Dime Community Bancshares (DCOM) 30 Jul 212021 Q2 Earnings call transcript

Good day, and welcome to the Dime Community Bancshares, Inc.

Second Quarter Earnings conference call 2021. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kevin O'Connor. Please go ahead.

Thank you, Tom, and thank you all for joining us this morning on our second earnings call as the new Dime. merger Stu Reddy, President remarks, first our some about is Officer; Chief I'll full today on comments Avi you new and CFO. In our quarter me as Lubow, in Dime. and our Operating make significant the With events update our and my prepared some I you progress made color will also on we've on provide the business front. time you some and plenty of quarter, details we'll the provide for on then will Avi questions. leave

First, let's with start merger. the

February converted we X systems cash recall, As our closed our XX. transaction on treasury successfully our core and you'll integration Since MOE completed that most and April on customers. time, management we've of

executed of has been dedicated our seamlessly All team. this by

the Importantly, at saves efficiency promised operated and cost we've ratio delivered an of XX%.

quarter this, on extremely staff watch commercial gives York's forward. first call, bank. and customers are first, New our As to while I'm growth tremendous our the merger I accomplish bullish confidence we prospects earning premier going our With me organic executing on our putting of mentioned mantle our complete,

up to second announced our book PPP $XX.X of bank the of our tranche gain XXXX a sale recognizing staff serving customers. loans, Apart we the the frees accretion, from our providing million. quarter, value refocus sale immediate on of During many community of

program, Our our and myself community bank involvement company. be the as of PPP in for pride on a the #X especially Island, point will always

million approximately historically addition criticized PPP strong In sold LTVS. and we at $XX standards low of of par, to the to underwriting sale loans also testament our loans,

new we our a footprint Several XX% an grew share to identity balance this be in existing also annualized closings, impact. Even quarter, X deposits Island by second would quarter, increasing complete with and by of common growing is goal expect about to brand competitive market. Ultimately, on XX% clients, branches existing branches noninterest-bearing believe with significant business branches. we high-quality sheet. deposits. Long Greater We having continue these total the our these the us business ratio During minimal the winning we operating and already provides advantage combining coverage a staff, and basis of we into announced

are no we operating core with liabilities. wholesale addition, now funded with virtually sheet balance In a

$XXX rate originated a approximately the X.XX%. we in quarter importantly, at of weighted million loans of As average

rate As build. core of over and a loans origination grow strong we to result of all originations $XXX expect more loan a an of to our and X.X%. Again, converted lending by annualized despite we've waiting with common the The teams X% approximately And loans systems our high coming these system, a and close quarters. we on fact, annualized weighted average X% to in able over have and loans, excluding approved we now continues relatively core at of loan our million basis. to grow by pipeline comfortable level were payoffs, of are PPP,

of of ratios. declined loans our diligence, very our strength our third-party as our sale nonperforming coverage. An linked-quarter credits by before, and XX% several was integration basis. the portfolio Our closing, done in reviews on comfortable increase with merger loss due I've And of are PPP loan a we've through and and capital material mentioned offshoot the a

expenses net earning sub-XX% at are our million. given a value I'd managed trading balance quarter, expect ratio. income and a bank quarter create time. We shareholder profile. To increased strong in we to my And appropriately definitely stock, in quarter levers basis of we stock by common the to to point the our managing levels continuing efficiently $XX million see We And equity tangible levels, our conclude sheet over had and reported prepared running remarks, efficiency trajectory $XX XX purchased Our out, multiple approximately points X.XX%. significant to have and we value. of the capital like with during

Our second X.X% by in or ROA $X approximately and we per the was share value adjusted quarter. book tangible grew X.XX%,

begin we planning of the tremendous coming I us. XXXX a in in As believe months, for opportunity front continue we have to

a to needs. bank have pure-play clarity be a to our being on responsive commercial community of We mission customers' focused

We growing demand continue relationships. developing will focus on deposits loan and

to transactions level As our there been and best-in-class any franchise extremely several large with have positioned you're all aware, we and disruption. Within our are a well have unique we believe an of footprint, industry-leading merger DDA. marketplace, and in we on deposit ready capitalize

high-density rate and bank for with raises on believe brand wealth our turn are the #X first the market a reserve scarcity that quarter low We interest metrics community operate we even among appeal to with additional this conference to Avi, I'd Chief point, strong who some environment. At very footprint Financial a in strong share like rates created Officer, have will federal color day business banks while the our significant call this provide producing opportunities. over currently We with positioned We in and value. well results.

Kevin. you, Thank

reported the results, to income Our and quarter associated quarter's Merger-related the only $X.X were of the million gains Included sale this loans. PPP declined million. quarter prior net expenses in million. for was from with second $XX.X of common $XX.X meaningfully

the With going to conversions complete, majority don't our see item in we forward. much this systems of expect line

to partially remaining In combinations related costs third $X be the we expect branch sales owned had costs will of X the properties. recorded. combinations we in offset $X.X the a Finally, by second quarter. to to of This these be related million branch million X of quarter,

to basis to cost a million. basis produce go-forward the the the ended environment. We earnings higher This which was of of quarter, deposits low significant basis migrate rate We of have points. tune We spot the over next XX, to a XX believe able revenue, ROAs approximately get we provides our several today sustainable in base. These lower in the opportunity cost at plus of of June months have coupled the eventually margin an power actions, were the DDA double percentage X betas company from ability the net a we to X% and the with digits. into our earnings points our result of rate banks second an pre-provision rise. The was regardless lagging glimpse rates lower net the X.XX%. even table should when we deposit release believe reported the sensitivity footprint provided and $XX clear our to have deposits deposit removed in down Most importantly, rate with interest amount our is in quarters on a adjusted current the XX of

at the press NIM accounting a range. I'll did last forward. help framing we with the was have our on quarter. The originations As of had $XXX $XXX impact on PPP end release and previously end X.XX% that quarter, million sold the the very were the telegraphed the approximately the our balance make purchase the provided of liquidity of details that comments tied within in of sheet Having on we The million. the sale adjusted couple XXXX now second of effective quarter, going of we PPP at should approximately to NIM PPP. PPP loans the sold yield we

build. Clearly, redeploy the quarter a will impacted loans, into build we margin QX, X was we points I the to be able liquidity back due mentioned, which, over third the to approximately be time. by the sale as As reported we and margin, securities cash as basis PPP to expect X to core X.XX% in for result, the relationship

reference, approximately purchasing we're at frame X.XX%. a Just for currently a of securities yield of

points had So only to drop if the X X million securities, on the $XXX from into PPP to fully we would hypothetically basis X NIM the immediately purely points. reinvested from basis impact sale

$X.X second our in And liquidity Given also strong the yet time where rates loans excess over the to as excess are million into was from the we help point, we this at build prudent and cash approach mentioned, have be a help the on in accretion will NIM sales. Purchase the deploying quarter. accounting Kevin PPP that will absorb patient, pipeline security. approximately

a paydowns to balance $X net remaining expect quarter-end, most had million be to of premiums respect at the this and on of some remaining $X million of to potentially that through be course, By over function $XXX we some loans, be would unrecognized to quarters. which will, PPP expected of remaining fees have We have next $X.X the run for of approximately of million on at the recognized Accretion next remaining. XXXX the next year, months. the sheet, originations accretion course couple early of are which we million discounts. With the were approximately XX

is overall should loan Kevin strong As lower first lead temporary PPP already outlined. We quarters costs capital the impact ex in of the ahead, X.X%, continue the stability I've ex-PPP. of liquidity is with This, our quarter line that sale ability portfolio mentioned, waiting levels. our the ended margin our deposit to to which with rate coupled to loans in with to pipeline close approximately

was tangible assets Our X.XX%. PPP equity tangible to excluding ratio,

share be the front to continue XXX,XXX attractive profile definitely levels trajectory quarter, of sheet at and of month on buyback continue repurchases be in purchased trading prospects. We believe trading shares value balance active our given very see second stock, and to our During we significant our given July. levels, us in earnings and $XX do the and to the

quality. credit to Moving

loans XX. PCD acquired loans of percentage a Our at loans, was XX nonperforming basis total as excluding June points only

points. for were basis charge-offs quarter the net X Our only

guidance this noninterest the cycle. We're PPP comfortable to basis PPP Our credit excluding we cash core in annualized million, operating by expense of $XXX flat loan expect approximately very our XXXX. into for loans comfortable we're of XXX is loss of reserve points, -- year-end run the level excluding an at relatively with hold with ratio a with which stage rate

ahead, begin of of in As we growth months appropriately leave we no managing expenses process in return certainly confines unturned the within profiles prospects. and XXXX the will our our budgeting stone terms

X touching had to we against previously. upon briefly enterprise-wide progress I'd end Finally, the like goals laid out by

was plans, X-year DDA In XX.X%. we quarter, to approximately XX% long-term to XX% first DDA DDA featured time when growing constructed the and short-term Notably, growing goal grew our frame. to in prominently. incentive a second Our we

near important equally core goal term. range over is operating currently of of The medium a efficiency bank XX% to ratio with within to We're XX%. ratio the second managing XX% efficiency an

the PPP ratio a leverage turn back loan coming ratio liquidity the operating in I'll the and positive manage as organic call third to we to to goal in may for core within have stated efficiency that, our efficiency sale expect Tom quarters. With questions. the the While growth near-term on the quarter, impact expect continue from we the bank

[Operator Fitzgibbon Instructions] comes the Mark from with Piper Sandler. And first question

quarter. Nice

of mentioned -- the the first, to expenses, annually? you Avi, couple of clarify, things. in will Just million on branches closed quarter? that did say next quick that Or is you $X from be benefit expenses to on X

No, Mark.

combining with branches. terms obviously have some the was those So the associated branches, we for my comment in charge of leases

that expect we we a a quarter, million basically of quarter, termination. lease then to the took fourth the X properties. $X second the hit million in there's the $X.X sales any -- remaining of of offset Of the actually termination with in by in of quarter, that third So properties, in lease a the associated charge couple And the we third partially but will the be own. some

quarter talking third accounting operate given standards So the the I associated in was with under. about that, we actually charge that the lease

you. on then Got And the margin.

it sounds be $X to going X.XX%, million million income, the of $X.X So but to PPP X.XX%. is sort like of margin core

that's tea right reading leaves So Am incremental. I the way? the

million so the that I had yield is Mark right? X.XX%. a had margin And $XXX we PPP think mean that easiest about, X.XX%, within was our way Yes. to of X.XX%, reported of

a X.XX%, assume whole XX cash. just that goes we're to thing math. down just And to in straight the basis then, keep going X.XX% it's the to you If straight obviously, down, points, not comes

So we're reinvesting start into securities that growth. initially with loan going to and

terms rate. down and So and securities X.XX% the the our that fact I to are you X.XX%, loan have with reducing investing obviously to see then current loan growth strong deposit wanted in pretty costs up and pipelines in back with but our full the just of

to these? loans. And I you are that did kinds curious guess likely loan of I sale to you then $XX on did million of more see transactions we quarters? was And of coming of sell the that in these Relative Great. criticized where par,

those at -- had had mean, aggressive longer a par. to quite turn I that But offloading $XXX,XXX. being seconds small Yes, multifamily of basically There any Stu. just little were think terms on are deals deals is it's were everything about hit we're that X going took of else we loans done at Mark, And around. to Yes. a -- take that par. we in

monthly, weekly, it And so looking we're at et cetera.

there'll LTV some terms the no more. under be But is see and So notes. these And XX% portfolio. on probably the of offloading have we issues average had in

and stressed talking excited and our opportunity portfolio kind manage pipeline. and are to we continue continue business. And that the organic we're I things want We're originate to make of just mention, going loans. about to loan we're move to to do So somewhat about the growth as grow that new very

And almost have XX, our book in $X June at by pipeline the loan billion million. increased $XXX we've just almost We this point. since

that we those lines loans beginning for So in the quarter, that to actually waiting closed we're and balance on to sheet. show were loans up loans are Kevin approved the quarter. quarter, close awaiting for mentioned Also and closings the million $XXX for the that

So there's lines construction that are and $XXX not of yet million plus are that. that of drawn loans part

attractive prime thereabout. or rates, very X at are plus that So

another that we loans closed actually, million, are the although So million to of drawn. $XXX or for of quarter yet be about there's lines balances in the $XXX so

terms honestly, of there's in new business bank. growth there's And terms our comfortable coming we we're forward. to So in trajectory very go opportunity loan -- as of an with the the

is I'm in curious, from that pipeline are the And a lot acquisitions. other coming of Stu, banks just involved

coming the more -- It's our customer able business larger as with The all existing institutions players. from were said usual as to able well. do on, to we're base early we

more some business newest think we in transaction the seen bit that of going there's to with transactions, opportunities even in we've some be quite so are from and institutions involved of occurred. that And terms upcoming those a

by excited that. we're So

looking opportunity organizations, are as those additional lot We and at also a think personnel there's well. because teams from we there of

to and around you -- around all the you consolidation do lastly, of that's sort think independent to staying transactions given off advantage Kevin, of the consolidation you, do curious, then more taking do better going And or I'm need the on you're feel you?

I the where is latter think go. we

the growth think organic I certainly opportunities are there.

door if do the in comes an are. close being Although very all having being the we But done position, we're scale in opportunity something to there's platform, you size the good and one can't and conversion, a something.

opportunity said, from those Stu locations out As there's really And coming I don't yet. there. tremendous think it's

sort but still of think see I certainly and there. opportunities there's we see, a wait

I just our Mark, front. we've very to stock there's buyback Yes, mean today. active to add we been in value think that, own on the significant

in purchased quarter, been XXX,XXX You in we've the saw shares around July. we active

stock So investing our return given right do balance capital we of given best feel is sheet. nature sheet, of in our the our balance now the low-risk probably

Inc. [Operator Instructions] next The with question Breese comes Matthew Stephens from

questions. Few

don't segments sense breakdown could the strength. And the give expanding We the you normal some about seeing us Curious quarter, first, but couldn't X.XX%. on a are this where little X.XX% going approved lot $XXX yields? a that? within of actually of whether that's I way million pipeline, then I you're loan So that environment and yield what on about difference was hoping bouncing talk yields just you help versus could pipeline around this hear a in kind yields for of the the notice often. in origination bit there's or of very

about so, And -- it's the XX% occupied Yes. robust CRE we're amount there. Obviously, -- pipeline, well it's owner all, -- new And still is relationships booking a terms C&I. Well, and than probably between we're portfolio the makeup the investment is little XX% so, diversified. C&I and the CRE to remaining pretty but terms the And first new market, market of or evenly in loans of less the comfortable developing split of CRE of multifamily. in C&I.

lower cash. so have that is and borrowers than somewhat existing and amount -- be the somewhat significant to there continues usage is but line normalizes opportunity under flushed reticent liquidity there -- an out, borrow once Our of or to historical economy lines, are levels the

nature the in yield although but a don't that we we of of it in continuing quarter rest did $X.X did that does have loans swap of the the billion In happens down I will pipeline, a almost activity construction our significant that and that And deals overall total curve, given throughout loans higher-yielding yields, X.XX%. $X and quarter, total of yield some quarter, have for what's so the of in pipeline say some number the just billion, see this have that the this in the or amount terms the include the year, of of about think drive that some of quarter. terms pipeline. I lines yields

So X.X% bit is for but there out I to think an the range pipeline. now in we're a quarter, entire anomaly, of this what's X.XX% the of in terms $X billion

other do and what if Very floating hike, helpful. when a was, question of reprice remind One we'll rate? I is you could had the loan Fed we of get portfolio And us immediately? percentage

sure, Matt. Yes,

rate there's Of XX% billion around immediately, a variable that rate. rate there's of XX% on adjustable also rate, portfolio, that reprice. there's is point -- and with basis another XX $XXX another floating million would hike portfolio floors with XX and then $X.XX floats that's So our them

XX-basis for treasury a of point of they adjustable our move, they floating it, the curve. which, stuff. reset also, billion rate call there's maturity when based we So $X.XX XX% rate, then date, And a hit obviously, on portfolio is have

X for ones Perfect. other me.

rate the The is this first one tax quarter. just a bit was higher

You also noise. had some

if noise to also New is how due to curious much of quarter? some taxes. was ongoing some just and state this changes that How York much of there is Just the of that

of the higher. In the Matt, some income year. tax this of was the Yes, quarter the is bit there. a There's for of good that press use XX.X% rate discrete sure. we the Because extra release, to also items pointed rate little in out rest

started were Could anecdote emerge consolidation. that as you're because clients institution a phones happened? have a little one, unhappy what brought acquisition? I'm actually you just to hiring ring, just give an gotten the to of seeing? you anybody curious, from in bit sold have or of Okay. opportunities yet? you lot And been Have conversations the about we've have Last talked the a see

the latter. think start are -- mean, I'll I seen. the think with to moves yet client be I I still the

of As mode. change. wait is is and going of Their see in wait a initial kind in everyone's to most these -- is change and nothing things then cases, reaction

we opportunity expect there. So certainly

new have on terms we relationship brought personnel, managers. In of several

institutions of I on from underwriters number calls been through a from take about. I yesterday we have announced will and I We to and able brought you, talking have have, staff mean, support those X pipeline to folks we got deal. get significant tell that recently the we're

our be a at the take real here, going aware are not in but there's to think real opportunity some size market. that to advantage and people of So there's And I levels, we're and disruption opportunity. capital the personnel, out only the

Got it.

folks Maybe follow-up. a the I want the lead do cart horse can terribly to here, too find far York you I Okay. don't Metro City get far to New expect to you markets. Metro wouldn't but just as front see of in the but around enter that New York you might as of new people, too suburban we emerge? some go of new areas also more City, outside

does the I'm so there, we couple New significant with And a of market. Northern business include know Yes. marketplace. -- amount a marketplace very ran we Jersey banks in our pipeline fairly well. very I that comfortable of the

are Jersey a concerned. as and point. as outside we're this Manhattan And Island Long is New So fertile fairly yes, certainly we're market we of moving -- at far

Wallace James. The with from next question comes Raymond William

on hopped bit a late. I little

leverage left mentioned buyback? using And So buyback. transcript. capital about comfortable on you the But levels it's could, if Where if you whether that it's And I us buyback me to asked, could the you have you read and you already are look my all at, if the look as TCE? you on on what's are aggressively? just the questions the or remind the know Avi, can been let that buyback, how aggressive to what preferred relative be capital with constraints

Yes, sure.

when started we off. XXX,XXX XXX,XXX shares purchased So shares had the around around we in We quarter. second

capital in testing that remaining right XXX,XXX shares of profile screen authorization. Well, done, burn have very our stress around points lower of a capital are levels, stress from The capital has, what in XXX burn the terms we comfortable to now. type buyback testing and left there's in importantly, So basically stress what basis risk perspective. of the testing terms of type we've where peer company, provider them the more we group XXX than generally of we're us a and provides we the

levels we're TCE, come that, So equity. I We over PPP comfortable at I'd to balance which between is sheet. some going running in point. tangible X.X% this between mean, bank got X%, X.X% out X% of the say and the we're those

bought -- We back lower even So it's we're $XX. going feel shares feel Slightly was than more it at to attractive. these that, again, we at we then. attractive levels,

as that continue go we we'll judiciously use forward. So to

on then if And And nobody base. Are a rate be? so, more come? might expense the saves if run comfortable has cost asked there where to

Yes.

base around prepared holding core my in -- comfortable of steady and we're million very fourth XXXX. quarter by we mentioned, noninterest that that So remarks, the into I'd $XXX with cash expense

of XX%. we've laid to think for XX% guidelines out I ratios some efficiency

we're so months. to next going not going there. in over the And of our process continue that to couple budgeting to leave soon to any down. We're going And drive start we're

Kevin as when we ratio running -- we XX% at transaction. upfront, efficiency promised We're bank the XX%. the announced we've of So an mentioned

to bound XXXX. the So of as liquidity we're time, be we to that excess we that back to XX% promise getting of XX% the lower into PPP, want over this some to from between leverage that going

question-and-answer for closing Kevin the remarks. back conference session. our O'Connor would to concludes I This turn over like now any to

you, you thank a participating. great and everybody, chatting weekend, forward Well, look soon. for and great a day with Have to

for you presentation. conference today's attending Thank is now The concluded.

disconnect. now may You