Ponce Financial Group - 10-Q quarterly report FY2025 Q3

Ponce Financial Group - 10-Q quarterly report FY2025 Q3

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 September 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 November 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	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	54
PART II.	OTHER INFORMATION	55
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	55
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	56
Signatures		57

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

September 30, 2025 and December 31, 2024

(Dollars in thousands, except share data)


	September 30,			December 31,
	2025			2024
	(unaudited)
ASSETS
Cash and due from banks:
Cash	$	29,296		$	35,478
Interest-bearing deposits		117,283			104,361
Total cash and cash equivalents		146,579			139,839
Available-for-sale securities, at fair value (Note 3)		94,822			104,970
Held-to-maturity securities, net of allowance for credit losses of $228 at September 30, 2025 and $216 at December 31, 2024; at amortized cost (fair value 2025 $279,852; 2024 $355,294) (Note 3)		285,125			367,938
Placement with banks		249			249
Mortgage loans held for sale, at fair value (Note 4)		5,794			10,736
Loans receivable, net of allowance for credit losses of $24,764 at September 30, 2025 and $22,502 at December 31, 2024 (Note 5)		2,490,046			2,286,599
Accrued interest receivable		18,903			17,771
Premises and equipment, net		16,129			16,794
Right of use assets (Note 6)		28,295			29,093
Federal Home Loan Bank of New York (FHLBNY) stock, at cost		25,945			29,182
Deferred tax assets		12,402			12,074
Other assets		32,790			24,693
Total assets	$	3,157,079		$	3,039,938
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits (Note 7)	$	2,063,081		$	1,895,213
Operating lease liabilities		30,028			30,696
Accrued interest payable		4,372			3,712
Borrowings (Note 8)		521,100			596,100
Other liabilities		8,663			8,717
Total liabilities		2,627,244			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 September 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 September 30, 2025 and December 31, 2024; 24,001,125 shares outstanding as of September 30, 2025 and 23,961,214 shares outstanding as of December 31, 2024		249			249
Treasury stock, at cost; 885,586 shares as of September 30, 2025 and 925,497 shares as of December 31, 2024		(7,270	)		(7,707	)
Additional paid-in-capital		208,909			207,319
Retained earnings		125,477			107,754
Accumulated other comprehensive loss (Note 13)		(11,586	)		(15,297	)
Unearned compensation ─ ESOP; 1,201,680 shares as of September 30, 2025 and 1,301,988 shares as of December 31, 2024		(10,944	)		(11,818	)
Total stockholders' equity		529,835			505,500
Total liabilities and stockholders' equity	$	3,157,079		$	3,039,938

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

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)

Three and Nine Months Ended September 30, 2025 and 2024

(Dollars in thousands, except share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025		2024
Interest and dividend income:
Interest on loans receivable	$	41,486		$	32,945		$	118,913	$	94,890
Interest on deposits due from banks		978			2,430			3,453		6,883
Interest and dividend on securities and FHLBNY stock		4,383			5,918			14,338		17,978
Total interest and dividend income		46,847			41,293			136,704		119,751
Interest expense:
Interest on certificates of deposit		6,553			6,926			21,689		19,664
Interest on other deposits		9,996			8,519			27,608		22,448
Interest on borrowings		5,050			6,825			15,530		21,889
Total interest expense		21,599			22,270			64,827		64,001
Net interest income		25,248			19,023			71,877		55,750
Provision (benefit) for credit losses (Note 3) (Note 5) (1)		1,364			537			2,705		(346	)
Net interest income after provision (benefit) for credit losses		23,884			18,486			69,172		56,096
Non-interest income:
Service charges and fees		539			508			1,575		1,473
Brokerage commissions		8			—			12		17
Late and prepayment charges		385			77			1,612		862
Income on sale of mortgage loans		166			218			483		794
Income on sale of SBA loans		—			—			404		—
Grant income		429			—			857		—
Other		(35	)		348			990		1,970
Total non-interest income		1,492			1,151			5,933		5,116
Non-interest expense:
Compensation and benefits		7,868			7,674			23,275		23,242
Occupancy and equipment		3,934			3,786			11,754		11,017
Data processing expenses		1,296			1,099			3,636		3,239
Direct loan expenses		155			573			784		1,938
Insurance and surety bond premiums		318			292			930		808
Office supplies, telephone and postage		170			222			514		704
Professional fees		1,409			1,351			4,140		4,443
Microloans recoveries		—			(54	)		—		(172	)
Marketing and promotional expenses		184			180			533		425
Federal deposit insurance and regulatory assessment(2)		266			392			1,273		1,209
Other operating expenses (2)		1,018			1,051			3,536		3,139
Total non-interest expense (1)		16,618			16,566			50,375		49,992
Income before income taxes		8,758			3,071			24,730		11,220
Provision for income taxes		2,250			638			6,163		3,181
Net income	$	6,508		$	2,433		$	18,567	$	8,039
Dividends on preferred shares		281			281			844		356
Net income available to common stockholders	$	6,227		$	2,152		$	17,723	$	7,683
Earnings per common share (Note 9):
Basic	$	0.27		$	0.10		$	0.78	$	0.34
Diluted	$	0.27		$	0.10		$	0.77	$	0.34
Weighted average common shares outstanding (Note 9):
Basic		22,766,195			22,446,009			22,715,620		22,403,258
Diluted		23,135,448			22,612,028			22,992,655		22,466,178

(1) For the three and nine months ended September 30, 2024, benefit for contingencies in the amount of $0.3 million and $0.6 million, respectively, were reclassified from total non-interest expense to provision (benefit) for credit losses.

(2) For the three months and nine months ended September 30, 2024, $0.3 million and $0.9 million, respectively, of federal deposit insurance were reclassified from other operating expenses to federal deposit insurance and regulatory assessments and $0.1 million and $0.3 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 (Unaudited)

Three and Nine Months Ended September 30, 2025 and 2024

(In thousands)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
Net income	$	6,508		$	2,433		$	18,567		$	8,039
Net change in unrealized gain on securities:
Unrealized gain		1,852			4,912			4,711			3,758
Income tax effect		(391	)		(1,041	)		(1,000	)		(795	)
Total other comprehensive income, net of tax		1,461			3,871			3,711			2,963
Total comprehensive income		7,969			6,304			22,278			11,002
Less: Dividends on preferred shares		281			281			844			356
Total comprehensive income available to common stockholders	$	7,688		$	6,023		$	21,434		$	10,646

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

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity (Unaudited)

Nine Months Ended September 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
Net income		—		—		—		—		—			—			6,508			—			—			6,508
Preferred Stock Dividend		—		—		—		—		—			—			(281	)		—			—			(281	)
Other comprehensive income, net of tax		—		—		—		—		—			—			—			1,461			—			1,461
Exercise of stock options		—		—		16,325		—		134			(23	)		—			—			—			111
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			200			—			—			291			491
Share-based compensation		—		—		—		—		—			457			—			—			—			457
Balance, September 30, 2025		225,000	$	225,000		24,001,125	$	249	$	(7,270	)	$	208,909		$	125,477		$	(11,586	)	$	(10,944	)	$	529,835


																		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
Net income		—		—		—		—		—			—			2,433			—			—			2,433
Preferred Stock Dividend								—		—			—			(281	)		—			—			(281	)
Other comprehensive income, net of tax		—		—		—		—		—			—			—			3,871			—			3,871
Release of restricted stock units		—		—		7,731		—		74			(74	)		—			—			—			—
ESOP shares committed to be released (33,436 shares)		—		—		—		—		—			99			—			—			291			390
Share-based compensation		—		—		—		—		—			519			—			—			—			519
Balance, September 30, 2024		225,000	$	225,000		23,819,463	$	249	$	(9,445	)	$	208,478		$	105,103		$	(12,686	)	$	(12,110	)	$	504,589

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)

Nine Months Ended September 30, 2025 and 2024

(In thousands)


	Nine Months Ended
	September 30,
	2025			2024
Cash Flows From Operating Activities:
Net income	$	18,567		$	8,039
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization of premiums/discounts on securities, net		(54	)		(82	)
Gain on sale of loans		(887	)		(794	)
Provision for credit losses		2,705			235
Depreciation and amortization		3,578			3,484
ESOP compensation expense		1,573			1,028
Share-based compensation expense		1,413			1,555
Deferred income taxes		(1,328	)		1,691
Changes in assets and liabilities:
Decrease in mortgage loans held for sale, fair value		5,425			2,032
(Increase) decrease in accrued interest receivable		(1,132	)		1,120
Increase in other assets		(8,097	)		(26,669	)
Increase (decrease) in accrued interest payable		660			(9,047	)
Decrease in operating lease liabilities		(2,015	)		(1,897	)
Increase in other liabilities		245			3,650
Net cash provided by (used in) operating activities		20,653			(15,655	)
Cash Flows From Investing Activities:
Net redemption and (purchase) of FHLBNY stock		3,237			(9,123	)
Proceeds from maturities, calls and principal repayments on securities		97,714			70,940
Proceeds from sale of loans		6,653			—
Net increase in loans		(212,638	)		(279,739	)
Purchase of loans		—			(5,956	)
Purchases of premises and equipment		(1,013	)		(2,242	)
Net cash used in investing activities		(106,047	)		(226,120	)
Cash Flows From Financing Activities:
Net increase in deposits		167,868			362,703
Stock options exercised		110			—
Net repayments from borrowings		(75,000	)		(104,000	)
Dividends paid on preferred stock		(844	)		(306	)
Net cash provided by financing activities		92,134			258,397
Net increase in cash and cash equivalents		6,740			16,622
Cash and cash equivalents at beginning of period		139,839			139,190
Cash and cash equivalents at end of period	$	146,579		$	155,812
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	$	64,167		$	73,048
Cash paid for income taxes	$	6,385		$	1,363
Supplemental Disclosures of Noncash Investing Activities:
Transferred from loans receivable to mortgage loans held for sale, at fair value	$	—		$	824

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 a financial holding company and the holding company of Ponce Bank, National Association. (“Ponce Bank” or the “Bank”), a national bank (See Note 15). 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 and its wholly-owned subsidiary Ponce 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 Financial Condition at December 31, 2024, Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024, and deposits (Note 7) 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.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 $0.8 million for the nine months ended September 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 13 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 September 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 September 30, 2025 and December 31, 2024 are summarized as follows:


	September 30, 2025
				Gross		Gross
	Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,998		$	—	$	(43	)	$	2,955
Corporate Bonds		14,752			—		(857	)		13,895
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		31,686			—		(4,888	)		26,798
FHLMC Certificates		8,192			—		(890	)		7,302
FNMA Certificates		51,840			—		(8,051	)		43,789
GNMA Certificates		81			2		—			83
Total available-for-sale securities	$	109,549		$	2	$	(14,729	)	$	94,822

Held-to-Maturity Securities:
Corporate Bonds	$	7,500		$	35	$	(230	)	$	7,305
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		167,024			90		(3,516	)		163,598
FHLMC Certificates		3,156			5		(132	)		3,029
FNMA Certificates		94,729			5		(1,792	)		92,942
SBA Certificates		12,944			34		—			12,978
Allowance for Credit Losses		(228	)		—		—			—
Total held-to-maturity securities	$	285,125		$	169	$	(5,670	)	$	279,852

(1)

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

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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 36 and 39 available-for-sale securities and 28 and 31 held-to-maturity securities at September 30, 2025 and December 31, 2024, respectively. There were no available-for-sale and held-to-maturity securities sold during the nine months ended September 30, 2025 and for the year ended December 31, 2024. There were three available-for-sale securities in the total amount of $7.0 million and three held-to-maturity securities in the total amount of $50.0 million that matured and/or were called during the nine months ended September 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 nine months ended September 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 September 30, 2025 and December 31, 2024:


	September 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	$	—	$	—	$	2,955	$	(43	)	$	2,955	$	(43	)
Corporate Bonds		—		—		12,645		(857	)		12,645		(857	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		—		—		26,798		(4,888	)		26,798		(4,888	)
FHLMC Certificates		—		—		7,302		(890	)		7,302		(890	)
FNMA Certificates		—		—		43,789		(8,051	)		43,789		(8,051	)
Total available-for-sale securities	$	—	$	—	$	93,489	$	(14,729	)	$	93,489	$	(14,729	)
Held-to-Maturity Securities:
Corporate Bonds	$	—	$	—	$	5,270	$	(230	)	$	5,270	$	(230	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		—		—		154,468		(3,516	)		154,468		(3,516	)
FHLMC Certificates		—		—		609		(132	)		609		(132	)
FNMA Certificates		—		—		88,960		(1,792	)		88,960		(1,792	)
Total held-to-maturity securities	$	—	$	—	$	249,307	$	(5,670	)	$	249,307	$	(5,670	)


	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 September 30, 2025 and December 31, 2024, the Company had 33 and 37 available-for-sale securities and 21 and 27 held-to-maturity securities at September 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 September 30, 2025 and December 31, 2024. The unrealized losses related 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 September 30, 2025 represents a credit

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 September 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.


	September 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		2,998			2,955
More than one year through five years		—			—
More than five years through ten years		—			—
		2,998			2,955
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		1,000			458
More than five years through ten years		13,752			13,437
		14,752			13,895
Mortgage-Backed Securities		91,799			77,972
Total available-for-sale securities	$	109,549		$	94,822
Held-to-Maturity Securities:
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		—			—
More than five years through ten years		7,500			7,305
		7,500			7,305
Mortgage-Backed Securities		277,853			272,547
Allowance for Credit Losses		(228	)		—
Total held-to-maturity securities	$	285,125		$	279,852

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

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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


	For the Nine
	Months Ended		For the Year Ended
	September 30, 2025		December 31, 2024
	(in thousands)
Allowance for credit losses on securities at beginning of period	$	216	$	398
Benefit for credit losses		12		(182	)
Allowance for credit losses on securities at end of period	$	228	$	216

At September 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:


	September 30,		December 31,
	2025		2024
	(in thousands)
Mortgage loans held-for-sale, at fair value	$	5,794	$	10,736
Mortgage loans held-for-sale, contractual principal outstanding		5,774		10,674
Fair value less unpaid principal balance	$	20	$	62

At September 30, 2025 and December 31, 2024, the Company had 7 loans and 17 loans in the amount of $5.8 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 September 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 September 30, 2025 and December 31, 2024 are summarized as follows:


	September 30,			December 31,
	2025			2024
	(in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	311,728		$	330,053
Owner-Occupied		132,874			142,363
Multifamily residential		688,574			670,159
Nonresidential properties		436,175			389,898
Construction and land		886,369			733,660
Total mortgage loans		2,455,720			2,266,133
Nonmortgage loans:
Business loans		58,012			40,849
Consumer loans		727			1,038
Total non-mortgage loans		58,739			41,887
Total loans, gross		2,514,459			2,308,020
Net deferred loan origination costs		351			1,081
Allowance for Credit Losses		(24,764	)		(22,502	)
Loans receivable, net	$	2,490,046		$	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.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The following tables summarize total loans by year of origination and internally assigned credit risk ratings:


	2025		2024		2023		2022		2021		2020 and Prior		Total
	(in thousands)
September 31, 2025
Mortgage Loans:
1-4 Family Investor Owned
Pass	$	765	$	2,703	$	25,855	$	50,926	$	43,391	$	177,800	$	301,440
Special mention		—		—		844		—		1,590		3,394		5,828
Substandard		—		—		—		—		644		3,816		4,460
Total 1-4 Family Investor Owned		765		2,703		26,699		50,926		45,625		185,010		311,728
1-4 Family Owner Occupied
Pass		18		1,341		18,908		48,782		10,689		50,111		129,849
Special mention		—		—		—		—		464		—		464
Substandard		—		—		—		—		431		2,130		2,561
Total 1-4 Family Owner Occupied		18		1,341		18,908		48,782		11,584		52,241		132,874
Multifamily residential
Pass		71,436		113,456		75,113		157,777		62,050		187,747		667,579
Special mention		—		—		—		—		4,347		1,361		5,708
Substandard		—		—		5,057		—		—		10,230		15,287
Total Multifamily residential		71,436		113,456		80,170		157,777		66,397		199,338		688,574
Nonresidential properties
Pass		78,241		78,117		28,188		75,439		60,127		112,495		432,607
Special mention		—		—		—		2,632		—		936		3,568
Substandard		—		—		—		—		—		—		—
Total Nonresidential properties		78,241		78,117		28,188		78,071		60,127		113,431		436,175
Construction and Land
Pass		182,089		189,349		440,516		61,861		—		—		873,815
Special mention		—		—		4,567		—		—		—		4,567
Substandard		—		—		—		—		3,180		4,807		7,987
Total Construction and land		182,089		189,349		445,083		61,861		3,180		4,807		886,369
Total mortgage loans		332,549		384,966		599,048		397,417		186,913		554,827		2,455,720
Nonmortgage Loans:
Business loans
Pass		27,371		18,168		6,470		85		1,603		2,966		56,663
Special mention		366		—		—		52		—		196		614
Substandard		39		39		25		45		587		—		735
Total Business loans		27,776		18,207		6,495		182		2,190		3,162		58,012
Consumer loans
Pass		261		206		185		65		9		—		726
Special mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		1		1
Total Consumer loans		261		206		185		65		9		1		727
Total nonmortgage loans		28,037		18,413		6,680		247		2,199		3,163		58,739
Total loans, gross	$	360,586	$	403,379	$	605,728	$	397,664	$	189,112	$	557,990	$	2,514,459

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	2024		2023		2022		2021		2020		2019 and Prior		Total
	(in thousands)
December 31, 2024
Mortgage Loans:
1-4 Family Investor Owned
Pass	$	2,980	$	27,030	$	52,826	$	45,835	$	29,216	$	164,667	$	322,554
Special mention		—		855		—		1,637		787		1,757		5,036
Substandard		—		—		—		—		—		2,463		2,463
Total 1-4 Family Investor Owned		2,980		27,885		52,826		47,472		30,003		168,887		330,053
1-4 Family Owner Occupied
Pass		1,541		19,294		51,470		11,318		11,707		43,157		138,487
Special mention		—		—		—		472		—		—		472
Substandard		—		—		—		—		—		3,404		3,404
Total 1-4 Family Owner Occupied		1,541		19,294		51,470		11,790		11,707		46,561		142,363
Multifamily residential
Pass		145,528		77,659		160,731		63,842		57,108		145,658		650,526
Special mention		—		—		—		4,389		1,380		2,501		8,270
Substandard		—		5,566		—		—		1,657		4,140		11,363
Total Multifamily residential		145,528		83,225		160,731		68,231		60,145		152,299		670,159
Nonresidential properties
Pass		84,891		28,787		83,842		59,835		25,997		104,144		387,496
Special mention		—		—		—		—		—		2,402		2,402
Substandard		—				—		—		—		—		—
Total Nonresidential properties		84,891		28,787		83,842		59,835		25,997		106,546		389,898
Construction and Land
Pass		125,883		448,811		131,703		13,110		915		—		720,422
Special mention		—		—		—		3,180		—		—		3,180
Substandard		—		5,251		—		—		—		4,807		10,058
Total Construction and land		125,883		454,062		131,703		16,290		915		4,807		733,660
Total mortgage loans		360,823		613,253		480,572		203,618		128,767		479,100		2,266,133
Nonmortgage Loans:
Business loans
Pass		24,356		5,032		2,379		2,760		2,022		3,079		39,628
Special mention		—		—		135		871		—		215		1,221
Substandard		—		—		—		—		—		—		—
Total Business loans		24,356		5,032		2,514		3,631		2,022		3,294		40,849
Consumer loans
Pass		602		322		93		16		2		—		1,035
Special mention		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		3		3
Total Consumer loans		602		322		93		16		2		3		1,038
Total nonmortgage loans		24,958		5,354		2,607		3,647		2,024		3,297		41,887
Total loans, gross	$	385,781	$	618,607	$	483,179	$	207,265	$	130,791	$	482,397	$	2,308,020

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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


	September 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	$	308,836	$	—	$	365	$	2,527	$	311,728	$	2,527	$	—
Owner-Occupied		131,039		—		772		1,063		132,874		1,063		—
Multifamily residential		674,372		—		—		14,202		688,574		14,202		—
Nonresidential properties		435,039		1,136		—		—		436,175		—		—
Construction and land		881,562		—		—		4,807		886,369		4,807		—
Nonmortgage loans:
Business		55,959		1,075		98		880		58,012		880		—
Consumer		642		70		15		—		727		—		—
Total	$	2,487,449	$	2,281	$	1,250	$	23,479	$	2,514,459	$	23,479	$	—


	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	$	—

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 nine months ended September 30, 2025 and 2024, and as of and for the year ended December 31, 2024:



	For the Nine Months Ended September 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		(1,412	)		(624	)		3,119			812		(766	)		1,836			(22	)		2,943
Charge-offs		—			(38	)		—			—		—			(644	)		(3	)		(685	)
Recoveries		—			—			—			—		—			4			—			4
Balance, end of period	$	2,736		$	1,122		$	8,123		$	3,509	$	6,944		$	2,309		$	21		$	24,764
Ending balance: individually evaluated for impairment	$	—		$	—		$	—		$	—	$	—		$	880		$	—		$	880
Ending balance: collectively evaluated for impairment		2,736			1,122			8,123			3,509		6,944			1,429			21			23,884
Total	$	2,736		$	1,122		$	8,123		$	3,509	$	6,944		$	2,309		$	21		$	24,764
Loans:
Ending balance: individually evaluated for impairment	$	2,527		$	1,063		$	14,202		$	—	$	4,807		$	880		$	—		$	23,479
Ending balance: collectively evaluated for impairment		309,201			131,811			674,372			436,175		881,562			57,132			727			2,490,980
Total	$	311,728		$	132,874		$	688,574		$	436,175	$	886,369		$	58,012		$	727		$	2,514,459

	For the Three Months Ended September 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	$	2,601		$	1,082		$	8,863		$	3,294	$	6,895		$	1,345		$	20		$	24,100
Provision (benefit) charged to expense		135			40			(740	)		215		49			1,164			1			864
Charge-offs		—			—			—			—		—			(200	)		—			(200	)
Recoveries		—			—			—			—		—			—			—			—
Balance, end of period	$	2,736		$	1,122		$	8,123		$	3,509	$	6,944		$	2,309		$	21		$	24,764

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	For the Nine Months Ended September 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	)		(185	)		302		(35	)		2,010		683			(2,122	)		426
Charge-offs		—			—			—		(7	)		—		(502	)		(2,683	)		(3,192	)
Recoveries		—			—			—		—			—		9			569			578
Balance, end of period	$	4,188		$	1,827		$	4,667	$	3,134		$	6,817	$	721		$	2,612		$	23,966
Ending balance: individually evaluated for impairment	$	—		$	—		$	—	$	—		$	—	$	180		$	—		$	180
Ending balance: collectively evaluated for impairment		4,188			1,827			4,667		3,134			6,817		541			2,612			23,786
Total	$	4,188		$	1,827		$	4,667	$	3,134		$	6,817	$	721		$	2,612		$	23,966
Loans:
Ending balance: individually evaluated for impairment	$	436		$	1,867		$	4,685	$	—		$	4,807	$	180		$	—		$	11,975
Ending balance: collectively evaluated for impairment		331,944			143,198			673,344		383,277			626,654		28,319			4,021			2,190,757
Total	$	332,380		$	145,065		$	678,029	$	383,277		$	631,461	$	28,499		$	4,021		$	2,202,732

	For the Three Months Ended September 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	$	4,188		$	1,946		$	4,185	$	2,297		$	6,796	$	987		$	3,662		$	24,061
(Benefit) provision charged to expense		—			(119	)		482		844			21		183			(610	)		801
Charge-offs		—			—			—		(7	)		—		(450	)		(634	)		(1,091	)
Recoveries		—			—			—		—			—		1			194			195
Balance, end of period	$	4,188		$	1,827		$	4,667	$	3,134		$	6,817	$	721		$	2,612		$	23,966

Table of Contents

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

The following tables summarize gross charge-offs by vintage:


											Revolving
	2024		2023		2022		2021		2020 and Prior		lines of credit		Total
	(in thousands)
For the Three Months Ended September 30, 2025
Business loans	$	199	$	—	$	—	$	—	$	—	$	—	$	199
Total charge-offs	$	199	$	—	$	—	$	—	$	—	$	—	$	199
For the Nine Months Ended September 30, 2025
1-4 Family Owner Occupied	$	—	$	—	$	—	$	—	$	38	$	—	$	38
Business loans		618		—		—		—		25		—		643
Consumer loans		—		3		—		—		—		—		3
Total charge-offs	$	618	$	3	$	—	$	—	$	63	$	—	$	684

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


											Revolving
	2024		2023		2022		2021		2020 and Prior		lines of credit		Total
	(in thousands)
For the Three Months Ended September 30, 2024
Nonresidential properties	$	—	$	—	$	—	$	—	$	7	$	—	$	7
Business loans		200		250		—		—		—		—		450
Consumer loans		—		—		1		—		—		633		634
Total charge-offs	$	200	$	250	$	1	$	—	$	7	$	633	$	1,091
For the Nine Months Ended September 30, 2024
Nonresidential properties	$	—	$	—	$	—	$	—	$	7	$	—	$	7
Business loans		219		250		—		8		25		—		502
Consumer loans		—		—		6		—		2		2,675		2,683
Total charge-offs	$	219	$	250	$	6	$	8	$	34	$	2,675	$	3,192

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.

The following information relates to impaired loans as of and for the nine months ended September 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 Nine Months Ended September 30, 2025	Balance		Allowance		Allowance		Investment		Allowance		Investment		on a Cash Basis
	(in thousands)
Mortgage loans:
1-4 Family residential	$	3,589	$	3,590	$	—	$	3,590	$	—	$	2,768	$	97
Multifamily residential		13,862		14,202		—		14,202		—		11,491		292
Nonresidential properties		—		—		—		—		—		135		—
Construction and land		4,807		4,807		—		4,807		—		7,433		—
Nonmortgage loans:
Business		880		—		880		880		880		417		35
Consumer		—		—		—		—		—		—		—
Total	$	23,138	$	22,599	$	880	$	23,479	$	880	$	22,244	$	424

	Unpaid Contractual		Recorded Investment		Recorded Investment		Total				Average		Interest Income
	Principal		With No		With		Recorded		Related		Recorded		Recognized
As of and For the Nine Months Ended September 30, 2024	Balance		Allowance		Allowance		Investment		Allowance		Investment		on a Cash Basis
	(in thousands)
Mortgage loans:
1-4 Family residential	$	2,284	$	2,303	$	—	$	2,303	$	—	$	2,452	$	19
Multifamily residential		4,603		4,685		—		4,685		—		4,379		5
Nonresidential properties		—		—		—		—		—		317		—
Construction and land		4,807		4,807		—		4,807		—		5,612		1,059
Nonmortgage loans:
Business		180		—		180		180		180		222		2
Consumer		—		—		—		—		—		—		—
Total	$	11,874	$	11,795	$	180	$	11,975	$	180	$	12,982	$	1,085

Table of Contents

Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


	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 September 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.

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 September 30, 2025 and December 31, 2024, there were 17 and 18 troubled debt restructured loans totaling $5.1 million and $5.4 million, respectively, of which $4.4 million and $4.7 million are on accrual status at September 30, 2025 and December 31, 2024, respectively. 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 September 30, 2025 and December 31, 2024, the allowance for off-balance sheet credit losses was $2.6 million and $2.8 million, respectively, which is included in the "Other liabilities" on the Consolidated Statements of Financial Condition. During the three months ended September 30, 2025 and 2024, the Company had $0.2 million and $0.3 million, respectively, in benefit for credit losses and $0.2 million and $0.6 million, respectively, in benefit for credit losses for the nine months ended September 30, 2025 and 2024, for off-balance items, which are included in "Provision (benefit) for contingencies" in the Consolidated Statements of Operations.

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 14.3 years, none of which has a renewal option reasonably certain of exercise, which has been reflected in the Company’s calculation of lease term.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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:


	September 30,			December 31,
	2025			2024
	(Dollars in thousands)
Operating lease ROU assets	$	28,295		$	29,093
Operating lease liabilities		30,028			30,696
Weighted-average remaining lease term-operating leases	11.6 years			12.0 years
Weighted average discount rate-operating leases		5.1	%		5.1	%

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


		For the Three				For the Nine
		Months Ended				Months Ended
		September 30,				September 30,
		2025		2024		2025		2024
		(Dollars in thousands)
Lease Cost
Operating lease cost	Occupancy and equipment	$	1,070	$	1,035	$	3,242	$	3,082
Operating lease cost	Other operating expenses		3		2		7		24
Short-term lease cost	Other operating expenses		8		7		24		17
Variable lease cost	Occupancy and equipment		39		46		127		122
Total lease cost		$	1,120	$	1,090	$	3,400	$	3,245

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


	Minimum Rental
Years ended December 31:	(in thousands)
Remainder of 2025	$	1,005
2026		3,859
2027		3,607
2028		3,629
2029		3,176
Thereafter		24,393
Total Minimum payments required		39,669
Less: implied interest		9,641
Present value of lease liabilities	$	30,028

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Note 7. Deposits

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


	September 30,		December 31,
	2025		2024
	(in thousands)
Demand	$	192,595	$	169,178
Interest-bearing deposits:
NOW/IOLA accounts		75,051		62,616
Money market accounts		821,844		636,219
Reciprocal deposits		154,548		130,677
Savings accounts (1)		117,401		116,219
Total NOW, money market, reciprocal and savings		1,168,844		945,731
Certificates of deposit of $250K or more		209,819		204,293
Brokered certificates of deposits (2)		67,952		94,531
Listing service deposits (2)		4,150		7,376
Certificates of deposit less than $250K		419,721		474,104
Total certificates of deposit		701,642		780,304
Total interest-bearing deposits		1,870,486		1,726,035
Total deposits	$	2,063,081	$	1,895,213

(1)

As of September 30, 2025 and December 31, 2024, Advance payments by borrowers for taxes and insurance in the amounts of $14.3 million and $10.3 million, respectively, are included in deposits. The $10.3 million at December 31, 2024 were reclassified for consistency.

(2)

At September 30, 2025 and December 31, 2024, there were no individual listing service deposits amounting to $250,000 or more. At December 31, 2024, 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 September 30, 2025 scheduled maturities of certificates of deposit were as follows:


	(in thousands)
2025	$	285,253
2026		329,550
2027		73,335
2028		8,293
2029		2,532
Thereafter		2,679
	$	701,642

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

Note 8. Borrowings

The Bank had outstanding term advances from the FHLBNY at September 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 September 30, 2025 and December 31, 2024, respectively. The Bank had a $25.0 million overnight line of credit advance from the FHLBNY at December 31, 2024. The Bank had no overnight line of credit advance from the FHLBNY at September 30, 2025

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

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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


	September 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	$	—	$	—		—	%	$	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
	$	521,100	$	521,100		3.84	%	$	596,100	$	596,100		3.94	%

Interest expense on advances totaled $5.1 million and $6.8 million for the three months ended September 30, 2025 and 2024, and $15.5 million and $21.9 million for the nine months ended September 30, 2025 and 2024, respectively.

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 September 30,				For the Nine Months Ended September 30,
	2025		2024		2025		2024
	(Dollars in thousands except share data)

Net income available to common stockholders	$	6,227	$	2,152	$	17,723	$	7,683
Common shares outstanding for basic EPS:
Weighted average common shares outstanding		24,000,948		23,814,505		23,983,560		23,805,066
Less: Weighted average unallocated Employee Stock Ownership Plan (ESOP) shares		1,234,753		1,368,496		1,267,940		1,401,808
Basic weighted average common shares outstanding		22,766,195		22,446,009		22,715,620		22,403,258
Basic earnings per common share	$	0.27	$	0.10	$	0.78	$	0.34
Potential dilutive common shares:
Add: Dilutive effect of restricted stock awards and stock options		369,253		166,019		277,035		62,920
Diluted weighted average common shares outstanding		23,135,448		22,612,028		22,992,655		22,466,178
Diluted earnings per common share	$	0.27	$	0.10	$	0.77	$	0.34

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

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 September 30, 2025 and December 31, 2024 are as follows:


	September 30,		December 31,
	2025		2024
	(in thousands)
Commitments to grant mortgage loans	$	270,978	$	359,170
Unfunded commitments under lines of credit		125,274		52,329
Total commitments	$	396,252	$	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.

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 September 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 September 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 September 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.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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, 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.

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 September 30, 2025, the fair value carrying amount of mortgages held for sale measured under the fair value option was $5.8 million and the aggregate unpaid principal amounted to $5.8 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.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 September 30, 2025 and December 31, 2024, and indicate the level within the fair value hierarchy utilized to determine the fair value:


			September 30, 2025
Description	Total		Level 1		Level 2		Level 3
	(in thousands)
Available-for-Sale Securities, at fair value:
U.S. Government Bonds	$	2,955	$	2,955	$	—	$	—
Corporate bonds		13,895		458		13,437		—
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		26,798		—		26,798		—
FHLMC Certificates		7,302		—		7,302		—
FNMA Certificates		43,789		—		43,789		—
GNMA Certificates		83		—		83		—
Mortgage Loans Held for Sale, at fair value		5,794		—		5,794		—
	$	100,616	$	3,413	$	97,203	$	—


			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 September 30, 2025 and December 31, 2024 and indicate the fair value hierarchy utilized to determine the fair value:


	September 30, 2025
	Total		Level 1		Level 2		Level 3
	(in thousands)
Impaired loans	$	23,479	$	—	$	—	$	23,479


	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 nine months ended September 30, 2025 and 2024, respectively.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

As of September 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)
September 30, 2025
Financial assets:
Cash and cash equivalents	$	146,579	$	146,579	$	—	$	—	$	146,579
Available-for-sale securities, at fair value		94,822		3,413		91,409		—		94,822
Held-to-maturity securities, at amortized cost, net		285,125		—		279,852		—		279,852
Placement with banks		249		—		249		—		249
Mortgage loans held for sale, at fair value		5,794		—		5,794		—		5,794
Loans receivable, net		2,490,046		—		—		2,439,878		2,439,878
Accrued interest receivable		18,903		—		18,903		—		18,903
FHLBNY stock		25,945		25,945		—		—		25,945
Financial liabilities:
Deposits:
Demand deposits		192,595		192,595		—		—		192,595
Interest-bearing deposits		1,168,844		1,168,844		—		—		1,168,844
Certificates of deposit		701,642		—		700,368		—		700,368
Borrowings		521,100		—		518,873		—		518,873
Accrued interest payable		4,372		—		4,372		—		4,372


	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		945,731		945,731		—		—		945,731
Certificates of deposit		780,304		—		778,603		—		778,603
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 September 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 September 30, 2025 and December 31, 2024.

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

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 September 30, 2025 and December 31, 2024, the applicable capital adequacy requirements specified below have been met.

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 13.8% at September 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 September 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)
September 30, 2025
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	568,651		24.08	%	$	188,957	8.00%	$	236,196		10.00	%
Tier 1 Capital to Risk-Weighted Assets		541,306		22.92	%		141,717	6.00%		188,957		8.00	%
Common Equity Tier 1 Capital Ratio		316,306		13.39	%		106,288	4.50%		153,527		6.50	%
Tier 1 Capital to Total Assets		541,306		17.33	%		124,918	4.00%		156,148		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	531,580		21.79	%	$	195,207	8.00%	$	244,008		10.00	%
Tier 1 Capital to Risk-Weighted Assets		504,235		20.66	%		146,405	6.00%		195,207		8.00	%
Common Equity Tier 1 Capital Ratio		504,235		20.66	%		109,804	4.50%		158,605		6.50	%
Tier 1 Capital to Total Assets		504,235		16.08	%		125,467	4.00%		156,833		5.00	%

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)


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

Note 13. Accumulated Other Comprehensive Loss

The accumulated other comprehensive loss is as follows:


	September 30, 2025
	December 31, 2024			Change		September 30, 2025
	(in thousands)
Unrealized losses on available-for-sale securities, net	$	(15,297	)	$	3,711	$	(11,586	)
Total	$	(15,297	)	$	3,711	$	(11,586	)


	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 nine months ended September 30, 2025 and 2024 were as follows:


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2025			2024			2025			2024
	(in thousand)
Beginning balance	$	8,256		$	9,303		$	7,671		$	8,810
Originations		675			248			1,400			1,840
Payments		(43	)		(49	)		(183	)		(1,148	)
Ending balance	$	8,888		$	9,502		$	8,888		$	9,502

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Ponce Financial Group, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

The Company held deposits in the amount of $8.1 million and $8.8 million from directors, executive officers and non-executive officers at September 30, 2025 and December 31, 2024, respectively.

Note 15. Subsequent Events

Ponce Bank Conversion

On October 10, 2025, the Company wholly-owned subsidiary, Ponce Bank (formerly a federally chartered stock savings association), completed its previously announced conversion to a national bank and commenced operations as Ponce Bank, National Association. In connection with the conversion of Ponce Bank, the Company also commenced operations as a bank holding company as of the same date. Further, the Company also became a financial holding company, which is an additional election that allows the Company to engage in activities that are financial in nature or incidental to a financial activity.

Table of Contents

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 September 30, 2025 and December 31, 2024, and results of operations for the three and nine months ended September 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 that are worse than expected, particularly in connection with low or negative growth in the. economy as well as economic uncertainty (including from an economic slowdown or recession, the federal government shutdown, unemployment, or limited growth in consumer income or spending), either nationally or in the market areas;

•

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;

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•

adverse changes related to the businesses of our partners;

•

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

•

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

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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 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. On June 24, 2025, the Bank received an additional $10.0 million from the New York City Department of Finance resulting in a total BDD Program deposit of $45.0 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

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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.

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.

Inwood, New York Branch

On September 16, 2025, Ponce Bank opened another branch at its new location 3879 9th Avenue, New York, NY 10034. With its ribbon cutting ceremony on October 6, 2025, the Bank noted that this new branch at this Inwood location will create opportunities for residents and small business owners in one of Manhattan's most vibrant and diverse neighborhoods.

Ponce Bank Conversion

On October 10, 2025, the Company's wholly-owned subsidiary, Ponce Bank (formerly a federally chartered stock savings association), completed its previously announced conversion to a national bank and commenced operations as Ponce Bank, National Association. In connection with the conversion of Ponce Bank, the Company also commenced operations as a bank holding company as of the same date. Further, the Company also became a financial holding company, which is an additional election that allows the Company to engage in activities that are financial in nature or incidental to a financial activity.

Ponce Bank sought 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 a financial 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.

Policies with respect to the methodology used to determine the allowance for credit losses is a critical accounting policy and estimate because of its importance to presentation of the Company's financial condition and results of operations and high level of subjectivity. The critical accounting policy involves a higher degree of complexity and requires management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. The allowance for credit losses policy and its application is reviewed periodically, and at least annually, with the Audit Committee of the Board of Directors.

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.

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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 September 30, 2025 and December 31, 2024, the Company had $639.1 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 $3.16 billion in assets, $2.49 billion in loans receivables, net of allowance for credit losses of $24.8 million, and $2.06 billion in deposits at September 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.

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

Total Assets. Total consolidated assets increased $117.1 million, or 3.9%, to $3.16 billion at September 30, 2025 from $3.04 billion at December 31, 2024. The increase in total assets is largely attributable to increases of $203.4 million in net loans receivable, $8.1 million in other assets, $6.7 million in cash and cash equivalents, $1.1 million in accrued interest receivable and $0.3 million in deferred tax asset, partially offset by decreases of $82.8 million in held-to-maturity securities, $10.1 million in available-for-sale securities, $4.9 million in mortgage loans held for sale, $3.2 million in Federal Home Loan Bank of New York stock, $0.8 million in right of use asset and $0.7 million in premises and equipment, net.

Cash and Cash Equivalents. Cash and cash equivalents increased $6.7 million, or 4.8%, to $146.6 million at September 30, 2025, compared to $139.8 million at December 31, 2024. The increase in cash and cash equivalents was primarily the result of an increase of $167.9 million in net deposits, $97.7 million in proceeds from maturities, calls and principal repayment on securities, $6.7 million from sale of loans and $3.2 million in net redemption of FHLBNY stock. The increase in cash and cash equivalents was offset primarily by an increase of $212.7 million in net loans and $75.0 million in net repayment of borrowings.

Securities. The Company securities portfolio decreased $10.1 million, or 9.7%, to $94.8 million in available-for-sale at September 30, 2025 from $105.0 million December 31, 2024 and decreased $82.8 million, or 22.5%, to $285.1 million in held-to-maturity at September 30, 2025 from $367.9 million at December 31, 2024. The decrease in the securities portfolio was primarily due to three available-for-sale securities in the total amount of $7.0 million and three held-to-maturity securities in the total amount of $50.0 million that matured and/or were called and changes in principal amount of the securities.

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


	September 30, 2025					December 31, 2024					Increase (Decrease)
	Amount		Percent			Amount		Percent			Dollars			Percent
	(Dollars in thousands)
Mortgage loans:
1-4 Family residential
Investor-Owned	$	311,728		12.4	%	$	330,053		14.3	%	$	(18,325	)		(5.6	%)
Owner-Occupied		132,874		5.3	%		142,363		6.2	%		(9,489	)		(6.7	%)
Multifamily residential		688,574		27.4	%		670,159		29.0	%		18,415			2.7	%
Nonresidential properties		436,175		17.4	%		389,898		16.9	%		46,277			11.9	%
Construction and land		886,369		35.3	%		733,660		31.8	%		152,709			20.8	%
Total mortgage loans		2,455,720		97.7	%		2,266,133		98.2	%		189,587			8.4	%
Nonmortgage loans:
Business loans		58,012		2.3	%		40,849		1.8	%		17,163			42.0	%
Consumer loans		727		0.0	%		1,038		0.0	%		(311	)		(30.0	%)
		58,739		2.3	%		41,887		1.8	%		16,852			40.2	%
Total	$	2,514,459		100.0	%	$	2,308,020		100.0	%	$	206,439			8.9	%

Based on current internal loan reviews, the Company believes that the quality of our underwriting, our weighted average loan-to-value ratio of 49.3% 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 $18.4 million, or 2.7%, 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 $152.7 million, or 20.8%, when compared to December 31, 2024. The $152.7 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 $88.2 million as of September 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 70 construction and land mortgage loans with balances of $886.4 million as indicated in the table above. Of those loans, 38 loans with aggregate balances of $599.6 million, or 67.7%, of the total, have a percentage of completion of 80% or more. Within those 38 loans there are 20 loans with balances of $328.6 million that are 100% completed and the properties have received their certificates of occupancy.

Commercial real estate loans, as defined by applicable banking regulations, include multifamily residential, nonresidential properties, and construction and land mortgage loans. At September 30, 2025 and December 31, 2024, approximately 3.4% 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 September 30, 2025 and December 31, 2024, the Bank’s construction and land mortgage loans as a percentage of total risk-based capital was 167.0% and 145.0%, respectively. Investor-owned commercial real estate mortgage loans as a percentage of total risk-based capital was 366.1% and 341.7% as of September 30, 2025 and December 31, 2024, respectively. At September 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.

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Loans Held For Sale. Loans held for sale, at fair value, at September 30, 2025 decreased $4.9 million, or 46.0%, to $5.8 million from $10.7 million at December 31, 2024.

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


	September 30, 2025					December 31, 2024					Increase (Decrease)
			Percent					Percent
	Amount		of Total			Amount		of Total			Dollars			Percent
	(Dollars in thousands)
Demand	$	192,595		9.4	%	$	169,178		8.9	%	$	23,417			13.8	%
Interest-bearing deposits:
NOW/IOLA accounts		75,051		3.6	%		62,616		3.3	%		12,435			19.9	%
Money market accounts		821,844		39.8	%		636,219		33.6	%		185,625			29.2	%
Reciprocal deposits		154,548		7.5	%		130,677		6.9	%		23,871			18.3	%
Savings accounts (1)		117,401		5.7	%		116,219		6.1	%		1,182			1.0	%
Total NOW, money market, reciprocal and savings		1,168,844		56.6	%		945,731		49.9	%		223,113			23.6	%
Certificates of deposit of $250K or more		209,819		10.2	%		204,293		10.8	%		5,526			2.7	%
Brokered certificates of deposit (2)		67,952		3.3	%		94,531		5.0	%		(26,579	)		(28.1	%)
Listing service deposits (2)		4,150		0.2	%		7,376		0.4	%		(3,226	)		(43.7	%)
Certificates of deposit less than $250K		419,721		20.3	%		474,104		25.0	%		(54,383	)		(11.5	%)
Total certificates of deposit		701,642		34.0	%		780,304		41.2	%		(78,662	)		(10.1	%)
Total interest-bearing deposits		1,870,486		90.6	%		1,726,035		91.1	%		144,451			8.4	%
Total deposits	$	2,063,081		100.0	%	$	1,895,213		100.0	%	$	167,868			8.9	%

(1)

(2)

At September 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.

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 September 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 September 30, 2025 and December 31, 2024 of $521.1 million and $571.1 million in term advances from the FHLBNY. The Bank had no overnight line of credit advance from the FHLBNY at September 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 both periods at September 30, 2025 and December 31, 2024. The Bank did not have any term and overnight line of credit advances from the FRBNY at September 30, 2025 and December 31, 2024.

Stockholders’ Equity. The Company’s consolidated stockholders’ equity increased $24.3 million, or 4.8%, to $529.8 million as of September 30, 2025 from $505.5 million as of December 31, 2024. The $24.3 million increase in stockholders’ equity was largely attributable to $18.6 million in net income, $3.7 million in other comprehensive income, $1.4 million impact to additional paid in capital as a result of share-based compensation, $1.4 million from release of ESOP shares and $0.1 million from exercise of stock options, offset by $0.8 million in dividends on preferred shares.

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

The discussion of the Company’s results of operations for the three months ended September 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 $6.2 million for the three months ended September 30, 2025 compared to net income available to common stockholders of $2.2 million for the three months ended September 30, 2024. Earnings per basic and diluted share was $0.27 for the three months ended September 30, 2025 compared to earnings per basic and diluted share of $0.10 for the three months ended September 30, 2024. The $4.1 million increase of net income available to common stockholders from the three months ended September 30, 2024, was due to increases of $6.2 million in net interest income and $0.3 million in non-interest income, partially offset by increases of $1.6 million in provision for income taxes and $0.8 million in provision for credit losses.

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Net income for the three months ended September 30, 2025 and 2024, which excludes $0.3 million and $0.3 million, respectively, in dividends on preferred shares, were $6.5 million and $2.4 million, respectively.

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


	For the Three Months Ended September 30,				Increase (Decrease)
	2025		2024		Dollars			Percent
	(Dollars in thousands)
Interest and dividend income	$	46,847	$	41,293	$	5,554			13.5	%
Interest expense		21,599		22,270		(671	)		(3.0	%)
Net interest income		25,248		19,023		6,225			32.7	%
Provision for credit losses		1,364		537		827			154.0	%
Net interest income after provision for credit losses		23,884		18,486		5,398			29.2	%
Non-interest income		1,492		1,151		341			29.6	%
Non-interest expense		16,618		16,566		52			0.3	%
Income before income taxes		8,758		3,071		5,687			185.2	%
Provision for income taxes		2,250		638		1,612			252.7	%
Net income	$	6,508	$	2,433	$	4,075			167.5	%
Dividends on preferred shares		281		281		—			—	%
Net income available to common stockholders	$	6,227	$	2,152	$	4,075			189.4	%
Earnings per share:
Basic	$	0.27	$	0.10	$	0.17			170.0	%
Diluted	$	0.27	$	0.10	$	0.17			170.0	%

(1) For the three months ended September 30, 2024, benefit 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 $5.6 million, or 13.5%, to $46.8 million for the three months ended September 30, 2025 from $41.3 million for the three months ended September 30, 2024. Interest income on loans receivable, which is the Company’s primary source of income, increased $8.5 million, or 25.9%, to $41.5 million for the three months ended September 30, 2025 from $32.9 million for the three months ended September 30, 2024.

Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $3.0 million, or 35.8%, to $5.4 million for the three months ended September 30, 2025 from $8.3 million for the three months ended September 30, 2024. The decrease was primarily attributable to a decrease of $1.5 million in interest on securities and $1.5 million in interest on deposits due from banks.

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


	For the Three Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
1-4 Family residential	$	6,649	$	7,509	$	(860	)		(11.5	%)
Multifamily residential		11,436		7,130		4,306			60.4	%
Nonresidential properties		6,646		4,889		1,757			35.9	%
Construction and land		15,100		12,708		2,392			18.8	%
Business loans		1,636		596		1,040			174.5	%
Consumer loans		19		113		(94	)		(83.2	%)
Total interest income on loans receivable	$	41,486	$	32,945	$	8,541			25.9	%

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

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	For the Three Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Interest on deposits due from banks	$	978	$	2,430	$	(1,452	)		(59.8	%)
Interest on securities		3,913		5,324		(1,411	)		(26.5	%)
Dividend on FHLBNY stock		470		594		(124	)		(20.9	%)
Total interest and dividend income	$	5,361	$	8,348	$	(2,987	)		(35.8	%)

Interest Expense. Interest expense decreased $0.7 million, or 3.0%, to $21.6 million for the three months ended September 30, 2025 from $22.3 million for the three months ended September 30, 2024.

The following table presents interest expense for the periods indicated


	For the Three Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Certificates of deposit	$	6,553	$	6,926	$	(373	)		(5.4	%)
Money market		9,831		8,318		1,513			18.2	%
Savings		28		27		1			3.7	%
NOW/IOLA		137		174		(37	)		(21.3	%)
Borrowings		5,050		6,825		(1,775	)		(26.0	%)
Total interest expense	$	21,599	$	22,270	$	(671	)		(3.0	%)

Net Interest Income. Net interest income increased $6.2 million, or 32.7%, to $25.2 million for the three months ended September 30, 2025 from $19.0 million for the three months ended September 30, 2024. The $6.2 million increase in net interest income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was attributable to an increase of $5.6 million in total interest and dividend income primarily due to increases in average loans receivable and a decrease of $0.7 million in interest expense due primarily to a higher average cost of funds on interest bearing liabilities.

Net interest rate spread increased by 74 basis points to 2.51% for the three months ended September 30, 2025 from 1.77% for the three months ended September 30, 2024. The increase in the net interest rate spread for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to an increase in the average yields on interest-earning assets of 37 basis points to 6.12% for the three months ended September 30, 2025 from 5.75% for the three months ended September 30, 2024, and a decrease in the average rates paid on interest-bearing liabilities of 37 basis points to 3.61% for the three months ended September 30, 2025 from 3.98% for the three months ended September 30, 2024.

Net interest margin increased 65 basis points for the three months ended September 30, 2025, to 3.30% from 2.65% for the three months ended September 30, 2024.

Non-Interest Income. Non-interest income increased $0.3 million, or 29.6%, to $1.5 million for the three months ended September 30, 2025 from $1.2 million for the three months ended September 30, 2024. The $0.3 million increase in non-interest income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was largely attributable to increases of $0.4 million in grant income and $0.3 million in late and prepayment charges, partially offset by a decrease of $0.4 million in other non-interest income attributable to the Bank's investment in Oaktree as a result of a loss from Oaktree's investment.

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


	For the Three Months Ended September 30,					Change
	2025			2024		Amount			Percent
	(Dollars in thousands)
Service charges and fees	$	539		$	508	$	31			6.1	%
Brokerage commissions		8			—		8			—	%
Late and prepayment charges		385			77		308			400.0	%
Income on sale of mortgage loans		166			218		(52	)		(23.9	%)
Grant income		429			—		429			—	%
Other		(35	)		348		(383	)		(110.1	%)
Total non-interest income	$	1,492		$	1,151	$	341			29.6	%

Non-Interest Expense. Non-interest expense remains flat at $16.6 million for the three months ended September 30, 2025 and 2024. Non-interest expense was impacted by increases of $0.2 million in compensation and benefits, $0.2 million in data processing expenses and $0.1 million in occupancy and equipment, partially offset by decreases of $0.4 million in direct loan expenses and $0.1 million in federal deposit insurance and regulatory assessment.

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


	For the Three Months Ended September 30,					Change
	2025		2024			Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	7,868	$	7,674		$	194			2.5	%
Occupancy and equipment		3,934		3,786			148			3.9	%
Data processing expenses		1,296		1,099			197			17.9	%
Direct loan expenses		155		573			(418	)		(72.9	%)
Insurance and surety bond premiums		318		292			26			8.9	%
Office supplies, telephone and postage		170		222			(52	)		(23.4	%)
Professional fees		1,409		1,351			58			4.3	%
Microloans recoveries		—		(54	)		54			—	%
Marketing and promotional expenses		184		180			4			2.2	%
Federal deposit insurance and regulatory assessment (2)		266		392			(126	)		(32.1	%)
Other operating expenses (2)		1,018		1,051			(33	)		(3.1	%)
Total non-interest expense (1)	$	16,618	$	16,566		$	52			0.3	%

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

(2) For the three months ended September 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 $2.3 million for the three months ended September 30, 2025 compared to a provision for income taxes of $0.6 million for the three months ended September 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 September 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)	$	2,499,268		41,486		6.59	%	$	2,096,592	$	32,945		6.25	%
Securities (3)		418,513		3,913		3.71	%		548,708		5,324		3.86	%
Other (4)		119,262		1,448		4.82	%		210,057		3,024		5.73	%
Total interest-earning assets		3,037,043		46,847		6.12	%		2,855,357		41,293		5.75	%
Non-interest-earning assets		96,095							107,153
Total assets	$	3,133,138						$	2,962,510
Interest-bearing liabilities:
NOW/IOLA	$	78,526	$	137		0.69	%	$	74,690	$	174		0.93	%
Money market		958,277		9,831		4.07	%		711,385		8,318		4.65	%
Savings (5)		119,159		28		0.09	%		122,722		27		0.09	%
Certificates of deposit		698,019		6,553		3.72	%		655,562		6,926		4.20	%
Total deposits		1,853,981		16,549		3.54	%		1,564,359		15,445		3.93	%
Borrowings		521,100		5,050		3.84	%		660,312		6,825		4.11	%
Total interest-bearing liabilities		2,375,081		21,599		3.61	%		2,224,671		22,270		3.98	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		199,922		—					185,543		—
Other non-interest-bearing liabilities		31,406		—					49,702		—
Total non-interest-bearing liabilities		231,328		—					235,245		—
Total liabilities		2,606,409		21,599					2,459,916		22,270
Total equity		526,729							502,594
Total liabilities and total equity	$	3,133,138				3.61	%	$	2,962,510				3.98	%
Net interest income			$	25,248						$	19,023
Net interest rate spread (6)						2.51	%						1.77	%
Net interest-earning assets (7)	$	661,962						$	630,686
Net interest margin (8)						3.30	%						2.65	%
Average interest-earning assets to interest-bearing liabilities						127.87	%						128.35	%

(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)

For the three months ended September 30, 2024, Advance payments by borrowers for taxes and insurance in the amount of $13.2 million, were reclassified to Savings.

(6)

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

(7)

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

(8)

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

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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 September 30,
	2025 vs. 2024
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans (1)	$	6,435		$	2,106		$	8,541
Securities (2)		(1,252	)		(159	)		(1,411	)
Other		(1,302	)		(274	)		(1,576	)
Total interest-earning assets		3,881			1,673			5,554
Interest-bearing liabilities:
NOW/IOLA		8			(45	)		(37	)
Money market		2,918			(1,405	)		1,513
Savings		(1	)		2			1
Certificates of deposit		469			(842	)		(373	)
Total deposits		3,394			(2,290	)		1,104
Borrowings		(1,424	)		(351	)		(1,775	)
Total interest-bearing liabilities		1,970			(2,641	)		(671	)
Change in net interest income	$	1,911		$	4,314		$	6,225

(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 Nine Months Ended September 30, 2025 and 2024

The discussion of the Company’s results of operations for the nine months ended September 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 $17.7 million for the nine months ended September 30, 2025 compared to net income available to common stockholders of $7.7 million for the nine months ended September 30, 2024. Earnings per basic share was $0.78 and diluted share was $0.77 for the nine months ended September 30, 2025 compared to earnings per basic and diluted share of $0.34 for nine months ended September 30, 2024. The $10.0 million increase of net income available to common stockholders from the nine months ended September 30, 2024, was due to increases of $16.1 million in net interest income and $0.8 million in non-interest income, partially offset by increases of $3.1 million in provision for credit losses, $3.0 million in provision for income taxes, $0.5 million in dividends on preferred shares and $0.4 million in non-interest expense. Net income for the nine months ended September 30, 2025 and 2024, which excludes $0.8 million and $0.4 million in dividends on preferred shares, was $18.6 million and $8.0 million, respectively.

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


	For the Nine Months Ended September 30,					Increase (Decrease)
	2025		2024			Dollars		Percent
	(Dollars in thousands)
Interest and dividend income	$	136,704	$	119,751		$	16,953		14.2	%
Interest expense		64,827		64,001			826		1.3	%
Net interest income		71,877		55,750			16,127		28.9	%
Provision (benefit) for credit losses (1)		2,705		(346	)		3,051		(881.8	%)
Net interest income after provision (benefit) for credit losses		69,172		56,096			13,076		23.3	%
Non-interest income		5,933		5,116			817		16.0	%
Non-interest expense (1)		50,375		49,992			383		0.8	%
Income before income taxes		24,730		11,220			13,510		120.4	%
Provision for income taxes		6,163		3,181			2,982		93.7	%
Net income		18,567		8,039			10,528		131.0	%
Dividends on preferred shares		844		356			488		137.1	%
Net income available to common stockholders	$	17,723	$	7,683		$	10,040		130.7	%
Earnings per common share:
Basic	$	0.78	$	0.34		$	0.44		129.4	%
Diluted	$	0.77	$	0.34		$	0.43		126.5	%

(1) For the nine months ended September 30, 2024, provision for contingencies in the amount of $0.6 million were reclassified from total non-interest expense to provision (benefit) for credit losses.

Interest and Dividend Income. Interest and dividend income increased $17.0 million, or 14.2%, to $136.7 million for the nine months ended September 30, 2025 from $119.8 million for the nine months ended September 30, 2024. Interest income on loans receivable, which is the Company’s primary source of income, increased $24.0 million, or 25.3%, to $118.9 million for the nine months ended September 30, 2025 from $94.9 million for the nine months ended September 30, 2024.

Total interest and dividend income on securities, FHLBNY stock and deposits due from banks decreased $7.1 million, or 28.4%, to $17.8 million for the nine months ended September 30, 2025 from $24.9 million for the nine months ended September 30, 2024. The decrease was primarily attributable to decreases of $3.7 million in interest on securities and $3.4 million in interest on deposits due from banks, offset by an increase of $0.1 million in dividend on FHLBNY stock.

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


	For the Nine Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
1-4 Family residential	$	20,910	$	22,462	$	(1,552	)		(6.9	%)
Multifamily residential		30,751		21,026		9,725			46.3	%
Nonresidential properties		18,060		13,697		4,363			31.9	%
Construction and land		45,351		35,633		9,718			27.3	%
Business loans		3,779		1,601		2,178			136.0	%
Consumer loans		62		471		(409	)		(86.8	%)
Total interest income on loans receivable	$	118,913	$	94,890	$	24,023			25.3	%

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


	For the Nine Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Interest on deposits due from banks	$	3,453	$	6,883	$	(3,430	)		(49.8	%)
Interest on securities		12,680		16,429		(3,749	)		(22.8	%)
Dividend on FHLBNY stock		1,658		1,549		109			7.0	%
Total interest and dividend income	$	17,791	$	24,861	$	(7,070	)		(28.4	%)

Interest Expense. Interest expense increased $0.8 million, or 1.3%, to $64.8 million for the nine months ended September 30, 2025 from $64.0 million for the nine months ended September 30, 2024.

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The following table presents interest expense for the periods indicated:


	For the Nine Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Certificates of deposit	$	21,689	$	19,664	$	2,025			10.3	%
Money market		27,172		21,819		5,353			24.5	%
Savings		84		86		(2	)		(2.3	%)
NOW/IOLA		352		543		(191	)		(35.2	%)
Borrowings		15,530		21,889		(6,359	)		(29.1	%)
Total interest expense	$	64,827	$	64,001	$	826			1.3	%

Net Interest Income. Net interest income increased $16.1 million, or 28.9%, to $71.9 million for the nine months ended September 30, 2025 from $55.8 million for the nine months ended September 30, 2024. The $16.1 million increase in net interest income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was attributable to an increase of $17.0 million in total interest and dividend income primarily due to increases in average loans receivable, offset by an increase of $0.8 million in interest expense due primarily to a higher average cost of funds on interest bearing liabilities.

Net interest rate spread increased by 62 basis points to 2.39% for the nine months ended September 30, 2025 from 1.77% for the nine months ended September 30, 2024. The increase in the net interest rate spread for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to and an increase in the average yields on interest-earning assets of 33 basis points to 6.05% for the nine months ended September 30, 2025 from 5.72% for the nine months ended September 30, 2024, and a decrease in the average rates paid on interest-bearing liabilities of 29 basis points to 3.66% for the nine months ended September 30, 2025 from 3.95% for the nine months ended September 30, 2024.

Net interest margin increased 52 basis points for the nine months ended September 30, 2025, to 3.18% from 2.66% for nine months ended September 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 during its July 2025 meeting, reduced its federal funds rate by 50 basis points and a further 25 basis points in September 2025 resulting in the federal funds rate at 4.00% to 4.25%. 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 $0.8 million, or 16.0%, to $5.9 million for the nine months ended September 30, 2025 from $5.1 million for the nine months ended September 30, 2024. The $0.8 million increase in non-interest income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was attributable to increases of $0.9 million in grant income, $0.8 million in late and prepayment charges and $0.4 million in income on sale of SBA loans, partially offset by decreases of $1.0 million in other non-interest income attributable to the Bank's investment in Oaktree as a result of a loss from Oaktree's investment 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 Nine Months Ended September 30,				Change
	2025		2024		Amount			Percent
	(Dollars in thousands)
Service charges and fees	$	1,575	$	1,473	$	102			6.9	%
Brokerage commissions		12		17		(5	)		(29.4	%)
Late and prepayment charges		1,612		862		750			87.0	%
Income on sale of mortgage loans		483		794		(311	)		(39.2	%)
Income on sale of SBA loans		404		—		404			—	%
Grant income		857		—		857			—	%
Other		990		1,970		(980	)		(49.7	%)
Total non-interest income	$	5,933	$	5,116	$	817			16.0	%

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Non-Interest Expense. Non-interest expense increased $0.4 million, or 0.8%, to $50.4 million for the nine months ended September 30, 2025 from $50.0 million for the nine months ended September 30, 2024. The $0.4 million increase in non-interest expense for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024 was primarily attributable to increases of $0.7 million in occupancy and equipment, $0.4 million in data processing expenses and $0.4 million in other operating expense, partially offset by decreases of $1.2 million in direct loan expenses and $0.3 million in professional fees.

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


	For the Nine Months Ended September 30,					Change
	2025		2024			Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	23,275	$	23,242		$	33			0.1	%
Occupancy and equipment		11,754		11,017			737			6.7	%
Data processing expenses		3,636		3,239			397			12.3	%
Direct loan expenses		784		1,938			(1,154	)		(59.5	%)
Insurance and surety bond premiums		930		808			122			15.1	%
Office supplies, telephone and postage		514		704			(190	)		(27.0	%)
Professional fees		4,140		4,443			(303	)		(6.8	%)
Microloans recoveries		—		(172	)		172			—	%
Marketing and promotional expenses		533		425			108			25.4	%
Federal deposit insurance and regulatory assessment (2)		1,273		1,209			64			5.3	%
Other operating expenses (2)		3,536		3,139			397			12.6	%
Total non-interest expense (1)	$	50,375	$	49,992		$	383			0.8	%

(1) For the nine months ended September 30, 2024, benefit for contingencies in the amount of $0.6 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 $6.2 million for the nine months ended September 30, 2025 compared to a provision for income taxes of $3.2 million for nine months ended September 30, 2024.

Credit Quality. Total non-performing assets and accruing modifications to borrowers experiencing financial difficulty, including loans held for sale, increased $0.3 million to $32.4 million at September 30, 2025 from $32.1 million at December 31, 2024.

During the nine months ended September 30, 2025, a credit loss provision of $2.7 million on loans was recorded, consisting of $2.9 million charged on the funded portion and a benefit of $0.2 million on the unfunded portion on loans. During the nine months ended September 30, 2024, a credit loss benefit of $0.2 million on loans was recorded, consisting of $0.4 million charged on the funded portion on loans and a benefit of $0.6 million on unfunded portion on loans.

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Average Balance Sheets


	For the Nine Months Ended September 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)	$	2,439,280		118,913		6.52	%	$	2,038,879	$	94,890		6.22	%
Securities (3)		445,130		12,680		3.81	%		562,451		16,429		3.90	%
Other (4)		135,600		5,111		5.04	%		196,668		8,432		5.73	%
Total interest-earning assets		3,020,010		136,704		6.05	%		2,797,998		119,751		5.72	%
Non-interest-earning assets		103,059							106,500
Total assets	$	3,123,069						$	2,904,498
Interest-bearing liabilities:
NOW/IOLA	$	73,034	$	352		0.64	%	$	76,817	$	543		0.94	%
Money market		884,115		27,172		4.11	%		618,725		21,819		4.71	%
Savings (5)		118,656		84		0.09	%		125,296		86		0.09	%
Certificates of deposit		754,531		21,689		3.84	%		640,369		19,664		4.10	%
Total deposits		1,830,336		49,297		3.60	%		1,461,207		42,112		3.85	%
Borrowings		536,851		15,530		3.87	%		703,775		21,889		4.15	%
Total interest-bearing liabilities		2,367,187		64,827		3.66	%		2,164,982		64,001		3.95	%
Non-interest-bearing liabilities:
Non-interest-bearing demand		199,978		—					191,087		—
Other non-interest-bearing liabilities		37,206		—					51,061		—
Total non-interest-bearing liabilities		237,184		—					242,148		—
Total liabilities		2,604,371		64,827					2,407,130		64,001
Total equity		518,698							497,368
Total liabilities and total equity	$	3,123,069				3.66	%	$	2,904,498				3.95	%
Net interest income			$	71,877						$	55,750
Net interest rate spread (6)						2.39	%						1.77	%
Net interest-earning assets (7)	$	652,823						$	633,016
Net interest margin (8)						3.18	%						2.66	%
Average interest-earning assets to interest-bearing liabilities						127.58	%						129.24	%

(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)

For the nine months ended September 30, 2024, Advance payments by borrowers for taxes and insurance in the amount of $13.7 million, were reclassified to Savings.

(6)

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

(7)

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

(8)

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

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Rate/Volume Analysis


	For the Nine Months Ended September 30,
	2025 vs. 2024
	Increase (Decrease) Due to						Total Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans (1)	$	18,530		$	5,493		$	24,023
Securities (2)		(3,439	)		(310	)		(3,749	)
Other		(2,624	)		(697	)		(3,321	)
Total interest-earning assets		12,467			4,486			16,953
Interest-bearing liabilities:
NOW/IOLA		(27	)		(164	)		(191	)
Money market		9,330			(3,977	)		5,353
Savings		(5	)		3			(2	)
Certificates of deposit		3,484			(1,459	)		2,025
Total deposits		12,782			(5,597	)		7,185
Borrowings		(5,207	)		(1,152	)		(6,359	)
Total interest-bearing liabilities		7,575			(6,749	)		826
Change in net interest income	$	4,892		$	11,235		$	16,127

(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 under instantaneous changes to interest rates. As of

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September 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	$	93,706	(9.84%)
+300		96,026	(7.61%)
+200		98,721	(5.02%)
+100		101,365	(2.48%)
Level		103,938	— %
-100		106,330	2.30%
-200		108,195	4.10%
-300		110,248	6.07%
-400		110,479	6.29%

(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 non-interest-bearing deposits with higher-yielding deposits or market-based funding would reduce the benefit in those scenarios.

At September 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 September 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	$	414,566	$	(109,577	)		(20.91	%)		14.30	%		2,091
+300		439,319		(84,824	)		(16.18	%)		14.91	%		(1,618	)
+200		466,013		(58,130	)		(11.09	%)		15.55	%		(1,109	)
+100		495,337		(28,806	)		(5.50	%)		16.24	%		(6	)
Level		524,143		—			—	%		16.88	%		—
-100		553,562		29,419			5.61	%		17.50	%		561
-200		577,799		53,656			10.24	%		17.95	%		1,024
-300		609,609		85,466			16.31	%		18.55	%		1,631
-400		642,964		118,821			22.67	%		19.16	%		2,267

(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 September 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. 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 during its July 2025 meeting, reduced its federal funs rate by 50 basis points and a further 25 basis points in September 2025 resulting in the federal funds rate at 4.00% to 4.25%. 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.

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 September 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 September 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.


	September 30, 2025
	Time to Repricing
	Zero to 90 Days			Zero to 180 Days			Zero Days to One Year			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	$	117,283		$	117,283		$	117,283		$	117,283		$	—		$	117,283		$	29,296		$	146,579
Securities (1)		21,525			37,872			62,352			262,588			129,304			391,892			(11,945	)		379,947
Placement with banks		249			249			249			249			—			249			—			249
Net loans (includes LHFS)		564,482			937,109			1,278,328			2,485,905			34,699			2,520,604			(24,764	)		2,495,840
FHLBNY stock		—			—			—			—			—			—			25,945			25,945
Other assets		—			—			—			—			—			—			108,519			108,519
Total	$	703,539		$	1,092,513		$	1,458,212		$	2,866,025		$	164,003		$	3,030,028		$	127,051		$	3,157,079
Liabilities:
Non-maturity deposits	$	77,101		$	158,196		$	320,387		$	1,068,676		$	292,763			1,361,439		$	-		$	1,361,439
Certificates of deposit		285,253			478,648			604,388			701,642			—			701,642			—			701,642
Borrowings		50,000			100,000			250,000			521,100			—			521,100			—			521,100
Other liabilities		—			—			—			—			—			—			43,063			43,063
Total liabilities		412,354			736,844			1,174,775			2,291,418			292,763			2,584,181			43,063			2,627,244
Capital		—			—			—			—			—			—			529,835			529,835
Total liabilities and capital	$	412,354		$	736,844		$	1,174,775		$	2,291,418		$	292,763		$	2,584,181		$	572,898		$	3,157,079
Asset/liability gap	$	291,185		$	355,669		$	283,437		$	574,607		$	(128,760	)	$	445,847
Gap/assets ratio		170.62	%		148.27	%		124.13	%		125.08	%		56.02	%		117.25	%

(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 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		$	35,478		$	139,839
Securities (1)		23,921			56,636			107,958			288,893			203,742			492,635			(19,727	)		472,908
Placement with banks		249			249			249			249			—			249			—			249
Net loans (includes LHFS)		267,730			415,218			923,776			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
Other assets		—			—			—			—			—			—			100,425			100,425
Total	$	425,443		$	605,646		$	1,165,526		$	2,633,558		$	285,558		$	2,919,116		$	120,822		$	3,039,938
Liabilities:
Non-maturity deposits	$	60,746		$	121,499		$	243,005		$	870,025		$	60,680		$	930,705		$	184,204		$	1,114,909
Certificates of deposit		315,709			507,093			670,619			780,304			—			780,304			—			780,304
Borrowings		75,000			75,000			125,000			596,100			—			596,100			—			596,100
Other liabilities		—			—			—			—			—			—			43,125			43,125
Total liabilities		451,455			703,592			1,038,624			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		$	2,246,429		$	60,680		$	2,307,109		$	732,829		$	3,039,938
Asset/liability gap	$	(26,012	)	$	(97,946	)	$	126,902		$	387,129		$	224,878		$	612,007
Gap/assets ratio		94.24	%		86.08	%		112.22	%		117.23	%		470.60	%		126.53	%

(1)

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

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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 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 September 30, 2025 and December 31, 2024, respectively. The Bank had no overnight line of credit advance from the FHLBNY at September 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 $20.7 million and ($15.7) million for the nine months ended September 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 ($106.0) million and ($226.1) million for the nine months ended September 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 $92.1 million and $258.4 million for the nine months ended September 30, 2025 and 2024, respectively.

At September 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 September 30, 2025 and December 31, 2024, the Company had outstanding commitments to originate loans and extend credit of $396.3 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 $285.3 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.

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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 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 $0.8 million for the nine months ended September 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 $23.3 million for the nine months ended September 30, 2025. The Company also has material cash requirements for occupancy and equipment expenses, excluding depreciation and amortization of $1.6 million, related to rental expenses, general maintenance and cleaning supplies, guard services, software licenses and other miscellaneous expenses, which were $10.2 million for the nine months ended September 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 September 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 nine months ended September 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 September 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: November 5, 2025	By:	/s/ Carlos P. Naudon
		Carlos P. Naudon
		President and Chief Executive Officer

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

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