Dime Community Bancshares (DCOM) 23 Jul 242024 Q2 Earnings call transcript

Thank you for standing by, and welcome to Dime Community Bancshares, Inc.

Second Quarter Earnings Conference Call.

Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and factors that may cause actual results to differ materially from those contained in any such statements, including, as set forth in today's press release and the company's filings with the U.S. to refer Commissions Exchange and which you. we Securities

not be non-GAAP review GAAP. isolation financial this measures assess call, information as or U.S. to and will references are financial for non-GAAP to During as measures a considered the the made supplemental presented performance. in These to with substitute intended be operating financial in and prepared measures accordance

reconciliation to release. For GAAP, refer and information about earnings non-GAAP to for measures today's please

conference today's to is recorded. [Operator and Instructions] that Please turn over advised now would conference CEO. to Stuart being like ahead. be I President Please the go Lubow,

deposits In you, Good second to continued in core on business earnings Thank us growth With loans over grew $XXX quarter, momentum million. this and our since reduce you for year-end. position deposits execute substantially The by growth Lisa, core enabled strong, we morning. strong business CFO. is $XXX million all call. for Avi our joining the and wholesale thank by is me has our Dime quarterly The our funding today us plan. to morning our and Reddy, over in

of pleased the net the quarter the increased points margin net quarter. was both and result, a increase XXXX margin of cycle the by basis terms We interest this XX a As and in interest believe first were with in in the for NIM. trough income

to And a basis. continued on deposits since end stable cost Our deposits declined second down. linked-quarter have of the of to remain the quarter,

coupon we half this into cuts of will expansion that in structurally cuts. NIM. slow should rate expect absent we build and and and our fixed of any get eventual as loan adjustable Rate a XXXX, NIM portfolios forward, the a latter Going and drive accelerate repricing the higher XXXX NIM, legacy lower steady rate and

group XX.X%, $XX quarter, successfully and month, total capital past the have the was second capital. debt. ratio end we total rank absolute of terms at our end the the subordinated local of of million top raised in we peer in now Over At our

executing is Capital obviously strategy. growth our important in

Asset a branch linked-quarter to be regulatory We Westchester to assets quarter in XX% received next will on quality XX% XX-Q week new file continues NPAs County. location a that down report plan basis. expect a down We and remain also with to on classified approval solid basis. approximately our for linked recently

we expand this I important fact, reception, and White Plains last new a into In new prospective just proud in Dime new hosted franchise week attractive market. many to ability was our for and clients with business of

quarter deposit deposit Subsequent earnings teams announced the to onboarded our first onboarding call, gathering another we've teams, X June. and X May where in we gathering of

Williamsburg, based were where One in market time that of these founded. a teams to we and familiar very is is

is based team second The in Manhattan.

out to hired terms we build umbrella. integrating in an effort year Additionally, proud company-wide banker vertical. all lending successful. the been past our of and Dime efforts bankers have into not-for-profit I these the over our recruiting Clearly, the am exceptional of recruiting

our and this are groups $X loan group over gathering billion deposits, market total drive middle growth business strong deposit Our up C&I of helped quarter.

very they yields. In In we and Dime trajectory loan vertical our I that growth the optimistic to diversification is ahead, loan health substantial begin the meaningfully sheet to balance contribute attractive at the the on. about pipeline care quarters to the as of built expect summary, have am a

it I to will is we've numbers. turn be the significantly continues over With that, off playing strategic paying market Our Avi. to in and the offense disrupted been

growth as June, $XX.X driven line executed with deposits we intangible the we funding. of wholesale the that a the in quarter Stu. expansion over was tune cash operating This million. strong NIM and XX Thank Noninterest portfolio provided was second NIM quarter. EPS expenses you, per for meaningful income X% back points. update basis year-to-date share, in our lease gain expansion the amortization, $X.XX linked saw quarter, the included proactive to for an Reported the a was core increase of mid-quarter business well sale Core second branch by In cost of was loan million. we a on. higher in on reduction as $XX.X the sale excluding the

vertical bankers We of have including course X teams, out recruited approximately deposit health the recently, over fully not-for-profit XX gathering vertical. a quarters, past care XX the and built most a revenue-generating

in of We hires loan this expect to outweigh to a years these the expenses basis The XX the these million quarter. ahead. points. revenue groups the We to far had provision allowance the loans all build-out generation start-up $X.X with organic increased from associated loss

ratio Our XX%, now ratio group. total of best local amongst is our above class in XX.X% capital CETX is our peer and

basis a some of I'll sheet we was and NIM, was point previously release the from to the in Next, on called earnings provide With thoughts respect NIM X loan the nonaccrual that there expenses payoff on benefit balance growth. the status. that a out

addition, on In a going sub expected of which forward. X the quarter have last NIM the is the point on basis day offering, debt the to closed downward impact

the closer such, work quarters from for future to base modeling for is to X.XX%. NIM As purposes

kick in cuts of NIM As and Stu a said, rate improvement until impact expect we slow in. the steady the

that rate $X XXXX or half rate we of at time approximately and across portfolio second the that To either that's opportunity loan mature expected of portfolios also fixed of loans adjustable in kick XXXX, of second in sense reprice weighted 'XX have you frame. the of loan significant repricing give our fixed the opportunity in repricing in, have adjustable and a in the and X.X% in rate half billion We a a to and average 'XX.

those million, with XXX nominal rates loans approximately over we loans in to see respect core basis reset XXXX. quarterly rate NIM spread to be should the operating the With as Assuming cash for substantial a hold 'XX. 'XX in higher we expect basis quarter X-year $XX and we and increase conservative point forward expenses, treasury, point in third growth XX the very a that for to to expect expenses run these

the drop line for and very company-wide to We should on that XXXX. growth initiatives 'XX, in bottom are working expense nominal result a in should few this

to respect will anticipate the growth offset call continued lending be positioning With year. Growth we'll basis, expect your to CRE lending, Lisa, servicing the where loan all we be in to turn portfolio business our half our in and happy back On the of to an declines for the that, are and multifamily business existing in digits portfolio. portfolio relationships. we low second up the With I'll on we still take questions. single aggregate

Fitzgibbon question first Sandler. is from Mark of [Operator Piper coming today Our Instructions]

in Zingone the is stepping at Greg This Mark moment. for

Just was what June? curious, for your spot NIM

Yes.

around out So to of June. X I Greg, what point of loan. basis tried the points payoff previous was the from All that the nonaccrual we prepared had our remarks, happened month in in

June out, inflated. back been you that But X.XX% month spot X.XX%, was of around NIM the little June. will if NIM a the probably So for the

that mentioned at sub June. offering of also end debt closed the We the

So going June. forward, probably have around that an for the will X.XX% but impact ex to sub X.XX% debt

And about us the run on a of good is the think for that Okay. million provision, year? the remainder to rate for then $X.X

economic on evaluate quarter we based Well, provision conditions. every the

on So going-forward forecast it's what the really are function Moody's basis. to going a a of be

point we a here. think right provisioned. We now, I adequately built pretty feel the basis reserve

estimates to really going how the a Greg. come Moody's function of out, it's be So

book business-related C&I new obviously, we somewhat And continue loans, Yes. as and higher. those are to loans, provisions

model. loan So relative that in be change there'll will the provisioning will the associated of shift that, ongoing the be to just terms in portfolio, some there with

teams lastly, how then big adding Westchester more Okay. And push are in of make you in do plan more forward? priority going or to branches Westchester? Is a

I branch full up looking or think got an to there. just limited up locations. story growth. service business-related really teams X We've we've now. more We're up not got for a open retail approval a second It's service there really

us see And locations. see I bricks so for over a branch and there opening teams of up time. more us in don't now, terms bringing more on I lot up mortar can

will Navas Our Manuel coming Davidson. of from next D.A. be question

that? you're expense year, next nominal you then you I bist OpEx saying at And can growth. -- I next have you're think for some things looking color going what any you're add some appreciate just -- the guide Could just I'd of quarter? to reiterate for of the on

of Just greater in you Or to early highlight say? too discuss it those initiatives is detail? could or any

Yes. We're just process now, going through Manuel. our budgeting

$XX the of get So of guidance opportunities rest next kind have QX, for nominal be expect year hold probably we But really team January our year. of in towards growth, our additional as take to call, the in year those we'll is that absent end around to all we for the of could next goal that any million very place hiring year. think the The outline I into able to was detail. be

So at that's pretty much the point. this guidance

December frame have through budgeting we I get we once as think into time we'll more our January get details the and season.

me kind still talent next process? update pipeline I calmed Are my really on down? hire? out kind you I of it question. that's of That leads hiring an appreciate there to What's seeing What's of that. kind interesting? Is the

some obviously And teams talent brought there, health the both care there's volume loan meaningful side. other I -- C&I We of are and on the in been balance way this And of very still out the a both in sides of they've sheet. business business. begun sides be on our and folks. have terms is side really that contributing lenders We've to of We both on as in balance talking a exploring There's lending deposit to still are significant significant. we the pipeline well. group on in C&I busy both think sheet, quarter going group

So opportunity. yes, there's some

in we and but think next whatnot, slow folks year-end that's seeds into a as are and the I planting down bit, closer to little get going year as the year. we later bonuses to get

opportunity. So think do there's I some

bringing we're think and we customers opportunity that bank terms over. be I proved our of the in to

at teams We've business to with opened relationship that starting $X.X the X,XXX Nearly half DDA. are to that fund. accounts deposits. accounts almost just in new of X,XXX We're new and billion new

to proved think and of a opportunity. the thesis And have So look we in out. the terms that we'll model as at I has place go

I a in come So there's think the to future. lot do really

health disclosable the past Is you've Is to I for single-digit growth that the that's low given going group. in of this back big year? care pipeline think something chunk a the today? that be half of in

business rate million is health X.X%. of pipeline pipeline rate at an Sure. X.XX%. average $XXX in our an care our at is million I $XXX But C&I the of mean average

for the following saying what terms board, really, and in again, we've across it's So been the last year it's diversification. of

we're encouraged C&I rate pipeline the in middle pipeline. at our our our the by residential business. They all adjustable market terms both in X.X% $XX is up a group Even health million business, of quite substantially build-out over of So care have mortgages. rate

So again, business. out and we're there we're doing

encouraged. very we're so And

moment. a repricing the opportunity XXXX. really year for More NIM the September, into rate a steady to shift I appreciate in fourth term, a just of NIM next get and I if If near cut second could bit increases half accelerate the do we quarter? slow the in

yes. Yes,

think this year. what repricing seeing do yields I new of flat just the terms We're with growth and yields seeing we're and are month-over-month to have steady and down. loans in we repricing are loan slow deposit of that originations a

rate So a in the we with quite just a see that the natural later year, in one and progression could is bit. September possibly positive, accelerate certainly but cut

date, Just over we repricing. quarter's this and up accelerate example, points, loans that month expect on and are basis to yields for originations to new with our X

steady to accelerate And see I rate we're rate that going up. So But going growth. grind again, optimistic. certainly, to are we're and help said, as a the slow absent cuts cuts,

the is of question it forward -- any doesn't there, side, second include it cuts Is the that include loan 'XX on into the includes to the repricing half doesn't last think that rate analysis? 'XX. My curve right for way just It's opportunity about in correct? that expectations just

Yes.

Just the Manuel. curve off forward

back $X and have the half a of 'XX we was 'XX at X.XX%. comment the rate So in of billion

the overall, increase follow solely the NIM X% just Just is X-year see point in curve, that. a forward, which basis -- of because forward going should that's around and the XX for you

of that, paid broker obviously deposit That's million to we of the around short-term top FHLB balance $XXX then borrowings. that the X every remixing portfolio. quarter we they of NIM. obviously X that, top on growth have. said, of basis sheet. We've our points still the the We a as on we And Now lot are down have around adding, on are loan to

that sheet the in the So first balance was step evolution.

million. $XXX The still broker at is

lending we offset teams in as So bring bring our going -- the new sheet. balance to teams in the as deposits as deposits, on that's broker the help deposits

the once the rate upward an then really in than NIM. cuts we to the bias think the time With point NIM. the need don't based in are accelerate here last in showing. repricing back probably to going we what greater the have So that cycle I in, going opportunity And see to at models NIM our were message is higher rate an in we're is even where kicks and increase cuts, on

And Moss Steve our be of next question Raymond from will coming James.

up down on I at balances the here. you to on following stable deposits of think deposits call. were Just Stu, the beginning said

And curious a pace with all of could see you've step-up the to it second added the continue healthy kind in then part here. possible deposit growth this we the Is Just quarter? teams that that... that

steady but was to What stable on said side. I on we're seeing down, yields deposit deposits were growth the

side. on growth we So continued deposits expect

Okay.

at And saw to a we quarter? past so similar pace perhaps what this

our there Steve. disruption of in was quarters, basis, quarterly a first on second it about think don't and one Obviously, significant the competitors. with we Yes,

it it is on tenure look of is mean groups have average a and the The X months ebbs weighted X on, I flows. way at that X at right? sometimes, bank. So -- to the But basis the come we the average groups only

So that. do a to they substantial of them in front have runway

it quarters. measuring years we're in as opposed So terms to of

now. we're I seasonality, out. to we have coming where So substantially coming right be than deposits you in, higher going from year individual a now, deposits quarter, are think Every

track, Stu is other as way we account. The said,

about and bringing deposits see So to we're and time. over open over day, continuing very accounts more every every week more bullish them

were us how Okay. accounts open Could you share quarter? this with many

around had, say, I XXX close were This XXX to that accounts to would probably open. we quarter,

And over then curious deposits funds cost you're coming just seeing of blended on of terms -- the in days. the what these

groups. XX% coming of said, a that's and stuff portion as Yes, new plus around XX% Because stay probably probably between to X.XX%, X.XX% DDA, minus or substantial it Stu is the of from in. the in

it's and between X.XX%. X.XX% So

drivers on that. down lowered And then quarter-over-quarter. the Appreciate of the Okay. in classified XX% here terms

those Just curious to get drivers. some color around incremental

in the just have provided expectation Yes. an should detail right all We now. the XX-Q. We

I down is million, million. think multifamily $XX around $XX

basically is Steve. owner C&I the -- rest investor basically and think in I occupied next Q be our the detail week, all down, are flat. But CRE

Appreciate that.

Okay.

one me So here. guess I last just for

the at remain like guys active In it ads Or hiring interested. least it for year you steady -- the terms teams? a of XXXX. is expect sounds Do the half of you additional more a pace or of on like in front, second maybe

Yes, I think it's more XXXX.

view the end folks out As tend to [indiscernible] for we're the coming of, got getting the stay now, wearing toward year, have bonuses of I up.

end probably opportunity And we may there available, think so that the it's quarter of are although seriously. talking probably I first XXXX, more some be be to on towards side teams might lending the the some and of with

deposit on toward think more geared early I but -- the So it's side, XXXX. probably

[Operator O'Connell Instructions] Our will question Christopher coming next from KBW. of be

of the here I half if back wanted cuts just So there's understand, what anything, yes, I thinking recovery? and I ex and that's X.XX% I the on Are slow the the offering, you from in will rate progress steady start up from sub the recovery. nonaccrual from NIM until of but kind nonaccrual the progress to year, the off correct? the apologize NIM, debt And guys minus and NIM missed June and of range, inclusive be

Yes.

So is the base Chris, said use in X.XX%. was remarks, prepared NIM what my I to

basis X debt. nonaccrual then the X X.XX% excludes the points the the points recovery and interest sub the basis from So from

the bias So off that it slow X.XX% and upward and the base. of starts use with steady and

basis. are the to an quarter we've basis of going X As on up probably said, loan X points every yields average

of going that's natural in you to see see deposits, the to going progression a NIM. help. if cost you're in obviously, stabilization upward So And the

Once can there's we than rate that cuts, more cuts. have deposits think there's rate that's I the we obviously reprice. still So assets case

I'd and on So going QX second say, layer in next QX to that's of substantial year. in help really the that, opportunity repricing 'XX. us, of of starting QX the that then into starts half top And

terms teams as in deposits, a cost factor in think the X.XX%. then layered are also deposit that, be X.XX% a now, that -- to said, X.XX% coming to So that is of I right it's are brokered have the into and versus of all between the bringing rate going NIM. And approach you of I which new

if 'XX, you we that get 'XX the into as together, NIM structurally think the of pretty put of I confident lot it then back half So now. all that a be where we're and than will is right higher

NPLs. Great. maturing customers quarter, that service of multifamily That's Can us helpful. no the debt second customers qualitative conversations anything the been And are, guys then remind much criticized as data as rent-regulated been seeing half the year-to-date? you've you or just what's good guys just for you have it portfolio year? of ratios either of classifieds, like a And the your of sounds in any you've in how to very the you with just terms just terms what from matured seeing in coverage in on

start I'll and I with in qualitative rent-regulated probably around comments. we And have, the add then in think, Stu million off on some have coming QX, to million. you the $XX mean QX, million to will I what's -- Yes. side. we $XX $XX

we reprice second we've that terms remaining. supposed around were rent-regulated year So issues for modest of had had million probably this associated $XX example, million that satisfied them. very what's around repriced, own it's to our million no In $XX with loans in the that $XX of of quarter, and of

repricings. the... some So terms probably last quarter probably of on X/X you color and of in a satisfaction Stu the X/X, like give split as qualitatively

we customers. lot conversations with of a Yes. haven't had I mean

and delinquencies We Obviously, are in hook are -- or ringing the stable problems. haven't NPLs not of terms the down. to off phones our had issues

everything. monitoring we're -- it's So

probably terms to positive has of We I'd XX% to XX% change service service debt coverages of lot a coverage. service year-over-year actually and growth haven't the of a debt debt portfolio in coverages. in in it overall, significant the actually, seen say gone

So contact this at we're stay seeing where point, we customers this necessary, with certainly but issues not monitor significant point. and continue at to in any

And in sounds next can compensation from a into it then million the just assuming level XXXX. the hires. up quarter. on you I'm relatively flat hold And that jumps expense that's to $XX like think lot of it new discussion, then

kind overall cetera, are kind and I'm puts the 'XX. of think you here guys et merit limit into that opportunities takes? save what the increase, Just some have to you there's from assuming in and 'XX, where of expense growth of

Yes. Yes.

all So that's Chris. of fair, I think

for minus, of year, a to this going Obviously, million on probably second half is impact think I $XX the range. really around So X. good plus merit or it's the increase April

groups So is managed going to to half especially to and always second very the be. is you Like where said, the of in expenses expense, with first of year going an uptick the see we're quarter mean, new pretty next look, this well. are efficiently. be year we've performing consistent as going comp I salary

there's So basis. on such accruals a and about think going-forward to

working, But disclose will have we're I working company-wide year. probably when question, Manuel's to get said, like when more initiatives early next on into I a we answered few

better the what growth. And improve performance next happy costs at be nominal the guidance there's we're is the wouldn't early rate beyond going invest now. with we're in trajectory are. this coming say time, right in fixed are the for groups million to that as as over think we're are our very And run well. than in as to the I additional but in us you $XX little we The a the Look, that of think that's no year see have to we breakeven always the basically point room time. year, of I bit business groups. very NIM I give investing judicious very flat obviously throughout businesses because going

that our the they So I time, then. time X.XX%. down in will able coming look, sheet more if down a road, little we'll asset bit coming X.XX% but the also that do start at say and I to growth think in We've And come years right closer when and see expense company probably picks naturally We're up balance the to grow think to sheet we X.XX% down. And X.XX% balance historically as point when more. will the ratio ahead we we're have managed -- just to to between up. now,

Because but take unusually strong of Great. And small, the kind any like drop as fees it last quarter service customer X? in quarter? on this quarter? an blend any we then a of Or color the should

quarter We had Yes. rollover just some repricing. some last on that we're fees loans Yes. basically

this quarter versus So we as satisfied had repriced. that loans I earlier, said more actually multifamily

that and loans quarter, that's that's had option, the fits goes quarter, that took first loans more Last And rollover in more there. so in where in. the we

would out, So items look, I come there's but say, that, that seasonal couple and material. in on a of nothing here

you and of it. any of sense in the the 'XX cautious second I guys would this, amount the just And know Got cut basis impact 'XX, on each 'XX be of everything but usually outside on are fixed half of margin? happening what of but into the maturities point

Yes.

going our than part -- money base. I the it's and think doing. towards depend competition markets what it's -- have in of in they're we deposit terms deposits on rate more obviously, is to time be the base skewed That second to the going to commercial our customers, said, first cut it's will I going rate more of say cut, and

of [indiscernible], If loan variable the Obviously, more of So in look sheet. you from the sheet rate the terms side -- is at than a deposit which lot sheet of portfolio. DDA the now, to cuts balance XX% rate itself balance being around of of should XX% in right more on the lend terms XX% balance having benefit is right? to

cost have probably that than less are deposits some we X%. And

model by of large, company is back latter going goal margin internal higher really our part 'XX. say, And change plus the on drive their the for But is into to I so to overall and our get which to that going 'XX be it's to X% to returns the rates us those. and harder would show area, getting

level in that an and benefit going be quarter, there's from down a it to individual definitely could so of cuts. between And QX but be choppy up rate how happens

Avi of down that to of that before, able as Yes. moved And have, have billion of cut terms broker do we of municipals in rate be also are we do terms plus have easily $XXX about we quickly in rate a we'll very said cut. million a a move $X.X those

looking We've we're the terms move prepared. how of portfolio a going cut in much. to buckets -- already to we're segregated when happens, rate and which look, So are

we're a pretty going we're But So because, at bit is play there optimistic. cautious point competition to little a role a of this obviously, as well.

Got it. And what's tax last going just one for rate me, the forward?

Yes.

I we of discrete a think quarter. this couple around Chris, had XX%, items

So I'd going forward. use XX%

no in does for This Lubow are session. to There the go back turn like now And conclude I questions queue. more Please over Stu closing the call today's ahead. Q&A to remarks. would

you, our like I'd our dedicated look third Thank forward all quarter. thank for joining their the to today. to continued and support, Lisa. you for and with us I you employees shareholders Thank after speaking

conference Thank joining call. today's you for

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