Regulatory Capital Requirements

9 Months Ended

Sep. 30, 2022

Disclosure Of Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Note 14. 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, 2022 and December 31, 2021, 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 25.39% at September 30, 2022 and 9.23% at December 31, 2021.

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, 2022 and December 31, 2021 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, 2022
Ponce Financial Group, Inc.
Total Capital to Risk-Weighted Assets	$	537,356		36.93	%	$	116,417	8.00%	$	145,521		10.00	%
Tier 1 Capital to Risk-Weighted Assets		519,071		35.67	%		87,313	6.00%		116,417		8.00	%
Common Equity Tier 1 Capital Ratio		519,071		35.67	%		65,485	4.50%		94,589		6.50	%
Tier 1 Capital to Total Assets		519,071		28.24	%		73,513	4.00%		91,891		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	483,120		33.39	%	$	115,758	8.00%	$	144,698		10.00	%
Tier 1 Capital to Risk-Weighted Assets		464,936		32.13	%		86,819	6.00%		115,758		8.00	%
Common Equity Tier 1 Capital Ratio		464,936		32.13	%		65,114	4.50%		94,054		6.50	%
Tier 1 Capital to Total Assets		464,936		22.91	%		81,190	4.00%		101,487		5.00	%

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2021
PDL Community Bancorp
Total Capital to Risk-Weighted Assets	$	204,216		18.96	%	$	86,169		8.00	%	$	107,711		10.00	%
Tier 1 Capital to Risk-Weighted Assets		190,714		17.71	%		64,627		6.00	%		86,169		8.00	%
Common Equity Tier 1 Capital Ratio		190,714		17.71	%		48,470		4.50	%		70,012		6.50	%
Tier 1 Capital to Total Assets		190,714		12.58	%		60,629		4.00	%		75,786		5.00	%
Ponce Bank
Total Capital to Risk-Weighted Assets	$	184,689		17.23	%	$	85,735		8.00	%	$	107,168		10.00	%
Tier 1 Capital to Risk-Weighted Assets		171,253		15.98	%		64,301		6.00	%		85,735		8.00	%
Common Equity Tier 1 Capital Ratio		171,253		15.98	%		48,226		4.50	%		69,659		6.50	%
Tier 1 Capital to Total Assets		171,253		10.91	%		62,784		4.00	%		78,481		5.00	%

Ponce Bank, through its Mortgage World division, is subject to various net worth requirements in connection with lending agreements that Ponce Bank has entered with purchase facility lenders. Failure to maintain minimum capital requirements could result in the Bank’s Mortgage World division being unable to originate and service loans, and, therefore, could have a direct material effect on the Company’s consolidated financial statements.

Prior to becoming a division of Ponce Bank, Mortgage World’s minimum net worth requirements as of September 31, 2022 and December 31, 2021 are reflected below:

	Minimum
	Requirement
	(in thousands)
September 30, 2022
HUD	$	1,000

	Minimum
	Requirement
	(in thousands)
December 31, 2021
HUD	$	1,000
New York Department of Financial Services		250
Other State Banking Departments		250

As of December 31, 2021, Mortgage World was in compliance with the applicable minimum capital requirements specified above.