• Ponce Financial Group, Inc. Reports Third Quarter 2023 Results

    Source: Nasdaq GlobeNewswire / 30 Oct 2023 15:17:24   America/Chicago

    NEW YORK, Oct. 30, 2023 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., (the “Company”) (NASDAQ: PDLB), the holding company for Ponce Bank (the “Bank”), today announced results for the third quarter of 2023.

    Third Quarter 2023 Highlights (Compared to Prior Periods):

    • Net income of $2.6 million, or $0.12 per diluted share for the three months ended September 30, 2023, as compared to net loss of ($0.1) million, or $0.00 per diluted share for the three months ended June 30, 2023 and net loss of ($14.7) million, or ($0.64) per diluted share for the three months ended September 30, 2022.
    • Included in the $2.6 million of net income for the third quarter of 2023 results is $33.5 million in interest and dividend income and $5.6 million in non-interest income, offset by a $17.3 million in non-interest expense and $17.0 million in interest expense.
    • Net interest income of $16.5 million for the third quarter of 2023 increased $0.3 million, or 1.60%, from the prior quarter and decreased $1.1 million, or 6.07%, from the same quarter last year.
    • Net interest margin was 2.58% for the third quarter of 2023, decreased from 2.65% for the prior quarter and from 3.59% for the same quarter last year.
    • Cash and equivalents were $117.0 million as of September 30, 2023, an increase of $62.7 million, or 115.25%, from December 31, 2022, as we decided to keep ample sources of liquidity at hand while taking advantage of the positive spread between our interest bearing overnight deposits at the Fed and borrowing costs under the Bank Term Funding Program ("BTFP").
    • Securities totaled $587.8 million as of September 30, 2023, a decrease of $52.5 million, or 8.20%, from December 31, 2022 primarily due to a call on one of the securities amounting to $10.0 million, maturities on two securities amounting to $3.0 million and regular principal payments.
    • Net loans receivable were $1.79 billion as of September 30, 2023, an increase of $294.5 million, or 19.72%, from December 31, 2022.
    • Deposits were $1.40 billion as of September 30, 2023, an increase of $148.7 million, or 11.87%, from December 31, 2022.

    President and Chief Executive Officer’s Comments

    Carlos P. Naudon, Ponce Financial Group’s President and CEO, stated “During the quarter, we completed our share buyback program at a cost of $8.91 per share, almost a 20% discount to our book value at September 30, 2023. Despite the headwinds caused by the increase in interest rates, which impacts our AOCI and drives down our net interest margin, we were able to increase book value per share by 5 cents quarter over quarter as well as grow our net interest income for the second quarter in a row. As previously announced, in addition to the $3.7 million grant received this quarter, we have been informed that we will receive an additional grant of approximately $0.5 million from the Community Development Financial Institutions ("CDFI") fund in the fourth quarter of 2023.

    We continue to show strong levels of capital and liquidity. On the capital front, our total capital ratio at Ponce Bank stands at 25.10% well in excess of regulatory requirements. In terms of liquidity, our liquid assets plus borrowing capacity at the Federal Home Loan Bank of New York ("FHLBNY") stand at $695.0 million, more than two times of our uninsured deposits of $334.0 million.
      
    We remain committed to the communities we serve, our Minority Depository Institution (“MDI”)/CDFI status and continuing to invest in our people and in technology to improve our efficiency".

    Executive Chairman’s Comment

    Steven A. Tsavaris, Ponce Financial Group’s Executive Chairman added “While the increase in rates continues to put pressure on our operations, we still see resiliency on our client base, strong credit conditions and loan demand. While our credit metrics continue to improve, we will be prudent on our underwriting and balance sheet management even at the expense of loan growth.”

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

      At or for the Three Months Ended 
      September 30,  June 30,  March 31,  December 31,  September 30, 
    Performance Ratios (Annualized): 2023  2023  2023  2022  2022 
    Return on average assets (1)  0.39%  (0.01%)  0.06%  (1.62%)  (2.80%)
    Return on average equity (1)  2.11%  (0.07%)  0.27%  (7.28%)  (11.25%)
    Net interest rate spread (1) (2)  1.58%  1.66%  1.78%  2.13%  3.08%
    Net interest margin (1) (3)  2.58%  2.65%  2.75%  2.97%  3.59%
    Non-interest expense to average assets (1)  2.58%  2.65%  2.79%  2.78%  4.83%
    Efficiency ratio (4)  78.11%  96.15%  95.88%  94.95%  132.46%
    Average interest-earning assets to average interest- bearing liabilities  137.92%  141.14%  148.20%  152.30%  162.67%
    Average equity to average assets  18.32%  19.21%  20.91%  22.32%  24.90%


      At or for the Three Months Ended 
      September 30,  June 30,  March 31,  December 31,  September 30, 
    Capital Ratios (Annualized): 2023  2023  2023  2022  2022 
    Total capital to risk weighted assets (Bank only)  25.10%  26.30%  27.54%  30.53%  33.39%
    Tier 1 capital to risk weighted assets (Bank only)  23.85%  25.05%  26.28%  29.26%  32.13%
    Common equity Tier 1 capital to risk-weighted assets (Bank only)  23.85%  25.05%  26.28%  29.26%  32.13%
    Tier 1 capital to average assets (Bank only)  17.51%  17.95%  19.51%  20.47%  22.91%


      At or for the Three Months Ended 
      September 30,  June 30,  March 31,  December 31,  September 30, 
    Asset Quality Ratios (Annualized): 2023  2023  2023  2022  2022 
    Allowance for loan losses as a percentage of total loans  1.51%  1.64%  1.77%  2.27%  1.77%
    Allowance for loan losses as a percentage of nonperforming loans  169.49%  167.06%  149.73%  252.33%  118.43%
    Net (charge-offs) recoveries to average outstanding loans (1)  (0.34%)  (0.41%)  (0.57%)  (0.85%)  (0.52%)
    Non-performing loans as a percentage of total gross loans  0.89%  0.98%  1.18%  0.90%  1.50%
    Non-performing loans as a percentage of total assets  0.62%  0.63%  0.76%  0.59%  0.97%
    Total non-performing assets as a percentage of total assets  0.62%  0.63%  0.76%  0.59%  0.97%
    Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets(5)  0.82%  0.83%  0.93%  0.78%  1.16%

    (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.
    (5) For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For periods in 2022, the balances only include troubled debt restructurings.

    Summary of Results of Operations

    Net income for the three months ended September 30, 2023 was $2.6 million compared to net loss of ($0.1) million for the three months ended June 30, 2023 and net loss of ($14.7) million for the three months ended September 30, 2022. The increase of net income for the three months ended September 30, 2023 compared to the three months ended June 30, 2023 was attributed mainly to increases in non-interest income and net interest income and a decrease in provision for credit loss, partially offset by increases provision for income taxes and non-interest expense. The increase of net income for the three months ended September 30, 2023 compared to the three months ended September 30, 2022 was largely due to decreases in provision for credit loss and non-interest expense and an increase in non-interest income, partially offset by an increase in provision for income taxes and a decrease in net interest income.

    Net income for the nine months ended September 30, 2023 was $2.8 million compared to a net loss of ($20.8) million for the nine months ended September 30, 2022. The increase in net income was attributable to decreases in non-interest expense and provision for credit losses and an increase in non-interest income, partially offset by an increase in provision for income taxes and a decrease in net interest income.

    Net Interest Income and Net Margin

    Net interest income for the three months ended September 30, 2023, increased $0.3 million, or 1.60%, to $16.5 million compared to $16.3 million for the three months ended June 30, 2023 and decreased $1.1 million, or 6.07%, compared to $17.6 million for the three months end September 30, 2022.

    Net interest margin was 2.58% for the three months ended September 30, 2023 compared to 2.65% for the prior quarter, a decrease of 7bps and 3.59% for the same period last year, a decrease of 101bps. 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 September 30, 2023, was $5.6 million, an increase of $4.1 million, or 277.14%, compared to the three months ended June 30, 2023 and an increase of $4.1 million, or 256.82%, compared to the three months ended September 30, 2022.

    The $4.1 million increase in non-interest income for the three months ended September 30, 2023 compared to the three months ended June 30, 2023 and the three months ended September 30, 2022 was largely attributable to a grant of $3.7 million received in the third quarter of 2023 from the U.S. Treasury as part of the CDFI Equitable Recovery Program and a $0.5 million assignment fee that was recognized in the third quarter of 2023.

    Non-interest income for the nine months ended September 30, 2023, was $8.9 million, an increase of $3.0 million, or 49.41%, compared to $6.0 million for the nine months ended September 30, 2022. The $3.0 million increase from the nine months ended September 30, 2022 was attributable to a grant of $3.7 million received from the U.S. Treasury and an increase of $1.6 million in late and prepayment charges, partially offset by a decrease of $1.8 million in loan origination.

    Non-interest Expense

    Non-interest expense for the three months ended September 30, 2023, was $17.3 million, an increase of $0.2 million, or 1.33%, compared to $17.1 million for the three months ended June 30, 2023 and a decrease of $8.1 million, or 31.87%, compared to $25.4 million for the three months ended September 30, 2022.

    The $8.1 million decrease from the three months ended September 30, 2022 was mainly attributable to $8.9 million of Grain consumer microloans write-offs during the third quarter of 2022 and a decrease of $0.3 million in direct loan expense, partially offset by increases of $0.6 million in data processing expenses and $0.4 million in professional fees.

    Non-interest expense for the nine months ended September 30, 2023, was $50.8 million, a decrease of $19.3 million, or 27.54%, compared to the nine months ended September 30, 2022. The $19.3 million decrease of non-interest expense from the nine months ended September 30, 2022 was attributable to $18.5 million of Grain consumer microloan write-off during the corresponding period last year compared with $1.3 million of Grain consumer microloan recoveries recognized during the current period. The decrease in non-interest expense was also impacted by a $5.0 million contribution to the Ponce De Leon Foundation during the corresponding period last year, partially offset by increases of $1.3 million in provision for contingencies, $1.3 million in data processing expenses, $1.0 million in compensation and benefits and $0.7 million in professional fees.

    Balance Sheet Summary

    Total assets increased $311.9 million, or 13.49%, to $2.62 billion as of September 30, 2023 from $2.31 billion as of December 31, 2022. The increase in total assets is largely attributable to increases of $294.5 million in net loans receivable, $62.7 million in cash and cash equivalents, $12.1 million in mortgage loans held for sale and $2.5 million in other assets, offset by decreases of $39.8 million in held-to-maturity securities, $12.8 million in available-for-sale securities, and $5.8 million in Federal Home Loan Bank of New York stock.

    Total liabilities increased $319.5 million, or 17.56%, to $2.14 billion as of September 30, 2023 from $1.82 billion as of December 31, 2022. The increase in total liabilities was largely attributable to increases of $157.7 million in borrowings and $148.7 million in deposits.

    Total stockholders’ equity decreased $7.6 million, or 1.55%, to $485.1 million as of September 30, 2023, from $492.7 million as of December 31, 2022. This decrease in stockholders’ equity was largely attributable to $11.0 million in share repurchases and an increase of $2.6 million in other comprehensive loss, partially offset by increases of $2.8 million in net income, $1.2 million in share-based compensation, $1.1 million as a result of implementation of CECL and $0.8 million in ESOP.

    About Ponce Financial Group, Inc.

    Ponce Financial Group, Inc. 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 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2023  2022  2022 
    ASSETS              
    Cash and due from banks:              
    Cash$26,046  $31,162  $26,951  $31,977  $34,007 
    Interest-bearing deposits 90,966   212,627   157,736   22,383   28,514 
    Total cash and cash equivalents 117,012   243,789   184,687   54,360   62,521 
    Available-for-sale securities, at fair value 116,753   123,720   128,320   129,505   131,977 
    Held-to-maturity securities, at amortized cost(1) 471,065   481,952   491,649   510,820   494,297 
    Placement with banks 996   996   1,245   1,494   2,490 
    Mortgage loans held for sale, at fair value 14,103   10,070   2,987   1,979   3,357 
    Loans receivable, net 1,787,607   1,695,047   1,614,428   1,493,127   1,392,553 
    Accrued interest receivable 16,624   16,054   15,435   15,049   14,063 
    Premises and equipment, net 16,453   16,856   17,215   17,446   17,759 
    Right of use assets 32,110   32,435   33,147   33,423   34,121 
    Federal Home Loan Bank of New York stock (FHLBNY), at cost 18,870   19,195   19,209   24,661   14,272 
    Deferred tax assets 15,984   15,924   15,413   16,137   13,822 
    Other assets 16,286   15,919   15,799   13,988   11,170 
    Total assets$2,623,863  $2,671,957  $2,539,534  $2,311,989  $2,192,402 
    LIABILITIES AND STOCKHOLDERS' EQUITY              
    Liabilities:              
    Deposits$1,401,132  $1,442,013  $1,336,877  $1,252,412  $1,351,189 
    Operating lease liabilities 33,459   33,716   34,308   34,532   35,081 
    Accrued interest payable 8,385   4,704   1,767   1,390   854 
    Advance payments by borrowers for taxes and insurance 13,743   12,402   14,902   9,724   10,589 
    Borrowings 675,100   682,100   648,375   517,375   286,375 
    Other liabilities 6,986   6,540   7,264   3,856   7,631 
    Total liabilities 2,138,805   2,181,475   2,043,493   1,819,289   1,691,719 
    Commitments and contingencies              
    Stockholders' Equity:              
    Preferred stock, $0.01 par value; 100,000,000 shares authorized 225,000   225,000   225,000   225,000   225,000 
    Common stock, $0.01 par value; 200,000,000 shares authorized 249   249   249   249   247 
    Treasury stock, at cost (10,975)  (5,202)  (2)  (2)  — 
    Additional paid-in-capital 207,626   207,287   206,883   206,508   206,092 
    Retained earnings 96,902   94,312   94,399   92,955   102,169 
    Accumulated other comprehensive loss (20,468)  (17,597)  (16,629)  (17,860)  (18,420)
    Unearned compensation ─ ESOP (13,276)  (13,567)  (13,859)  (14,150)  (14,405)
    Total stockholders' equity 485,058   490,482   496,041   492,700   500,683 
    Total liabilities and stockholders' equity$2,623,863  $2,671,957  $2,539,534  $2,311,989  $2,192,402 

    (1) Included for the quarterly period ended September 30, 2023, June 30, 2023 and March 31, 2023 were $0.6 million, $0.9 million and $0.8 million, respectively, 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 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2023  2022  2022 
    Interest and dividend income:              
    Interest on loans receivable$25,276  $23,015  $19,700  $18,550  $17,058 
    Interest on deposits due from banks 1,969   1,817   197   199   346 
    Interest and dividend on securities and FHLBNY stock 6,261   6,223   6,459   6,184   4,230 
    Total interest and dividend income 33,506   31,055   26,356   24,933   21,634 
    Interest expense:              
    Interest on certificates of deposit 4,362   3,881   3,225   1,786   855 
    Interest on other deposits 5,639   4,413   2,812   3,649   1,375 
    Interest on borrowings 6,963   6,479   5,074   3,332   1,793 
    Total interest expense 16,964   14,773   11,111   8,767   4,023 
    Net interest income 16,542   16,282   15,245   16,166   17,611 
    Provision (benefit) for credit losses 535   987   (174)  12,641   9,330 
    Net interest income after provision (benefit) for credit losses 16,007   15,295   15,419   3,525   8,281 
    Non-interest income:              
    Service charges and fees 516   481   491   481   464 
    Brokerage commissions 17   35   15   180   288 
    Late and prepayment charges 899   372   729   263   109 
    Income on sale of mortgage loans 173   82   99   7   116 
    Loan origination(1) —   —   —   (557)  522 
    Grant income 3,718   —   —   —   — 
    (Loss) gain on sale of premises and equipment —   —   —   —   (436)
    Other 304   522   485   63   514 
    Total non-interest income 5,627   1,492   1,819   437   1,577 
    Non-interest expense:              
    Compensation and benefits 7,566   7,425   7,446   6,501   7,377 
    Occupancy and equipment 3,588   3,724   3,570   3,928   3,611 
    Data processing expenses 1,582   1,208   1,192   1,114   994 
    Direct loan expenses 369   345   412   454   654 
    Provision for contingencies 391   517   985   (440)  519 
    Insurance and surety bond premiums 255   248   265   270   297 
    Office supplies, telephone and postage 301   489   399   375   369 
    Professional fees 1,693   1,904   1,455   1,571   1,251 
    Grain (recoveries) and write-off (69)  (346)  (914)  (515)  8,881 
    Marketing and promotional expenses 248   303   128   256   214 
    Directors fees and regulatory assessment 169   160   155   196   188 
    Other operating expenses 1,223   1,112   1,268   2,055   1,061 
    Total non-interest expense 17,316   17,089   16,361   15,765   25,416 
    Income (loss) before income taxes 4,318   (302)  877   (11,803)  (15,558)
    Provision (benefit) for income taxes 1,728   (215)  546   (2,589)  (820)
    Net income (loss)$2,590  $(87) $331  $(9,214) $(14,738)
    Earnings (loss) per common share:              
    Basic$0.12  $(0.00) $0.01  $(0.40) $(0.64)
    Diluted$0.12  $(0.00) $0.01  $(0.40) $(0.64)
    Weighted average common shares outstanding:              
    Basic 22,272,076   23,208,168   23,293,013   23,168,097   23,094,859 
    Diluted 22,349,217   23,208,168   23,324,532   23,168,097   23,094,859 

    (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 Nine Months Ended September 30, 
      2023  2022  Variance $  Variance % 
    Interest and dividend income:            
    Interest on loans receivable $67,991  $51,315  $16,676   32.50%
    Interest on deposits due from banks  3,983   514   3,469   674.90%
    Interest and dividend on securities and FHLBNY stock  18,943   5,990   12,953   216.24%
    Total interest and dividend income  90,917   57,819   33,098   57.24%
    Interest expense:            
    Interest on certificates of deposit  11,468   2,361   9,107   385.73%
    Interest on other deposits  12,864   2,154   10,710   497.21%
    Interest on borrowings  18,516   2,867   15,649   545.83%
    Total interest expense  42,848   7,382   35,466   480.44%
    Net interest income  48,069   50,437   (2,368)  (4.69%)
    Provision for credit losses  1,348   11,405   (10,057)  (88.18%)
    Net interest income after provision for credit losses  46,721   39,032   7,689   19.70%
    Non-interest income:            
    Service charges and fees  1,488   1,349   139   10.30%
    Brokerage commissions  67   840   (773)  (92.02%)
    Late and prepayment charges  2,000   360   1,640   455.56%
    Income on sale of mortgage loans  354   734   (380)  (51.77%)
    Loan origination  —   1,843   (1,843)  (100.00%)
    Grant income  3,718   —   3,718   —%
    (Loss) gain on sale of premises and equipment  —   (436)  436   (100.00%)
    Other  1,311   1,292   19   1.47%
    Total non-interest income  8,938   5,982   2,956   49.41%
    Non-interest expense:            
    Compensation and benefits  22,437   21,413   1,024   4.78%
    Occupancy and equipment  10,882   10,040   842   8.39%
    Data processing expenses  3,982   2,665   1,317   49.42%
    Direct loan expenses  1,126   2,033   (907)  (44.61%)
    Provision for contingencies  1,893   566   1,327   234.45%
    Insurance and surety bond premiums  768   600   168   28.00%
    Office supplies, telephone and postage  1,189   1,180   9   0.76%
    Professional fees  5,052   4,333   719   16.59%
    Contribution to the Ponce De Leon Foundation  —   4,995   (4,995)  (100.00%)
    Grain (recoveries) and write-off  (1,329)  18,455   (19,784)  (107.20%)
    Marketing and promotional expenses  679   337   342   101.48%
    Directors fees and regulatory assessment  484   509   (25)  (4.91%)
    Other operating expenses  3,603   2,931   672   22.93%
    Total non-interest expense  50,766   70,057   (19,291)  (27.54%)
    Income (loss) before income taxes  4,893   (25,043)  29,936   (119.54%)
    Provision (benefit) for income taxes  2,059   (4,256)  6,315   (148.38%)
    Net income (loss) $2,834  $(20,787) $23,621   (113.63%)
    Earnings (loss) per common share:            
    Basic $0.12  $(0.92) $1.05   (113.40%)
    Diluted $0.12  $(0.92) $1.05   (113.37%)
    Weighted average common shares outstanding:            
    Basic  22,920,680   22,524,477   396,203   1.76%
    Diluted  22,962,956   22,524,477   438,479   1.95%

    Ponce Financial Group, Inc. and Subsidiaries
    Key Metrics

     At or for the Three Months Ended 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2023  2022  2022 
    Performance Ratios:              
    Return on average assets (1) 0.39%  (0.01%)  0.06%  (1.62%)  (2.80%)
    Return on average equity (1) 2.11%  (0.07%)  0.27%  (7.28%)  (11.25%)
    Net interest rate spread (1) (2) 1.58%  1.66%  1.78%  2.13%  3.08%
    Net interest margin (1) (3) 2.58%  2.65%  2.75%  2.97%  3.59%
    Non-interest expense to average assets (1) 2.58%  2.65%  2.79%  2.78%  4.83%
    Efficiency ratio (4) 78.11%  96.15%  95.88%  94.95%  132.46%
    Average interest-earning assets to average interest- bearing liabilities 137.92%  141.14%  148.20%  152.30%  162.67%
    Average equity to average assets 18.32%  19.21%  20.91%  22.32%  24.90%
    Capital Ratios:              
    Total capital to risk weighted assets (Bank only) 25.10%  26.30%  27.54%  30.53%  33.39%
    Tier 1 capital to risk weighted assets (Bank only) 23.85%  25.05%  26.28%  29.26%  32.13%
    Common equity Tier 1 capital to risk-weighted assets (Bank only) 23.85%  25.05%  26.28%  29.26%  32.13%
    Tier 1 capital to average assets (Bank only) 17.51%  17.95%  19.51%  20.47%  22.91%
    Asset Quality Ratios:              
    Allowance for credit losses on loans as a percentage of total loans 1.51%  1.64%  1.77%  2.27%  1.77%
    Allowance for credit losses on loans as a percentage of nonperforming loans 169.49%  167.06%  149.73%  252.33%  118.43%
    Net (charge-offs) recoveries to average outstanding loans (1) (0.34%)  (0.41%)  (0.57%)  (0.85%)  (0.52%)
    Non-performing loans as a percentage of total gross loans 0.89%  0.98%  1.18%  0.90%  1.50%
    Non-performing loans as a percentage of total assets 0.62%  0.63%  0.76%  0.59%  0.97%
    Total non-performing assets as a percentage of total assets 0.62%  0.63%  0.76%  0.59%  0.97%
    Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets(5) 0.82%  0.83%  0.93%  0.78%  1.16%
    Other:              
    Number of offices 19   19   19   19   19 
    Number of full-time equivalent employees 243   244   251   253   257 
                   

    (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.
    (5) For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For periods in 2022, the balances only include troubled debt restructurings.

    Ponce Financial Group, Inc. and Subsidiaries 
    Securities Portfolio

      September 30, 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 $2,989  $—  $(276) $2,713  $2,985  $—  $(296) $2,689 
    Corporate Bonds  25,799   —   (2,609)  23,190   25,824   —   (2,465)  23,359 
    Mortgage-Backed Securities:                        
    Collateralized Mortgage Obligations(1)  40,646   —   (7,657)  32,989   44,503   —   (6,726)  37,777 
    FHLMC Certificates  10,441   —   (1,904)  8,537   11,310   —   (1,676)  9,634 
    FNMA Certificates  62,771   —   (13,552)  49,219   67,199   —   (11,271)  55,928 
    GNMA Certificates  108   —   (3)  105   122   —   (4)  118 
    Total available-for-sale securities $142,754  $—  $(26,001) $116,753  $151,943  $—  $(22,438) $129,505 
                             
    Held-to-Maturity Securities:                        
    U.S. Agency Bonds $25,000  $—  $(504) $24,496  $35,000  $—  $(380) $34,620 
    Corporate Bonds  82,500   —   (5,117)  77,383   82,500   57   (3,819)  78,738 
    Mortgage-Backed Securities:                        
    Collateralized Mortgage Obligations(1)  217,632   —   (12,198)  205,434   235,479   192   (5,558)  230,113 
    FHLMC Certificates  3,923   —   (358)  3,565   4,120   —   (268)  3,852 
    FNMA Certificates  121,940   —   (8,818)  113,122   131,918   —   (5,227)  126,691 
    SBA Certificates  20,717   147   —   20,864   21,803   34   —   21,837 
    Allowance for Credit Losses  (647)  —   —   —   —   —   —   — 
    Total held-to-maturity securities $471,065  $147  $(26,995) $444,864  $510,820  $283  $(15,252) $495,851 

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

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

      September 30,  December 31, 
      2023  2022 
    Beginning balance $—  $— 
    CECL adoption  662   — 
    Provision for credit losses  (15)  — 
    Allowance for credit losses on securities $647  $— 

    Ponce Financial Group, Inc. and Subsidiaries
    Loan Portfolio

      As of 
      September 30,  June 30,  March 31,  December 31,  September 30, 
      2023  2023  2023  2022  2022 
      Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
        
      (Dollars in thousands) 
    Mortgage loans:                              
    1-4 family residential                              
    Investor Owned $347,082   19.13% $351,754   20.43% $354,559   21.60% $343,968   22.54% $336,667   23.79%
    Owner-Occupied  151,866   8.37%  154,116   8.94%  149,481   9.10%  134,878   8.84%  112,749   7.97%
    Multifamily residential  553,694   30.52%  550,033   31.94%  553,430   33.71%  494,667   32.42%  421,917   29.81%
    Nonresidential properties  321,472   17.71%  317,416   18.43%  314,560   19.17%  308,043   20.19%  282,642   19.97%
    Construction and land  411,383   22.67%  315,843   18.34%  235,157   14.33%  185,018   12.13%  197,437   13.95%
    Total mortgage loans  1,785,497   98.40%  1,689,162   98.08%  1,607,187   97.91%  1,466,574   96.12%  1,351,412   95.49%
    Non-mortgage loans:                              
    Business loans (1)  18,416   1.02%  21,041   1.22%  19,890   1.21%  39,965   2.62%  41,398   2.92%
    Consumer loans (2)  10,416   0.58%  11,958   0.70%  14,227   0.88%  19,129   1.26%  22,563   1.59%
    Total non-mortgage loans  28,832   1.60%  32,999   1.92%  34,117   2.09%  59,094   3.88%  63,961   4.51%
    Total loans, gross  1,814,329   100.00%  1,722,161   100.00%  1,641,304   100.00%  1,525,668   100.00%  1,415,373   100.00%
    Net deferred loan origination costs  692      1,059      2,099      2,051      2,288    
    Allowance for credit losses on loans  (27,414)     (28,173)     (28,975)     (34,592)     (25,108)   
    Loans, net $1,787,607     $1,695,047     $1,614,428     $1,493,127     $1,392,553    

    (1)   As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, business loans include $1.1 million, $3.2 million, $3.6 million, $20.0 million and $24.7 million, respectively, of PPP loans.

    (2)   As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, consumer loans include $9.3 million, $11.2 million, $13.4 million, $18.2 million and $21.5 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 September 30, 2023 
    (in thousands) 
    Receivable from Grain   
    Microloans originated - put back to Grain (inception-to-September 30, 2023) $24,255 
    Write-downs, net of recoveries (inception-to-date as of September 30, 2023)  (15,610)
    Cash receipts from Grain (inception-to-September 30, 2023)  (6,819)
    Grant/reserve  (1,826)
    Net receivable as of September 30, 2023 $— 
    Microloan receivables from Grain Borrowers   
    Grain originated loans receivable as of September 30, 2023 $9,318 
    Allowance for credit losses on loans as of September 30, 2023(1)  (8,163)
    Microloans, net of allowance for credit losses on loans as of September 30, 2023 $1,155 
    Investments   
    Investment in Grain $1,000 
    Investment in Grain write-off in Q3 2022  (1,000)
    Investment in Grain as of September 30, 2023  — 
    Total exposure to Grain as of September 30, 2023 $1,155 

    (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 $1.6 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 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2022  2022  2022 
       
     (Dollars in thousands) 
    Allowance for credit losses on loans at beginning of the period$28,173  $28,975  $34,592  $25,108  $17,535 
    Provision (benefit) for credit losses on loans 750   934   (321)  12,641   9,330 
    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 (1,592)  (1,931)  (2,569)  (3,659)  (1,799)
    Total charge-offs (1,592)  (1,931)  (2,569)  (3,659)  (1,799)
    Recoveries:              
    Mortgage loans:              
    1-4 family residences              
    Investor owned —   —   —   —   — 
    Owner occupied —   —   —   —   39 
    Multifamily residences —   —   —   —   — 
    Nonresidential properties —   —   —   —   — 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business 3   —   —   —   1 
    Consumer 80   195   363   502   2 
    Total recoveries 83   195   363   502   42 
    Net (charge-offs) recoveries (1,509)  (1,736)  (2,206)  (3,157)  (1,757)
    Allowance for credit losses on loans at end of the period$27,414  $28,173  $28,975  $34,592  $25,108 

    Ponce Financial Group, Inc. and Subsidiaries
    Deposits

      As of 
      September 30,  June 30,  March 31,  December 31,  September 30, 
      2023  2023  2023  2022  2022 
      Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent  Amount  Percent 
        
      (Dollars in thousands) 
    Demand $265,862   18.98% $266,545   18.48% $282,741   21.15% $289,149   23.08% $288,654   21.37%
    Interest-bearing deposits:                              
    NOW/IOLA accounts  22,519   1.61%  22,754   1.57%  21,735   1.63%  24,349   1.94%  28,799   2.13%
    Money market accounts  370,500   26.44%  387,970   26.91%  293,140   21.93%  236,143   18.86%  257,409   19.05%
    Reciprocal deposits  82,670   5.90%  100,919   7.00%  109,649   8.20%  114,049   9.11%  162,858   12.05%
    Savings accounts  117,870   8.41%  119,635   8.30%  127,731   9.55%  130,432   10.41%  140,055   10.37%
    Total NOW, money market, reciprocal and savings accounts  593,559   42.36%  631,278   43.78%  552,255   41.31%  504,973   40.32%  589,121   43.60%
    Certificates of deposit of $250K or more  122,353   8.73%  120,043   8.32%  113,955   8.52%  106,336   8.49%  114,016   8.43%
    Brokered certificates of deposit(1)  98,729   7.05%  98,729   6.85%  98,754   7.39%  98,754   7.89%  98,760   7.31%
    Listing service deposits(1)  15,180   1.08%  20,258   1.40%  28,417   2.13%  35,813   2.86%  40,964   3.03%
    All other certificates of deposit less than $250K  305,449   21.80%  305,160   21.17%  260,755   19.50%  217,387   17.36%  219,674   16.26%
    Total certificates of deposit  541,711   38.66%  544,190   37.74%  501,881   37.54%  458,290   36.60%  473,414   35.03%
    Total interest-bearing deposits  1,135,270   81.02%  1,175,468   81.52%  1,054,136   78.85%  963,263   76.92%  1,062,535   78.63%
    Total deposits $1,401,132   100.00% $1,442,013   100.00% $1,336,877   100.00% $1,252,412   100.00% $1,351,189   100.00%

    (1)   As of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, there were $0.3 million, $3.3 million, $9.5 million, $13.6 million and $13.8 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

     September 30,  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   4.61%
                      
    Term advances ending:                 
    2023$—  $—   —  $178,375  $178,375   4.32 
    2024 354,000   354,000   4.53   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 
     $675,100  $675,100   4.08% $517,375  $517,375   3.90%

    Ponce Financial Group, Inc. and Subsidiaries
    Nonperforming Assets

     As of Three Months Ended 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2023  2022  2022 
       
     (Dollars in thousands) 
    Non-accrual loans:              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$396  $296  $2,836  $2,844  $5,902 
    Owner occupied 1,685   2,363   2,245   961   971 
    Multifamily residential 1,444   1,435   —   —   — 
    Nonresidential properties —   —   —   —   778 
    Construction and land 11,721   11,721   11,906   7,567   10,660 
    Non-mortgage loans:              
    Business 209   —   40   —   359 
    Consumer —   —   —   —   — 
    Total non-accrual loans (not including non-accruing modifications to borrowers experiencing financial difficulty)(1)$15,455  $15,815  $17,027  $11,372  $18,670 
                   
    Non-accruing modifications to borrowers experiencing financial difficulty(1):              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$270  $209  $213  $217  $221 
    Owner occupied 449   840   2,020   2,027   2,215 
    Multifamily residential —   —   —   —   — 
    Nonresidential properties —   —   91   93   95 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   —   —   —   — 
    Consumer —   —   —   —   — 
    Total non-accruing modifications to borrowers experiencing financial difficulty(1) 719   1,049   2,324   2,337   2,531 
    Total non-accrual loans$16,174  $16,864  $19,351  $13,709  $21,201 
                   
    Accruing modifications to borrowers experiencing financial difficulty (1):              
    Mortgage loans:              
    1-4 family residential              
    Investor owned$2,131  $2,161  $2,185  $2,207  $2,228 
    Owner occupied 2,335   2,353   1,310   1,328   1,254 
    Multifamily residential —   —   —   —   — 
    Nonresidential properties 765   783   701   708   715 
    Construction and land —   —   —   —   — 
    Non-mortgage loans:              
    Business —   —   —   —   — 
    Consumer —   —   —   —   — 
    Total accruing modifications to borrowers experiencing financial difficulty(1)$5,231  $5,297  $4,196  $4,243  $4,197 
    Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty(1)$21,405  $22,161  $23,547  $17,952  $25,398 
    Total non-performing loans to total gross loans 0.89%  0.98%  1.18%  0.90%  1.50%
    Total non-performing assets to total assets 0.62%  0.63%  0.76%  0.59%  0.97%
    Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty as a percentage of total assets(1) 0.82%  0.83%  0.93%  0.78%  1.16%

    (1) For periods in 2023, balances include both modifications to borrowers experiencing financial difficulty, in accordance with ASU 2022-02 adopted on January 1, 2023, and previously existing troubled debt restructurings. For periods in 2022, the balances only include troubled debt restructurings.

    Ponce Financial Group, Inc. and Subsidiaries
    Average Balance Sheets

     For the Three Months Ended September 30,
     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)$1,777,585  $25,276  5.64% $1,379,029  $17,058  4.91%
    Securities(3) 599,573   5,821  3.85%  492,337   4,153  3.35%
    Other(4)(5) 169,570   2,409  5.64%  74,055   423  2.27%
    Total interest-earning assets 2,546,728   33,506  5.22%  1,945,421   21,634  4.41%
    Non-interest-earning assets(5) 111,771        108,329      
    Total assets$2,658,499       $2,053,750      
    Interest-bearing liabilities:               
    NOW/IOLA$22,876  $8  0.14% $29,939  $13  0.17%
    Money market 485,042   5,601  4.58%  381,606   1,303  1.35%
    Savings 118,095   29  0.10%  141,200   57  0.16%
    Certificates of deposit 527,302   4,362  3.28%  382,163   855  0.89%
    Total deposits 1,153,315   10,000  3.44%  934,908   2,228  0.95%
    Advance payments by borrowers 14,537   1  0.03%  10,918   2  0.07%
    Borrowings 678,676   6,963  4.07%  250,112   1,793  2.84%
    Total interest-bearing liabilities 1,846,528   16,964  3.64%  1,195,938   4,023  1.33%
    Non-interest-bearing liabilities:               
    Non-interest-bearing demand 278,358   —     321,556   —   
    Other non-interest-bearing liabilities 46,643   —     16,377   —   
    Total non-interest-bearing liabilities 325,001   —     337,933   —   
    Total liabilities 2,171,529   16,964     1,533,871   4,023   
    Total equity 486,970        519,879      
    Total liabilities and total equity$2,658,499     3.64% $2,053,750     1.33%
    Net interest income   $16,542       $17,611   
    Net interest rate spread(6)      1.58%       3.08%
    Net interest-earning assets(7)$700,200       $749,483      
    Net interest margin(8)      2.58%       3.59%
    Average interest-earning assets to interest-bearing liabilities      137.92%       162.67%

    (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, FHLBNY stock dividends and FRB demand deposits.
    (5)   FRB demand deposits for prior period have been reclassified for consistency.
    (6)   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.
    (7)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    (8)   Net interest margin represents net interest income divided by average total interest-earning assets.

    Ponce Financial Group, Inc. and Subsidiaries
    Average Balance Sheets

     For the Nine Months Ended September 30, 
     2023  2022 
     Average        Average       
     Outstanding     Average  Outstanding     Average 
     Balance  Interest  Yield/Rate(1)  Balance  Interest  Yield/Rate 
     (Dollars in thousands) 
    Interest-earning assets:                 
    Loans(2)$1,678,369  $67,991  5.42% $1,341,151  $51,315  5.12%
    Securities(3) 614,987   17,627  3.83%  263,421   5,778  2.93%
    Other(4)(5) 127,961   5,299  5.54%  96,623   726  1.00%
    Total interest-earning assets 2,421,317   90,917  5.02%  1,701,195   57,819  4.54%
    Non-interest-earning assets(5) 118,609         136,650       
    Total assets$2,539,926        $1,837,845       
    Interest-bearing liabilities:                 
    NOW/IOLA$22,828  $25  0.15% $31,769  $43  0.18%
    Money market 403,171   12,745  4.23%  344,361   1,986  0.77%
    Savings 123,218   88  0.10%  137,808   120  0.12%
    Certificates of deposit 522,740   11,468  2.93%  398,661   2,361  0.79%
    Total deposits 1,071,957   24,326  3.03%  912,599   4,510  0.66%
    Advance payments by borrowers 14,814   6  0.05%  11,033   5  0.06%
    Borrowings 617,912   18,516  4.01%  152,084   2,867  2.52%
    Total interest-bearing liabilities 1,704,683   42,848  3.36%  1,075,716   7,382  0.92%
    Non-interest-bearing liabilities:                 
    Non-interest-bearing demand 298,148   —      350,871   —    
    Other non-interest-bearing liabilities 43,864   —      43,606   —    
    Total non-interest-bearing liabilities 342,012   —      394,477   —    
    Total liabilities 2,046,695   42,848      1,470,193   7,382    
    Total equity 493,231         367,652       
    Total liabilities and total equity$2,539,926     3.36% $1,837,845     0.92%
    Net interest income   $48,069        $50,437    
    Net interest rate spread(6)      1.66%       3.62%
    Net interest-earning assets(7)$716,634        $625,479       
    Net interest margin(8)      2.65%       3.96%
    Average interest-earning assets to                 
    interest-bearing liabilities      142.04%       158.15%

    (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, FHLBNY stock dividends and FRB demand deposit.
    (5) FRB demand deposits for prior period have been reclassified for consistency.
    (6) 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.
    (7) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    (8) Net interest margin represents net interest income divided by average total interest-earning assets.

    Ponce Financial Group, Inc. and Subsidiaries
    Other Data

     As of 
     September 30,  June 30,  March 31,  December 31,  September 30, 
     2023  2023  2023  2022  2022 
    Other Data              
    Common shares issued 24,886,711   24,886,711   24,865,476   24,861,329   24,728,460 
    Less treasury shares 1,233,111   617,924   1,976   1,976   — 
    Common shares outstanding at end of period 23,653,600   24,268,787   24,863,500   24,859,353   24,728,460 
                   
    Book value per common share$10.99  $10.94  $10.90  $10.77  $11.15 
    Tangible book value per common share$10.99  $10.94  $10.90  $10.77  $11.15 

    Contact:
    Frank Perez
    frank.perez@poncebank.net
    718-981-9000


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