Dime(DCOM) - 2024 Q4 - Annual Results

Executive Summary & Highlights This section provides an overview of the company's financial performance, key operational achievements, and strategic initiatives during the quarter Overall Financial Performance Dime Community Bancshares, Inc. reported a net loss available to common stockholders of $22.2 million, or $(0.54) per diluted common share, for Q4 2024, a significant decline from prior periods. However, adjusted net income (non-GAAP) increased by 52% linked quarter and 16% year-over-year, reaching $17.4 million, or $0.42 per adjusted diluted common share, indicating improved underlying operational performance after accounting for one-time charges Net Income Available to Common Stockholders & EPS | Metric | Q4 2024 (millions) | Q3 2024 (millions) | Q4 2023 (millions) | FY 2024 (millions) | FY 2023 (millions) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Net Income (Loss) Available to Common Stockholders | $(22.2) | $11.5 | $14.5 | $21.8 | $88.8 | | Diluted EPS ($) | $(0.54) | $0.29 | $0.37 | $0.55 | $2.29 | | Adjusted Net Income (non-GAAP) | $17.4 (↑52% QoQ, ↑16% YoY) | $11.5 | $15.0 | $58.1 | $99.9 | | Adjusted EPS (non-GAAP) ($) | $0.42 (↑45% QoQ, ↑8% YoY) | $0.29 | $0.39 | $1.46 | $2.58 | - Fourth quarter 2024 results included significant pre-tax charges: $42.8 million loss-on-sale of securities, $1.3 million severance expense, and $1.2 million related to pension plan termination. Additionally, $9.1 million income tax expense was incurred from BOLI asset surrender[2] Fourth Quarter 2024 Highlights The fourth quarter of 2024 saw strong growth in deposits and capital ratios, alongside an expansion in net interest margin. The company successfully executed a common equity offering and repositioned its securities portfolio, contributing to a stronger balance sheet and enhanced earnings potential. The Bank also achieved an 'Outstanding' rating in its Community Reinvestment Act examination Key Financial and Operational Highlights (Q4 2024 vs. Q3 2024) | Metric | Q4 2024 | Q3 2024 | Change (QoQ) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Total deposits (millions) | ↑ $268.8 | | ↑ $268.8 | | Core deposits (excl. brokered & time) (millions) | ↑ $513.4 | | ↑ $513.4 | | Avg. non-interest-bearing deposits to avg. total deposits (%) | 30.0 | | Increase | | Cost of total deposits (basis points) | | | ↓ 37 | | Net Interest Margin (NIM) (%) | 2.79 | 2.50 | ↑ 29 basis points | | Loan to deposit ratio (%) | 93.0 | 95.4 | ↓ 2.4 percentage points | | Allowance for credit losses to total loans (%) | 0.82 | 0.78 | ↑ 4 basis points | | Common Equity Tier 1 Ratio (%) | 11.07 | | Increase | - The Bank received an 'Outstanding' overall rating and 'Outstanding' ratings on all individual components (Lending, Investment, and Service tests) for its Community Reinvestment Act examination[6] Management's Discussion of Quarterly Operating Results This section analyzes the company's financial performance across key operational areas, including net interest income, loan portfolio, deposits, non-interest income and expense, income tax, credit quality, and capital management Net Interest Income Net interest income for Q4 2024 significantly increased to $91.1 million, driven by strong core deposit growth and proactive deposit rate management, leading to a 29 basis point expansion in Net Interest Margin (NIM) to 2.79%. The company anticipates further positive impact on NIM in 2025 from the securities repositioning completed in November Net Interest Income and NIM Trends | Metric | Q4 2024 (thousands) | Q3 2024 (thousands) | Q4 2023 (thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Net interest income | $91,098 | $79,924 | $74,121 | | Purchase accounting amortization (accretion) on loans (PAA) | $(1,268) | $(266) | $(55) | | Adjusted net interest income excluding PAA (non-GAAP) | $89,830 | $79,658 | $74,066 | | Average interest-earning assets | $12,974,958 | $12,734,246 | $12,828,060 | | NIM (%) | 2.79 | 2.50 | 2.29 | | Adjusted NIM excluding PAA (non-GAAP) (%) | 2.75 | 2.49 | 2.29 | - Management expects the full quarter impact of the securities repositioning to positively benefit NIM in 2025[8] Loan Portfolio The total loan portfolio's weighted average rate (WAR) decreased by 14 basis points to 5.26% at December 31, 2024, primarily due to floating rate loans adjusting lower following Federal Reserve rate cuts. Business loans showed an increase in balance, while multifamily residential and non-owner-occupied commercial real estate loans experienced slight declines Loans Held for Investment Balances and Weighted Average Rates (WAR) | Loan Category | Dec 31, 2024 Balance (thousands) | Dec 31, 2024 WAR (%) | Sep 30, 2024 Balance (thousands) | Sep 30, 2024 WAR (%) | Dec 31, 2023 Balance (thousands) | Dec 31, 2023 WAR (%) | | :------------------------------------------ | :------------------------------- | :------------------- | :------------------------------- | :------------------- | :------------------------------- | :------------------- | | Business loans | $2,726,602 | 6.56 | $2,653,624 | 6.82 | $2,310,379 | 6.81 | | One-to-four family residential | $952,195 | 4.72 | $934,209 | 4.65 | $889,236 | 4.47 | | Multifamily residential & residential mixed-use | $3,820,492 | 4.49 | $3,866,931 | 4.60 | $4,017,703 | 4.53 | | Non-owner-occupied commercial real estate | $3,231,398 | 5.13 | $3,281,923 | 5.25 | $3,381,842 | 5.19 | | Acquisition, development, and construction | $136,172 | 7.95 | $149,299 | 8.46 | $168,513 | 8.71 | | Total Loans held for investment | $10,871,943 | 5.26 | $10,892,044 | 5.40 | $10,773,428 | 5.29 | Loan Originations | Metric | Q4 2024 (millions) | Q3 2024 (millions) | Q4 2023 (millions) | | :---------------- | :----------------- | :----------------- | :----------------- | | Loan originations | $187.5 | $122.7 | $195.9 | Deposits and Borrowed Funds Total deposits increased to $11.69 billion at December 31, 2024, reflecting significant progress in re-creating a core-deposit funded balance sheet. This growth allowed for a substantial reduction in Federal Home Loan Bank (FHLB) advances and brokered deposits on a year-over-year basis Deposits and Borrowed Funds | Metric | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Total deposits (incl. mortgage escrow) | $11.69 billion | $11.42 billion | $10.53 billion | | Total Federal Home Loan Bank advances | $608.0 million | $508.0 million | $1.31 billion | - The company reduced FHLB advances by approximately $700 million and brokered deposits by approximately $475 million on a year-over-year basis in 2024, driven by strong growth in core business deposits[17] Non-Interest Income Non-interest income recorded a loss of $33.9 million in Q4 2024, primarily due to a $42.8 million pre-tax loss on the sale of securities as part of a portfolio repositioning strategy. This contrasts with positive non-interest income in prior quarters Non-Interest Income (in millions) | Metric | Q4 2024 (millions) | Q3 2024 (millions) | Q4 2023 (millions) | | :------------------ | :----------------- | :----------------- | :----------------- | | Non-interest income | $(33.9) | $7.6 | $8.9 | | Pre-tax loss-on-sale of securities | $42.8 | — | — | Non-Interest Expense Total non-interest expense increased to $60.6 million in Q4 2024. However, adjusted non-interest expense remained relatively flat linked quarter at $57.7 million, aligning with previous guidance. The efficiency ratio significantly increased to 105.9% due to the non-interest income loss, but the adjusted efficiency ratio improved to 58.0% from 65.6% in the prior quarter Non-Interest Expense and Ratios | Metric | Q4 2024 (millions) | Q3 2024 (millions) | Q4 2023 (millions) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Total non-interest expense | $60.6 | $57.7 | $53.9 | | Adjusted non-interest expense (non-GAAP) | $57.7 | $57.4 | $52.6 | | Non-interest expense to average assets (%) | 1.76 | 1.71 | 1.58 | | Adjusted non-interest expense to average assets (non-GAAP) (%) | 1.68 | 1.70 | 1.54 | | Efficiency ratio (%) | 105.9 | 65.9 | 65.0 | | Adjusted efficiency ratio (non-GAAP) (%) | 58.0 | 65.6 | 63.6 | Income Tax Expense Income tax expense for Q4 2024 was $3.3 million, which included a $9.1 million expense related to the taxable gain and Modified Endowment Contract Tax (MEC Tax) on the surrender of legacy Bank Owned Life Insurance (BOLI) assets. Excluding this BOLI impact, the effective tax rate for the quarter was a benefit of 33.5% Income Tax Expense and Effective Tax Rate | Metric | Q4 2024 (millions) | Q3 2024 (millions) | Q4 2023 (millions) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Income tax expense | $3.3 | $4.9 | $9.0 | | Income tax expense from BOLI surrender | $9.1 | — | — | | Effective tax rate (excl. BOLI surrender) (%) | (33.5) benefit | | | | Reported effective tax rate (%) | (19.44) | 26.87 | 35.62 | Credit Quality Non-performing loans remained stable quarter-over-quarter at $49.5 million but increased significantly year-over-year. The provision for credit losses also increased to $13.7 million in Q4 2024, reflecting a more conservative stance on potential credit risks Credit Quality Metrics | Metric | Dec 31, 2024 (millions) | Sep 30, 2024 (millions) | Dec 31, 2023 (millions) | | :----------------------------------------- | :---------------------- | :---------------------- | :---------------------- | | Non-performing loans (NPLs) | $49.5 | $49.5 | $29.1 | | Credit loss provision | $13.7 | $11.6 | $3.7 | | NPLs / Total assets (%) | 0.34 | 0.36 | 0.21 | | Net charge-offs (NCOs) (thousands) | $10,611 | $4,199 | $4,555 | | NCOs / Average loans (%) | 0.39 | 0.15 | 0.17 | Capital Management Stockholders' equity increased by $170.3 million to $1.40 billion at December 31, 2024, primarily due to retained earnings and $135.8 million in net proceeds from a common equity offering. All risk-based regulatory capital ratios improved in Q4 2024 and remain in excess of regulatory requirements, positioning the company with 'best-in-class' capital ratios among its peers Capital Metrics | Metric | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Stockholders' equity (billions) | $1.40 | $1.26 | $1.23 | | Net proceeds from common equity offering (millions) | $135.8 | | | | Common Equity Tier 1 Ratio (%) | 11.07 | 10.16 | 9.84 | | Tier 1 risk-based capital ratio (%) | 12.17 | 11.28 | 10.94 | | Total risk-based capital ratio (%) | 15.65 | 14.76 | 13.54 | | Tier 1 leverage ratio (%) | 9.39 | 8.76 | 8.51 | | Book value per common share ($) | $29.34 | $29.31 | $28.58 | | Tangible common book value per share (non-GAAP) ($) | $25.68 | $25.22 | $24.44 | | Dividends per common share ($) | $0.25 | $0.25 | $0.25 | Company Information This section provides details regarding the company's earnings call, corporate profile, forward-looking statement disclaimers, and investor contact information Earnings Call Information Dime Community Bancshares, Inc. scheduled a conference call for January 23, 2025, at 8:30 a.m. ET to discuss its fourth quarter 2024 financial performance. Participants can access the call via webcast or telephone, with a replay available on-demand for 12 months - Conference call scheduled for January 23, 2025, at 8:30 a.m. ET, with webcast and telephone access available[27][28] - A replay of the conference call and webcast will be available on-demand for 12 months[29] About Dime Community Bancshares, Inc. Dime Community Bancshares, Inc. is the holding company for Dime Community Bank, a New York State-chartered trust company with over $14.4 billion in assets. It holds the leading deposit market share among community banks on Greater Long Island - Dime Community Bancshares, Inc. is the holding company for Dime Community Bank[30] - Dime Community Bank has over $14.4 billion in assets[30] - The Bank holds the number one deposit market share among community banks on Greater Long Island (Kings, Queens, Nassau & Suffolk counties for banks with less than $20 billion in assets)[30] Forward-Looking Statements This section contains forward-looking statements, which are based on management's assumptions and perceptions of future developments. These statements are not guarantees of future performance and are subject to various risks, uncertainties, and factors beyond the Company's control that could cause actual results to differ materially. Investors are cautioned not to place undue reliance on such statements and are advised to refer to the Company's SEC filings for a discussion of risks - Statements identified by words such as 'anticipate,' 'believe,' 'expect,' 'intend,' 'may,' 'plan,' 'should,' 'will', and similar terms are forward-looking[31] - Forward-looking statements are based on management's assumptions and are not guarantees of future performance, subject to risks and uncertainties[32] - Factors affecting results include competitive pressure, interest rate changes, deposit flows, loan demand, real estate values, credit quality, accounting changes, tax laws, socio-economic conditions, regulatory changes, technological changes, and litigation[32][33] Contact Information Contact information for investor relations is provided for Avinash Reddy, Senior Executive Vice President – Chief Financial Officer - Contact: Avinash Reddy, Senior Executive Vice President – Chief Financial Officer, 718-782-6200 extension 5909[34] Financial Statements & Reconciliations This section presents the company's unaudited consolidated financial statements, including the balance sheet, income statement, selected financial highlights, average balances, non-performing assets, and non-GAAP reconciliations Unaudited Consolidated Statements of Financial Condition The consolidated balance sheet shows total assets increased to $14.35 billion at December 31, 2024, from $13.75 billion at September 30, 2024. This growth was primarily driven by an increase in cash and due from banks, while total loans held for investment remained relatively stable. Total liabilities also increased, with deposits showing growth, and stockholders' equity saw a notable increase Key Balance Sheet Items (in thousands) | Metric | Dec 31, 2024 (thousands) | Sep 30, 2024 (thousands) | Dec 31, 2023 (thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | :----------------------- | | Total assets | $14,353,258 | $13,746,529 | $13,636,005 | | Cash and due from banks | $1,283,571 | $626,056 | $457,547 | | Loans held for investment, net | $10,783,192 | $10,806,823 | $10,701,685 | | Total liabilities | $12,956,741 | $12,482,600 | $12,409,780 | | Deposits (excluding mortgage escrow) | $11,631,420 | $11,329,472 | $10,469,398 | | FHLBNY advances | $608,000 | $508,000 | $1,313,000 | | Total stockholders' equity | $1,396,517 | $1,263,929 | $1,226,225 | Unaudited Consolidated Statements of Operations The consolidated income statement for Q4 2024 shows a net loss of $20.4 million, primarily influenced by a significant net loss on sale of securities and increased provision for credit losses. Despite this, net interest income improved quarter-over-quarter, driven by higher interest income and lower interest expense on deposits Key Income Statement Items (in thousands) | Metric | Q4 2024 (thousands) | Q3 2024 (thousands) | Q4 2023 (thousands) | FY 2024 (thousands) | FY 2023 (thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Total interest income | $165,483 | $164,239 | $158,756 | $650,149 | $609,360 | | Total interest expense | $74,385 | $84,315 | $84,635 | $332,095 | $292,789 | | Net interest income | $91,098 | $79,924 | $74,121 | $318,054 | $316,571 | | Provision for credit losses | $13,715 | $11,603 | $3,720 | $36,113 | $2,770 | | Total non-interest (loss) income | $(33,861) | $7,631 | $8,872 | $(3,955) | $36,206 | | Total non-interest expense | $60,613 | $57,729 | $53,944 | $226,547 | $213,128 | | Net (loss) income | $(20,413) | $13,327 | $16,308 | $29,084 | $96,094 | | Net (loss) income available to common stockholders | $(22,234) | $11,505 | $14,487 | $21,798 | $88,808 | Unaudited Selected Financial Highlights This section provides a summary of key per share data, performance ratios, and balance sheet data. It highlights the reported diluted EPS of $(0.54) for Q4 2024, a negative return on average assets and equity, but also an improved net interest margin and capital ratios. The loan-to-deposit ratio declined, indicating improved liquidity Per Share Data | Metric | Dec 31, 2024 | Sep 30, 2024 | Dec 31, 2023 | FY 2024 | FY 2023 | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Reported EPS (Diluted) ($) | $(0.54) | $0.29 | $0.37 | $0.55 | $2.29 | | Cash dividends paid per common share ($) | $0.25 | $0.25 | $0.25 | $1.00 | $0.99 | | Book value per common share ($) | $29.34 | $29.31 | $28.58 | $29.34 | $28.58 | | Tangible common book value per share (non-GAAP) ($) | $25.68 | $25.22 | $24.44 | $25.68 | $24.44 | | Common shares outstanding (thousands) | 43,622 | 39,152 | 38,823 | 43,622 | 38,823 | Performance Ratios | Metric | Q4 2024 (%) | Q3 2024 (%) | Q4 2023 (%) | FY 2024 (%) | FY 2023 (%) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Return on average assets | (0.59) | 0.39 | 0.48 | 0.21 | 0.71 | | Return on average equity | (6.02) | 4.19 | 5.32 | 2.27 | 7.91 | | Net interest margin | 2.79 | 2.50 | 2.29 | 2.48 | 2.46 | | Efficiency ratio | 105.9 | 65.9 | 65.0 | 72.1 | 60.4 | | Effective tax rate | (19.44) | 26.87 | 35.62 | 43.46 | 29.80 | Capital Ratios and Reserves - Consolidated (Preliminary for Dec 31, 2024) | Metric | Dec 31, 2024 (%) | Sep 30, 2024 (%) | Dec 31, 2023 (%) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | | Tangible common equity to tangible assets (non-GAAP) | 7.89 | 7.27 | 7.04 | | Tier 1 common equity ratio | 11.07 | 10.16 | 9.84 | | Total risk-based capital ratio | 15.65 | 14.76 | 13.54 | | Allowance for credit losses/Total loans | 0.82 | 0.78 | 0.67 | Unaudited Average Balances and Net Interest Income This schedule provides a detailed breakdown of average interest-earning assets and interest-bearing liabilities, along with their corresponding interest income/expense and yields/costs. It shows an increase in average interest-earning assets and a decrease in the cost of total interest-bearing deposits, contributing to the expanded net interest margin Average Balances and Yields/Costs (Q4 2024) | Category | Average Balance (Q4 2024, thousands) | Interest (Q4 2024, thousands) | Yield/Cost (Q4 2024, %) | | :----------------------------------------- | :----------------------------------- | :---------------------------- | :---------------------- | | Total interest earning assets | $12,974,958 | $165,483 | 5.07 | | Business loans | $2,681,953 | $46,791 | 6.94 | | Multifamily residential & residential mixed-use | $3,848,579 | $44,152 | 4.56 | | Total interest bearing deposits | $7,914,163 | $64,773 | 3.26 | | Money market | $3,968,793 | $33,695 | 3.38 | | FHLBNY advances | $509,630 | $4,241 | 3.31 | | Net interest income | | $91,098 | | | Net interest margin (%) | | | 2.79 | Unaudited Schedule of Non-Performing Assets The schedule details non-performing loans (NPLs) and non-performing assets (NPAs). Total NPLs remained stable quarter-over-quarter at $49.5 million but increased significantly from $29.1 million year-over-year. Non-owner-occupied commercial real estate NPLs saw a notable increase Non-Performing Assets (in thousands) | Metric | Dec 31, 2024 (thousands) | Sep 30, 2024 (thousands) | Dec 31, 2023 (thousands) | | :----------------------------------------- | :----------------------- | :----------------------- | :----------------------- | | Business loans NPLs | $22,624 | $25,411 | $18,574 | | Non-owner-occupied commercial real estate NPLs | $22,960 | $19,509 | $6,620 | | Total Non-accrual loans | $49,479 | $49,463 | $29,099 | | Total Non-performing assets (NPAs) | $49,479 | $49,463 | $29,099 | | NPAs and 90+ Delinquent / Total assets (%) | 0.34 | 0.36 | 0.21 | Non-GAAP Reconciliation This section provides reconciliations of GAAP to non-GAAP financial measures, which management believes offer a clearer understanding of the Company's operating results by excluding certain non-recurring or non-operational items. Key adjustments include fair value changes, loss/gain on asset sales, severance, FDIC special assessment, pension settlement loss, and BOLI tax adjustments. These adjustments significantly improve reported net income and efficiency ratios - Non-GAAP measures exclude pre-tax income/expenses from fair value changes, asset sales, severance, FDIC special assessment, debt extinguishment loss, and pension settlement loss, and include BOLI tax adjustments[53] Reconciliation of Reported and Adjusted Net (Loss) Income Available to Common Stockholders (in thousands) | Metric | Q4 2024 (thousands) | Q3 2024 (thousands) | Q4 2023 (thousands) | FY 2024 (thousands) | FY 2023 (thousands) | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Reported net (loss) income available to common stockholders | $(22,234) | $11,505 | $14,487 | $21,798 | $88,808 | | Adjustments (pre-tax) | $42,256 (Net loss on sale of securities and other assets) + $1,254 (Severance) + $126 (FDIC special assessment) + $1,215 (Pension settlement loss) | $(2) (Net loss on sale of securities and other assets) + $1 (Loss on extinguishment of debt) | $25 (Severance) + $999 (FDIC special assessment) | $35,591 (Net loss on sale of securities and other assets) + $1,296 (Severance) + $126 (FDIC special assessment) + $454 (Loss on extinguishment of debt) + $1,215 (Pension settlement loss) | $1,469 (Net loss on sale of securities and other assets) + $9,093 (Severance) + $999 (FDIC special assessment) | | BOLI tax adjustment | $9,073 | — | — | $9,073 | — | | Adjusted net income available to common stockholders (non-GAAP) | $17,417 | $11,478 | $14,982 | $58,073 | $99,934 | Adjusted Ratios (non-GAAP) | Metric | Q4 2024 | Q3 2024 | Q4 2023 | FY 2024 | FY 2023 | | :----------------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | | Adjusted EPS (Diluted) ($) | $0.42 | $0.29 | $0.39 | $1.46 | $2.58 | | Adjusted return on average assets (%) | 0.56 | 0.39 | 0.49 | 0.48 | 0.79 | | Adjusted efficiency ratio (%) | 58.0 | 65.6 | 63.6 | 63.4 | 56.8 |