NEW YORK, Jan. 30, 2023 (GLOBE NEWSWIRE) -- Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp (the "Company") (NASDAQ:PDLB), the holding company for Ponce Bank (the "Bank"), today announced results for the fourth quarter of 2022.

Fourth Quarter Highlights (Compared to Prior Periods):

Net loss of ($9.2) million or ($0.40) per diluted share, for the three months ended December 31, 2022, as compared to net loss of ($14.7) million, or ($0.64) per diluted share for the three months ended September 30, 2022 and net income of $15.0 million, or $0.89 per diluted share for the three months ended December 31, 2021.
Included in the ($9.2) million 2022 fourth quarter results is a $10.4 million increase in net provision for loan loss reserves/unused commitments to our Grain-originated microloan portfolio, as well as a reversal of $0.8 million of loan origination income that had been taken upfront (as opposed to deferred over the life of the loan).
Net interest income of $16.2 million for the fourth quarter of 2022 decreased $1.4 million, or 8.21%, from the prior quarter and $0.6 million, or 3.67%, 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 2.98% for the fourth quarter of 2022, a decrease from 3.62% for the prior quarter and from 4.51% for the same quarter last year. The reduction was largely attributable to an increase of lower yielding securities in the Company's portfolio and to an increase in the cost of funds.
Securities totaled $640.3 million as of December 31, 2022, an increase of $526.0 million, or 460.31%, from December 31, 2021.
Net loans receivable were $1.49 billion as of December 31, 2022, an increase of $188.0 million, or 14.41%, from December 31, 2021. The increase of $188.0 million was attributable to a $304.8 million net increase in non-PPP loans partially offset by a $116.7 million decrease in PPP loans.
Deposits were $1.25 billion as of December 31, 2022, an increase of $47.7 million, or 3.96%, from December 31, 2021.

President and Chief Executive Officer's Comments

Carlos P. Naudon, Ponce Financial Group's President and CEO, stated "We took action this quarter, within applicable guidelines, to further reduce future exposure to our consumer microloan program with Grain by reducing available credit lines for many borrowers. Grain unused credit line exposure was reduced from $15.3 million at the end of the third quarter of 2022 to $0.4 million at the end of the fourth quarter of 2022. We also increased our allowance for loan losses for this portfolio to $15.4 million, leaving us with total possible remaining exposure, inclusive of unused commitments, of $3.2 million at year-end, down from previous exposure of $28.6 million at the end of the third quarter. We also retained $1.4 million of security deposits from Grain borrowers, which may be available to offset the remaining exposure. While we are winding down our partnership with Grain, we will continue to explore and foster other partnerships, to invest in our people and in efficiency enhancing technologies and to use all available capital management tools to deliver value to our stakeholders as a nationally recognized MDI and CDFI institution.

Mr. Naudon continued, "Looking to the coming year, we are focused on successfully navigating a dramatically changed environment compared to a year ago in terms of credit costs and economic uncertainty. We are keenly aware, as many others in our industry have pointed out, that the road ahead will continue to be more volatile as we navigate through this necessary adjustment from an extended period of ultra-low interest rates. Fortunately for Ponce, during 2022 we significantly increased our capital base, both due to the second-step conversion as well as the $225 million sale of our perpetual preferred stock to the U.S. Department of the Treasury, as evidenced by our strong capital ratios. Our financial strength provides significant capacity for future growth, but we will be patient and judicious in deploying this capital while at the same time making use of our strength to support underserved but not undeserving members of our communities."

Executive Chairman's Comment

Steven A. Tsavaris, Ponce Financial Group's Executive Chairman, added, "Despite a challenging environment, we were able to add almost $200 million to our loan portfolio across most categories during the quarter. We saw healthy growth in our multi-family loan and non-qualified mortgage portfolios. The loan portfolio, excluding Grain originations, continues to show great resiliency and continues to enjoy low LTVs".

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

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Performance Ratios (Annualized):	2022			2022			2022			2022			2021
Return on average assets (1)		(1.62	%)		(2.80	%)		0.17	%		(1.55	%)		3.69	%
Return on average equity (1)		(7.28	%)		(11.25	%)		1.01	%		(10.06	%)		31.46	%
Net interest rate spread (1) (2)		2.14	%		3.12	%		3.86	%		4.48	%		4.32	%
Net interest margin (1) (3)		2.98	%		3.62	%		4.10	%		4.68	%		4.51	%
Non-interest expense to average assets (1)		2.78	%		4.83	%		3.73	%		6.39	%		3.90	%
Efficiency ratio (4)		94.95	%		132.46	%		93.77	%		143.50	%		44.10	%
Average interest-earning assets to average interest- bearing liabilities		151.73	%		161.30	%		151.98	%		145.54	%		138.10	%
Average equity to average assets		22.32	%		24.90	%		17.32	%		15.76	%		11.71	%

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Capital Ratios (Annualized):	2022			2022			2022			2022			2021
Total capital to risk weighted assets (Bank only)		30.53	%		33.39	%		36.00	%		23.27	%		17.23	%
Tier 1 capital to risk weighted assets (Bank only)		29.26	%		32.13	%		34.75	%		22.02	%		15.98	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		29.26	%		32.13	%		34.75	%		22.02	%		15.98	%
Tier 1 capital to average assets (Bank only)		20.47	%		22.91	%		28.79	%		14.88	%		10.95	%

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
Asset Quality Ratios (Annualized):	2022			2022			2022			2022			2021
Allowance for loan losses as a percentage of total loans		2.27	%		1.77	%		1.31	%		1.28	%		1.24	%
Allowance for loan losses as a percentage of nonperforming loans		252.33	%		118.43	%		94.05	%		106.84	%		142.90	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.85	%)		(0.52	%)		(0.05	%)		(0.22	%)		(0.18	%)
Non-performing loans as a percentage of total gross loans		0.90	%		1.50	%		1.39	%		1.20	%		0.87	%
Non-performing loans as a percentage of total assets		0.59	%		0.97	%		0.90	%		0.97	%		0.69	%
Total non-performing assets as a percentage of total assets		0.59	%		0.97	%		0.90	%		0.97	%		0.69	%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets		0.78	%		1.16	%		1.14	%		1.30	%		1.07	%

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 loss for the year ended December 31, 2022, was ($30.0) million compared to net income of $25.4 million for the year ended December 31, 2021. This variance was largely due to charges related to Grain and a contribution to the Ponce De Leon Foundation this year, gains on property sales last year versus a loss on equipment sale this year, higher compensation and occupancy expenses and a reduction on the income on sale of mortgage loans.

Net Interest Income and Net Margin

Net interest income for the year ended December 31, 2022, was $66.6 million compared to $58.8 million for the year ended December 31, 2021. This increase is largely explained by the increases in the securities and loan portfolios.

Net interest margin was 3.75% for the year ended December 31, 2022 compared to 4.13% for the same period last year, a decrease of 38bps. The decrease in net interest margin was a result of an increase in the cost of funds driven by higher interest rates as well as a higher proportion of investment securities within interest-earning assets. These securities offer lower yields versus traditional loans.

Non-interest Income

Non-interest income for the three months ended December 31, 2022, was $0.4 million, a decrease of $1.1 million, or 72.29%, compared to the three months ended September 30, 2022 and a decrease of $18.7 million, or 97.72%, compared to the three months ended December 31, 2021.

The $1.1 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended September 30, 2022 was impacted by the reversal of loan origination income that had been taken upfront (as opposed to deferred) as well as lower income on sale of mortgage loans.

The $18.7 million decrease in non-interest income for the three months ended December 31, 2022 compared to the three months ended December 31, 2021 was attributable to the non-recurring $15.4 million gains on sale of property last year, a $1.4 million reduction in loan origination fees and a $1.3 million reduction in income on sale of mortgage loans.

Non-interest income for the year ended December 31, 2022, decreased $28.2 million, or 81.47%, to $6.4 million compared to $34.6 million for the year ended December 31, 2021. The decrease is primarily due to $20.3 million gains on sale of property last year versus a loss on sale of equipment of $0.4 million, a $4.5 million reduction in income on sale of mortgage loans and a $1.7 million reduction in loan origination fees this year.

Non-interest Expense

Non-interest expense for the three months ended December 31, 2022, was $15.8 million, a decrease of $9.7 million, or 37.97%, compared to the three months ended September 30, 2022 and $0.1 million, or 0.56%, compared to the three months ended December 31, 2021. The $9.7 million decrease from the three months ended September 30, 2022 was mainly attributable to the Grain write-off and write-down in the third quarter and to a lesser extent, a decrease in compensation and benefits expense as we reduced the bonus accrual during the fourth quarter. The $0.1 million decrease from the three months ended December 31, 2021 was attributable to a decrease of $0.6 million in direct loan expense, a $0.5 million recovery of Grain charge-offs and a decrease of $0.5 million in compensation and benefits expense, offset by increases of $0.9 million in occupancy and equipment, mainly due to rental expenses incurred after the sale of property during 2021 and $0.3 million in data processing expenses.

Non-interest expense for the year ended December 31, 2022, was $85.8 million, an increase of $28.7 million or 50.19%, compared to $57.1 million the year ended December 31, 2021. The $28.7 million increase in non-interest expense was attributable to the $17.9 million Grain write-off and write-down, $5.0 million contribution to the Ponce De Leon Foundation, and increases of $4.7 million in compensation and benefits expense, $2.6 million in occupancy and equipment expenses, $0.8 million in data processing expenses, $0.5 million in other operating expenses, $0.4 million in marketing and promotional expenses and $0.3 million in insurance and surety bond premiums. These items were partially offset by decreases of $1.7 million in professional fees, $1.4 million in direct loan expenses and $0.5 million in office supplies, telephone and postage.

Balance Sheet Summary

Total assets increased $658.5 million, or 39.82%, to $2.31 billion as of December 31, 2022 from $1.65 billion as of December 31, 2021. The increase in total assets is largely attributable to an increase of $509.9 million resulting from the purchases in held-to-maturity securities utilizing the $225.0 million received from the issuance of preferred stock to the U.S. Treasury pursuant to its Emergency Capital Investment Program. The increase in total assets is further impacted by increases of $188.0 million in net loans receivable (inclusive of a $116.7 million net decrease in PPP loans), $33.4 million in right of use assets, $18.7 million in Federal Home Loan Bank of New York stock, $16.2 million resulting from the purchase of available-for-sale securities and $12.3 million in deferred tax assets. These increases are partially offset by decreases of $99.5 million in cash and equivalents, $13.9 million in mortgage loans held for sale, at fair value and $6.2 million in other assets.

Total liabilities increased $355.0 million, or 24.25%, to $1.82 billion as of December 31, 2022 from $1.46 billion as of December 31, 2021. The increase in total liabilities was largely attributable to increases of $411.1 million in advances from FHLBNY, $47.7 million in deposits, and $34.5 million in operating lease liabilities, offset by decreases of $122.0 million in subscription liabilities related to the conversion of the mutual holding company to a stock company held as of December 31, 2021 pending the closing of the conversion and reorganization on January 27, 2022 and $15.1 million in warehouse lines of credit.

Total stockholders' equity increased $303.4 million, or 160.34%, to $492.7 million as of December 31, 2022, from $189.3 million as of December 31, 2021. This increase in stockholders' equity was largely attributable to the $225.0 million issuance of preferred stock to the U.S. Department of the Treasury pursuant to its Emergency Capital Investment Program and the $118.0 million received as a result of the sale of common stock in the conversion of the mutual holding company to a stock company.

About Ponce Financial Group, Inc.

Ponce Financial Group, Inc., as the successor by merger with PDL Community Bancorp, is the holding company for Ponce Bank. Ponce Bank is a Minority Depository Institution, a Community Development Financial Institution, and a certified Small Business Administration lender. Ponce Bank's business primarily consists of taking deposits from the general public and to a lesser extent alternative funding sources and investing those funds, together with funds generated from operations and borrowings, in mortgage loans, consisting of 1-4 family residences (investor-owned and owner-occupied), multifamily residences, nonresidential properties, construction and land, and, to a lesser extent, in business and consumer loans. Ponce Bank also invests in securities, which consist of U.S. Government and federal agency securities and securities issued by government-sponsored or government-owned enterprises, as well as, mortgage-backed securities, corporate bonds and obligations, and Federal Home Loan Bank stock.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as "believes," "will," "would," "expects," "project," "may," "could," "developments," "strategic," "launching," "opportunities," "anticipates," "estimates," "intends," "plans," "targets" and similar expressions. These statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which Ponce Bank operates, including changes that adversely affect borrowers' ability to service and repay Ponce Bank's loans; anticipated losses with respect to the Company's investment in Grain; the anticipated impact of the COVID-19 pandemic and Ponce Bank's attempts at mitigation; changes in the value of securities in the investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; changes in government regulation; changes in accounting standards and practices; the risk that intangibles recorded in the financial statements will become impaired; demand for loans in Ponce Bank's market area; Ponce Bank's ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that Ponce Financial Group, Inc. may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in Ponce Financial Group, Inc.'s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the "SEC"), which are available at the SEC's website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Ponce Financial Group, Inc. disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as may be required by applicable law or regulation.

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

Consolidated Statements of Financial Condition

(Dollars in thousands, except for share data)


	As of
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
ASSETS
Cash and due from banks:
Cash	$	34,074		$	37,235		$	53,544		$	32,168		$	98,954
Interest-bearing deposits in banks		20,286			25,286			221,262			37,127			54,940
Total cash and cash equivalents		54,360			62,521			274,806			69,295			153,894
Available-for-sale securities, at fair value		129,505			131,977			140,044			154,799			113,346
Held-to-maturity securities, at amortized cost		510,820			494,297			211,517			927			934
Placement with banks		1,494			2,490			2,490			2,490			2,490
Mortgage loans held for sale, at fair value		1,979			3,357			9,234			7,972			15,836
Loans receivable, net		1,493,127			1,392,553			1,324,320			1,300,446			1,305,078
Accrued interest receivable		15,049			14,063			13,255			12,799			12,362
Premises and equipment, net		17,446			17,759			18,945			19,279			19,617
Right of use assets		33,423			34,121			34,416			35,179			—
Federal Home Loan Bank of New York stock (FHLBNY), at cost		24,661			14,272			16,429			5,420			6,001
Deferred tax assets		16,137			13,822			9,658			7,440			3,820
Other assets		13,988			11,170			21,585			13,730			20,132
Total assets	$	2,311,989		$	2,192,402		$	2,076,699		$	1,629,776		$	1,653,510
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	1,252,412		$	1,351,189		$	1,148,728		$	1,181,165		$	1,204,716
Operating lease liabilities		34,532			35,081			35,217			35,821			—
Accrued interest payable		1,390			854			158			223			228
Advance payments by borrowers for taxes and insurance		9,724			10,589			8,668			10,161			7,657
Advances from the FHLBNY and others		517,375			286,375			334,375			93,375			106,255
Warehouse lines of credit		—			—			—			753			15,090
Mutual holding company conversion subscription liabilities		—			—			—			—			122,000
Other liabilities		3,856			7,631			31,471			8,699			8,308
Total liabilities		1,819,289			1,691,719			1,558,617			1,330,197			1,464,254
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized		225,000			225,000			225,000			—			—
Common stock, $0.01 par value; 200,000,000 shares authorized		249			247			247			247			185
Treasury stock, at cost		(2	)		—			—			—			(13,687	)
Additional paid-in-capital		206,508			206,092			205,669			205,243			85,601
Retained earnings		92,955			102,169			116,907			116,136			122,956
Accumulated other comprehensive loss		(17,860	)		(18,420	)		(15,032	)		(7,035	)		(1,456	)
Unearned compensation ─ ESOP		(14,150	)		(14,405	)		(14,709	)		(15,012	)		(4,343	)
Total stockholders' equity		492,700			500,683			518,082			299,579			189,256
Total liabilities and stockholders' equity	$	2,311,989		$	2,192,402		$	2,076,699		$	1,629,776		$	1,653,510

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

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
Interest and dividend income:
Interest on loans receivable	$	18,550		$	17,058		$	16,057		$	18,200		$	18,013
Interest on deposits due from banks		199			346			132			36			7
Interest and dividend on securities and FHLBNY stock		6,184			4,230			978			782			632
Total interest and dividend income		24,933			21,634			17,167			19,018			18,652
Interest expense:
Interest on certificates of deposit		1,310			687			677			803			907
Interest on other deposits		4,125			1,543			521			284			309
Interest on borrowings		3,332			1,793			481			593			654
Total interest expense		8,767			4,023			1,679			1,680			1,870
Net interest income		16,166			17,611			15,488			17,338			16,782
Provision for loan losses		12,641			9,330			817			1,258			873
Net interest income after provision for loan losses		3,525			8,281			14,671			16,080			15,909
Non-interest income:
Service charges and fees		481			464			445			440			468
Brokerage commissions		180			288			214			338			401
Late and prepayment charges		263			109			193			58			336
Income on sale of mortgage loans		7			116			200			418			1,294
Loan origination⁽¹⁾		(557	)		522			696			625			886
(Loss) gain on sale of premises and equipment		—			(436	)		—			—			15,431
Other		63			514			431			347			353
Total non-interest income		437			1,577			2,179			2,226			19,169
Non-interest expense:
Compensation and benefits		6,501			7,377			6,911			7,125			6,959
Occupancy and equipment		3,928			3,611			3,237			3,192			3,007
Data processing expenses		1,114			994			824			847			771
Direct loan expenses		454			654			505			874			1,032
Insurance and surety bond premiums		270			297			156			147			149
Office supplies, telephone and postage		375			369			406			405			552
Professional fees		1,571			1,251			1,748			1,334			1,700
Contribution to the Ponce De Leon Foundation		—			—			—			4,995			—
Grain write-off and write-down		(515	)		8,881			1,500			8,074			—
Marketing and promotional expenses		256			214			52			71			69
Directors fees		112			89			96			71			80
Regulatory assessment		84			99			71			83			69
Other operating expenses		1,615			1,580			1,061			856			1,466
Total non-interest expense		15,765			25,416			16,567			28,074			15,854
(Loss) income before income taxes		(11,803	)		(15,558	)		283			(9,768	)		19,224
(Benefit) provision for income taxes		(2,589	)		(820	)		(488	)		(2,948	)		4,245
Net (loss) income	$	(9,214	)	$	(14,738	)	$	771		$	(6,820	)	$	14,979
(Loss) earnings per common share:
Basic	$	(0.40	)	$	(0.64	)	$	0.03		$	(0.31	)	$	0.90
Diluted	$	(0.40	)	$	(0.64	)	$	0.03		$	(0.31	)	$	0.89
Weighted average common shares outstanding:
Basic		23,168,097			23,094,859			23,056,559			21,721,113			16,864,929
Diluted		23,168,097			23,094,859			23,128,911			21,721,113			16,924,785

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., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

	For the Years Ended December 31,
	2022			2021		Variance $			Variance %
Interest and dividend income:
Interest on loans receivable	$	69,865		$	65,532	$	4,333			6.61	%
Interest on deposits due from banks		713			20		693			3,465.00	%
Interest and dividend on securities and FHLBNY stock		12,174			1,546		10,628			687.45	%
Total interest and dividend income		82,752			67,098		15,654			23.33	%
Interest expense:
Interest on certificates of deposit		3,477			4,244		(767	)		(18.07	%)
Interest on other deposits		6,473			1,427		5,046			353.61	%
Interest on borrowings		6,199			2,581		3,618			140.18	%
Total interest expense		16,149			8,252		7,897			95.70	%
Net interest income		66,603			58,846		7,757			13.18	%
Provision for loan losses		24,046			2,717		21,329			785.02	%
Net interest income after provision for loan losses		42,557			56,129		(13,572	)		(24.18	%)
Non-interest income:
Service charges and fees		1,830			1,657		173			10.44	%
Brokerage commissions		1,020			1,324		(304	)		(22.96	%)
Late and prepayment charges		623			1,207		(584	)		(48.38	%)
Income on sale of mortgage loans		741			5,265		(4,524	)		(85.93	%)
Loan origination		1,286			3,021		(1,735	)		(57.43	%)
(Loss) gain on sale of premises and equipment		(436	)		20,270		(20,706	)		(102.15	%)
Other		1,355			1,893		(538	)		(28.42	%)
Total non-interest income		6,419			34,637		(28,218	)		(81.47	%)
Non-interest expense:
Compensation and benefits		27,914			23,262		4,652			20.00	%
Occupancy and equipment		13,968			11,328		2,640			23.31	%
Data processing expenses		3,779			3,015		764			25.34	%
Direct loan expenses		2,487			3,888		(1,401	)		(36.03	%)
Insurance and surety bond premiums		870			585		285			48.72	%
Office supplies, telephone and postage		1,555			2,054		(499	)		(24.29	%)
Professional fees		5,904			7,629		(1,725	)		(22.61	%)
Contribution to the Ponce De Leon Foundation		4,995			—		4,995			—	%
Grain write-off and write-down		17,940			—		17,940			—	%
Marketing and promotional expenses		593			206		387			187.86	%
Directors fees		368			285		83			29.12	%
Regulatory assessment		337			323		14			4.33	%
Other operating expenses		5,112			4,567		545			11.93	%
Total non-interest expense		85,822			57,142		28,680			50.19	%
(Loss) income before income taxes		(36,846	)		33,624		(70,470	)		(209.58	%)
(Benefit) provision for income taxes		(6,845	)		8,209		(15,054	)		(183.38	%)
Net (loss) income	$	(30,001	)	$	25,415	$	(55,416	)		(218.04	%)
(Loss) earnings per common share:
Basic	$	(1.32	)	$	1.52	$	(2.84	)		(187.11	%)
Diluted	$	(1.32	)	$	1.51	$	(2.84	)		(187.35	%)
Weighted average common shares outstanding:
Basic		22,690,943			16,744,561		5,946,382			35.51	%
Diluted		22,690,943			16,791,443		5,899,500			35.13	%

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

Key Metrics

	At or for the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
Performance Ratios:
Return on average assets (1)		(1.62	%)		(2.80	%)		0.17	%		(1.55	%)		3.69	%
Return on average equity (1)		(7.28	%)		(11.25	%)		1.01	%		(10.06	%)		31.46	%
Net interest rate spread (1) (2)		2.14	%		3.12	%		3.86	%		4.48	%		4.32	%
Net interest margin (1) (3)		2.98	%		3.62	%		4.10	%		4.68	%		4.51	%
Non-interest expense to average assets (1)		2.78	%		4.83	%		3.73	%		6.39	%		3.90	%
Efficiency ratio (4)		94.95	%		132.46	%		93.77	%		143.50	%		44.10	%
Average interest-earning assets to average interest- bearing liabilities		151.73	%		161.30	%		151.98	%		145.54	%		138.10	%
Average equity to average assets		22.32	%		24.90	%		17.32	%		15.76	%		11.71	%
Capital Ratios:
Total capital to risk weighted assets (Bank only)		30.53	%		33.39	%		36.00	%		23.27	%		17.23	%
Tier 1 capital to risk weighted assets (Bank only)		29.26	%		32.13	%		34.75	%		22.02	%		15.98	%
Common equity Tier 1 capital to risk-weighted assets (Bank only)		29.26	%		32.13	%		34.75	%		22.02	%		15.98	%
Tier 1 capital to average assets (Bank only)		20.47	%		22.91	%		28.79	%		14.88	%		10.95	%
Asset Quality Ratios:
Allowance for loan losses as a percentage of total loans		2.27	%		1.77	%		1.31	%		1.28	%		1.24	%
Allowance for loan losses as a percentage of nonperforming loans		252.33	%		118.43	%		94.05	%		106.84	%		142.90	%
Net (charge-offs) recoveries to average outstanding loans (1)		(0.85	%)		(0.52	%)		(0.05	%)		(0.22	%)		(0.18	%)
Non-performing loans as a percentage of total gross loans		0.90	%		1.50	%		1.39	%		1.20	%		0.87	%
Non-performing loans as a percentage of total assets		0.59	%		0.97	%		0.90	%		0.97	%		0.69	%
Total non-performing assets as a percentage of total assets		0.59	%		0.97	%		0.90	%		0.97	%		0.69	%
Total non-performing assets and accruing troubled debt restructured loans as a percentage of total assets		0.78	%		1.16	%		1.14	%		1.30	%		1.07	%
Other:
Number of offices		18			18			18			18			19
Number of full-time equivalent employees		253			257			253			223			217

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., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Securities Portfolio

	December 31, 2022									December 31, 2021
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value
	(in thousands)									(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,985	$	—	$	(296	)	$	2,689	$	2,981	$	—	$	(47	)	$	2,934
Corporate Bonds		25,824		—		(2,465	)		23,359		21,243		144		(203	)		21,184
Mortgage-Backed Securities:
Collateralized Mortgage Obligations⁽¹⁾		44,503		—		(6,726	)		37,777		18,845		—		(497	)		18,348
FHLMC Certificates		11,310		—		(1,676	)		9,634		—		—		—			—
FNMA Certificates		67,199		—		(11,271	)		55,928		71,930		—		(1,231	)		70,699
GNMA Certificates		122		—		(4	)		118		175		6		—			181
Total available-for-sale securities	$	151,943	$	—	$	(22,438	)	$	129,505	$	115,174	$	150	$	(1,978	)	$	113,346

Held-to-Maturity Securities:
U.S. Agency Bonds	$	35,000	$	—	$	(380	)	$	34,620	$	—	$	—	$	—		$	—
Corporate Bonds		82,500		57		(3,819	)		78,738		—		—		—			—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations⁽¹⁾		235,479		192		(5,558	)		230,113		—		—		—			—
FHLMC Certificates		4,120		—		(268	)		3,852		934		—		(20	)		914
FNMA Certificates		131,918		—		(5,227	)		126,691		—		—		—			—
SBA Certificates		21,803		34		—			21,837		—		—		—			—
Total held-to-maturity securities	$	510,820	$	283	$	(15,252	)	$	495,851	$	934	$	—	$	(20	)	$	914

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

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

Loan Portfolio

	As of
	December 31,						September 30,						June 30,						March 31,						December 31,
	2022						2022						2022						2022						2021
	Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent			Amount			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 family residential
Investor Owned	$	343,968			22.54	%	$	336,667			23.79	%	$	321,671			24.02	%	$	323,442			24.59	%	$	317,304			24.01	%
Owner-Occupied		134,878			8.84	%		112,749			7.97	%		100,048			7.47	%		95,234			7.24	%		96,947			7.33	%
Multifamily residential		494,667			32.42	%		421,917			29.81	%		396,470			29.60	%		368,133			27.98	%		348,300			26.34	%
Nonresidential properties		308,043			20.19	%		282,642			19.97	%		279,877			20.90	%		251,893			19.14	%		239,691			18.13	%
Construction and land		185,018			12.13	%		197,437			13.95	%		165,425			12.35	%		144,881			11.01	%		134,651			10.19	%
Total mortgage loans		1,466,574			96.12	%		1,351,412			95.49	%		1,263,491			94.34	%		1,183,583			89.96	%		1,136,893			86.00	%
Non-mortgage loans:
Business loans (1)		39,965			2.62	%		41,398			2.92	%		45,720			3.41	%		100,253			7.62	%		150,512			11.38	%
Consumer loans (2)		19,129			1.26	%		22,563			1.59	%		30,198			2.25	%		31,899			2.42	%		34,693			2.62	%
Total non-mortgage loans		59,094			3.88	%		63,961			4.51	%		75,918			5.66	%		132,152			10.04	%		185,205			14.00	%
Total loans, gross		1,525,668			100.00	%		1,415,373			100.00	%		1,339,409			100.00	%		1,315,735			100.00	%		1,322,098			100.00	%

Net deferred loan origination costs		2,051						2,288						2,446						1,604						(668	)
Allowance for losses on loans		(34,592	)					(25,108	)					(17,535	)					(16,893	)					(16,352	)

Loans, net	$	1,493,127					$	1,392,553					$	1,324,320					$	1,300,446					$	1,305,078

As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, business loans include $20.0 million, $24.7 million, $30.8 million, $86.0 million and $136.8 million, respectively, of PPP loans.
As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, consumer loans include $18.2 million, $21.5 million, $28.3 million, $31.0 million and $33.9 million, respectively, of loans originated by the Bank pursuant to its arrangement with Grain.

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

Grain Loan Exposure

Grain Technologies, Inc. ("Grain") Total Exposure as of December 31, 2022
(in thousands)
Receivable from Grain
Microloans originated - put back to Grain (inception-to-December 31, 2022)	$	25,467
Write-downs, net of recoveries (year to date as of December 31, 2022)		(17,455	)
Cash receipts from Grain (inception-to-December 31, 2022)		(6,186	)
Grant/reserve		(1,826	)
Net receivable as of December 31, 2022	$	—
Microloan receivables from Grain Borrowers
Grain originated loans receivable as of December 31, 2022	$	18,158
Allowance for loan losses as of December 31, 2022⁽¹⁾		(15,415	)
Microloans, net of allowance for loan losses as of December 31, 2022	$	2,743
Investments
Investment in Grain	$	1,000
Investment in Grain write-off in Q3 2022		(1,000	)
Investment in Grain as of December 31, 2022		—
Total exposure to Grain as of December 31, 2022	$	2,743

Includes $0.03 million for allowance for unused commitments on the $0.4 million of unused commitments available to Grain originated borrowers reported in other liabilities in the accompanying Consolidated Statements of Financial Conditions. Excludes $1.4 million of security deposits by Grain originated borrowers reported in deposits in the accompanying Consolidated Statements of Financial Conditions.

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

Allowance for Loan Losses

	For the Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
	(Dollars in thousands)
Allowance for loan losses at beginning of the period	$	25,108		$	17,535		$	16,893		$	16,352		$	16,008
Provision for loan losses		12,641			9,330			817			1,258			873
Charge-offs:
Mortgage loans:
1-4 family residences
Investor owned		—			—			—			—			—
Owner occupied		—			—			—			—			—
Multifamily residences		—			—			—			—			(38	)
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		(3,659	)		(1,799	)		(450	)		(751	)		(560	)
Total charge-offs		(3,659	)		(1,799	)		(450	)		(751	)		(598	)
Recoveries:
Mortgage loans:
1-4 family residences
Investor owned		—			—			156			—			8
Owner occupied		—			39			—			—			45
Multifamily residences		—			—			—			—			—
Nonresidential properties		—			—			—			—			—
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			1			91			2			15
Consumer		502			2			28			32			1
Total recoveries		502			42			275			34			69
Net (charge-offs) recoveries		(3,157	)		(1,757	)		(175	)		(717	)		(529	)
Allowance for loan losses at end of the period	$	34,592		$	25,108		$	17,535		$	16,893		$	16,352

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

Deposits

	As of
	December 31,					September 30,					June 30,					March 31,					December 31,
	2022					2022					2022					2022					2021
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Demand	$	289,149		23.08	%	$	288,654		21.37	%	$	284,462		24.77	%	$	281,132		23.81	%	$	274,956		22.83	%
Interest-bearing deposits:
NOW/IOLA accounts		24,349		1.94	%		28,799		2.13	%		28,597		2.49	%		33,010		2.79	%		35,280		2.93	%
Money market accounts		317,815		25.38	%		360,293		26.66	%		181,156		15.77	%		169,847		14.38	%		186,893		15.51	%
Reciprocal deposits		114,049		9.11	%		162,858		12.05	%		151,264		13.17	%		160,510		13.59	%		143,221		11.89	%
Savings accounts		130,432		10.41	%		140,055		10.37	%		139,244		12.12	%		133,966		11.34	%		134,887		11.20	%
Total NOW, money market, reciprocal and savings accounts		586,645		46.84	%		692,005		51.21	%		500,261		43.55	%		497,333		42.10	%		500,281		41.53	%
Certificates of deposit of $250K or more		70,113		5.60	%		61,900		4.58	%		65,157		5.67	%		75,130		6.36	%		78,454		6.51	%
Brokered certificates of deposit⁽¹⁾		98,754		7.89	%		98,760		7.31	%		62,650		5.45	%		79,282		6.71	%		79,320		6.58	%
Listing service deposits⁽¹⁾		35,813		2.86	%		40,964		3.03	%		48,953		4.26	%		53,876		4.56	%		66,411		5.51	%
All other certificates of deposit less than $250K		171,938		13.73	%		168,906		12.50	%		187,245		16.30	%		194,412		16.46	%		205,294		17.04	%
Total certificates of deposit		376,618		30.08	%		370,530		27.42	%		364,005		31.68	%		402,700		34.09	%		429,479		35.64	%
Total interest-bearing deposits		963,263		76.92	%		1,062,535		78.63	%		864,266		75.23	%		900,033		76.19	%		929,760		77.17	%
Total deposits	$	1,252,412		100.00	%	$	1,351,189		100.00	%	$	1,148,728		100.00	%	$	1,181,165		100.00	%	$	1,204,716		100.00	%

As of December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021, there were $13.6 million, $13.8 million, $18.5 million, $19.0 million, and $29.0 million, respectively, in individual listing service deposits amounting to $250,000 or more. All brokered certificates of deposit individually amounted to less than $250,000.

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

Nonperforming Assets

	As of Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021
	(Dollars in thousands)
Non-accrual loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,844		$	5,902		$	3,460		$	3,596		$	3,349
Owner occupied		961			971			1,140			962			1,284
Multifamily residential		—			—			—			—			1,200
Nonresidential properties		—			778			1,162			1,166			2,163
Construction and land		7,567			10,660			10,817			7,567			917
Non-mortgage loans:
Business		—			359			—			—			—
Consumer		—			—			—			—			—
Total non-accrual loans (not including non-accruing troubled debt restructured loans)	$	11,372		$	18,670		$	16,579		$	13,291		$	8,913

Non-accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	217		$	221		$	224		$	230		$	234
Owner occupied		2,027			2,215			1,746			2,192			2,196
Multifamily residential		—			—			—			—			—
Nonresidential properties		93			95			96			98			100
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total non-accruing troubled debt restructured loans		2,337			2,531			2,066			2,520			2,530
Total non-accrual loans	$	13,709		$	21,201		$	18,645		$	15,811		$	11,443

Accruing troubled debt restructured loans:
Mortgage loans:
1-4 family residential
Investor owned	$	2,207		$	2,228		$	2,246		$	2,269		$	3,089
Owner occupied		1,328			1,254			2,019			2,313			2,374
Multifamily residential		—			—			—			—			—
Nonresidential properties		708			715			725			726			732
Construction and land		—			—			—			—			—
Non-mortgage loans:
Business		—			—			—			—			—
Consumer		—			—			—			—			—
Total accruing troubled debt restructured loans	$	4,243		$	4,197		$	4,990		$	5,308		$	6,195
Total non-performing assets and accruing troubled debt restructured loans	$	17,952		$	25,398		$	23,635		$	21,119		$	17,638
Total non-performing loans to total gross loans		0.90	%		1.50	%		1.39	%		1.20	%		0.87	%
Total non-performing assets to total assets		0.59	%		0.97	%		0.90	%		0.97	%		0.69	%
Total non-performing assets and accruing troubled debt restructured loans to total assets		0.78	%		1.16	%		1.14	%		1.30	%		1.07	%

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

Average Balance Sheets

	For the Three Months Ended December 31,
	2022						2021
	Average						Average
	Outstanding				Average		Outstanding				Average
	Balance		Interest		Yield/Rate⁽¹⁾		Balance		Interest		Yield/Rate ⁽¹⁾
	(Dollars in thousands)
Interest-earning assets:
Loans⁽²⁾	$	1,478,308	$	18,550	4.98	%	$	1,320,635	$	18,013	5.41	%
Securities⁽³⁾		636,457		5,931	3.70	%		113,826		566	1.97	%
Other⁽⁴⁾		38,879		452	4.61	%		43,346		73	0.67	%
Total interest-earning assets		2,153,644		24,933	4.59	%		1,477,807		18,652	5.01	%
Non-interest-earning assets		96,051						134,798
Total assets	$	2,249,695					$	1,612,605
Interest-bearing liabilities:
NOW/IOLA	$	25,349	$	22	0.34	%	$	29,771	$	16	0.21	%
Money market		503,286		4,095	3.23	%		340,334		259	0.30	%
Savings		139,115		8	0.02	%		137,383		33	0.10	%
Certificates of deposit		368,895		1,310	1.41	%		433,571		907	0.83	%
Total deposits		1,036,645		5,435	2.08	%		941,059		1,215	0.51	%
Advance payments by borrowers		12,942		—	0.00	%		10,361		1	0.04	%
Borrowings		369,832		3,332	3.57	%		118,692		654	2.19	%
Total interest-bearing liabilities		1,419,419		8,767	2.45	%		1,070,112		1,870	0.69	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		325,616		—				320,074		—
Other non-interest-bearing liabilities		2,424		—				33,506		—
Total non-interest-bearing liabilities		328,040		—				353,580		—
Total liabilities		1,747,459		8,767				1,423,692		1,870
Total equity		502,236						188,913
Total liabilities and total equity	$	2,249,695			2.45	%	$	1,612,605			0.69	%
Net interest income			$	16,166					$	16,782
Net interest rate spread⁽⁵⁾					2.14	%					4.32	%
Net interest-earning assets⁽⁶⁾	$	734,225					$	407,695
Net interest margin⁽⁷⁾					2.98	%					4.51	%
Average interest-earning assets to interest-bearing liabilities					151.73	%					138.10	%

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., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Average Balance Sheets

	For the Years Ended December 31,
	2022							2021
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate⁽¹⁾			Balance		Interest		Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans⁽²⁾	$	1,375,723	$	69,865		5.08	%	$	1,312,505	$	65,532		4.99	%
Securities⁽³⁾		357,446		11,709		3.28	%		62,908		1,267		2.01	%
Other⁽⁴⁾		44,160		1,178		2.67	%		51,156		299		0.58	%
Total interest-earning assets		1,777,329		82,752		4.66	%		1,426,569		67,098		4.70	%
Non-interest-earning assets		164,324							89,152
Total assets	$	1,941,653						$	1,515,721
Interest-bearing liabilities:
NOW/IOLA	$	30,151	$	65		0.22	%	$	30,851	$	109		0.35	%
Money market		393,555		6,275		1.59	%		310,611		1,168		0.38	%
Savings		138,137		128		0.09	%		133,244		146		0.11	%
Certificates of deposit		382,022		3,477		0.91	%		430,164		4,244		0.99	%
Total deposits		943,865		9,945		1.05	%		904,870		5,667		0.63	%
Advance payments by borrowers		11,514		5		0.04	%		10,106		4		0.04	%
Borrowings		206,969		6,199		3.00	%		121,319		2,581		2.13	%
Total interest-bearing liabilities		1,162,348		16,149		1.39	%		1,036,295		8,252		0.80	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		344,505		—					287,008		—
Other non-interest-bearing liabilities		33,225		—					17,763		—
Total non-interest-bearing liabilities		377,730		—					304,771		—
Total liabilities		1,540,078		16,149					1,341,066		8,252
Total equity		401,575							174,655
Total liabilities and total equity	$	1,941,653				1.39	%	$	1,515,721				0.80	%
Net interest income			$	66,603						$	58,846
Net interest rate spread⁽⁵⁾						3.27	%						3.90	%
Net interest-earning assets⁽⁶⁾	$	614,981						$	390,274
Net interest margin⁽⁷⁾						3.75	%						4.13	%
Average interest-earning assets to
interest-bearing liabilities						152.91	%						137.66	%

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., as the successor by merger with PDL Community Bancorp, and Subsidiaries

Other Data

	As of
	December 31,		September 30,		June 30,		March 31,		December 31,
	2022		2022		2022		2022		2021
Other Data
Common shares issued		24,859,353		24,728,460		24,724,274		24,724,274		18,463,028
Less treasury shares		—		—		—		—		1,037,041
Common shares outstanding at end of period		24,859,353		24,728,460		24,724,274		24,724,274		17,425,987

Book value per common share	$	10.77	$	11.15	$	11.85	$	12.12	$	10.86
Tangible book value per common share	$	10.77	$	11.15	$	11.85	$	12.12	$	10.86

Contact:

Frank Perez

Frank.perez@poncebank.net

718-931-9000

Ponce Financial Group, Inc. Reports Fourth Quarter 2022 Results