Ponce Financial Group - 10-Q quarterly report FY2025 Q2

Ponce Financial Group - 10-Q quarterly report FY2025 Q2

Cautionary Note Regarding Forward-Looking Statements

Cautionary Note Regarding Forward-Looking Statements

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41255

Ponce Financial Group, Inc.

(Exact Name of Registrant as Specified in its Charter)


Maryland	87-1893965
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2244 Westchester Avenue Bronx, NY	10462
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (718) 931-9000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

PDLB

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2025, the registrant had 24,001,125 shares of common stock, $0.01 par value per share, outstanding.


Auditor Firm Id: 686	Auditor Name: Forvis Mazars, LLP	Auditor Location: New York, New York, USA

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Consolidated Financial Statements	1
	Consolidated Statements of Financial Condition (Unaudited)	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Comprehensive Income (Unaudited)	3
	Consolidated Statements of Stockholders’ Equity (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53
Signatures		54

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

June 30, 2025 and December 31, 2024

(Dollars in thousands, except share data)


	June 30,			December 31,
	2025			2024
	(unaudited)
ASSETS
Cash and due from banks:
Cash	$	35,767		$	35,478
Interest-bearing deposits		90,872			104,361
Total cash and cash equivalents		126,639			139,839
Available-for-sale securities, at fair value (Note 3)		96,562			104,970
Held-to-maturity securities, net of allowance for credit losses of $199 at June 30, 2025 and $216 at December 31, 2024; at amortized cost (fair value 2025 $329,279; 2024 $355,294) (Note 3)		336,879			367,938
Placement with banks		249			249
Mortgage loans held for sale, at fair value (Note 4)		5,703			10,736
Loans receivable, net of allowance for credit losses of $24,100 at June 30, 2025 and $22,502 at December 31, 2024 (Note 5)		2,458,712			2,286,599
Accrued interest receivable		19,126			17,771
Premises and equipment, net		16,067			16,794
Right of use assets (Note 6)		28,806			29,093
Federal Home Loan Bank of New York (FHLBNY) stock, at cost		26,620			29,182
Deferred tax assets		12,143			12,074
Other assets		26,363			24,693
Total assets	$	3,153,869		$	3,039,938
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 7)	$	2,042,209		$	1,884,864
Operating lease liabilities		30,501			30,696
Accrued interest payable		4,161			3,712
Advance payments by borrowers for taxes and insurance		10,942			10,349
Borrowings (Note 8)		536,100			596,100
Other liabilities		8,868			8,717
Total liabilities		2,632,781			2,534,438
Commitments and contingencies (Note 10)
Stockholders' Equity:
Preferred stock, $0.01 par value; 100,000,000 shares authorized, 225,000 shares issued and outstanding as of June 30, 2025 and as of December 31, 2024.		225,000			225,000
Common stock, $0.01 par value; 200,000,000 shares authorized; 24,886,711 shares issued at both June 30, 2025 and December 31, 2024; 23,984,800 shares outstanding as of June 30, 2025 and 23,961,214 shares outstanding as of December 31, 2024		249			249
Treasury stock, at cost; 901,911 shares as of June 30, 2025 and 925,497 shares as of December 31, 2024		(7,404	)		(7,707	)
Additional paid-in-capital		208,275			207,319
Retained earnings		119,250			107,754
Accumulated other comprehensive loss (Note 13)		(13,047	)		(15,297	)
Unearned compensation ─ ESOP; 1,235,116 shares as of June 30, 2025 and 1,301,988 shares as of December 31, 2024		(11,235	)		(11,818	)
Total stockholders' equity		521,088			505,500
Total liabilities and stockholders' equity	$	3,153,869		$	3,039,938

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Three and Six Months Ended June 30, 2025 and 2024

(Dollars in thousands, except share data)


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2025		2024			2025		2024
Interest and dividend income:
Interest on loans receivable	$	40,291	$	31,281		$	77,427	$	61,945
Interest on deposits due from banks		807		1,542			2,475		4,453
Interest and dividend on securities and FHLBNY stock		4,762		5,969			9,955		12,060
Total interest and dividend income		45,860		38,792			89,857		78,458
Interest expense:
Interest on certificates of deposit		7,382		6,358			15,136		12,738
Interest on other deposits		9,058		7,389			17,612		13,929
Interest on borrowings		4,994		7,141			10,480		15,064
Total interest expense		21,434		20,888			43,228		41,731
Net interest income		24,426		17,904			46,629		36,727
Provision (benefit) for credit losses (Note 3) (Note 5) (1)		1,626		(867	)		1,341		(883	)
Net interest income after provision (benefit) for credit losses		22,800		18,771			45,288		37,610
Non-interest income:
Service charges and fees		511		492			1,036		965
Brokerage commissions		—		9			4		17
Late and prepayment charges		530		426			1,227		785
Income on sale of mortgage loans		169		274			317		576
Income on sale of SBA loans		—		—			404		—
Grant income		428		—			428		—
Other		422		1,057			1,025		1,622
Total non-interest income		2,060		2,258			4,441		3,965
Non-interest expense:
Compensation and benefits		7,627		7,724			15,407		15,568
Occupancy and equipment		3,907		3,564			7,820		7,231
Data processing expenses		1,188		1,013			2,340		2,140
Direct loan expenses		241		633			629		1,365
Insurance and surety bond premiums		297		263			612		516
Office supplies, telephone and postage		174		233			344		482
Professional fees		1,367		1,369			2,731		3,092
Microloans recoveries		—		(65	)		—		(118	)
Marketing and promotional expenses		266		145			349		245
Federal deposit insurance and regulatory assessment(2)		546		428			1,007		817
Other operating expenses (2)		1,256		1,333			2,518		2,088
Total non-interest expense (1)		16,869		16,640			33,757		33,426
Income before income taxes		7,991		4,389			15,972		8,149
Provision for income taxes		1,891		1,197			3,913		2,543
Net income	$	6,100	$	3,192		$	12,059	$	5,606
Dividends on preferred shares		282		75			563		75
Net income available to common stockholders	$	5,818	$	3,117		$	11,496	$	5,531
Earnings per common share (Note 9):
Basic	$	0.26	$	0.14		$	0.51	$	0.25
Diluted	$	0.25	$	0.14		$	0.50	$	0.25
Weighted average common shares outstanding (Note 9):
Basic		22,716,615		22,409,803			22,689,914		22,381,647
Diluted		22,947,769		22,419,309			22,920,841		22,393,018

(1) For the three and six months ended June 30, 2024, benefit for contingencies in the amount of $0.5 million and $0.3 million, respectively, were reclassified from total non-interest expense to provision (benefit) for credit losses.

(2) For the three months and six months ended June 30, 2024, $0.3 million and $0.6 million, respectively, of federal deposit insurance was reclassified from other operating expenses to federal deposit insurance and regulatory assessments and $0.1 million and $0.2 million, respectively, of directors fees were reclassified from federal deposit insurance and regulatory assessments to other operating expenses.

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

Three and Six Months Ended June 30, 2025 and 2024

(In thousands)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2025			2024			2025			2024
Net income	$	6,100		$	3,192		$	12,059		$	5,606
Net change in unrealized gain (losses) on securities:
Unrealized gain (losses)		595			42			2,859			(1,154	)
Income (tax) benefit effect		(127	)		(9	)		(609	)		246
Total other comprehensive income (loss), net of tax		468			33			2,250			(908	)
Total comprehensive income		6,568			3,225			14,309			4,698
Less: Dividends on preferred shares		282			75			563			75
Total comprehensive income available to common stockholders	$	6,286		$	3,150		$	13,746		$	4,623

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)

Six Months Ended June 30, 2025 and 2024

(Dollars in thousands, except share data)


																		Accumulated			Unallocated
									Treasury			Additional						Other			Common
	Preferred Stock				Common Stock				Stock,			Paid-in			Retained			Comprehensive			Stock
	Shares		Amount		Shares		Amount		At Cost			Capital			Earnings			Loss			of ESOP			Total
Balance, December 31, 2024		225,000	$	225,000		23,961,214	$	249	$	(7,707	)	$	207,319		$	107,754		$	(15,297	)	$	(11,818	)	$	505,500
Net income		—		—		—		—		—			—			5,959			—			—			5,959
Preferred Stock Dividend																(281	)								(281	)
Other comprehensive income, net of tax		—		—		—		—		—			—			—			1,782			—			1,782
Release of restricted stock units		—		—		4,977		—		66			(66	)					—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			132			—			—			291			423
Share-based compensation		—		—		—		—		—			503			—			—			—			503
Balance, March 31, 2025		225,000	$	225,000		23,966,191	$	249	$	(7,641	)	$	207,888		$	113,432		$	(13,515	)	$	(11,527	)	$	513,886
Net income		—		—		—		—		—			—			6,100			—			—			6,100
Preferred Stock Dividend				—		—		—		—			—			(282	)		—			—			(282	)
Other comprehensive income, net of tax		—		—		—		—		—			—			—			468			—			468
Release of restricted stock units		—		—		18,609		—		237			(237	)		—			—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			171			—			—			292			463
Share-based compensation		—		—		—		—		—			453			—			—			—			453
Balance, June 30, 2025		225,000	$	225,000		23,984,800	$	249	$	(7,404	)	$	208,275		$	119,250		$	(13,047	)	$	(11,235	)	$	521,088


																		Accumulated			Unallocated
									Treasury			Additional						Other			Common
	Preferred Stock				Common Stock				Stock,			Paid-in			Retained			Comprehensive			Stock
	Shares		Amount		Shares		Amount		At Cost			Capital			Earnings			Loss			of ESOP			Total
Balance, December 31, 2023		225,000	$	225,000		23,785,520	$	249	$	(9,747	)	$	207,106		$	97,420		$	(15,649	)	$	(12,984	)	$	491,395
Net income		—		—		—		—		—			—			2,414			—			—			2,414
Other comprehensive loss, net of tax		—		—		—		—		—			—			—			(941	)		—			(941	)
Release of restricted stock units		—		—		4,977		—		45			(45	)					—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			6			—			—			291			297
Share-based compensation		—		—		—		—		—			517			—			—			—			517
Balance, March 31, 2024		225,000	$	225,000		23,790,497	$	249	$	(9,702	)	$	207,584		$	99,834		$	(16,590	)	$	(12,693	)	$	493,682
Net income		—		—		—		—		—			—			3,192			—			—			3,192
Preferred Stock Dividend				—		—		—		—			—			(75	)		—			—			(75	)
Other comprehensive income, net of tax		—		—		—		—		—			—			—			33			—			33
Release of restricted stock units		—		—		21,235		—		183			(183	)		—			—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			14			—			—			292			306
Share-based compensation		—		—		—		—		—			519			—			—			—			519
Balance, June 30, 2024		225,000	$	225,000		23,811,732	$	249	$	(9,519	)	$	207,934		$	102,951		$	(16,557	)	$	(12,401	)	$	497,657

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30, 2025 and 2024

(In thousands)


	Six Months Ended
	June 30,
	2025			2024
Cash Flows From Operating Activities:
Net income	$	12,059		$	5,606
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of premiums/discounts on securities, net		(39	)		(73	)
Gain on sale of loans		(721	)		(576	)
Provision (benefit) for credit losses		1,341			(555	)
Depreciation and amortization		2,427			2,260
ESOP compensation expense		1,053			626
Share-based compensation expense		955			1,036
Deferred income taxes		(678	)		1,406
Changes in assets and liabilities:
Decrease (increase) in mortgage loans held for sale, fair value		5,350			(4,651	)
(Increase) decrease in accrued interest receivable		(1,355	)		569
(Increase) decrease in other assets		(1,670	)		3,216
Increase (decrease) in accrued interest payable		449			(5,145	)
Decrease in operating lease liabilities		(1,355	)		(1,249	)
Increase in advance payments by borrowers		593			60
Increase (decrease) in other liabilities		852			(3,622	)
Net cash provided by (used in) operating activities		19,261			(1,092	)
Cash Flows From Investing Activities:
Net redemption and (purchase) of FHLBNY stock		2,562			(4,580	)
Proceeds from maturities, calls and principal repayments on securities		42,382			25,511
Proceeds from sale of loans		5,738			—
Net increase in loans		(179,518	)		(142,513	)
Purchase of loans		—			(5,956	)
Purchases of premises and equipment		(407	)		(1,846	)
Net cash used in investing activities		(129,243	)		(129,384	)
Cash Flows From Financing Activities:
Net increase in deposits		157,345			98,477
Net repayments from borrowings		(60,000	)		(4,000	)
Dividends paid on preferred stock		(563	)		(25	)
Net cash provided by financing activities		96,782			94,452
Net decrease in cash and cash equivalents		(13,200	)		(36,024	)
Cash and cash equivalents at beginning of period		139,839			139,190
Cash and cash equivalents at end of period	$	126,639		$	103,166
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	$	42,778		$	46,876
Cash paid for income taxes	$	3,335		$	305
Supplemental Disclosures of Noncash Investing Activities:
Transferred from loans receivable to mortgage loans held for sale, at fair value	$	—		$	22,557

The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business

Basis of Presentation and Consolidation:

Ponce Financial Group, Inc. (hereafter referred to as “we,” “our,” “us,” “Ponce Financial Group, Inc.,” or the “Company”) is the holding company of Ponce Bank (“Ponce Bank” or the “Bank”), a federally chartered stock savings association. The Company’s Consolidated Financial Statements presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Consolidated Financial Statements include the accounts of the Company, its wholly-owned subsidiary Ponce Bank (the “Bank”). All significant intercompany transactions and balances have been eliminated in consolidation.

For further information, refer to the audited Consolidated Financial Statements and Notes included in the Company' Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 13, 2025 (the "2024 Form 10-K").

Use of Estimates: In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, as of the date of the consolidated statement of financial condition, and revenues and expenses for the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, the valuation of loans held for sale, the valuation of deferred tax assets and investment securities and the estimates relating to the valuation for share-based awards.

Segment Reporting: Effective December 31, 2024, the Company adopted Accounting Standards Update ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates as one operating segment and one reportable segment.

Reclassification of Prior Periods Presentation: Certain prior periods amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on net income or comprehensive income. Refer to the Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 for details on the reclassification.

Note 2. Preferred Stock

On June 7, 2022 (the “Original Closing Date”), the Company issued 225,000 shares of the Company’s Preferred Stock‎, par value $0.01 (the “Preferred Stock”) for an aggregate purchase price equal to $225,000,000 in cash to the Treasury, pursuant to the Treasury’s ECIP. Under the ECIP, Treasury provided investment capital directly to depository institutions that are CDFIs or MDIs or their holding companies, to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, in low-income and underserved communities. No dividends accrued or were due for the first two years after issuance. For years three through ten, depending upon the level of qualified and/or deep impact lending made in targeted communities, as defined in the ECIP guidelines, dividends will be at an annual rate of either 2.0%, 1.25% or 0.5% and, thereafter, will be fixed at one of the foregoing rates. If we are unable to make qualified and/or deep impact loans at required levels, we will be required to pay dividends at the higher annual rates. Additionally, we may make qualified and/or deep impact loans that are riskier than we otherwise would in an effort to meet the lending requirements for the lower dividend rates and/or to qualify for the purchase option under the Repurchase Agreement (as described below).

Holders of Preferred Stock generally do not have any voting rights, with the exception of voting rights on certain matters as outlined in the Certificate of Designations. The Treasury is the holder of the Preferred Stock and a governmental entity, and the Treasury may hold interests that are different from a private investor in exercising its voting and other rights. In the event of a liquidation, dissolution or winding up of the Company, the Preferred Stock will be entitled to a liquidation preference, subject to certain limitations, in the amount of the sum of $1,000 per share plus declared and unpaid dividends (without accumulation of undeclared dividends) on each share.

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. In June 2024, the ‎Company began paying dividends on its Preferred Stock, which dividends were $0.6 million for the six months ended June 30, 2025 and $0.6 million for the year ended December 31, 2024.

On December 20, 2024, the Company entered into an ECIP Securities Purchase Option Agreement (the “Repurchase Agreement”) with Treasury. Pursuant to the Repurchase Agreement, Treasury has granted the Company an option to purchase all of the Preferred Stock during the Option Period, which is the first fifteen years following the Original Closing Date. The purchase price for the Preferred Stock pursuant to the purchase option is determined based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Repurchase Agreement, together with any accrued and unpaid dividends thereon, as of the closing date. Subject to variations in interest rates and the equity risk premium, which are components included in the purchase price calculation, the Company presently expects that the purchase price will be at a substantial discount from the face value of the Preferred Stock.

The purchase option may not be exercised unless and until at least one of the Threshold Conditions under the Repurchase Agreement has been met. The Threshold Conditions are as follows: during the ten years that follow the Original Closing Date (the “ECIP Period”) either (1) over any sixteen consecutive quarters, an average of at least 60% of the Company’s Total Originations, as defined pursuant to the terms of the ECIP, qualifies as “Deep Impact Lending,” as defined pursuant to the terms of the ECIP (the “Deep Impact Condition”); (2) over any twenty-four consecutive quarters, an average of at least 85% of the Company’s Total Originations qualifies as “Qualified Lending,” as defined pursuant to the terms of the ECIP (the “Qualified Lending Condition”); or (3) the Preferred Stock has a dividend rate of no more than 0.5%, which dividend rate is calculated pursuant to the ECIP and the terms thereof, at each of six consecutive Reset Dates, as defined in the ECIP.

The earliest possible date by which a Threshold Condition may be met is June 30, 2026, which is the end of the sixteenth consecutive quarter following the Original Closing Date. However, the Company does not currently meet any of the Threshold Conditions to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met. The closing of the repurchase of the Preferred Stock, if consummated, would occur between thirty and ninety days following the satisfaction of the Threshold Condition and all other applicable conditions. At present, the Company has reported 12 consecutive quarters for which it has met both the Deep Impact and Qualified Lending Conditions. The Preferred Stock currently has a dividend rate of 0.5%.

In addition to the requirement that a Threshold Condition be met, the Repurchase Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Preferred Stock, maintaining qualification as either a CDFI or an MDI, and meeting other legal and regulatory criteria. Although the Company currently meets the general eligibility criteria, other than satisfying one of the Threshold Conditions, there can be no assurance that the Company will meet such criteria in the future.

The purchase option granted under the agreement is a freestanding financial instrument under GAAP. The Company analyzed the fair value of the repurchase option in accordance with ASC Topic 820 “Fair Value Measurements” and determined that the purchase option value is de minimis as of December 20, 2024, December 31, 2024 and June 30, 2025.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Securities

The amortized cost, gross unrealized gains and losses, and fair value of securities at June 30, 2025 and December 31, 2024 are summarized as follows:


	June 30, 2025
				Gross		Gross
	Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,997		$	—	$	(71	)	$	2,926
Corporate Bonds		15,756			—		(1,161	)		14,595
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		32,540			—		(5,339	)		27,201
FHLMC Certificates		8,488			—		(938	)		7,550
FNMA Certificates		53,275			—		(9,072	)		44,203
GNMA Certificates		85			2		—			87
Total available-for-sale securities	$	113,141		$	2	$	(16,581	)	$	96,562

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(8	)	$	24,992
Corporate Bonds		22,500			31		(358	)		22,173
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		174,379			105		(4,659	)		169,825
FHLMC Certificates		3,182			—		(170	)		3,012
FNMA Certificates		98,441			—		(2,787	)		95,654
SBA Certificates		13,576			49		(2	)		13,623
Allowance for Credit Losses		(199	)		—		—			—
Total held-to-maturity securities	$	336,879		$	185	$	(7,984	)	$	329,279

(1)

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

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	December 31, 2024
				Gross		Gross
	Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,994		$	—	$	(121	)	$	2,873
Corporate Bonds		21,762			10		(1,368	)		20,404
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		34,526			—		(5,991	)		28,535
FHLMC Certificates		9,028			—		(1,366	)		7,662
FNMA Certificates		56,010			—		(10,602	)		45,408
GNMA Certificates		88			—		—			88
Total available-for-sale securities	$	124,408		$	10	$	(19,448	)	$	104,970

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(40	)	$	24,960
Corporate Bonds		32,500			12		(535	)		31,977
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		186,634			—		(7,052	)		179,582
FHLMC Certificates		3,229			—		(223	)		3,006
FNMA Certificates		105,417			—		(5,114	)		100,303
SBA Certificates		15,374			92		—			15,466
Allowance for Credit Losses		(216	)		—		—			—
Total held-to-maturity securities	$	367,938		$	104	$	(12,964	)	$	355,294

(1)

Comprised of FHLMC, FNMA and GNMA issued securities.

The Company’s securities portfolio had 37 and 39 available-for-sale securities and 30 and 31 held-to-maturity securities at June 30, 2025 and December 31, 2024, respectively. There were no available-for-sale and held-to-maturity securities sold during the six months ended June 30, 2025 and for the year ended December 31, 2024. There were two available-for-sale securities in the total amount of $6.0 million and one held-to-maturity security in the amount of $10.0 million that matured and/or were called during the six months ended June 30, 2025. There was one available-for-sale security in the amount of $4.0 million and two held-to-maturity securities in the total amount of $50.0 million that matured and/or were called during the year ended December 31, 2024. The Company did not purchase any available-for-sale securities and held-to-maturity securities during the six months ended June 30, 2025 and during the year ended December 31, 2024.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following table presents the Company's gross unrealized losses and fair values of its securities, aggregated by the length of time the individual securities have been in a continuous unrealized loss position, at June 30, 2025 and December 31, 2024:


	June 30, 2025
	Securities With Gross Unrealized Losses
	Less Than 12 Months					12 Months or More					Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	—	$	—		$	2,926	$	(71	)	$	2,926	$	(71	)
Corporate Bonds		986		(14	)		13,609		(1,147	)		14,595		(1,161	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		—		—			27,201		(5,339	)		27,201		(5,339	)
FHLMC Certificates		—		—			7,550		(938	)		7,550		(938	)
FNMA Certificates		—		—			44,203		(9,072	)		44,203		(9,072	)
Total available-for-sale securities	$	986	$	(14	)	$	95,489	$	(16,567	)	$	96,475	$	(16,581	)
Held-to-Maturity Securities:
U.S. Agency Bonds	$	—	$	—		$	24,992	$	(8	)	$	24,992	$	(8	)
Corporate Bonds		—		—			5,142		(358	)		5,142		(358	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		66,577		(431	)		93,507		(4,228	)		160,084		(4,659	)
FHLMC Certificates		—		—			3,012		(170	)		3,012		(170	)
FNMA Certificates		4,216		(26	)		91,438		(2,761	)		95,654		(2,787	)
SBA Certificates		5,547		(2	)		—		—			5,547		(2	)
Total held-to-maturity securities	$	76,340	$	(459	)	$	218,091	$	(7,525	)	$	294,431	$	(7,984	)


	December 31, 2024
	Securities With Gross Unrealized Losses
	Less Than 12 Months					12 Months or More					Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	—	$	—		$	2,873	$	(121	)	$	2,873	$	(121	)
Corporate Bonds		—		—			15,394		(1,368	)		15,394		(1,368	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		—		—			28,535		(5,991	)		28,535		(5,991	)
FHLMC Certificates		—		—			7,662		(1,366	)		7,662		(1,366	)
FNMA Certificates		—		—			45,407		(10,602	)		45,407		(10,602	)
Total available-for-sale securities	$	—	$	—		$	99,871	$	(19,448	)	$	99,871	$	(19,448	)
Held-to-Maturity Securities:
U.S. Agency Bonds	$	—	$	—		$	24,960	$	(40	)	$	24,960	$	(40	)
Corporate Bonds		—		—			29,965		(535	)		29,965		(535	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		81,112		(1,728	)		98,470		(5,324	)		179,582		(7,052	)
FHLMC Certificates		—		—			3,006		(223	)		3,006		(223	)
FNMA Certificates		4,691		(69	)		95,612		(5,045	)		100,303		(5,114	)
Total held-to-maturity securities	$	85,803	$	(1,797	)	$	252,013	$	(11,167	)	$	337,816	$	(12,964	)

At June 30, 2025 and December 31, 2024, the Company had 36 and 37 available-for-sale securities and 26 and 27 held-to-maturity securities at June 30, 2025 and December 31, 2024, respectively, with gross unrealized loss positions. Management reviewed the financial condition of the entities underlying the securities at both June 30, 2025 and December 31, 2024. The unrealized losses related

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

to the Company debt securities were issued by U.S. government-sponsored entities and agencies and corporate bonds. The Company does not believe that the debt securities that were in an unrealized loss position as of June 30, 2025 represents a credit loss impairment. The gross unrealized loss positions related to mortgage-backed securities and other obligations issued by the U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Total gross unrealized losses were primarily attributable to changes in interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities.

Management reviewed the collectability of the corporate bonds taking into consideration of such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting date. Management believes the unrealized losses on the corporate bonds are primarily attributable to changes in the interest rates and not changes in the credit quality of the issuers of the corporate bonds.

The following is a summary of maturities of securities at June 30, 2025. Amounts are shown by contractual maturity. Because borrowers for mortgage-backed securities have the right to prepay obligations with or without prepayment penalties, at any time, these securities are included as a total within the table.


	June 30, 2025
	Amortized			Fair
	Cost			Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		2,997			2,926
More than one year through five years		—			—
More than five years through ten years		—			—
		2,997			2,926
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		2,000			1,233
More than five years through ten years		13,756			13,362
		15,756			14,595
Mortgage-Backed Securities		94,388			79,041
Total available-for-sale securities	$	113,141		$	96,562
Held-to-Maturity Securities:
U.S. Agency Bonds:
Amounts maturing:
Three months or less	$	25,000		$	24,992
More than three months through one year		—			—
More than one year through five years		—			—
More than five years through ten years		—			—
		25,000			24,992
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		15,000			15,007
More than five years through ten years		7,500			7,166
		22,500			22,173
Mortgage-Backed Securities		289,578			282,114
Allowance for Credit Losses		(199	)		—
Total held-to-maturity securities	$	336,879		$	329,279

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

At June 30, 2025 and December 31, 2024, no securities were pledged as collateral for borrowing activities.

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


	For the Six
	Months Ended			For the Year Ended
	June 30, 2025			December 31, 2024
	(in thousands)
Allowance for credit losses on securities at beginning of period	$	216		$	398
Benefit for credit losses		(17	)		(182	)
Allowance for credit losses on securities at end of period	$	199		$	216

At June 30, 2025 and December 31, 2024, the entire allowance for credit losses on securities was allocated to corporate bonds.

Note 4. Mortgage Loans Held-for-Sale

The following table provides the fair value and contractual principal balance outstanding of mortgage loans held-for-sale accounted for under the fair value options:


	June 30,		December 31,
	2025		2024
	(in thousands)
Mortgage loans held-for-sale, at fair value	$	5,703	$	10,736
Mortgage loans held-for-sale, contractual principal outstanding		5,675		10,674
Fair value less unpaid principal balance	$	28	$	62

At June 30, 2025 and December 31, 2024, the Company had 6 loans and 17 loans in the amount of $5.7 million and $10.7 million, respectively, that were classified as held-for-sale and accounted for under the fair value option accounting guidance for financial assets and financial liabilities.

At June 30, 2025 and December 31, 2024, there were $4.4 million, for both periods, in loans held-for-sale that were greater than 90 days past due and non-accrual with a substandard risk rating.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Loans Receivable, Net and Allowance for Credit Losses

Loans receivable, net at June 30, 2025 and December 31, 2024 are summarized as follows:


	June 30,			December 31,
	2025			2024
	(in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	317,488		$	330,053
Owner-Occupied		134,862			142,363
Multifamily residential		693,670			670,159
Nonresidential properties		404,512			389,898
Construction and land		883,462			733,660
Total mortgage loans		2,433,994			2,266,133
Nonmortgage loans:
Business loans		47,372			40,849
Consumer loans		840			1,038
Total non-mortgage loans		48,212			41,887
Total loans, gross		2,482,206			2,308,020
Net deferred loan origination costs		606			1,081
Allowance for Credit Losses		(24,100	)		(22,502	)
Loans receivable, net	$	2,458,712		$	2,286,599

The Company’s lending activities are conducted principally in metropolitan New York City. The Company primarily grants loans secured by real estate to individuals and businesses pursuant to an established credit policy applicable to each type of lending activity in which it engages. Although collateral provides assurance as a secondary source of repayment, the Company ordinarily requires the primary source of repayment to be based on the borrowers’ ability to generate continuing cash flows. The Company also evaluates the collateral and creditworthiness of each customer. The credit policy provides that depending on the borrowers’ creditworthiness and type of collateral, credit may be extended up to predetermined percentages of the market value of the collateral or on an unsecured basis. Real estate is the primary form of collateral. Other important forms of collateral are time deposits and marketable securities.

For disclosures related to the allowance for credit losses and credit quality, the Company does not have any disaggregated classes of loans below the segment level.

Credit-Quality Indicators: Internally assigned risk ratings are used as credit-quality indicators, which are reviewed by management on a quarterly basis.

The objectives of the Company’s risk-rating system are to provide the Board of Directors and senior management with an objective assessment of the overall quality of the loan portfolio, to promptly and accurately identify loans with well-defined credit weaknesses so that timely action can be taken to minimize credit loss, to identify relevant trends affecting the collectability of the loan portfolio, to isolate potential problem areas and to provide essential information for determining the adequacy of the allowance for credit losses.

Below are the definitions of the internally assigned risk ratings:

•

Strong Pass – Loans to a new or existing borrower collateralized at least 90 percent by an unimpaired deposit account at the Company.

•

Good Pass – Loans to a new or existing borrower in a well-established enterprise in excellent financial condition with strong liquidity and a history of consistently high level of earnings, cash flow and debt service capacity.

•

Satisfactory Pass – Loans to a new or existing borrower of average strength with acceptable financial condition, satisfactory record of earnings and sufficient historical and projected cash flow to service the debt.

•

Performance Pass – Existing loans that evidence strong payment history but document less than average strength, financial condition, record of earnings, or projected cash flows with which to service the debt.

•

Special Mention – Loans in this category are currently protected but show one or more potential weaknesses and risks which may inadequately protect collectability or borrower’s ability to meet repayment terms at some future date if the weakness or weaknesses are not monitored or remediated.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

•

Substandard – Loans that are inadequately protected by the repayment capacity of the borrower or the current sound net worth of the collateral pledged, if any. Loans in this category have well defined weaknesses and risks that jeopardize the repayment. They are characterized by the distinct possibility that some loss may be sustained if the deficiencies are not remediated.

•

Doubtful – Loans that have all the weaknesses of loans classified as “Substandard” with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly questionable and improbable.

Loans within the top four categories above are considered pass rated, as commonly defined. Risk ratings are assigned as necessary to differentiate risk within the portfolio. Risk ratings are reviewed on an ongoing basis and revised to reflect changes in the borrowers’ financial condition and outlook, debt service coverage capability, repayment performance, collateral value and coverage as well as other considerations.

The following tables present credit risk ratings by loan segment as of June 30, 2025 and December 31, 2024:


	June 30, 2025
	Mortgage Loans								Nonmortgage Loans
							Construction						Total
	1-4 Family		Multifamily		Nonresidential		and Land		Business		Consumer		Loans
	(in thousands)
Risk Rating:
Pass	$	440,256	$	674,549	$	403,167	$	874,551	$	45,791	$	838	$	2,439,152
Special mention		6,333		6,327		940		924		1,451		—		15,975
Substandard		5,761		12,794		405		7,987		130		2		27,079
Total	$	452,350	$	693,670	$	404,512	$	883,462	$	47,372	$	840	$	2,482,206


	December 31, 2024
	Mortgage Loans								Nonmortgage Loans
							Construction						Total
	1-4 Family		Multifamily		Nonresidential		and Land		Business		Consumer		Loans
	(in thousands)
Risk Rating:
Pass	$	461,043	$	650,526	$	387,496	$	720,422	$	39,628	$	1,035	$	2,260,150
Special mention		5,507		8,270		2,402		3,180		1,221		—		20,580
Substandard		5,866		11,363		—		10,058		—		3		27,290
Total	$	472,416	$	670,159	$	389,898	$	733,660	$	40,849	$	1,038	$	2,308,020

An aging analysis of loans, as of June 30, 2025 and December 31, 2024, is as follows:


	June 30, 2025
			30-59		60-89		90 Days						90 Days
			Days		Days		or More				Nonaccrual		or More
	Current		Past Due		Past Due		Past Due		Total		Loans		Accruing
	(in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	315,023	$	—	$	606	$	1,859	$	317,488	$	1,859	$	—
Owner-Occupied		133,499		—		506		857		134,862		424		433
Multifamily residential		679,739		—		2,228		11,703		693,670		11,703		—
Nonresidential properties		400,756		3,348		3		405		404,512		405		—
Construction and land		878,655		—		—		4,807		883,462		4,807		—
Nonmortgage loans:
Business		45,017		1,456		123		776		47,372		276		500
Consumer		834		—		6		—		840		—		—
Total	$	2,453,523	$	4,804	$	3,472	$	20,407	$	2,482,206	$	19,474	$	933

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	December 31, 2024
			30-59		60-89		90 Days						90 Days
			Days		Days		or More				Nonaccrual		or More
	Current		Past Due		Past Due		Past Due		Total		Loans		Accruing
	(in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	324,552	$	2,275	$	2,790	$	436	$	330,053	$	436	$	—
Owner-Occupied		137,926		1,670		909		1,858		142,363		1,858		—
Multifamily residential		652,267		5,119		2,502		10,271		670,159		10,271		—
Nonresidential properties		386,606		890		2,402		—		389,898		—		—
Construction and land		720,422		—		3,180		10,058		733,660		10,058		—
Nonmortgage loans:
Business		39,346		123		1,037		343		40,849		343		—
Consumer		1,035		—		3		—		1,038		—		—
Total	$	2,262,154	$	10,077	$	12,823	$	22,966	$	2,308,020	$	22,966	$	—

The following schedules detail the composition of the allowance for credit losses on loans and the related recorded investment in loans as of and for the three and six months ended June 30, 2025 and 2024, and as of and for the year ended December 31, 2024:



	For the Six Months Ended June 30, 2025
	Mortgage Loans													Nonmortgage Loans						Total
	1-4 Family Investor Owned			1-4 Family Owner Occupied			Multifamily		Nonresidential		Construction and Land			Business			Consumer			For the Period
	(in thousands)
Allowance for Credit Losses:
Balance, beginning of period	$	4,148		$	1,784		$	5,004	$	2,697	$	7,710		$	1,113		$	46		$	22,502
(Benefit) provision charged to expense		(1,547	)		(664	)		3,859		597		(815	)		672			(23	)		2,079
Charge-offs		—			(38	)		—		—		—			(444	)		(3	)		(485	)
Recoveries		—			—			—		—		—			4			—			4
Balance, end of period	$	2,601		$	1,082		$	8,863	$	3,294	$	6,895		$	1,345		$	20		$	24,100
Ending balance: individually evaluated for impairment	$	—		$	—		$	—	$	—	$	—		$	276		$	—		$	276
Ending balance: collectively evaluated for impairment		2,601			1,082			8,863		3,294		6,895			1,069			20			23,824
Total	$	2,601		$	1,082		$	8,863	$	3,294	$	6,895		$	1,345		$	20		$	24,100
Loans:
Ending balance: individually evaluated for impairment	$	1,859		$	424		$	11,703	$	405	$	4,807		$	276		$	—		$	19,474
Ending balance: collectively evaluated for impairment		315,629			134,438			681,967		404,107		878,655			47,096			840			2,462,732
Total	$	317,488		$	134,862		$	693,670	$	404,512	$	883,462		$	47,372		$	840		$	2,482,206

	For the Three Months Ended June 30, 2025
	Mortgage Loans													Nonmortgage Loans						Total
	1-4 Family Investor Owned			1-4 Family Owner Occupied			Multifamily		Nonresidential		Construction and Land			Business			Consumer			For the Period
	(in thousands)
Allowance for loan losses:
Balance, beginning of period	$	3,307		$	1,194		$	7,840	$	2,997	$	6,646		$	947		$	43		$	22,974
Provision (benefit) charged to expense		(706	)		(112	)		1,023		297		249			620			(23	)		1,348
Charge-offs		—			—			—		—		—			(222	)		—			(222	)
Recoveries		—			—			—		—		—			—			—			—
Balance, end of period	$	2,601		$	1,082		$	8,863	$	3,294	$	6,895		$	1,345		$	20		$	24,100

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	For the Six Months Ended June 30, 2024
	Mortgage Loans														Nonmortgage Loans						Total
	1-4 Family Investor Owned			1-4 Family Owner Occupied			Multifamily			Nonresidential			Construction and Land		Business			Consumer			For the Period
	(in thousands)
Allowance for loan losses:
Balance, beginning of period	$	4,415		$	2,012		$	4,365		$	3,176		$	4,807	$	531		$	6,848		$	26,154
(Benefit) provision charged to expense		(227	)		(66	)		(180	)		(879	)		1,989		500			(1,512	)		(375	)
Charge-offs		—			—			—			—			—		(52	)		(2,049	)		(2,101	)
Recoveries		—			—			—			—			—		8			375			383
Balance, end of period	$	4,188		$	1,946		$	4,185		$	2,297		$	6,796	$	987		$	3,662		$	24,061
Ending balance: individually evaluated for impairment	$	—		$	81		$	—		$	—		$	—	$	396		$	—		$	477
Ending balance: collectively evaluated for impairment		4,188			1,865			4,185			2,297			6,796		591			3,662			23,584
Total	$	4,188		$	1,946		$	4,185		$	2,297		$	6,796	$	987		$	3,662		$	24,061
Loans:
Ending balance: individually evaluated for impairment	$	436		$	1,870		$	5,754		$	828		$	4,807	$	396		$	—		$	14,091
Ending balance: collectively evaluated for impairment		336,856			145,615			539,569			336,755			637,072		29,826			5,305			2,030,998
Total	$	337,292		$	147,485		$	545,323		$	337,583		$	641,879	$	30,222		$	5,305		$	2,045,089

	For the Three Months Ended June 30, 2024
	Mortgage Loans														Nonmortgage Loans						Total
	1-4 Family Investor Owned			1-4 Family Owner Occupied			Multifamily			Nonresidential			Construction and Land		Business			Consumer			Total
	(in thousands)
Allowance for loan losses:
Balance, beginning of period	$	4,257		$	1,963		$	4,214		$	2,236		$	6,403	$	561		$	5,030		$	24,664
(Benefit) provision charged to expense		(69	)		(17	)		(29	)		61			393		418			(877	)		(120	)
Charge-offs		—			—			—			—			—		—			(747	)		(747	)
Recoveries		—			—			—			—			—		8			256			264
Balance, end of period	$	4,188		$	1,946		$	4,185		$	2,297		$	6,796	$	987		$	3,662		$	24,061

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	For the Year Ended December 31, 2024
	Mortgage Loans													Nonmortgage Loans						Total
	1-4 Family Investor Owned			1-4 Family Owner Occupied			Multifamily		Nonresidential			Construction and Land		Business			Consumer			For the Period
	(in thousands)
Allowance for loan losses:
Balance, beginning of year	$	4,415		$	2,012		$	4,365	$	3,176		$	4,807	$	531		$	6,848		$	26,154
(Benefit) provision charged to expense		(267	)		(228	)		639		(472	)		2,903		1,307			(2,366	)		1,516
Charge-offs		—			—			—		(7	)		—		(734	)		(5,148	)		(5,889	)
Recoveries		—			—			—		—			—		9			712			721
Balance, end of year	$	4,148		$	1,784		$	5,004	$	2,697		$	7,710	$	1,113		$	46		$	22,502
Ending balance: individually evaluated for impairment	$	—		$	—		$	—	$	—		$	—	$	343		$	—		$	343
Ending balance: collectively evaluated for impairment		4,148			1,784			5,004		2,697			7,710		770			46			22,159
Total	$	4,148		$	1,784		$	5,004	$	2,697		$	7,710	$	1,113		$	46		$	22,502
Loans:
Ending balance: individually evaluated for impairment	$	436		$	1,858		$	10,271	$	—		$	10,058	$	343		$	—		$	22,966
Ending balance: collectively evaluated for impairment		329,617			140,505			659,888		389,898			723,602		40,506			1,038			2,285,054
Total	$	330,053		$	142,363		$	670,159	$	389,898		$	733,660	$	40,849		$	1,038		$	2,308,020

Loans are considered impaired when current information and events indicate all amounts due may not be collectable according to the contractual terms of the related loan agreements. Impaired loans are identified by applying normal loan review procedures in accordance with the allowance for credit losses methodology. Management periodically assesses loans to determine whether impairment exists. Any loan that is, or will potentially be, no longer performing in accordance with the terms of the original loan contract is evaluated to determine impairment.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following information relates to impaired loans as of and for the six months ended June 30, 2025 and 2024 and as of and for the year ended December 31, 2024:


	Unpaid Contractual		Recorded Investment		Recorded Investment		Total				Average		Interest Income
	Principal		With No		With		Recorded		Related		Recorded		Recognized
As of and For the Six Months Ended June 30, 2025	Balance		Allowance		Allowance		Investment		Allowance		Investment		on a Cash Basis
	(in thousands)
Mortgage loans:
1-4 Family residential	$	2,270	$	2,283	$	—	$	2,283	$	—	$	2,494	$	26
Multifamily residential		11,393		11,703		—		11,703		—		10,587		147
Nonresidential properties		395		405		—		405		—		203		2
Construction and land		4,807		4,807		—		4,807		—		8,308		—
Nonmortgage loans:
Business		276		—		276		276		276		263		3
Consumer		—		—		—		—		—		—		—
Total	$	19,141	$	19,198	$	276	$	19,474	$	276	$	21,855	$	178

	Unpaid Contractual		Recorded Investment		Recorded Investment		Total				Average		Interest Income
	Principal		With No		With		Recorded		Related		Recorded		Recognized
As of and For the Six Months Ended June 30, 2024	Balance		Allowance		Allowance		Investment		Allowance		Investment		on a Cash Basis
	(in thousands)
Mortgage loans:
1-4 Family residential	$	2,286	$	1,858	$	448	$	2,306	$	81	$	2,501	$	15
Multifamily residential		5,703		5,754		—		5,754		—		4,277		60
Nonresidential properties		824		828		—		828		—		423		7
Construction and land		4,807		4,807		—		4,807		—		5,881		1,059
Nonmortgage loans:
Business		396		—		396		396		396		277		5
Consumer		—		—		—		—		—		—		—
Total	$	14,016	$	13,247	$	844	$	14,091	$	477	$	13,359	$	1,146


	Unpaid Contractual		Recorded Investment		Recorded Investment		Total				Average		Interest Income
	Principal		With No		With		Recorded		Related		Recorded		Recognized
As of and for the Year Ended December 31, 2024	Balance		Allowance		Allowance		Investment		Allowance		Investment		on a Cash Basis
	(in thousands)
Mortgage loans:
1-4 Family residential	$	2,280	$	2,294	$	—	$	2,294	$	—	$	2,420	$	22
Multifamily residential		10,032		10,271		—		10,271		—		5,557		223
Nonresidential properties		—		—		—		—		—		317		—
Construction and land		10,058		10,058		—		10,058		—		6,501		1,335
Nonmortgage loans:
Business		343		—		343		343		343		246		3
Consumer		—		—		—		—		—		—		—
Total	$	22,713	$	22,623	$	343	$	22,966	$	343	$	15,041	$	1,583

Loan Modifications to Borrowers Experiencing Financial Difficulty

The Company adopted Accounting Standards Update (“ASU”) 2022-02 on January 1, 2023. Since adoption, the Company modified one loan with borrowers experiencing financial difficulty. These modifications may include a reduction in interest rate, an extension in term, principal forgiveness and/or other than insignificant payment delay. At June 30, 2025 and December 31, 2024, there was one loan in the amount of $0.2 million with modifications to a borrower experiencing financial difficulty.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Prior to the adoption of ASU 2022-02 on January 1, 2023, the Company classified certain loans as troubled debt restructuring (“TDR”) loans when credit terms to a borrower in financial difficulty were modified, in accordance with ASC 310-40. With the adoption of ASU 2022-02 as of January 1, 2023, the Company has ceased to recognize or measure for new TDRs but those existing at December 31, 2022 will remain until settled.

At June 30, 2025 and December 31, 2024, there were 18 troubled debt restructured loans totaling $5.2 million of which $4.5 million are on accrual status for both periods. There were no commitments to lend additional funds to borrowers whose loans have been modified in a troubled debt restructuring.

Off-Balance Sheet Credit Losses

Also included within the scope of the CECL standard are off-balance sheet loan commitments, which includes the unfunded portion of committed lines of credit and construction loans.

The Company estimates expected credit losses over the contractual period in which the company is exposed to credit risk through a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet exposures is adjusted as a provision for credit loss expense. The Company uses similar assumptions and risk factors that are developed for collectively evaluated financing receivables. This estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments to be funded over its estimated life.

At June 30, 2025 and December 31, 2024, the allowance for off-balance sheet credit losses was $2.1 million and $2.8 million, respectively, which is included in the "Other liabilities" on the Consolidated Statements of Financial Condition. During the six months ended June 30, 2025 and 2024, the Company had $0.7 million in benefit for credit losses and $0.3 million in provision for credit losses, respectively.

The following table presents the activity in the allowance for off-balance-sheet credit losses:


	For the Six
	Months Ended			For the Year Ended
	June 30, 2025			December 31, 2024
	(in thousands)
Allowance for credit losses on unfunded commitment at beginning of period	$	2,830		$	3,613
Benefit for credit losses		(720	)		(783	)
Allowance for credit losses on unfunded commitment at end of period	$	2,110		$	2,830

Note 6. Leases

The Company has 17 operating leases for branches and office spaces (including headquarters) and six operating leases for equipment. Our leases have remaining lease terms ranging from less than one year to approximately 14.6 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

Certain leases have escalation clauses for operating expenses and real estate taxes. The Company’s non-cancelable operating lease agreements expire through February of 2040.

Supplemental balance sheet information related to leases was as follows:


	June 30,			December 31,
	2025			2024
	(Dollars in thousands)
Operating lease ROU assets	$	28,806		$	29,093
Operating lease liabilities		30,501			30,696
Weighted-average remaining lease term-operating leases	11.8 years			12.0 years
Weighted average discount rate-operating leases		5.1	%		5.1	%

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The components of lease expense and cash flow information related to leases were as follows:


		For the Three				For the Six
		Months Ended				Months Ended
		June 30,				June 30,
		2025		2024		2025		2024
		(Dollars in thousands)
Lease Cost
Operating lease cost	Occupancy and equipment	$	1,047	$	1,021	$	2,172	$	2,047
Operating lease cost	Other operating expenses		4		19		4		22
Short-term lease cost	Other operating expenses		7		5		16		10
Variable lease cost	Occupancy and equipment		41		36		88		76
Total lease cost		$	1,099	$	1,081	$	2,280	$	2,155

The Company’s minimum annual rental payments under the terms of the leases are as follows at June 30, 2025:


	Minimum Rental
Years ended December 31:	(in thousands)
Remainder of 2025	$	1,940
2026		3,773
2027		3,607
2028		3,629
2029		3,176
Thereafter		24,393
Total Minimum payments required		40,518
Less: implied interest		10,017
Present value of lease liabilities	$	30,501

Note 7. Deposits

Deposits at June 30, 2025 and December 31, 2024 are summarized as follows:


	June 30,		December 31,
	2025		2024
	(in thousands)
Demand	$	197,671	$	169,178
Interest-bearing deposits:
NOW/IOLA accounts		63,626		62,616
Money market accounts		790,939		636,219
Reciprocal deposits		136,693		130,677
Savings accounts		102,759		105,870
Total NOW, money market, reciprocal and savings		1,094,017		935,382
Certificates of deposit of $250K or more		220,671		204,293
Brokered certificates of deposits (1)		69,531		94,531
Listing service deposits (1)		6,140		7,376
Certificates of deposit less than $250K		454,179		474,104
Total certificates of deposit		750,521		780,304
Total interest-bearing deposits		1,844,538		1,715,686
Total deposits	$	2,042,209	$	1,884,864

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

(1)

At June 30, 2025 and December 31, 2024, there were no individual listing service deposits amounting to $250,000 or more. There was one brokered certificates of deposit in the amount of $1.5 million amounting to $250,000 or more. All other brokered certificates of deposit individually amounted to less than $250,000.

At June 30, 2025 scheduled maturities of certificates of deposit were as follows:


	(in thousands)
2025	$	494,177
2026		184,345
2027		59,130
2028		8,103
2029		2,494
Thereafter		2,272
	$	750,521

Overdrawn deposit accounts that have been reclassified to loans amounted to $0.1 million as of both June 30, 2025 and December 31, 2024.

Note 8. Borrowings

The Bank had outstanding term advances from the FHLBNY at June 30, 2025 and December 31, 2024 as indicated below.

FHLBNY Advances: As a member of the FHLBNY, the Bank has the ability to borrow from the FHLBNY based on a certain percentage of the value of the Bank's qualified collateral, as defined in the FHLBNY Statement of Credit Policy, at the time of the borrowing. In accordance with an agreement with the FHLBNY, the qualified collateral must be free and clear of liens, pledges and encumbrances.

The Bank had $521.1 million and $571.1 million of outstanding term advances from the FHLBNY at June 30, 2025 and December 31, 2024, respectively. The Bank had a $15.0 million overnight line of credit advance from the FHLBNY at June 30, 2025 and a $25.0 million overnight line of credit advance from the FHLBNY at December 31, 2024.

FRBNY Advances: The Bank had no term and overnight line of credit advances outstanding from the FRBNY at June 30, 2025 and December 31, 2024.

Borrowed funds at June 30, 2025 and December 31, 2024 consist of the following and are summarized by maturity and call date below:


	June 30, 2025							December 31, 2024
	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	$	15,000	$	15,000		4.55	%	$	25,000	$	25,000		4.69	%

FHLBNY Term advances ending:
2025	$	50,000	$	50,000		4.41	%	$	100,000	$	100,000		4.48	%
2026		200,000		200,000		4.25			200,000		200,000		4.25
2027		212,000		212,000		3.44			212,000		212,000		3.44
2028		9,100		9,100		3.84			9,100		9,100		3.84
2029		50,000		50,000		3.35			50,000		50,000		3.35
	$	536,100	$	536,100		3.86	%	$	596,100	$	596,100		3.94	%

Interest expense on advances totaled $5.0 million and $7.1 million for the three months ended June 30, 2025 and 2024, and $10.5 million and $15.1 million for the six months ended June 30, 2025 and 2024, respectively.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 9. Earnings Per Common Share

The following table presents a reconciliation of the number of common shares used in the calculation of basic and diluted earnings per common share:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
	(Dollars in thousands except share data)

Net income available to common stockholders	$	5,818	$	3,117	$	11,496	$	5,531
Common shares outstanding for basic EPS:
Weighted average common shares outstanding		23,984,800		23,811,732		23,974,722		23,800,294
Less: Weighted average unallocated Employee Stock Ownership Plan (ESOP) shares		1,268,185		1,401,929		1,284,808		1,418,647
Basic weighted average common shares outstanding		22,716,615		22,409,803		22,689,914		22,381,647
Basic earnings per common share	$	0.26	$	0.14	$	0.51	$	0.25
Potential dilutive common shares:
Add: Dilutive effect of restricted stock awards and stock options		231,154		9,506		230,927		11,371
Diluted weighted average common shares outstanding		22,947,769		22,419,309		22,920,841		22,393,018
Diluted earnings per common share	$	0.25	$	0.14	$	0.50	$	0.25

Note 10. Commitments, Contingencies and Credit Risk

Financial Instruments With Off-Balance-Sheet Risk: In the normal course of business, financial instruments with off-balance-sheet risk may be used to meet the financing needs of customers. These financial instruments include commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized on the Consolidated Statements of Financial Condition. The contractual amounts of these instruments reflect the extent of involvement in particular classes of financial instruments.

The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless. The same credit policies are used in making commitments and contractual obligations as for on-balance-sheet instruments. Financial instruments whose contractual amounts represent credit risk at June 30, 2025 and December 31, 2024 are as follows:


	June 30,		December 31,
	2025		2024
	(in thousands)
Commitments to grant mortgage loans	$	231,946	$	359,170
Unfunded commitments under lines of credit		127,824		52,329
Total commitments	$	359,770	$	411,499

Commitments to Grant Mortgage Loans: Commitments to grant mortgage loans are agreements to lend to a customer as long as all terms and conditions are met as established in the contract. Commitments generally have fixed expiration dates or other termination clauses, and may require payment of a fee by the borrower. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Each customer's creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property and equipment, residential real estate and income-producing commercial properties. Material losses are not anticipated as a result of these transactions.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Commitments to Sell Loans at Lock-in Rates: In order to assure itself of a marketplace to sell its loans, the Bank has agreements with investors who will commit to purchase loans at locked-in rates. The Bank has off-balance sheet market risk to the extent that the Bank does not obtain matching commitments from these investors to purchase the loans. This will expose the Bank to the lower of cost or market valuation environment.

Repurchases, Indemnifications and Premium Recaptures: Loans sold by the Bank under investor programs are subject to repurchase or indemnification if they fail to meet the origination criteria of those programs. In addition, loans sold to investors are also subject to repurchase or indemnifications if the loan is two or three months delinquent during a set period which usually varies from six months to a year after the loan is sold. There are no open repurchase or indemnification requests for loans sold as a correspondent lender or where the Company acted as a broker in the transaction as of June 30, 2025.

Unfunded Commitments Under Lines of Credit: Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extension of credit to existing customers. These lines of credit are uncollateralized and usually contain a specified maturity date and, ultimately, may not be drawn upon to the total extent to which the Company is committed.

Unfunded Commitments with Oaktree: In December of 2021, the Bank committed to invest $5.0 million in Oaktree SBIC Fund, L.P. ("Oaktree"). As of June 30, 2025, the total unfunded commitment was $1.7 million.

Unfunded Commitments with Silvergate: In April of 2022, the Company committed to invest $5.2 million in EJF Silvergate Ventures Fund LP ("Silvergate"). As of June 30, 2025, the total unfunded commitment was $1.4 million.

Letters of Credit: Letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Letters of credit are largely cash secured.

Concentration by Geographic Location: Loans, commitments to extend credit and letters of credit have been granted to customers who are located primarily in the New York City metropolitan area. Generally, such loans most often are secured by residential properties. The loans are expected to be repaid from the borrowers' payment sources.

Legal Matters: The Company is involved in various legal proceedings which have arisen in the normal course of business. Management believes that resolution of these matters will not have a material effect on the Company’s financial condition or results of operations.

Note 11. Fair Value

The following fair value hierarchy is used based on the lowest level of input significant to the fair value measurement. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

Cash and Cash Equivalents, Placement with Banks, Accrued Interest Receivable, Advance Payments by Borrowers for Taxes and Insurance, and Accrued Interest Payable: The carrying amount is a reasonable estimate of fair value. These assets and liabilities are not recorded at fair value on a recurring basis.

Available-for-Sale Securities: These financial instruments are recorded at fair value in the consolidated financial statements on a recurring basis. Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted prices are not available, then fair values are estimated by using pricing models (e.g., matrix pricing) or quoted prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. Examples of such instruments include government agency bonds and mortgage-backed securities. Level 3 securities are securities for which significant unobservable inputs are utilized. There were no changes in valuation techniques used to measure similar assets during the period.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

FHLBNY Stock: The carrying value of FHLBNY stock approximates fair value since the Bank can redeem such stock with FHLBNY at cost. As a member of the FHLBNY, the Company is required to purchase this stock, which is carried at cost and classified as restricted equity securities.

Loans Receivable: For variable rate loans, which reprice frequently and have no significant change in credit risk, carrying values are a reasonable estimate of fair values, adjusted for credit losses inherent in the portfolios. The fair value of fixed rate loans is estimated by discounting the future cash flows using estimated market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, adjusted for credit losses inherent in the portfolios. Impaired loans are valued using a present value discounted cash flow method, or the fair value of the collateral. Loans are not recorded at fair value on a recurring basis.

Mortgage Loans Held for Sale: Loans held for sale, at fair value, consists of loans originated for sale by the Bank and accounted for under the fair value option. These assets are valued using stated investor pricing for substantially equivalent loans as Level 2. In determining fair value, such measurements are derived based on observable market data, including whole-loan transaction pricing and similar market transactions adjusted for portfolio composition, servicing value and market conditions. Loans held for sale by the Bank are carried at the lower of cost or fair value as determined by investor bid prices.

Under the fair value option, management has elected, on an instrument-by-instrument basis, fair value for substantially all forms of mortgage loans originated for sale on a recurring basis. As of June 30, 2025, the fair value carrying amount of mortgages held for sale measured under the fair value option was $5.7 million and the aggregate unpaid principal amounted to $5.7 million.

Other Real Estate Owned: Other real estate owned represents real estate acquired through foreclosure, and is recorded at fair value less estimated disposal costs on a nonrecurring basis. Fair value is based upon independent market prices, appraised values of the collateral or management's estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the asset is classified as Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the asset is classified as Level 3.

Deposits: The fair values of demand deposits, savings, NOW and money market accounts equal their carrying amounts, which represent the amounts payable on demand at the reporting date. Fair values for fixed-term, fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates on certificates of deposit to a schedule of aggregated expected monthly maturities on such deposits. Deposits are not recorded at fair value on a recurring basis.

FHLBNY Advances: The fair value of the advances is estimated using a discounted cash flow calculation that applies current market-based FHLBNY interest rates for advances of similar maturity to a schedule of maturities of such advances. These borrowings are not recorded at fair value on a recurring basis.

Off-Balance-Sheet Instruments: Fair values for off-balance-sheet instruments (lending commitments and standby letters of credit) are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. Off-balance-sheet instruments are not recorded at fair value on a recurring basis.

The following tables detail the assets that are carried at fair value and measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, and indicate the level within the fair value hierarchy utilized to determine the fair value:


			June 30, 2025
Description	Total		Level 1		Level 2		Level 3
	(in thousands)
Available-for-Sale Securities, at fair value:
U.S. Government Bonds	$	2,926	$	2,926	$	—	$	—
Corporate bonds		14,595		246		14,349		—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		27,201		—		27,201		—
FHLMC Certificates		7,550		—		7,550		—
FNMA Certificates		44,203		—		44,203		—
GNMA Certificates		87		—		87		—
Mortgage Loans Held for Sale, at fair value		5,703		—		5,703		—
	$	102,265	$	3,172	$	99,093	$	—

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


			December 31, 2024
Description	Total		Level 1		Level 2		Level 3
	(in thousands)
Available-for-Sale Securities, at fair value:
U.S. Government Bonds	$	2,873	$	2,873	$	—	$	—
Corporate bonds		20,404		330		20,074		—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		28,535		—		28,535		—
FHLMC Certificates		7,662		—		7,662		—
FNMA Certificates		45,408		—		45,408		—
GNMA Certificates		88		—		88		—
Mortgage Loans Held for Sale, at fair value		10,736		—		10,736		—
Interest rate swap		2,005		—		2,005		—
	$	117,711	$	3,203	$	114,508	$	—

Management’s assessment and classification of an investment within a level can change over time based upon maturity or liquidity of the investment and would be reflected at the beginning of the quarter in which the change occurred.

The following tables detail the assets carried at fair value and measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024 and indicate the fair value hierarchy utilized to determine the fair value:


	June 30, 2025
	Total		Level 1		Level 2		Level 3
	(in thousands)
Impaired loans	$	19,474	$	—	$	—	$	19,474


	December 31, 2024
	Total		Level 1		Level 2		Level 3
	(in thousands)
Impaired loans	$	22,966	$	—	$	—	$	22,966

Losses on assets carried at fair value on a nonrecurring basis were de minimis for the three and six months ended June 30, 2025 and 2024, respectively.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

As of June 30, 2025 and December 31, 2024, the carrying values and estimated fair values of the Company's financial instruments were as follows:


	Carrying		Fair Value Measurements
	Amount		Level 1		Level 2		Level 3		Total
	(in thousands)
June 30, 2025
Financial assets:
Cash and cash equivalents	$	126,639	$	126,639	$	—	$	—	$	126,639
Available-for-sale securities, at fair value		96,562		3,172		93,390		—		96,562
Held-to-maturity securities, at amortized cost, net		336,879		—		329,279		—		329,279
Placement with banks		249		—		249		—		249
Mortgage loans held for sale, at fair value		5,703		—		5,703		—		5,703
Loans receivable, net		2,458,712		—		—		2,448,877		2,448,877
Accrued interest receivable		19,126		—		19,126		—		19,126
FHLBNY stock		26,620		26,620		—		—		26,620
Financial liabilities:
Deposits:
Demand deposits		197,671		197,671		—		—		197,671
Interest-bearing deposits		1,094,017		1,094,017		—		—		1,094,017
Certificates of deposit		750,521		—		747,604		—		747,604
Advance payments by borrowers for taxes and insurance		10,942		—		10,942		—		10,942
Borrowings		536,100		—		531,758		—		531,758
Accrued interest payable		4,161		—		4,161		—		4,161

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	Carrying		Fair Value Measurements
	Amount		Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2024
Financial assets:
Cash and cash equivalents	$	139,839	$	139,839	$	—	$	—	$	139,839
Available-for-sale securities, at fair value		104,970		3,203		101,767		—		104,970
Held-to-maturity securities, at amortized cost		367,938		—		355,294		—		355,294
Placement with banks		249		—		249		—		249
Mortgage loans held for sale, at fair value		10,736		—		10,736		—		10,736
Loans receivable, net		2,286,599		—		—		2,260,989		2,260,989
Accrued interest receivable		17,771		—		17,771		—		17,771
FHLBNY stock		29,182		29,182		—		—		29,182
Interest rate swap		2,005				2,005				2,005
Financial liabilities:
Deposits:
Demand deposits		169,178		169,178		—		—		169,178
Interest-bearing deposits		935,382		935,382		—		—		935,382
Certificates of deposit		780,304		—		778,603		—		778,603
Advance payments by borrowers for taxes and insurance		10,349		—		10,349		—		10,349
Borrowings		596,100		—		586,562		—		586,562
Interest rate swap		2,005		—		2,005		—		2,005
Accrued interest payable		3,712		—		3,712		—		3,712

The Company recognizes transfers between levels of the valuation hierarchy at the end of the applicable reporting periods. There were no transfers of Level 3 assets in the fair value hierarchy at June 30, 2025 and December 31, 2024. Fair value for Level 3 securities was determined using a third-party pricing service with limited levels of activity and price transparency.

Off-Balance-Sheet Instruments: Loan commitments on which the committed interest rate is less than the current market rate are insignificant at June 30, 2025 and December 31, 2024.

The fair value information about financial instruments are disclosed, whether or not recognized in the consolidated statements of financial condition, for which it is practicable to estimate that value. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The estimated fair value amounts for 2025 and 2024 have been measured as of their respective period-ends and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than amounts reported at each period.

The information presented should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company's assets and liabilities. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other banks may not be meaningful.

Note 12. Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal Reserve Board, the OCC and the U.S. Department of Housing and Urban Development. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s operations and financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation require the maintenance of minimum amounts and ratios (set forth in the table below) of total risk-based and Tier 1 capital to risk-weighted assets (as defined), common equity Tier 1 capital (as defined), and Tier 1 capital to adjusted total assets (as defined) adjusted total assets (as defined). As of June 30, 2025 and December 31, 2024, the applicable capital adequacy requirements specified below have been met.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The below minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions including dividend payments and certain discretionary bonus payments to executive officers. The applicable capital buffer for the Bank was 13.2% at June 30, 2025 and 13.5% at December 31, 2024.

The most recent notification from the OCC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain minimum total risk-based, common equity risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There were no conditions or events since then that have changed the Bank's category.

The Company's and the Bank’s actual capital amounts and ratios as of June 30, 2025 and December 31, 2024 as compared to regulatory requirements are as follows:


									To Be Well
									Capitalized Under
						For Capital			Prompt Corrective
	Actual					Adequacy Purposes			Action Provisions
	Amount		Ratio			Amount		Ratio	Amount		Ratio
	(Dollars in thousands)
June 30, 2025
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	560,220		22.65	%	$	197,902	8.00%	$	247,377		10.00	%
Tier 1 Capital to Risk-Weighted Assets		534,011		21.59	%		148,426	6.00%		197,902		8.00	%
Common Equity Tier 1 Capital Ratio		309,011		12.49	%		111,320	4.50%		160,795		6.50	%
Tier 1 Capital to Total Assets		534,011		17.13	%		124,713	4.00%		155,892		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	522,728		21.22	%	$	197,088	8.00%	$	246,359		10.00	%
Tier 1 Capital to Risk-Weighted Assets		496,519		20.15	%		147,816	6.00%		197,088		8.00	%
Common Equity Tier 1 Capital Ratio		496,519		20.15	%		110,862	4.50%		160,134		6.50	%
Tier 1 Capital to Total Assets		496,519		15.99	%		124,240	4.00%		155,300		5.00	%


											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2024
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	546,128		22.98	%	$	190,147		8.00	%	$	237,684		10.00	%
Tier 1 Capital to Risk-Weighted Assets		520,796		21.91	%		142,611		6.00	%		190,147		8.00	%
Common Equity Tier 1 Capital Ratio		295,796		12.44	%		106,958		4.50	%		154,495		6.50	%
Tier 1 Capital to Total Assets		520,796		17.70	%		117,715		4.00	%		147,144		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	507,632		21.47	%	$	189,137		8.00	%	$	236,421		10.00	%
Tier 1 Capital to Risk-Weighted Assets		482,300		20.40	%		141,853		6.00	%		189,137		8.00	%
Common Equity Tier 1 Capital Ratio		482,300		20.40	%		106,390		4.50	%		153,674		6.50	%
Tier 1 Capital to Total Assets		482,300		15.81	%		122,011		4.00	%		152,514		5.00	%

As of June 30, 2025 and December 31, 2024, the Bank was in compliance with the applicable minimum capital requirements specified above.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 13. Accumulated Other Comprehensive Loss

The accumulated other comprehensive loss is as follows:


	June 30, 2025
	December 31, 2024			Change		June 30, 2025
	(in thousands)
Unrealized losses on available-for-sale securities, net	$	(15,297	)	$	2,250	$	(13,047	)
Total	$	(15,297	)	$	2,250	$	(13,047	)


	December 31, 2024
	December 31, 2023			Change		December 31, 2024
	(in thousands)
Unrealized losses on available-for-sale securities, net	$	(15,649	)	$	352	$	(15,297	)
Total	$	(15,649	)	$	352	$	(15,297	)

Note 14. Transactions with Related Parties

Directors, executive officers and non-executive officers of the Company have been customers of and have had transactions with the Bank, and it is expected that such persons will continue to have such transactions in the future. Aggregate loan transactions with related parties for the three and six months ended June 30, 2025 and 2024 were as follows:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2025			2024			2025			2024
	(in thousand)
Beginning balance	$	7,765		$	9,942		$	7,671		$	8,810
Originations		540			410			725			1,592
Payments		(49	)		(1,049	)		(140	)		(1,099	)
Ending balance	$	8,256		$	9,303		$	8,256		$	9,303

The Company held deposits in the amount of $7.9 million and $8.8 million from directors, executive officers and non-executive officers at June 30, 2025 and December 31, 2024, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General

Management’s discussion and analysis of the financial condition at June 30, 2025 and December 31, 2024, and results of operations for the three and six months ended June 30, 2025 and 2024, is intended to assist in understanding the financial condition and results of operations of Ponce Financial Group, Inc. (the “Company”). The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1, of this quarterly report on Form 10-Q.

This quarterly report contains forward-looking statements, which can be identified by the use of words such as "estimate," "project," "intend," "anticipate," "assume," "plan," "seek," "expect," "will," "may," "should," "indicate," "would," "believe," "contemplate," "continue," "target" and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of the Company’s goals, intentions and expectations;

•

statements regarding its business plans, prospects, growth and operating strategies;

•

statements regarding the quality of its loan and investment portfolios; and

•

estimates of the risks and future costs and benefits;

These forward-looking statements are based on current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•

the scope, duration and severity of rising interest rates, and its effects on our business and operations, our customers, including their ability to make timely payments on loans, our service providers, and on the economy and financial markets in general;

•

changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, and their related impacts on the economy;

•

changes in consumer spending, borrowing and savings habits;

•

general economic conditions, either nationally or in the market areas, that are worse than expected;

•

the Company’s ability to manage market risk, credit risk and operational risk in the current economic environment;

•

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

•

the ability to access cost-effective funding;

•

fluctuations in real estate values and real estate market conditions;

•

demand for loans and deposits in the market area;

•

the Company’s ability to implement and change its business strategies;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce the Company’s margins and yields, its mortgage banking revenues, the fair value of financial instruments or the level of loan originations, or increase the level of defaults, losses and prepayments on loans the Company have made and make;

•

adverse changes in the securities or secondary mortgage markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

•

adverse changes related to the businesses of our partners;

•

changes in the quality or composition of the Company’s loan or investment portfolios;

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•

technological changes that may be more difficult or expensive than expected;

•

the inability of third party providers to perform as expected;

•

the Company’s ability to enter new markets successfully and capitalize on growth opportunities;

•

the Company’s ability to successfully integrate into its operations, any assets, liabilities, customers, systems and management personnel the Company may acquire and management’s ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

•

the Company’s ability to retain key employees;

•

the Company’s compensation expense associated with equity allocated or awarded to its employees; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that the Company may own.

Additional factors that may affect the Company’s results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors” filed with the Securities and Exchange Commission (“SEC”) on March 13, 2025.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. The Company is under no duty to and does not assume any obligation to update any forward-looking statements after the date they were made, whether as a result of new information, future events or otherwise.

Federal Economic Relief Funds To Aid Lending

Emergency Capital Investment Program

As a participant in the ECIP, the Company must comply with certain operating requirements. Specifically, the Company must adopt the Treasury's standards for executive compensation and luxury expenses for the period during which the Treasury holds equity issued under the ECIP. These restrictions may make it difficult to adequately compensate our management team, which could impact our ability to retain qualified management. Additionally, under the ECIP regulations, the Company cannot pay dividends or repurchase its common stock unless it meets certain income-based tests and has paid the required dividends on the Preferred Stock. In June 2024, the ‎Company began paying dividends on its Preferred Stock, which dividends were $0.6 million for the six months ended June 30, 2025 and $0.6 million for the year ended December 31, 2024.

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variations in interest rates and the equity risk premium, which are components included in the purchase price calculation, the Company presently expects that the purchase price will be at a substantial discount from the face value of the Preferred Stock.

The Company believes that consummation of the repurchase of the Preferred Stock as contemplated by the Repurchase Agreement would be beneficial to its stockholders. As such, the Company expects it continue to emphasize its qualified Deep Impact Lending.

CDFI Financial Assistance Award

On February 6, 2025, the Bank received a $1.3 million grant from the U.S. Treasury as part of the CDFI Financial Assistance Award Program. This award is given to CDFI’s to support their operations and expand services in economically distressed communities.

Banking Development District

The Ponce Bank Westchester Avenue Branch located at 2244 Westchester Avenue in the Castle Hill area of the Bronx was approved as a Banking Development District ("BDD"). New York State’s BDD Program, administered by the Department of Financial Services ("DFS"), supports the establishment of bank and credit union branches in areas across New York State where there is a demonstrated need for banking services. To encourage participation, approved BDD branches receive access to subsidized and market rate deposits from New York State. On July 30, 2024, Ponce Bank received total program deposits of $35.0 million.

Westchester Avenue Branch Re-Design

On February 27, 2025, Ponce Bank officers and administrators and members of the public celebrated the Bank’s transformed Westchester Avenue Branch at its grand reopening. The transformed Branch is the result of the State-of-the-art Banking Technologies combined with Community Centric Banking that is customer friendly and supportive.

The transformation relaunched a process aimed at reinforcing the role of each banking branch as a "community hub"’ that attracts new depositors and business customers, but anchors Ponce Bank branches as community-centric destinations. The revitalization efforts include Open Tellers that invite a more consultative experience, managers located at a central hub of the branch, private space for sensitive conversations, and meeting spaces as well as open areas with teleconferencing and AV equipment to encourage community-wide gatherings.

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Coral Gables, Florida Office

On June 1, 2024, Ponce Bank opened its first-ever representative office in the state of Florida located at 1600 Ponce de Leon Drive in the Miami suburb of Coral Gables. This new office is home to a Commercial Relationship Officer who will split time between the new location and his former Bergen County, New Jersey territory. Many of our customers have businesses in Florida or spend their winter months here, and the large Hispanic community fits one of our primary demographics.

Ponce Bank Plan of Conversion

On May 13, 2025, the Company announced that its wholly-owned subsidiary, Ponce Bank, which is currently a federally chartered stock savings association, has adopted a plan of conversion to convert to a national bank. In connection with the conversion of Ponce Bank, the Company has filed an application with the Federal Reserve Board to become a bank holding company, which application is currently awaiting regulatory approval.

Ponce Bank is seeking to become a national bank in order to increase bank powers, including its eligibility to receive municipal deposits in New York. However, the Company and Ponce Bank do not expect any material changes in their core business as a result of the Company becoming a bank holding company and Ponce Bank becoming a national bank.

Critical Accounting Policies

Accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management and that could have a material impact on the carrying value of certain assets, liabilities or on income under different assumptions or conditions. Management believes that the most critical accounting policy relates to the allowance for credit losses.

The allowance for credit losses is established as probable incurred losses are estimated to have occurred through a provision for credit losses charged to earnings. Credit losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. If our loss rate factor was to increase 10 basis points, our reserve would increase by approximately $2.5 million. Likewise, if our loss rate factor was to decrease 10 basis points, our reserve would decrease by approximately $2.5 million.

The discussion and analysis of the financial condition and results of operations are based on the Company’s consolidated financial statements, which are prepared in conformity with GAAP. The preparation of these consolidated financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. The estimates and assumptions used are based on historical experience and various other factors and are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations.

Company's Growth

The Company has deployed a mobile application that digitizes the lending workflow from pre-approval to servicing and enables the Company to originate, close and fund small business loans within very short spans of time, without requiring a physical presence within banking offices and with automated underwriting using both traditional and non-traditional methods. The application was developed by Lending Front, a fintech in which the Company has acquired a financial interest. All Commercial Relationship Officers and Banking Branch Managers utilize these capabilities. The Company is seeking to establish loan origination partnerships with non-profit and community-based organizations to ensure penetration in underserved and underbanked markets.

The Company continues its relationship with Raisin Solutions US LLC ("Raisin"), a fintech that focuses on gathering deposits for financial institutions through the Internet. As of June 30, 2025 and December 31, 2024, the Company had $650.4 million and $574.1 million, respectively, in such deposits, which the Company classifies as core deposits.

Because the Company, through Ponce Bank, is an MDI and a CDFI, deposits made by other financial institutions may be treated as CRA credits by those depository institutions.

At December 31, 2018, the first year after our initial public offering, the Company had approximately $1.06 billion in assets, $918.5 million in loans, net of allowance for credit losses of $12.7 million, and $809.8 million in deposits. The Company has since grown to $3.15 billion in assets, $2.46 billion in loans receivables, net of allowance for credit losses of $24.1 million, and $2.04 billion in deposits at June 30, 2025, all while investing in infrastructure, implementing digital banking and diversifying its product offering. Now, the Company believes that it is poised to enhance its presence, locally and in similar communities outside New York, as a leading CDFI and MDI financial institution holding company.

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Comparison of Financial Condition at June 30, 2025 and December 31, 2024

Total Assets. Total consolidated assets increased $113.9 million, or 3.7%, to $3.15 billion at June 30, 2025 from $3.04 billion at December 31, 2024. The increase in total assets is largely attributable to increases of $172.1 million in net loans receivable, $1.7 million in other assets and $1.4 million in accrued interest receivable, partially offset by decreases of $31.1 million in held-to-maturity securities, $13.2 million in cash and cash equivalents, $8.4 million in available-for-sale securities, $5.0 million in mortgage loans held for sale and $2.6 million in FHLBNY stock.

Cash and Cash Equivalents. Cash and cash equivalents decreased $13.2 million, or 9.4%, to $126.6 million at June 30, 2025, compared to $139.8 million at December 31, 2024. The decrease in cash and cash equivalents was primarily the result of an increase of $179.5 million in net loans and a $60.0 million net repayment of borrowings. The decrease in cash and cash equivalents was offset primarily by an increase of $157.3 million in net deposits, $42.4 million in proceeds from maturities, calls and principal repayment on securities, $5.7 million from sale of loans and $2.6 million in net redemption of FHLBNY stock.

Securities. The Company securities portfolio decreased $8.4 million in available-for-sale and $31.1 million in held-to-maturity during the six months ended June 30, 2025. The decrease in the securities portfolio was primarily due to the call of two available-for-sale securities in the total amount of $6.0 million, the maturity of one held-to-maturity security in the amount of $10.0 million and changes in principal amount of the securities.

Gross Loans Receivable. The composition of gross loans receivable at June 30, 2025 and at December 31, 2024 and the percentage of each classification to total loans are summarized as follows:


	June 30, 2025					December 31, 2024					Increase (Decrease)
	Amount		Percent			Amount		Percent			Dollars			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	317,488		12.9	%	$	330,053		14.3	%	$	(12,565	)		(3.8	%)
Owner-Occupied		134,862		5.4	%		142,363		6.2	%		(7,501	)		(5.3	%)
Multifamily residential		693,670		27.9	%		670,159		29.0	%		23,511			3.5	%
Nonresidential properties		404,512		16.3	%		389,898		16.9	%		14,614			3.7	%
Construction and land		883,462		35.6	%		733,660		31.8	%		149,802			20.4	%
Total mortgage loans		2,433,994		98.1	%		2,266,133		98.2	%		167,861			7.4	%
Nonmortgage loans:
Business loans		47,372		1.9	%		40,849		1.8	%		6,523			16.0	%
Consumer loans		840		0.0	%		1,038		0.0	%		(198	)		(19.1	%)
		48,212		1.9	%		41,887		1.8	%		6,325			15.1	%
Total	$	2,482,206		100.0	%	$	2,308,020		100.0	%	$	174,186			7.5	%

Based on current internal loan reviews, the Company believes that the quality of our underwriting, our weighted average loan-to-value ratio of 49.0% and our customer selection processes have served us well and provided us with a reliable base with which to maintain a well-protected loan portfolio.

Multifamily residential loans increased $23.5 million, or 3.5%, when compared to December 31, 2024. The majority of the increases in multifamily residential loans that were refinanced from construction and land loans to a new permanent loan facility.

Construction and land loans increased $149.8 million, or 20.4%, when compared to December 31, 2024. The $149.8 million growth in construction and land mortgage loans is related to funding of existing commitments prior to 2025 and new commitments, offset by loans that were refinanced from construction and land loans to new permanent loan facilities.

Our commitments to grant new mortgage loans decreased by $127.2 million as of June 30, 2025 compared to December 31, 2024. See Note 10 ("Commitments, Contingencies and Credit Risk") of Notes to the Consolidated Financial Statements.

The Company had 76 construction and land mortgage loans with balances of $883.5 million as indicated in the table above. Of those loans, 38 loans with aggregate balances of $622.5 million, or 70.5%, of the total, have a percentage of completion of 80% or more. Within those 38 loans there are 22 loans with balances of $340.4 million that are 100% completed and the properties have received their certificates of occupancy.

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Commercial real estate loans, as defined by applicable banking regulations, include multifamily residential, nonresidential properties, and construction and land mortgage loans. At June 30, 2025 and December 31, 2024, approximately 3.6% and 3.5%, respectively, of the outstanding principal balance of the Bank’s commercial real estate mortgage loans were secured by owner-occupied commercial real estate. Owner-occupied commercial real estate is similar in many ways to commercial and industrial lending in that these loans are generally made to businesses predominantly on the basis of the cash flows of the business rather than on valuation of the real estate.

Banking regulations have established guidelines relating to the amount of construction and land mortgage loans and investor- owned commercial real estate mortgage loans of 100% and 300% of total risk-based capital, respectively. Should a bank’s ratios be in excess of these guidelines, banking regulations generally require an increased level of monitoring in these lending areas by bank management. The Bank’s policy is to operate within the 200% guideline for construction and land mortgage loans and up to 450% for investor-owned commercial real estate mortgage loans. Both ratios are calculated by dividing certain types of loan balances for each of the two categories by the Bank’s total risk-based capital. At June 30, 2025 and December 31, 2024, the Bank’s construction and land mortgage loans as a percentage of total risk-based capital was 169.4% and 145.0%, respectively. Investor-owned commercial real estate mortgage loans as a percentage of total risk-based capital was 366.0% and 341.7% as of June 30, 2025 and December 31, 2024, respectively. At June 30, 2025, the Bank was above the 100% guidelines established by the banking regulations and under the 200% guidelines set by the Bank for construction and land mortgage loans and above the 300% guideline established by banking regulators but under the 450% guidelines set by the Bank for investor owned commercial real estate mortgage loans. Management believes that it has established the appropriate level of controls to monitor the Bank’s lending in these areas.

Loans Held For Sale. Loans held for sale, at fair value, at June 30, 2025 decreased $5.0 million, or 46.9%, to $5.7 million from $10.7 million at December 31, 2024.

Deposits. The composition of deposits at June 30, 2025 and December 31, 2024 and changes in dollars and percentages are summarized as follows:


	June 30, 2025					December 31, 2024					Increase (Decrease)
			Percent					Percent
	Amount		of Total			Amount		of Total			Dollars			Percent
	(Dollars in thousands)
Demand	$	197,671		9.8	%	$	169,178		9.0	%	$	28,493			16.8	%
Interest-bearing deposits:
NOW/IOLA accounts		63,626		3.1	%		62,616		3.3	%		1,010			1.6	%
Money market accounts		790,939		38.7	%		636,219		33.8	%		154,720			24.3	%
Reciprocal deposits		136,693		6.7	%		130,677		6.9	%		6,016			4.6	%
Savings accounts		102,759		5.0	%		105,870		5.6	%		(3,111	)		(2.9	%)
Total NOW, money market, reciprocal and savings		1,094,017		53.5	%		935,382		49.6	%		158,635			17.0	%
Certificates of deposit of $250K or more		220,671		10.8	%		204,293		10.8	%		16,378			8.0	%
Brokered certificates of deposit (1)		69,531		3.4	%		94,531		5.0	%		(25,000	)		(26.4	%)
Listing service deposits (1)		6,140		0.3	%		7,376		0.4	%		(1,236	)		(16.8	%)
Certificates of deposit less than $250K		454,179		22.2	%		474,104		25.2	%		(19,925	)		(4.2	%)
Total certificates of deposit		750,521		36.8	%		780,304		41.4	%		(29,783	)		(3.8	%)
Total interest-bearing deposits		1,844,538		90.2	%		1,715,686		91.0	%		128,852			7.5	%
Total deposits	$	2,042,209		100.0	%	$	1,884,864		100.0	%	$	157,345			8.3	%

(1)

When wholesale funding is necessary to complement the Company's core deposit base, management determines which source is best suited to address both liquidity risk and interest rate risk in line with management objectives. The Company’s Interest Rate Risk Policy imposes limitations on overall wholesale funding and noncore funding reliance. The overall reliance on wholesale funding and noncore funding were within those policy limitations as of June 30, 2025 and December 31, 2024. The Management Asset/Liability Committee generally meets on a monthly basis to review funding needs, if any, and to ensure the Company operates within the approved limitations.

Borrowings. The Bank had outstanding borrowings at June 30, 2025 and December 31, 2024 of $521.1 million and $571.1 million in term advances from the FHLBNY. The Bank had one overnight line of credit advance in the amount of $15.0 million from the FHLBNY at June 30, 2025 and had one overnight line of credit advance in the amount of $25.0 million from the FHLBNY at December 31, 2024. Additionally, the Bank had two unsecured lines of credit in the amount of $75.0 million with two correspondent banks for

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both periods at June 30, 2025 and December 31, 2024. The Bank did not have any term and overnight line of credit advances from the FRBNY at June 30, 2025 and December 31, 2024.

Stockholders’ Equity. The Company’s consolidated stockholders’ equity increased $15.6 million, or 3.1%, to $521.1 million as of June 30, 2025 from $505.5 million as of December 31, 2024. The $15.6 million increase in stockholders’ equity was largely attributable to $12.1 million in net income, $2.3 million in other comprehensive income, $1.0 million impact to additional paid in capital as a result of share-based compensation and $0.9 million from release of ESOP shares, offset by $0.6 million in dividends on preferred shares.

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Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024

The discussion of the Company’s results of operations for the three months ended June 30, 2025 and 2024 are presented below. The results of operations for interim periods may not be indicative of future results.

Overview. Net income available to common stockholders was $5.8 million for the three months ended June 30, 2025 compared to net income available to common stockholders of $3.1 million for the three months ended June 30, 2024. Earnings per basic share was $0.26 and diluted share was $0.25 for the three months ended June 30, 2025 compared to earnings per basic and diluted share of $0.14 for the three months ended June 30, 2024. The $2.7 million increase of net income available to common stockholders from the three months ended June 30, 2024, was due to an increase of $6.5 million in net interest income, partially offset by increases of $2.5 million in provision for credit losses, $0.7 million in provision for income taxes, $0.2 million in dividends on preferred shares and $0.2 million in non-interest expense and a decrease of $0.2 million in non-interest income. Net income for the three months ended June 30, 2025 and 2024, which excludes $0.3 million and $0.1 million, respectively, in dividends on preferred shares, were $6.1 million and $3.2 million, respectively.

The following table presents the results of operations for the periods indicated:


	For the Three Months Ended June 30,					Increase (Decrease)
	2025		2024			Dollars			Percent
	(Dollars in thousands)
Interest and dividend income	$	45,860	$	38,792		$	7,068			18.2	%
Interest expense		21,434		20,888			546			2.6	%
Net interest income		24,426		17,904			6,522			36.4	%
Provision (benefit) for credit losses		1,626		(867	)		2,493			(287.5	%)
Net interest income after provision (benefit) for credit losses		22,800		18,771			4,029			21.5	%
Non-interest income		2,060		2,258			(198	)		(8.8	%)
Non-interest expense		16,869		16,640			229			1.4	%
Income before income taxes		7,991		4,389			3,602			82.1	%
Provision for income taxes		1,891		1,197			694			58.0	%
Net income	$	6,100	$	3,192		$	2,908			91.1	%
Dividends on preferred shares		282		75			207			276.0	%
Net income available to common stockholders	$	5,818	$	3,117		$	2,701			86.7	%
Earnings per share:
Basic	$	0.26	$	0.14		$	0.12			85.7	%
Diluted	$	0.25	$	0.14		$	0.11			78.6	%

(1) For the three months ended June 30, 2024, benefit for contingencies in the amount of $0.5 million were reclassified from total non-interest expense to benefit for credit losses.

Interest and Dividend Income. Interest and dividend income increased $7.1 million, or 18.2%, to $45.9 million for the three months ended June 30, 2025 from $38.8 million for the three months ended June 30, 2024. Interest income on loans receivable, which is the Company’s primary source of income, increased $9.0 million, or 28.8%, to $40.3 million for the three months ended June 30, 2025 from $31.3 million for the three months ended June 30, 2024.

Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $1.9 million, or 25.9%, to $5.6 million for the three months ended June 30, 2025 from $7.5 million for the three months ended June 30, 2024. The decrease was primarily attributable to a decrease of $1.2 million in interest on securities and $0.7 million in interest on deposits due from banks.

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The following table presents interest income on loans receivable for the periods indicated:


	For the Three Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
1-4 Family residential	$	7,169	$	7,407	$	(238	)		(3.2	%)
Multifamily residential		10,165		6,975		3,190			45.7	%
Nonresidential properties		5,737		4,449		1,288			29.0	%
Construction and land		15,649		11,701		3,948			33.7	%
Business loans		1,551		593		958			161.6	%
Consumer loans		20		156		(136	)		(87.2	%)
Total interest income on loans receivable	$	40,291	$	31,281	$	9,010			28.8	%

The following table presents interest and dividend income on securities and FHLBNY stock and deposits due from banks for the periods indicated:


	For the Three Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Interest on deposits due from banks	$	807	$	1,542	$	(735	)		(47.7	%)
Interest on securities		4,246		5,486		(1,240	)		(22.6	%)
Dividend on FHLBNY stock		516		483		33			6.8	%
Total interest and dividend income	$	5,569	$	7,511	$	(1,942	)		(25.9	%)

Interest Expense. Interest expense increased $0.5 million, or 2.6%, to $21.4 million for the three months ended June 30, 2025 from $20.9 million for the three months ended June 30, 2024.

The following table presents interest expense for the periods indicated


	For the Three Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Certificates of deposit	$	7,382	$	6,358	$	1,024			16.1	%
Money market		8,930		7,209		1,721			23.9	%
Savings		26		27		(1	)		(3.7	%)
NOW/IOLA		100		151		(51	)		(33.8	%)
Advance payments by borrowers		2		2		—			—	%
Borrowings		4,994		7,141		(2,147	)		(30.1	%)
Total interest expense	$	21,434	$	20,888	$	546			2.6	%

Net Interest Income. Net interest income increased $6.5 million, or 36.4%, to $24.4 million for the three months ended June 30, 2025 from $17.9 million for the three months ended June 30, 2024. The $6.5 million increase in net interest income for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was attributable to an increase of $7.1 million in total interest and dividend income primarily due to increases in average loans receivable, offset by an increase of $0.5 million in interest expense due primarily to a higher average cost of funds on interest bearing liabilities.

Net interest rate spread increased by 75 basis points to 2.47% for the three months ended June 30, 2025 from 1.72% for the three months ended June 30, 2024. The increase in the net interest rate spread for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily due to and an increase in the average yields on interest-earning assets of 44 basis points to 6.13% for the three months ended June 30, 2025 from 5.69% for the three months ended June 30, 2024, and a decrease in the average rates paid on interest-bearing liabilities of 31 basis points to 3.66% for the three months ended June 30, 2025 from 3.97% for the three months ended June 30, 2024.

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Net interest margin increased 65 basis points for the three months ended June 30, 2025, to 3.27% from 2.62% for the three months ended June 30, 2024.

Non-Interest Income. Non-interest income decreased $0.2 million, or 8.8%, to $2.1 million for the three months ended June 30, 2025 from $2.3 million for the three months ended June 30, 2024. The $0.2 million decrease in non-interest income for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was largely attributable to decreases of $0.6 million in other non-interest income and $0.1 million in income on the sale of mortgage loans, partially offset by increases of $0.4 million in grant income from grants received from the CDFI and $0.1 million in late and prepayment charges.

The following table presents non-interest income for the periods indicated:


	For the Three Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Service charges and fees	$	511	$	492	$	19			3.9	%
Brokerage commissions		—		9		(9	)		—	%
Late and prepayment charges		530		426		104			24.4	%
Income on sale of mortgage loans		169		274		(105	)		(38.3	%)
Grant income		428		—		428			—	%
Other		422		1,057		(635	)		(60.1	%)
Total non-interest income	$	2,060	$	2,258	$	(198	)		(8.8	%)

Non-Interest Expense. Non-interest expense increased $0.2 million, or 1.4%, to $16.9 million for the three months ended June 30, 2025 from $16.6 million for the three months ended June 30, 2024. The $0.2 million increase in non-interest expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024 was mainly attributable to increases of $0.3 million in occupancy and equipment, $0.2 million in data processing expenses, $0.1 million in marketing and promotional expenses and $0.1 million in federal deposit insurance and regulatory assessment, partially offset by a decrease of $0.4 million in direct loan expenses.

The following table presents non-interest expense for the periods indicated:


	For the Three Months Ended June 30,					Change
	2025		2024			Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	7,627	$	7,724		$	(97	)		(1.3	%)
Occupancy and equipment		3,907		3,564			343			9.6	%
Data processing expenses		1,188		1,013			175			17.3	%
Direct loan expenses		241		633			(392	)		(61.9	%)
Insurance and surety bond premiums		297		263			34			12.9	%
Office supplies, telephone and postage		174		233			(59	)		(25.3	%)
Professional fees		1,367		1,369			(2	)		(0.1	%)
Microloans recoveries		—		(65	)		65			—	%
Marketing and promotional expenses		266		145			121			83.4	%
Federal deposit insurance and regulatory assessment (2)		546		428			118			27.6	%
Other operating expenses (2)		1,256		1,333			(77	)		(5.8	%)
Total non-interest expense (1)	$	16,869	$	16,640		$	229			1.4	%

(1) For the three months ended June 30, 2024, benefit for contingencies in the amount of $0.5 million were reclassified from total non-interest expense to benefit for credit losses.

(2) For the three months ended June 30, 2024, $0.3 million of federal deposit insurance was reclassified from other operating expenses to federal deposit insurance and regulatory assessments and $0.1 million of directors fees were reclassified from federal deposit insurance and regulatory assessments to other operating expenses.

Income Tax Provision. The Company had a provision for income taxes of $1.9 million for the three months ended June 30, 2025 compared to a provision for income taxes of $1.2 million for the three months ended June 30, 2024.

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Average Balance Sheets

The following table sets forth average outstanding balances, average yields and rates, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the effects would be immaterial. Average balances are derived from average daily balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.


	For the Three Months Ended June 30,
	2025							2024
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate (1)			Balance		Interest		Yield/Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Loans (2)	$	2,447,713		40,291		6.60	%	$	2,040,149	$	31,281		6.17	%
Securities (3)		449,858		4,246		3.79	%		562,560		5,486		3.92	%
Other (4)		102,252		1,323		5.19	%		141,368		2,025		5.76	%
Total interest-earning assets		2,999,823		45,860		6.13	%		2,744,077		38,792		5.69	%
Non-interest-earning assets		104,059							105,774
Total assets	$	3,103,882						$	2,849,851
Interest-bearing liabilities:
NOW/IOLA	$	68,155	$	100		0.59	%	$	72,932	$	151		0.83	%
Money market		864,688		8,930		4.14	%		599,209		7,209		4.84	%
Savings		104,243		26		0.10	%		111,859		27		0.10	%
Certificates of deposit		772,363		7,382		3.83	%		635,850		6,358		4.02	%
Total deposits		1,809,449		16,438		3.64	%		1,419,850		13,745		3.89	%
Advance payments by borrowers		14,934		2		0.05	%		14,948		2		0.05	%
Borrowings		521,375		4,994		3.84	%		680,421		7,141		4.22	%
Total interest-bearing liabilities		2,345,758		21,434		3.66	%		2,115,219		20,888		3.97	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		203,349		—					188,920		—
Other non-interest-bearing liabilities		36,435		—					49,437		—
Total non-interest-bearing liabilities		239,784		—					238,357		—
Total liabilities		2,585,542		21,434					2,353,576		20,888
Total equity		518,340							496,275
Total liabilities and total equity	$	3,103,882				3.66	%	$	2,849,851				3.97	%
Net interest income			$	24,426						$	17,904
Net interest rate spread (5)						2.47	%						1.72	%
Net interest-earning assets (6)	$	654,065						$	628,858
Net interest margin (7)						3.27	%						2.62	%
Average interest-earning assets to interest-bearing liabilities						127.88	%						129.73	%

(1)

Annualized where appropriate.

(2)

Loans include loans and mortgage loans held for sale, at fair value.

(3)

Securities include available-for-sale securities and held-to-maturity securities.

(4)

Includes FHLBNY demand account and FHLBNY stock dividends and FRBNY demand deposits.

(5)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(6)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(7)

Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

The following table presents the effects of changing rates and volumes on the Company’s net interest income for the periods indicated. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume.


	For the Three Months Ended June 30,
	2025 vs. 2024
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans (1)	$	6,352		$	2,658		$	9,010
Securities (2)		(1,087	)		(153	)		(1,240	)
Other		(556	)		(146	)		(702	)
Total interest-earning assets		4,709			2,359			7,068
Interest-bearing liabilities:
NOW/IOLA		(11	)		(40	)		(51	)
Money market		3,222			(1,501	)		1,721
Savings		(2	)		1			(1	)
Certificates of deposit		1,386			(362	)		1,024
Total deposits		4,595			(1,902	)		2,693
Borrowings		(1,654	)		(493	)		(2,147	)
Total interest-bearing liabilities		2,941			(2,395	)		546
Change in net interest income	$	1,768		$	4,754		$	6,522

(1)

Loans include loans and mortgage loans held for sale, at fair value.

(2)

Securities include available-for-sale securities and held-to-maturity securities.

Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024

The discussion of the Company’s results of operations for the six months ended June 30, 2025 and 2024 are presented below. The results of operations for interim periods may not be indicative of future results.

Overview. Net income available to common stockholders was $11.5 million for the six months ended June 30, 2025 compared to net income available to common stockholders of $5.5 million for the six months ended June 30, 2024. Earnings per basic share was $0.51 and diluted share was $0.50 for the six months ended June 30, 2025 compared to earnings per basic and diluted share of $0.25 for six months ended June 30, 2024. The $6.0 million increase of net income available to common stockholders from the six months ended June 30, 2024, was due to increases of $9.9 million in net interest income and $0.5 million in non-interest income, partially offset by increases of $2.2 million in provision for credit losses, $1.4 million in provision for income taxes, $0.5 million in dividends on preferred shares and $0.3 million in non-interest expense. Net income for the six months ended June 30, 2025 and 2024, which excludes $0.6 million and $0.1 million in dividends on preferred shares, was $12.1 million and $5.6 million, respectively.

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The following table presents the results of operations for the periods indicated:


	For the Six Months Ended June 30,					Increase (Decrease)
	2025		2024			Dollars		Percent
	(Dollars in thousands)
Interest and dividend income	$	89,857	$	78,458		$	11,399		14.5	%
Interest expense		43,228		41,731			1,497		3.6	%
Net interest income		46,629		36,727			9,902		27.0	%
Provision (benefit) for credit losses (1)		1,341		(883	)		2,224		(251.9	%)
Net interest income after provision (benefit) for credit losses		45,288		37,610			7,678		20.4	%
Non-interest income		4,441		3,965			476		12.0	%
Non-interest expense (1)		33,757		33,426			331		1.0	%
Income before income taxes		15,972		8,149			7,823		96.0	%
Provision for income taxes		3,913		2,543			1,370		53.9	%
Net income		12,059		5,606			6,453		115.1	%
Dividends on preferred shares		563		75			488		650.7	%
Net income available to common stockholders	$	11,496	$	5,531		$	5,965		107.8	%
Earnings per common share:
Basic	$	0.51	$	0.25		$	0.26		104.0	%
Diluted	$	0.50	$	0.25		$	0.25		100.0	%

(1) For the six months ended June 30, 2024, provision for contingencies in the amount of $0.3 million were reclassified from total non-interest expense to benefit for credit losses.

Interest and Dividend Income. Interest and dividend income increased $11.4 million, or 14.5%, to $89.9 million for the six months ended June 30, 2025 from $78.5 million for the six months ended June 30, 2024. Interest income on loans receivable, which is the Company’s primary source of income, increased $15.5 million, or 25.0%, to $77.4 million for the six months ended June 30, 2025 from $61.9 million for the six months ended June 30, 2024.

Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $4.1 million, or 24.7%, to $12.4 million for the six months ended June 30, 2025 from $16.5 million for the six months ended June 30, 2024. The decrease was primarily attributable to decreases of $2.3 million in interest on securities and $2.0 million in interest on deposits due from banks, offset by an increase of $0.2 million in dividend on FHLBNY stock.

The following table presents interest income on loans receivable for the periods indicated:


	For the Six Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
1-4 Family residential	$	14,261	$	14,953	$	(692	)		(4.6	%)
Multifamily residential		19,315		13,896		5,419			39.0	%
Nonresidential properties		11,414		8,808		2,606			29.6	%
Construction and land		30,251		22,925		7,326			32.0	%
Business loans		2,143		1,005		1,138			113.2	%
Consumer loans		43		358		(315	)		(88.0	%)
Total interest income on loans receivable	$	77,427	$	61,945	$	15,482			25.0	%

The following table presents interest and dividend income on securities and FHLBNY stock and deposits due from banks for the periods indicated:


	For the Six Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Interest on deposits due from banks	$	2,475	$	4,453	$	(1,978	)		(44.4	%)
Interest on securities		8,767		11,105		(2,338	)		(21.1	%)
Dividend on FHLBNY stock		1,188		955		233			24.4	%
Total interest and dividend income	$	12,430	$	16,513	$	(4,083	)		(24.7	%)

Interest Expense. Interest expense increased $1.5 million, or 3.6%, to $43.2 million for the six months ended June 30, 2025 from $41.7 million for the six months ended June 30, 2024.

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The following table presents interest expense for the periods indicated:


	For the Six Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Certificates of deposit	$	15,136	$	12,738	$	2,398			18.8	%
Money market		17,341		13,501		3,840			28.4	%
Savings		52		55		(3	)		(5.5	%)
NOW/IOLA		215		369		(154	)		(41.7	%)
Advance payments by borrowers		4		4		—			—	%
Borrowings		10,480		15,064		(4,584	)		(30.4	%)
Total interest expense	$	43,228	$	41,731	$	1,497			3.6	%

Net Interest Income. Net interest income increased $9.9 million, or 27.0%, to $46.6 million for the six months ended June 30, 2025 from $36.7 million for the six months ended June 30, 2024. The $9.9 million increase in net interest income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was attributable to an increase of $11.4 million in total interest and dividend income primarily due to increases in average loans receivable, offset by an increase of $1.5 million in interest expense due primarily to a higher average cost of funds on interest bearing liabilities.

Net interest rate spread increased by 56 basis points to 2.33% for the six months ended June 30, 2025 from 1.77% for the six months ended June 30, 2024. The increase in the net interest rate spread for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to and an increase in the average yields on interest-earning assets of 32 basis points to 6.02% for the six months ended June 30, 2025 from 5.70% for the six months ended June 30, 2024, and a decrease in the average rates paid on interest-bearing liabilities of 24 basis points to 3.69% for the six months ended June 30, 2025 from 3.93% for the six months ended June 30, 2024.

Net interest margin increased 45 basis points for the six months ended June 30, 2025, to 3.12% from 2.67% for six months ended June 30, 2024.

On September 18, 2024, the Federal Reserve announced that the target range for the federal funds rate decreased by 50 basis points to 4.75% to 5.00% effective on September 19, 2024. It marked the first rate cut in over four years and signaled a shift in strategy aimed at bolstering the economy and preventing a rise in unemployment. In November 2024, the Federal Reserve lowered the target range by 25 basis points to 4.50% to 4.75% and in December 2024 another 25 basis points to 4.25% to 4.50%. The Federal Reserve left federal funds rate unchanged at 4.25% to 4.50% during its July 2025 meeting, though it is still anticipated that they may reduce interest rates by around 50bps this year. Our net interest income may be positively impacted if the demand for loans increases due to the lower rates, alone or in tandem with lower inflation.

Non-Interest Income. Non-interest income increased $0.5 million, or 12.0%, to $4.4 million for the six months ended June 30, 2025 from $4.0 million for the six months ended June 30, 2024. The $0.5 million increase in non-interest income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was attributable to increases of $0.4 million in income on sale of SBA loans, $0.4 million in grant income and $0.4 million in late and prepayment charges, partially offset by decreases of $0.6 million in other non-interest income and $0.3 million in income on the sale of mortgage loans.

The following table presents non-interest income for the periods indicated:


	For the Six Months Ended June 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Service charges and fees	$	1,036	$	965	$	71			7.4	%
Brokerage commissions		4		17		(13	)		(76.5	%)
Late and prepayment charges		1,227		785		442			56.3	%
Income on sale of mortgage loans		317		576		(259	)		(45.0	%)
Income on sale of SBA loans		404		—		404			—	%
Grant income		428		—		428			—	%
Other		1,025		1,622		(597	)		(36.8	%)
Total non-interest income	$	4,441	$	3,965	$	476			12.0	%

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Non-Interest Expense. Non-interest expense increased $0.3 million, or 1.0%, to $33.8 million for the six months ended June 30, 2025 from $33.4 million for the six months ended June 30, 2024. The $0.3 million increase in non-interest expense for the six months ended June 30, 2025, compared to the six months ended June 30, 2024 was primarily attributable to increases of $0.6 million in occupancy and equipment, $0.4 million in other operating expense, $0.2 million in data processing expenses, partially offset by decreases of $0.7 million in direct loan expenses and $0.4 million in professional fee.

The following table presents non-interest expense for the periods indicated:


	For the Six Months Ended June 30,					Change
	2025		2024			Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	15,407	$	15,568		$	(161	)		(1.0	%)
Occupancy and equipment		7,820		7,231			589			8.1	%
Data processing expenses		2,340		2,140			200			9.3	%
Direct loan expenses		629		1,365			(736	)		(53.9	%)
Insurance and surety bond premiums		612		516			96			18.6	%
Office supplies, telephone and postage		344		482			(138	)		(28.6	%)
Professional fees		2,731		3,092			(361	)		(11.7	%)
Microloans recoveries		—		(118	)		118			—	%
Marketing and promotional expenses		349		245			104			42.4	%
Federal deposit insurance and regulatory assessment (2)		1,007		817			190			23.3	%
Other operating expenses (2)		2,518		2,088			430			20.6	%
Total non-interest expense (1)	$	33,757	$	33,426		$	331			1.0	%

(1) For the six months ended June 30, 2024, benefit for contingencies in the amount of $0.3 million were reclassified from total non-interest expense to benefit for credit losses.

Income Tax Provision. The Company had a provision for income taxes of $3.9 million for the six months ended June 30, 2025 compared to a provision for income taxes of $2.5 million for six months ended June 30, 2024.

Credit Quality. Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty, including loans held for sale, decreased $3.6 million to $28.5 million at June 30, 2025 from $32.1 million at December 31, 2024.

During the six months ended June 30, 2025, a credit loss provision of $1.3 million on loans was recorded, consisting of $2.1 million charged on the funded portion and a benefit of $0.7 million on the unfunded portion on loans. During the six months ended June 30, 2024, a credit loss benefit of $0.7 million on loans were recorded, consisting of $0.4 million benefit on the funded portion and a benefit of $0.3 million on unfunded portion on loans.

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Average Balance Sheets


	For the Six Months Ended June 30,
	2025							2024
	Average							Average
	Outstanding				Average			Outstanding				Average
	Balance		Interest		Yield/Rate (1)			Balance		Interest		Yield/Rate (1)
	(Dollars in thousands)
Interest-earning assets:
Loans (2)	$	2,408,788		77,427		6.48	%	$	2,009,706	$	61,945		6.20	%
Securities (3)		458,660		8,767		3.85	%		569,397		11,105		3.92	%
Other (4)		143,905		3,663		5.13	%		189,899		5,408		5.73	%
Total interest-earning assets		3,011,353		89,857		6.02	%		2,769,002		78,458		5.70	%
Non-interest-earning assets		106,600							106,172
Total assets	$	3,117,953						$	2,875,174
Interest-bearing liabilities:
NOW/IOLA	$	70,243	$	215		0.62	%	$	77,891	$	369		0.95	%
Money market		846,420		17,341		4.13	%		571,886		13,501		4.75	%
Savings		104,704		52		0.10	%		112,680		55		0.10	%
Certificates of deposit		783,256		15,136		3.90	%		632,689		12,738		4.05	%
Total deposits		1,804,623		32,744		3.66	%		1,395,146		26,663		3.84	%
Advance payments by borrowers		13,696		4		0.06	%		13,917		4		0.06	%
Borrowings		544,857		10,480		3.88	%		725,745		15,064		4.17	%
Total interest-bearing liabilities		2,363,176		43,228		3.69	%		2,134,808		41,731		3.93	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		200,007		—					193,891		—
Other non-interest-bearing liabilities		40,155		—					51,749		—
Total non-interest-bearing liabilities		240,162		—					245,640		—
Total liabilities		2,603,338		43,228					2,380,448		41,731
Total equity		514,615							494,726
Total liabilities and total equity	$	3,117,953				3.69	%	$	2,875,174				3.93	%
Net interest income			$	46,629						$	36,727
Net interest rate spread (5)						2.33	%						1.77	%
Net interest-earning assets (6)	$	648,177						$	634,194
Net interest margin (7)						3.12	%						2.67	%
Average interest-earning assets to interest-bearing liabilities						127.43	%						129.71	%

(1)

Annualized where appropriate.

(2)

Loans include loans and mortgage loans held for sale, at fair value.

(3)

Securities include available-for-sale securities and held-to-maturity securities.

(4)

Includes FHLBNY demand account and FHLBNY stock dividends and FRBNY demand deposits.

(5)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.

(6)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(7)

Net interest margin represents net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis


	For the Six Months Ended June 30,
	2025 vs. 2024
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans (1)	$	12,095		$	3,387		$	15,482
Securities (2)		(2,184	)		(154	)		(2,338	)
Other		(1,321	)		(424	)		(1,745	)
Total interest-earning assets		8,590			2,809			11,399
Interest-bearing liabilities:
NOW/IOLA		(37	)		(117	)		(154	)
Money market		6,426			(2,586	)		3,840
Savings		(4	)		1			(3	)
Certificates of deposit		2,988			(590	)		2,398
Total deposits		9,373			(3,292	)		6,081
Borrowings		(3,786	)		(798	)		(4,584	)
Total interest-bearing liabilities		5,587			(4,090	)		1,497
Change in net interest income	$	3,003		$	6,899		$	9,902

(1)

Loans include loans and mortgage loans held for sale, at fair value.

(2)

Securities include available-for-sale securities and held-to-maturity securities.

Management of Market Risk

General. The most significant form of market risk is interest rate risk because, as a financial institution, the majority of the Bank’s assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure of its financial condition and results of operations to changes in market interest rates. The Bank’s Asset/Liability Committee ("ALCO") is responsible for evaluating the interest rate risk inherent in the Bank’s assets and liabilities, for determining the level of risk that is appropriate, given the business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with policies and guidelines approved by the Board of Directors. The Bank currently utilizes a third-party modeling solution that is prepared on a quarterly basis, to evaluate its sensitivity to changing interest rates, given the Bank’s business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors.

Net Interest Income Simulation Models. Management utilizes a respected, sophisticated third party designed asset liability modeling software that measures the Bank’s earnings through simulation modeling. Earning assets, interest-bearing liabilities and off-balance sheet financial instruments are combined with forecasts of interest rates for the next 12 months and are combined with other factors in order to produce various earnings simulations over that same 12-month period. To limit interest rate risk, the Bank has policy guidelines for earnings risk which seek to limit the variance of net interest income in both gradual and instantaneous changes to interest

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rates. As of June 30, 2025, in the event of an instantaneous upward and downward change in rates from management's interest rate forecast over the next twelve months, assuming a static balance sheet, the following estimated changes are calculated:


	Net Interest Income		Year 1 Change
Rate Shift (1)	Year 1 Forecast		from Level
	(Dollars in thousands)
+400	$	96,600	(7.66%)
+300		98,942	(5.43%)
+200		101,202	(3.27%)
+100		103,260	(1.30%)
Level		104,618	— %
-100		105,536	0.88%
-200		106,184	1.50%
-300		105,794	1.12%
-400		105,020	0.38%

(1)

Assumes an instantaneous uniform change in interest rates at all maturities.

Although an instantaneous and severe shift in interest rates was used in this analysis to provide an estimate of exposure under these scenarios, management believes that a gradual shift in interest rates would have a more modest impact. Further, the earnings simulation model does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could alter any potential adverse impact of changes in interest rates.

The behavior of the deposit portfolio in the baseline forecast and in alternate interest rate scenarios set out in the table above is a key assumption in the projected estimates of net interest income. The projected impact on net interest income in the table above assumes no change in deposit portfolio size or mix from the baseline forecast in alternative rate environments. In higher rate scenarios, any customer activity resulting in the replacement of low-cost or noninterest-bearing deposits with higher-yielding deposits or market-based funding would reduce the benefit in those scenarios.

At June 30, 2025, the earnings simulation model indicated that the Bank was in compliance with the Board of Directors approved Interest Rate Risk Policy.

Economic Value of Equity Model. While earnings simulation modeling attempts to determine the impact of a changing rate environment to net interest income, the Economic Value of Equity Model (“EVE”) measures estimated changes to the economic values of assets, liabilities and off-balance sheet items as a result of interest rate changes. Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case EVE. Rates are then shocked as prescribed by the Interest Rate Risk Policy to measure the sensitivity in EVE values for each of those shocked rate scenarios versus the base case. The Interest Rate Risk Policy sets limits for those sensitivities. At June 30, 2025, the EVE modeling calculated the following estimated changes in EVE due to instantaneous upward and downward changes in rates:


									EVE as a Percentage of Present
									Value of Assets (3)
			Estimated Increase (Decrease) in									Increase
Change in Interest	Estimated		EVE						EVE			(Decrease)
Rates (basis points) (1)	EVE (2)		Amount			Percent			Ratio (4)			(basis points)
	(Dollars in thousands)
+400	$	432,100	$	(108,819	)		(20.12	%)		14.62	%		(2,012	)
+300		462,495		(78,424	)		(14.50	%)		15.38	%		(1,450	)
+200		491,726		(49,193	)		(9.09	%)		16.08	%		(909	)
+100		518,452		(22,467	)		(4.15	%)		16.69	%		(415	)
Level		540,919		—			—	%		17.15	%		—
-100		560,066		19,147			3.54	%		17.50	%		354
-200		573,748		32,829			6.07	%		17.68	%		607
-300		592,207		51,288			9.48	%		17.96	%		948
-400		610,908		69,989			12.94	%		18.24	%		1,294

(1)

Assumes an instantaneous uniform change in interest rates at all maturities.

(2)

EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3)

Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(4)

EVE Ratio represents EVE divided by the present value of assets.

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discounted present value of cash flows over the estimated lives of instruments, the change in EVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year). Further, EVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could alter the adverse impact of changes in interest rates.

At June 30, 2025, the EVE model indicated that the Bank was in compliance with the Board of Directors’ approved Interest Rate Risk Policy.

Most Likely Earnings Simulation Models. Management also analyzes a most-likely earnings simulation scenario that projects the expected change in rates based on a forward yield curve adopted by management using expected balance sheet volumes forecasted by management. Separate growth assumptions are developed for loans, investments, deposits, etc. Other interest rate scenarios analyzed by management may include delayed rate shocks, yield curve steepening or flattening, or other variations in rate movements to further analyze or stress the balance sheet under various interest rate scenarios. Each scenario is evaluated by management and weighted to determine the most likely result. These processes assist management to better anticipate financial results and, as a result, management may determine the need to review other operating strategies and tactics which might enhance results or better position the balance sheet to reduce interest rate risk going forward.

Each of the above analyses may not, on its own, be an accurate indicator of how net interest income will be affected by changes in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates. Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising interest rates. The ALCO Committee reviews each of the above interest rate sensitivity analyses along with several different interest rate scenarios as part of its responsibility to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing and capital policies.

Management's model governance, model implementation and model validation processes and controls are subject to review in the Bank’s regulatory examinations to ensure they are in compliance with the most recent regulatory guidelines and industry and regulatory practices. Management utilizes a respected, sophisticated third party designed asset liability modeling software to help ensure implementation of management's assumptions into the model are processed as intended in a robust manner. That said, there are numerous assumptions regarding financial instrument behaviors that are integrated into the model. The assumptions are formulated by combining observations gleaned from the Bank’s historical studies of financial instruments and the best estimations of how, if at all, these instruments may behave in the future given changes in economic conditions, technology, etc. These assumptions may prove to be inaccurate. Additionally, given the large number of assumptions built into Bank’s asset liability modeling software, it is difficult, at best, to compare its results to other banks.

The ALCO Committee may determine that the Company should over time become more or less asset or liability sensitive depending on the underlying balance sheet circumstances and its conclusions regarding interest rate fluctuations in future periods. The historically low benchmark federal funds interest rate of the last several years implemented in response the turmoil resulting from COVID-19 pandemic has ended. The Federal Reserve announced that the target range for the federal funds rate decreased by 50 basis points to 4.75% to 5.00% effective on September 19, 2024. It marked the first rate cut in over four years and signaled a shift in strategy aimed at bolstering the economy and preventing a rise in unemployment. In November 2024, the Federal Reserve lowered the target range by 25 basis points to 4.50% to 4.75% and in December 2024 another 25 basis points to 4.25% to 4.50%. The Federal Reserve left federal funds rate unchanged at 4.25% to 4.50% during its July 2025 meeting, though it is still anticipated that they may reduce interest rates by around 50bps this year. Our net interest income may also be positively impacted if the demand for loans increases due to the rate decreases, alone or in tandem with the concurrent inflationary pressures. We may be negatively impacted if we are unable to appropriately time adjustments to our funding costs and the rates we earn on our loans.

GAP Analysis. In addition, management analyzes interest rate sensitivity by monitoring the Bank’s interest rate sensitivity "gap." The interest rate sensitivity gap is the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest bearing-liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets maturing or repricing during a period exceeds the amount of interest rate sensitive liabilities maturing or repricing during the same period, and a gap is considered negative when the amount of interest rate sensitive liabilities maturing or repricing during a period exceeds the amount of interest rate sensitive assets maturing or repricing during the same period.

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The following table sets forth the Company’s interest-earning assets and its interest-bearing liabilities at June 30, 2025, which are anticipated to reprice or mature in each of the future time periods shown based upon certain assumptions. The amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at June 30, 2025, on the basis of contractual maturities, anticipated prepayments and scheduled rate adjustments. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and as a result of contractual rate adjustments on adjustable-rate loans.


	June 30, 2025
	Time to Repricing
	Zero to 90 Days			Zero to 180 Days			Zero Days to One Year			Zero Days to Two Years			Zero Days to Five Years			Five Years Plus			Total Earning Assets & Costing Liabilities			Non Earning Assets & Non Costing Liabilities			Total
	(Dollars in thousands)
Assets:
Interest-bearing deposits in banks	$	90,872		$	90,872		$	90,872		$	90,872		$	90,872		$	—		$	90,872		$	35,767		$	126,639
Securities (1)		57,148			75,769			111,271			183,533			319,024			131,090			450,114			(16,673	)		433,441
Placement with banks		249			249			249			249			249			—			249			—			249
Net loans (includes LHFS)		509,289			855,833			1,178,933			1,695,285			2,365,303			96,699			2,462,002			2,413			2,464,415
FHLBNY stock		—			—			—			—			—			—			—			26,620			26,620
Other assets		—			—			—			—			—			—			—			102,505			102,505
Total	$	657,558		$	1,022,723		$	1,381,325		$	1,969,939		$	2,775,448		$	227,789		$	3,003,237		$	150,632		$	3,153,869
Liabilities:
Non-maturity deposits	$	73,640		$	147,275		$	294,545		$	589,090		$	1,031,379		$	61,306			1,092,685		$	199,003		$	1,291,688
Certificates of deposit		317,676			494,270			660,386			697,976			750,521			—			750,521			—			750,521
Borrowings		15,000			65,000			115,000			294,000			536,100			—			536,100			—			536,100
Other liabilities		—			—			—			—			—			—			—			54,472			54,472
Total liabilities		406,316			706,545			1,069,931			1,581,066			2,318,000			61,306			2,379,306			253,475			2,632,781
Capital		—			—			—			—			—			—			—			521,088			521,088
Total liabilities and capital	$	406,316		$	706,545		$	1,069,931		$	1,581,066		$	2,318,000		$	61,306		$	2,379,306		$	774,563		$	3,153,869
Asset/liability gap	$	251,242		$	316,178		$	311,394		$	388,873		$	457,448		$	166,483		$	623,931
Gap/assets ratio		161.83	%		144.75	%		129.10	%		124.60	%		119.73	%		371.56	%		126.22	%

(1)

Includes available-for-sale securities and held-to-maturity securities.

The following table sets forth the Company’s interest-earning assets and its interest-bearing liabilities at December 31, 2024, which are anticipated to reprice or mature in each of the future time periods shown based upon certain assumptions. The amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2024, on the basis of contractual maturities, anticipated prepayments and scheduled rate adjustments. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and as a result of contractual rate adjustments on adjustable-rate loans.


	December 31, 2024
	Time to Repricing
	Zero to 90 Days			Zero to 180 Days			Zero Days to One Year			Zero Days to Two Years			Zero Days to Five Years			Five Years Plus			Total Earning Assets & Costing Liabilities			Non Earning Assets & Non Costing Liabilities			Total
	(Dollars in thousands)
Assets:
Interest-bearing deposits in banks	$	104,361		$	104,361		$	104,361		$	104,361		$	104,361		$	—		$	104,361		$	35,478		$	139,839
Securities (1)		23,921			56,636			107,958			160,603			288,893			203,742			492,635			(19,727	)		472,908
Placement with banks		249			249			249			249			249			—			249			—			249
Net loans (includes LHFS)		267,730			415,218			923,776			1,425,128			2,210,873			81,816			2,292,689			4,646			2,297,335
FHLBNY stock		29,182			29,182			29,182			29,182			29,182			—			29,182			—			29,182
Other assets		—			—			—			—			—			—			—			100,425			100,425
Total	$	425,443		$	605,646		$	1,165,526		$	1,719,523		$	2,633,558		$	285,558		$	2,919,116		$	120,822		$	3,039,938
Liabilities:
Non-maturity deposits	$	60,746		$	121,499		$	243,005		$	486,011		$	870,025		$	60,680		$	930,705		$	173,855		$	1,104,560
Certificates of deposit		315,709			507,093			670,619			728,383			780,304			—			780,304			—			780,304
Borrowings		75,000			75,000			125,000			325,000			596,100			—			596,100			—			596,100
Other liabilities		—			—			—			—			—			—			—			53,474			53,474
Total liabilities		451,455			703,592			1,038,624			1,539,394			2,246,429			60,680			2,307,109			227,329			2,534,438
Capital		—			—			—			—			—			—			—			505,500			505,500
Total liabilities and capital	$	451,455		$	703,592		$	1,038,624		$	1,539,394		$	2,246,429		$	60,680		$	2,307,109		$	732,829		$	3,039,938
Asset/liability gap	$	(26,012	)	$	(97,946	)	$	126,902		$	180,129		$	387,129		$	224,878		$	612,007
Gap/assets ratio		94.24	%		86.08	%		112.22	%		111.70	%		117.23	%		470.60	%		126.53	%

(1)

Includes available-for-sale securities and held-to-maturity securities.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net interest income and EVE tables presented assume that the composition of the interest-sensitive assets

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and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net interest income and EVE tables provide an indication of the interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on net interest income and EVE and will differ from actual results. Furthermore, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Additionally, certain assets, such as adjustable-rate loans, have features that restrict changes in interest rates both on a short-term basis and over the life of the asset.

In the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the gap table.

Interest rate risk calculations also may not reflect the fair values of financial instruments. For example, decreases in market interest rates can increase the fair values of loans, deposits and borrowings.

Liquidity and Capital Resources

Liquidity describes the ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of the Company’s customers and to fund current and future planned expenditures.

Although maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. The most liquid assets are cash and interest-bearing deposits in banks. The levels of these assets are dependent on operating, financing, lending, and investing activities during any given period. The Bank had $521.1 million and $571.1 million of outstanding term advances from FHLBNY at June 30, 2025 and December 31, 2024, respectively. The Bank had $15.0 million of overnight line of credit advance from the FHLBNY at June 30, 2025 and $25.0 million of overnight line of credit advance from the FHLBNY at December 31, 2024.

Net cash provided by (used in) operating activities was $19.3 million and ($1.1) million for the six months ended June 30, 2025 and 2024, respectively. Net cash used in investing activities, which consists primarily of disbursements for loan originations, purchase of loans, net purchase and redemption of FHLBNY stock and purchase of equipment offset by principal collections on loans and proceeds from maturities, calls and principal repayments on securities was ($129.2) million and ($129.4) million for the six months ended June 30, 2025 and 2024, respectively. Net cash provided by financing activities, consisting of activities in borrowing, deposit accounts and dividends paid on preferred stock, was $96.8 million and $94.5 million for the six months ended June 30, 2025 and 2024, respectively.

The Bank’s management took steps to enhance the Company’s liquidity position by increasing its on balance sheet cash and cash equivalents position in order to meet unforeseen liquidity events and to fund upcoming funding needs.

At June 30, 2025 and December 31, 2024, all regulatory capital requirements were met, resulting in the Company and the Bank being categorized as well capitalized. Management is not aware of any conditions or events that would change this categorization.

Material Cash Requirements

Commitments. As a financial services provider, the Company routinely is a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. Although these contractual obligations represent the Company’s future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans originated. At June 30, 2025 and December 31, 2024, the Company had outstanding commitments to originate loans and extend credit of $359.8 million and $411.5 million, respectively.

It is anticipated that the Company will have sufficient funds available to meet its current lending commitments. Certificates of deposit that are scheduled to mature in 2025 totaled $494.2 million. Management expects that a substantial portion of the maturing time deposits will be renewed. However, if a substantial portion of these deposits are not retained, the Company may utilize FHLBNY advances, unsecured credit lines with correspondent banks, or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Contractual Obligations. In the ordinary course of its operations, the Company enters into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities. There have been no material changes in the Company’s material cash requirements under its contractual obligations as discussed in its most recent annual report on Form 10-K.

Dividend on Preferred Stock. Pursuant to the terms of its Preferred Stock, the Company is required to pay a quarterly dividend on its Preferred Stock, beginning during the quarter ended June 30, 2024. The floor dividend rate is 0.50% and the ceiling dividend rate

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is 2.00%, based on achievement of certain qualified lending targets. For quarterly dividends through June 15, 2025, the Company is required to pay quarterly dividends on the Preferred Stock at a rate of 0.50%. In June 2024, the ‎Company began paying dividends on its Preferred Stock, which dividends were $0.6 million for the six months ended June 30, 2025 and $0.6 million for the year ended December 31, 2024.

Other Material Cash Requirements. In addition to contractual obligations, the Company’s material cash requirements also includes compensation and benefits expenses for its employees, which were $15.4 million for the six months ended June 30, 2025. The Company also has material cash requirements for occupancy and equipment expenses, excluding depreciation and amortization of $1.1 million, related to rental expenses, general maintenance and cleaning supplies, guard services, software licenses and other miscellaneous expenses, which were $6.8 million for the six months ended June 30, 2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The information required by this item is included in Part I, Item 2 of this report under “Management of Market Risk”.

Item 4. Controls and Procedures.

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2025. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Registrant’s disclosure controls and procedures were effective.

During the six months ended June 30, 2025, there were no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal controls over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is not involved in any pending legal proceedings as a plaintiff or a defendant other than routine legal proceeding occurring in the ordinary course of business. At June 30, 2025, the Company was not involved in any legal proceedings the outcome of which management believes would be material to its financial condition or results of operations.

Item 1A. Risk Factors.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our 2024 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in our Risk Factors from those disclosed in Item 1A of our 2024 Form 10-K or our other SEC filings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

None

Item 5. Other Information.

None

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Item 6. Exhibits


Exhibit Number		Description



3.1		Articles of Incorporation of Ponce Financial Group, Inc. (attached as Exhibit 3.1 to the Registrant’s Form S-1 (File No. 333-258394) filed with the Commission on August 3, 2021).

3.2		Bylaws of Ponce Financial Group, Inc. (attached as Exhibit 3.2 to the Registrant’s Form S-1 (File No. 333-258394) filed with the Commission on August 3, 2021).

3.3		Articles Supplementary to the Charter of Ponce Financial Group, Inc. (attached as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-41255) filed with the Commission on June 9, 2022).

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Ponce Financial Group, Inc. (Registrant)

Date: August 5, 2025	By:	/s/ Carlos P. Naudon
		Carlos P. Naudon
		President and Chief Executive Officer

Date: August 5, 2025	By:	/s/ Sergio J. Vaccaro
		Sergio J. Vaccaro
		Executive Vice President and Chief Financial Officer

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