)


	As of
	March 31,			December 31,			September 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
ASSETS
Cash and due from banks:
Cash	$	83,670		$	34,074		$	37,235		$	53,544		$	32,168
Interest-bearing deposits in banks		101,017			20,286			25,286			221,262			37,127
Total cash and cash equivalents		184,687			54,360			62,521			274,806			69,295
Available-for-sale securities, at fair value		128,320			129,505			131,977			140,044			154,799
Held-to-maturity securities, at amortized cost ⁽¹⁾		491,649			510,820			494,297			211,517			927
Placement with banks		1,245			1,494			2,490			2,490			2,490
Mortgage loans held for sale, at fair value		2,987			1,979			3,357			9,234			7,972
Loans receivable, net		1,614,428			1,493,127			1,392,553			1,324,320			1,300,446
Accrued interest receivable		15,435			15,049			14,063			13,255			12,799
Premises and equipment, net		17,215			17,446			17,759			18,945			19,279
Right of use assets		33,147			33,423			34,121			34,416			35,179
Federal Home Loan Bank of New York stock (FHLBNY), at cost		19,209			24,661			14,272			16,429			5,420
Deferred tax assets		15,413			16,137			13,822			9,658			7,440
Other assets		15,799			13,988			11,170			21,585			13,730
Total assets	$	2,539,534		$	2,311,989		$	2,192,402		$	2,076,699		$	1,629,776
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,336,877		$	1,252,412		$	1,351,189		$	1,148,728		$	1,181,165
Operating lease liabilities		34,308			34,532			35,081			35,217			35,821
Accrued interest payable		1,767			1,390			854			158			223
Advance payments by borrowers for taxes and insurance		14,902			9,724			10,589			8,668			10,161
Borrowings		648,375			517,375			286,375			334,375			93,375
Warehouse lines of credit		—			—			—			—			753
Other liabilities		7,264			3,856			7,631			31,471			8,699
Total liabilities		2,043,493			1,819,289			1,691,719			1,558,617			1,330,197
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000			225,000			225,000			225,000			—
Common stock, $0.01 par value; 200,000,000 shares authorized		249			249			247			247			247
Treasury stock, at cost		(2	)		(2	)		—			—			—
Additional paid-in-capital		206,883			206,508			206,092			205,669			205,243
Retained earnings		94,399			92,955			102,169			116,907			116,136
Accumulated other comprehensive loss		(16,629	)		(17,860	)		(18,420	)		(15,032	)		(7,035	)
Unearned compensation ─ ESOP		(13,859	)		(14,150	)		(14,405	)		(14,709	)		(15,012	)
Total stockholders' equity		496,041			492,700			500,683			518,082			299,579
Total liabilities and stockholders' equity	$	2,539,534		$	2,311,989		$	2,192,402		$	2,076,699		$	1,629,776

(1) Included for the quarterly period ended March 31, 2023 was $0.8 million related to the allowance for credit loss on held-to-maturity securities.

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
Interest and dividend income:
Interest on loans receivable	$	19,700		$	18,550		$	17,058		$	16,057		$	18,200
Interest on deposits due from banks		197			199			346			132			36
Interest and dividend on securities and FHLBNY stock		6,459			6,184			4,230			978			782
Total interest and dividend income		26,356			24,933			21,634			17,167			19,018
Interest expense:
Interest on certificates of deposit		1,871			1,310			687			677			803
Interest on other deposits		4,166			4,125			1,543			521			284
Interest on borrowings		5,074			3,332			1,793			481			593
Total interest expense		11,111			8,767			4,023			1,679			1,680
Net interest income		15,245			16,166			17,611			15,488			17,338
(Benefit) provision for credit losses		(174	)		12,641			9,330			817			1,258
Net interest income after (benefit) provision for credit losses		15,419			3,525			8,281			14,671			16,080
Non-interest income:
Service charges and fees		491			481			464			445			440
Brokerage commissions		15			180			288			214			338
Late and prepayment charges		729			263			109			193			58
Income on sale of mortgage loans		99			7			116			200			418
Loan origination ⁽¹⁾		—			(557	)		522			696			625
(Loss) gain on sale of premises and equipment		—			—			(436	)		—			—
Other		485			63			514			431			347
Total non-interest income		1,819			437			1,577			2,179			2,226
Non-interest expense:
Compensation and benefits		7,446			6,501			7,377			6,911			7,125
Occupancy and equipment		3,570			3,928			3,611			3,237			3,192
Data processing expenses		1,192			1,114			994			824			847
Direct loan expenses		412			454			654			505			874
Provision for contingencies		985			(440	)		519			30			17
Insurance and surety bond premiums		265			270			297			156			147
Office supplies, telephone and postage		399			375			369			406			405
Professional fees		1,455			1,571			1,251			1,748			1,334
Contribution to the Ponce De Leon Foundation		—			—			—			—			4,995
Grain (recoveries) and write-off		(914	)		(515	)		8,881			1,500			8,074
Marketing and promotional expenses		128			256			214			52			71
Directors fees and regulatory assessment		155			196			188			167			154
Other operating expenses		1,268			2,055			1,061			1,031			839
Total non-interest expense		16,361			15,765			25,416			16,567			28,074
Income (loss) before income taxes		877			(11,803	)		(15,558	)		283			(9,768	)
Provision (benefit) for income taxes		546			(2,589	)		(820	)		(488	)		(2,948	)
Net income (loss)	$	331		$	(9,214	)	$	(14,738	)	$	771		$	(6,820	)
Earnings (loss) per common share:
Basic	$	0.01		$	(0.40	)	$	(0.64	)	$	0.03		$	(0.31	)
Diluted	$	0.01		$	(0.40	)	$	(0.64	)	$	0.03		$	(0.31	)
Weighted average common shares outstanding:
Basic		23,293,013			23,168,097			23,094,859			23,056,559			21,721,113
Diluted		23,324,532			23,168,097			23,094,859			23,128,911			21,721,113

(1) Amounts for the quarterly period ended December 31, 2022 include the reversal of $0.8 million of loan origination income that had been taken upfront in prior quarters of 2022 (as opposed to deferred over the life of ‎the loan)‎.

Ponce Financial Group, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share data)

	For the Three Months Ended March 31,
	2023			2022			Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	19,700		$	18,200		$	1,500			8.24	%
Interest on deposits due from banks		197			36			161			447.22	%
Interest and dividend on securities and FHLBNY stock		6,459			782			5,677			725.96	%
Total interest and dividend income		26,356			19,018			7,338			38.58	%
Interest expense:
Interest on certificates of deposit		1,871			803			1,068			133.00	%
Interest on other deposits		4,166			284			3,882			1,366.90	%
Interest on borrowings		5,074			593			4,481			755.65	%
Total interest expense		11,111			1,680			9,431			561.37	%
Net interest income		15,245			17,338			(2,093	)		(12.07	%)
(Benefit) provision for credit losses		(174	)		1,258			(1,432	)		(113.83	%)
Net interest income after (benefit) provision for credit losses		15,419			16,080			(661	)		(4.11	%)
Non-interest income:
Service charges and fees		491			440			51			11.59	%
Brokerage commissions		15			338			(323	)		(95.56	%)
Late and prepayment charges		729			58			671			1,156.90	%
Income on sale of mortgage loans		99			418			(319	)		(76.32	%)
Loan origination		—			625			(625	)		(100.00	%)
Other		485			347			138			39.77	%
Total non-interest income		1,819			2,226			(407	)		(18.28	%)
Non-interest expense:
Compensation and benefits		7,446			7,125			321			4.51	%
Occupancy and equipment		3,570			3,192			378			11.84	%
Data processing expenses		1,192			847			345			40.73	%
Direct loan expenses		412			874			(462	)		(52.86	%)
Provision for contingencies		985			17			968			5,694.12	%
Insurance and surety bond premiums		265			147			118			80.27	%
Office supplies, telephone and postage		399			405			(6	)		(1.48	%)
Professional fees		1,455			1,334			121			9.07	%
Contribution to the Ponce De Leon Foundation		—			4,995			(4,995	)		(100.00	%)
Grain (recoveries) and write-off		(914	)		8,074			(8,988	)		(111.32	%)
Marketing and promotional expenses		128			71			57			80.28	%
Directors fees and regulatory assessment		155			154			1			0.65	%
Other operating expenses		1,268			839			429			51.13	%
Total non-interest expense		16,361			28,074			(11,713	)		(41.72	%)
Income (loss) before income taxes		877			(9,768	)		10,645			(108.98	%)
Provision (benefit) for income taxes		546			(2,948	)		3,494			(118.52	%)
Net income (loss)	$	331		$	(6,820	)	$	7,151			(104.85	%)
Earnings (loss) per common share:
Basic	$	0.01		$	(0.31	)	$	0.33			(104.53	%)
Diluted	$	0.01		$	(0.31	)	$	0.33			(104.52	%)
Weighted average common shares outstanding:
Basic		23,293,013			21,721,113			1,571,900			7.24	%
Diluted		23,324,532			21,721,113			1,603,419			7.38	%

Ponce Financial Group, Inc. and Subsidiaries
Key Metrics

	At or for the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
Performance Ratios:
Return on average assets (1)		0.06	%		(1.62	%)		(2.80	%)		0.17	%		(1.55	%)
Return on average equity (1)		0.27	%		(7.28	%)		(11.25	%)		1.01	%		(10.06	%)
Net interest rate spread (1) (2)		1.79	%		2.14	%		3.12	%		3.86	%		4.48	%
Net interest margin (1) (3)		2.75	%		2.98	%		3.62	%		4.10	%		4.68	%
Non-interest expense to average assets (1)		2.79	%		2.78	%		4.83	%		3.73	%		6.39	%
Efficiency ratio (4)		95.88	%		94.95	%		132.46	%		93.77	%		143.50	%
Average interest-earning assets to average interest- bearing liabilities		147.75	%		151.73	%		161.30	%		151.98	%		145.54	%
Average equity to average assets		20.91	%		22.32	%		24.90	%		17.32	%		15.76	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		27.54	%		30.53	%		33.39	%		36.00	%		23.27	%
Tier 1 capital to risk weighted assets (Bank only)		26.28	%		29.26	%		32.13	%		34.75	%		22.02	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		26.28	%		29.26	%		32.13	%		34.75	%		22.02	%
Tier 1 capital to average assets (Bank only)		19.51	%		20.47	%		22.91	%		28.79	%		14.88	%
Asset Quality Ratios:
Allowance for credit losses on loans as a percentage of total loans		1.77	%		2.27	%		1.77	%		1.31	%		1.28	%
Allowance for credit losses on loans as a percentage of nonperforming loans		149.73	%		252.33	%		118.43	%		94.05	%		106.84	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.57	%)		(0.85	%)		(0.52	%)		(0.05	%)		(0.22	%)
Non-performing loans as a percentage of total gross loans		1.18	%		0.90	%		1.50	%		1.39	%		1.20	%
Non-performing loans as a percentage of total assets		0.76	%		0.59	%		0.97	%		0.90	%		0.97	%
Total non-performing assets as a percentage of total assets		0.76	%		0.59	%		0.97	%		0.90	%		0.97	%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets		0.93	%		0.78	%		1.16	%		1.14	%		1.30	%
Other:
Number of offices		19			19			19			19			19
Number of full-time equivalent employees		251			253			257			253			223

Annualized where appropriate.
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.
Net interest margin represents net interest income divided by average total interest-earning assets.
Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income.

Ponce Financial Group, Inc. and Subsidiaries
Securities Portfolio

	March 31, 2023									December 31, 2022
			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	$	2,987	$	—	$	(241	)	$	2,746	$	2,985	$	—	$	(296	)	$	2,689
Corporate Bonds		25,816		—		(2,639	)		23,177		25,824		—		(2,465	)		23,359
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		43,421		—		(6,030	)		37,391		44,503		—		(6,726	)		37,777
FHLMC Certificates		11,036		—		(1,490	)		9,546		11,310		—		(1,676	)		9,634
FNMA Certificates		65,819		—		(10,474	)		55,345		67,199		—		(11,271	)		55,928
GNMA Certificates		117		—		(2	)		115		122		—		(4	)		118
Total available-for-sale securities	$	149,196	$	—	$	(20,876	)	$	128,320	$	151,943	$	—	$	(22,438	)	$	129,505

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000	$	—	$	(206	)	$	24,794	$	35,000	$	—	$	(380	)	$	34,620
Corporate Bonds		82,500		—		(4,158	)		78,342		82,500		57		(3,819	)		78,738
Mortgage-Backed Securities:
Collateralized Mortgage Obligations ⁽¹⁾		230,531		853		(2,457	)		228,927		235,479		192		(5,558	)		230,113
FHLMC Certificates		4,008		—		(245	)		3,763		4,120		—		(268	)		3,852
FNMA Certificates		128,968		—		(3,695	)		125,273		131,918		—		(5,227	)		126,691
SBA Certificates		21,451		71		—			21,522		21,803		34		—			21,837
Total held-to-maturity securities ⁽²⁾	$	492,458	$	924	$	(10,761	)	$	482,621	$	510,820	$	283	$	(15,252	)	$	495,851

Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.
Excludes $0.8 million related to allowance for credit losses on securities.

The following table presents the activity in the allowance for credit losses for held-to-maturity securities.

	For the Three Months Ended March 31,
	2023		2022
Beginning balance	$	—	$	—
CECL adoption		662		—
Provision for credit losses		147		—
Allowance for credit losses on securities	$	809	$	—

Ponce Financial Group, Inc. and Subsidiaries
Loan Portfolio

	As of
	March 31,						December 31,						September 30,						June 30,						March 31,
	2023						2022						2022						2022						2022
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	354,559			21.60	%	$	343,968			22.54	%	$	336,667			23.79	%	$	321,671			24.02	%	$	323,442			24.59	%
Owner-Occupied		149,481			9.10	%		134,878			8.84	%		112,749			7.97	%		100,048			7.47	%		95,234			7.24	%
Multifamily residential		553,430			33.71	%		494,667			32.42	%		421,917			29.81	%		396,470			29.60	%		368,133			27.98	%
Nonresidential properties		314,560			19.17	%		308,043			20.19	%		282,642			19.97	%		279,877			20.90	%		251,893			19.14	%
Construction and land		235,157			14.33	%		185,018			12.13	%		197,437			13.95	%		165,425			12.35	%		144,881			11.01	%
Total mortgage loans		1,607,187			97.91	%		1,466,574			96.12	%		1,351,412			95.49	%		1,263,491			94.34	%		1,183,583			89.96	%
Non-mortgage loans:
Business loans (1)		19,890			1.21	%		39,965			2.62	%		41,398			2.92	%		45,720			3.41	%		100,253			7.62	%
Consumer loans (2)		14,227			0.88	%		19,129			1.26	%		22,563			1.59	%		30,198			2.25	%		31,899			2.42	%
Total non-mortgage loans		34,117			2.09	%		59,094			3.88	%		63,961			4.51	%		75,918			5.66	%		132,152			10.04	%
Total loans, gross		1,641,304			100.00	%		1,525,668			100.00	%		1,415,373			100.00	%		1,339,409			100.00	%		1,315,735			100.00	%

Net deferred loan origination costs		2,099						2,051						2,288						2,446						1,604
Allowance for credit losses on loans		(28,975	)					(34,592	)					(25,108	)					(17,535	)					(16,893	)

Loans, net	$	1,614,428					$	1,493,127					$	1,392,553					$	1,324,320					$	1,300,446

As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, business loans include $3.6 million, $20.0 million, $24.7 million, $30.8 million and $86.0 million, respectively, of PPP loans.
As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, consumer loans include $13.4 million, $18.2 million, $21.5 million, $28.3 million and $31.0 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.

Ponce Financial Group, Inc. and Subsidiaries
Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of March 31, 2023
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-March 31, 2023)	$	25,057
Write-downs, net of recoveries (inception-to-date as of March 31, 2023)		(16,541	)
Cash receipts from Grain (inception-to-March 31, 2023)		(6,690	)
Grant/reserve		(1,826	)
Net receivable as of March 31, 2023	$	—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of March 31, 2023	$	13,365
Allowance for credit losses on loans as of March 31, 2023 ⁽¹⁾		(11,597	)
Microloans, net of allowance for credit losses on loans as of March 31, 2023	$	1,768
Investments
Investment in Grain	$	1,000
Investment in Grain write-off in Q3 2022		(1,000	)
Investment in Grain as of March 31, 2023		—
Total exposure to Grain as of March 31, 2023	$	1,768

(1) Includes $0.3 million for allowance for unused commitments on the $2.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.2 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.

Ponce Financial Group, Inc. and Subsidiaries
Allowance for Credit Losses on Loans

	For the Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
	(Dollars in thousands)
Allowance for credit losses on loans at beginning of the period	$	34,592		$	25,108		$	17,535		$	16,893		$	16,352
(Benefit) provision for credit losses on loans		(321	)		12,641			9,330			817			1,258
Adoption of CECL		(3,090	)		—			—			—			—
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		(2,569	)		(3,659	)		(1,799	)		(450	)		(751	)
Total charge-offs		(2,569	)		(3,659	)		(1,799	)		(450	)		(751	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			156			—
Owner occupied		—			—			39			—			—
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			1			91			2
Consumer		363			502			2			28			32
Total recoveries		363			502			42			275			34
Net (charge-offs) recoveries		(2,206	)		(3,157	)		(1,757	)		(175	)		(717	)
Allowance for credit losses on loans at end of the period	$	28,975		$	34,592		$	25,108		$	17,535		$	16,893

Ponce Financial Group, Inc. and Subsidiaries
Deposits

	As of
	March 31,					December 31,					September 30,					June 30,					March 31,
	2023					2022					2022					2022					2022
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Demand	$	282,741		21.15	%	$	289,149		23.08	%	$	288,654		21.37	%	$	284,462		24.77	%	$	281,132		23.81	%
Interest-bearing deposits:
NOW/IOLA accounts		21,735		1.63	%		24,349		1.94	%		28,799		2.13	%		28,597		2.49	%		33,010		2.79	%
Money market accounts		408,404		30.55	%		317,815		25.38	%		360,293		26.66	%		181,156		15.77	%		169,847		14.38	%
Reciprocal deposits		109,649		8.20	%		114,049		9.11	%		162,858		12.05	%		151,264		13.17	%		160,510		13.59	%
Savings accounts		127,731		9.55	%		130,432		10.41	%		140,055		10.37	%		139,244		12.12	%		133,966		11.34	%
Total NOW, money market, reciprocal and savings accounts		667,519		49.93	%		586,645		46.84	%		692,005		51.21	%		500,261		43.55	%		497,333		42.10	%
Certificates of deposit of $250K or more		76,893		5.75	%		70,113		5.60	%		61,900		4.58	%		65,157		5.67	%		75,130		6.36	%
Brokered certificates of deposit ⁽¹⁾		98,754		7.39	%		98,754		7.89	%		98,760		7.31	%		62,650		5.45	%		79,282		6.71	%
Listing service deposits ⁽¹⁾		28,417		2.13	%		35,813		2.86	%		40,964		3.03	%		48,953		4.26	%		53,876		4.56	%
All other certificates of deposit less than $250K		182,553		13.65	%		171,938		13.73	%		168,906		12.50	%		187,245		16.30	%		194,412		16.46	%
Total certificates of deposit		386,617		28.92	%		376,618		30.08	%		370,530		27.42	%		364,005		31.68	%		402,700		34.09	%
Total interest-bearing deposits		1,054,136		78.85	%		963,263		76.92	%		1,062,535		78.63	%		864,266		75.23	%		900,033		76.19	%
Total deposits	$	1,336,877		100.00	%	$	1,252,412		100.00	%	$	1,351,189		100.00	%	$	1,148,728		100.00	%	$	1,181,165		100.00	%

(1) As of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022 and March 31, 2022, there were $9.5 million, $13.6 million, $13.8 million, $18.5 million, and $19.0 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. and Subsidiaries
Borrowings

	March 31,							December 31,
	2023							2022
	Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate			Scheduled Maturity		Redeemable at Call Date		Weighted Average Rate
	(Dollars in thousands)
Overnight line of credit advance	$	—	$	—		—	%	$	6,000	$	6,000		4.6	%

Term advances ending:
2023	$	24,775	$	24,775		2.81		$	178,375	$	178,375		4.32
2024		302,500		302,500		4.51			50,000		50,000		4.75
2025		50,000		50,000		4.41			50,000		50,000		4.41
2026		—		—		—			—		—		—
2027		212,000		212,000		3.44			183,000		183,000		3.25	%
Thereafter		59,100		59,100		3.43			50,000		50,000		3.35	%
	$	648,375	$	648,375		3.99	%	$	517,375	$	517,375		3.90	%

Ponce Financial Group, Inc. and Subsidiaries
Nonperforming Assets

	As of Three Months Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2023			2022			2022			2022			2022
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,836		$	2,844		$	5,902		$	3,460		$	3,596
Owner occupied		2,245			961			971			1,140			962
Multifamily residential		—			—			—			—			—
Nonresidential properties		—			—			778			1,162			1,166
Construction and land		11,906			7,567			10,660			10,817			7,567
Non-mortgage loans:
Business		40			—			359			—			—
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)	$	17,027		$	11,372		$	18,670		$	16,579		$	13,291

Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	213		$	217		$	221		$	224		$	230
Owner occupied		2,020			2,027			2,215			1,746			2,192
Multifamily residential		—			—			—			—			—
Nonresidential properties		91			93			95			96			98
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing troubled debt restructured loans		2,324			2,337			2,531			2,066			2,520
Total non-accrual loans	$	19,351		$	13,709		$	21,201		$	18,645		$	15,811

Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,185		$	2,207		$	2,228		$	2,246		$	2,269
Owner occupied		1,310			1,328			1,254			2,019			2,313
Multifamily residential		—			—			—			—			—
Nonresidential properties		701			708			715			725			726
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total accruing troubled debt restructured loans	$	4,196		$	4,243		$	4,197		$	4,990		$	5,308
Total non-performing assets and accruing troubled debt restructured loans	$	23,547		$	17,952		$	25,398		$	23,635		$	21,119
Total non-performing loans to total gross loans		1.18	%		0.90	%		1.50	%		1.39	%		1.20	%
Total non-performing assets to total assets		0.76	%		0.59	%		0.97	%		0.90	%		0.97	%
Total non-performing assets and accruing troubled debt restructured loans to total assets		0.93	%		0.78	%		1.16	%		1.14	%		1.30	%

Ponce Financial Group, Inc. and Subsidiaries
Average Balance Sheets

	For the Three Months Ended March 31,
	2023						2022
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate ⁽¹⁾		Balance		Interest		Yield/Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Loans ⁽²⁾	$	1,572,148	$	19,700	5.08	%	$	1,325,433	$	18,200	5.57	%
Securities ⁽³⁾		631,138		6,075	3.90	%		138,095		717	2.11	%
Other ⁽⁴⁾		41,643		581	5.66	%		38,253		101	1.07	%
Total interest-earning assets		2,244,929		26,356	4.76	%		1,501,781		19,018	5.14	%
Non-interest-earning assets		129,837						225,006
Total assets	$	2,374,766					$	1,726,787
Interest-bearing liabilities:
NOW/IOLA	$	23,334	$	9	0.16	%	$	33,083	$	16	0.20	%
Money market		449,206		4,124	3.72	%		319,806		235	0.30	%
Savings		128,876		30	0.09	%		135,404		32	0.10	%
Certificates of deposit		381,362		1,871	1.99	%		419,104		803	0.78	%
Total deposits		982,778		6,034	2.49	%		907,397		1,086	0.49	%
Advance payments by borrowers		12,919		3	0.09	%		9,808		1	0.04	%
Borrowings		523,705		5,074	3.93	%		114,688		593	2.10	%
Total interest-bearing liabilities		1,519,402		11,111	2.97	%		1,031,893		1,680	0.66	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		316,803		—				372,433		—
Other non-interest-bearing liabilities		42,038		—				47,562		—
Total non-interest-bearing liabilities		358,841		—				419,995		—
Total liabilities		1,878,243		11,111				1,451,888		1,680
Total equity		496,523						274,899
Total liabilities and total equity	$	2,374,766			2.97	%	$	1,726,787			0.66	%
Net interest income			$	15,245					$	17,338
Net interest rate spread ⁽⁵⁾					1.79	%					4.48	%
Net interest-earning assets ⁽⁶⁾	$	725,527					$	469,888
Net interest margin⁽⁷⁾					2.75	%					4.68	%
Average interest-earning assets to interest-bearing liabilities					147.75	%					145.54	%

Annualized where appropriate.
Loans include loans and mortgage loans held for sale, at fair value.
Securities include available-for-sale securities and held-to-maturity securities.
Includes FHLBNY demand account and FHLBNY stock dividends.
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.
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
Net interest margin represents net interest income divided by average total interest-earning assets.

Ponce Financial Group, Inc. and Subsidiaries
Other Data

	As of
	March 31,		December 31,		September 30,		June 30,		March 31,
	2023		2022		2022		2022		2022
Other Data
Common shares issued		24,865,476		24,861,329		24,728,460		24,724,274		24,724,274
Less treasury shares		1,976		1,976		—		—		—
Common shares outstanding at end of period		24,863,500		24,859,353		24,728,460		24,724,274		24,724,274

Book value per common share	$	10.90	$	10.77	$	11.15	$	11.85	$	12.12
Tangible book value per common share	$	10.90	$	10.77	$	11.15	$	11.85	$	12.12

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

Ponce Financial Group, Inc. Reports First Quarter 2023 Results

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