Dime(DCOM) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements This section presents Dime Community Bancshares' unaudited condensed consolidated financial statements for Q2 2025 and FY 2024, covering financial condition, operations, comprehensive income, equity, and cash flows Consolidated Statements of Financial Condition Total assets and liabilities slightly decreased, while stockholders' equity increased from net income and comprehensive income | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $14,207,935 | $14,353,258 | $(145,323) | -1.01% | | Total liabilities | $12,776,929 | $12,956,741 | $(179,812) | -1.39% | | Total stockholders' equity | $1,431,006 | $1,396,517 | $34,489 | 2.47% | - Cash and due from banks decreased by $126.8 million, while Bank Owned Life Insurance (BOLI) increased by $102.7 million[14] Consolidated Statements of Operations Net income significantly increased for both periods ended June 30, 2025, driven by higher net interest income and lower interest expense 3 Months Ended June 30 | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | :------- | | Net interest income | $98,097 | $75,502 | $22,595 | 29.93% | | Provision for credit losses | $9,221 | $5,585 | $3,636 | 65.10% | | Total non-interest income | $11,595 | $11,808 | $(213) | -1.80% | | Total non-interest expense | $60,299 | $55,694 | $4,605 | 8.27% | | Net income | $29,697 | $18,479 | $11,218 | 60.71% | | Basic EPS | $0.64 | $0.43 | $0.21 | 48.84% | | Diluted EPS | $0.64 | $0.43 | $0.21 | 48.84% | 6 Months Ended June 30 | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | :------- | | Net interest income | $192,310 | $147,032 | $45,278 | 30.80% | | Provision for credit losses | $18,847 | $10,795 | $8,052 | 74.59% | | Total non-interest income | $21,228 | $22,275 | $(1,047) | -4.70% | | Total non-interest expense | $125,810 | $108,205 | $17,605 | 16.27% | | Net income | $51,155 | $36,170 | $14,985 | 41.43% | | Basic EPS | $1.09 | $0.84 | $0.25 | 29.76% | | Diluted EPS | $1.09 | $0.84 | $0.25 | 29.76% | Consolidated Statements of Comprehensive Income Total comprehensive income increased for both periods ended June 30, 2025, driven by higher net income and positive changes in unrealized gains on securities 3 Months Ended June 30 | Metric | 3 Months Ended June 30, 2025 (in thousands) | 3 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | :------- | | Net income | $29,697 | $18,479 | $11,218 | 60.71% | | Total other comprehensive income, net of tax | $1,108 | $2,686 | $(1,578) | -58.75% | | Total comprehensive income | $30,805 | $21,165 | $9,640 | 45.55% | 6 Months Ended June 30 | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | :------- | | Net income | $51,155 | $36,170 | $14,985 | 41.43% | | Total other comprehensive income, net of tax | $7,081 | $8,799 | $(1,718) | -19.53% | | Total comprehensive income | $58,236 | $44,969 | $13,267 | 29.50% | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased by $34.5 million during H1 2025 from net income and other comprehensive income, partially offset by cash dividends | Metric | January 1, 2025 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | :-------------------- | | Total Stockholders' Equity | $1,396,517 | $1,431,006 | $34,489 | | Net income | - | $51,155 | $51,155 | | Other comprehensive income, net of tax | - | $7,081 | $7,081 | | Cash dividends declared to preferred stockholders | - | $(3,643) | $(3,643) | | Cash dividends declared to common stockholders | - | $(21,817) | $(21,817) | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased for H1 2025, while cash used in investing and financing also increased, leading to an overall decrease in cash | Metric | 6 Months Ended June 30, 2025 (in thousands) | 6 Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :-------------------- | :------- | | Net cash provided by operating activities | $88,483 | $43,358 | $45,125 | 104.08% | | Net cash (used in) provided by investing activities | $(92,224) | $55,718 | $(147,942) | -265.52% | | Net cash used in financing activities | $(123,076) | $(142,640) | $19,564 | -13.71% | | Decrease in cash and cash equivalents | $(126,817) | $(43,564) | $(83,253) | 191.11% | | Cash and cash equivalents, end of period | $1,156,754 | $413,983 | $742,771 | 179.45% | Notes to Unaudited Condensed Consolidated Financial Statements This section details disclosures and explanations for the unaudited condensed consolidated financial statements, covering accounting policies, asset/liability, equity, and financial instruments Note 1. BASIS OF PRESENTATION Dime Community Bancshares operates as a bank holding company for Dime Community Bank, offering commercial banking and financial services in Long Island and NYC with 62 branches - The Company operates 62 branch locations throughout Long Island and New York City boroughs, with regulatory approval to open a branch in Lakewood, New Jersey[26] - The unaudited Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information and SEC regulations[27] Note 2. SUMMARY OF ACCOUNTING POLICIES This note affirms fair presentation and highlights new accounting standards, ASU 2023-07 and ASU 2023-09, which had no material effect - ASU 2023-07, effective January 1, 2025, for interim periods, requires disclosure of significant expense categories for each reportable segment but did not materially affect the Company's consolidated financial statements[30] - ASU 2023-09, effective January 1, 2025, for annual periods, enhances income tax disclosures, particularly for rate reconciliation and taxes paid, and is not anticipated to have a material effect[31][33] Note 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive loss improved from $(45.0) million to $(37.9) million at June 30, 2025, driven by net other comprehensive income from securities and pension obligations Component Balances | Component (in thousands) | Balance as of Jan 1, 2025 | Net OCI (Loss) during period | Balance as of June 30, 2025 | | :----------------------- | :------------------------ | :--------------------------- | :-------------------------- | | Securities | $(43,767) | $9,981 | $(33,786) | | Defined Benefit Plans | $(7,499) | $3,465 | $(4,034) | | Derivatives | $6,248 | $(6,365) | $(117) | | Total AOCI (Loss) | $(45,018) | $7,081 | $(37,937) | Other Comprehensive Income, Net of Tax | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net change in unrealized gain on securities, net of tax | $9,981 | $5,809 | | Net change in pension and other postretirement obligations, net of tax | $3,465 | $270 | | Net change in unrealized (loss) gain on derivatives, net of tax | $(6,365) | $2,720 | | Other comprehensive income, net of tax | $7,081 | $8,799 | Note 4. EARNINGS PER COMMON SHARE Basic and diluted EPS for common stock increased significantly for both periods ended June 30, 2025, reflecting higher net income available to common stockholders 3 Months Ended June 30 | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net income available to common stockholders (in thousands) | $27,876 | $16,657 | $11,219 | | Weighted-average common shares outstanding | 43,030,023 | 38,329,485 | 4,700,538 | | Basic EPS | $0.64 | $0.43 | $0.21 | | Diluted EPS | $0.64 | $0.43 | $0.21 | 6 Months Ended June 30 | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net income available to common stockholders (in thousands) | $47,512 | $32,527 | $14,985 | | Weighted-average common shares outstanding | 42,989,581 | 38,292,253 | 4,697,328 | | Basic EPS | $1.09 | $0.84 | $0.25 | | Diluted EPS | $1.09 | $0.84 | $0.25 | Note 5. PREFERRED STOCK Dime Community Bancshares has 5,299,200 shares of 5.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, outstanding, callable on or after June 15, 2025 - The Company has 5,299,200 shares of 5.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, outstanding, with an aggregate liquidation preference of $132.5 million[41] - Dividends are payable quarterly at a fixed rate of 5.50% per annum. The Preferred Stock is perpetual and callable at $25.00 per share on or after June 15, 2025, subject to regulatory approval[42] Note 6. SECURITIES The Company's securities portfolio saw a slight increase in available-for-sale fair value and a decrease in held-to-maturity, with unrealized losses from interest rate changes and an allowance for credit losses on one corporate security | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Securities available-for-sale, at fair value | $703,461 | $690,693 | | Securities held-to-maturity, at amortized cost | $625,188 | $637,339 | | Total securities | $1,328,649 | $1,328,032 | - Gross unrealized losses on available-for-sale securities totaled $(34.4) million at June 30, 2025, primarily due to changes in interest rates, not credit quality[43][50] - An allowance for credit losses of $1.8 million was recorded for one available-for-sale corporate security due to non-compliance with financial covenants[43][51] Note 7. LOANS HELD FOR INVESTMENT, NET Loans held for investment, net, slightly decreased to $10.78 billion at June 30, 2025, while the allowance for credit losses increased to $93.19 million, with higher non-accrual loans | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total loans held for investment, net | $10,777,683 | $10,783,192 | | Allowance for credit losses | $93,189 | $88,751 | | Non-accrual loans | $53,214 | $49,479 | | Provision for credit losses (6 months) | $16,901 | $10,448 | - Business loans and non-owner-occupied commercial real estate loans saw the largest increases in non-accrual status[55][202] - Loan modifications for borrowers experiencing financial difficulty totaled $113.6 million for the six months ended June 30, 2025, with significant payment delays and interest rate reductions[61] Note 8. LEASES The Company's operating lease liabilities totaled $47.56 million at June 30, 2025, with a 4.2-year weighted-average remaining lease term and $7.34 million in costs for H1 | Metric (in thousands) | June 30, 2025 | | :-------------------- | :------------ | | Operating lease liabilities | $47,559 | | Total undiscounted lease payments | $50,915 | | Weighted average remaining lease term | 4.2 years | | Weighted average discount rate | 2.94 % | | Operating lease cost (6 months) | $7,341 | Note 9. DERIVATIVES AND HEDGING ACTIVITIES The Company uses interest rate swaps for fair value, cash flow, and freestanding derivatives to manage interest rate risk, with substantial notional amounts and fluctuating fair values | Derivative Type (in thousands) | June 30, 2025 Notional Amount | June 30, 2025 Fair Value Assets | June 30, 2025 Fair Value Liabilities | | :----------------------------- | :------------------------------ | :------------------------------ | :------------------------------- | | Cash flow hedges | $150,000 | $5,277 | $255 | | Fair value hedges | $700,000 | - | $151 | | Freestanding derivatives | $1,676,072 | $85,689 | $85,689 | | Risk participations | $140,626 | - | $15 | - The Company uses interest rate swaps for fair value hedges (notional $700 million), cash flow hedges (notional $150 million assets, $450 million liabilities), and freestanding derivatives (notional $1.68 billion)[75] - For the six months ended June 30, 2025, cash flow hedges resulted in a $(12.97) million loss recognized in OCI and a $(3.79) million loss reclassified into interest expense[89] Note 10. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures financial instruments at fair value using a three-level hierarchy, with most securities and derivatives using Level 2 inputs, and individually evaluated loans using Level 3 inputs, totaling $2.3 million Financial Asset Fair Value Measurements | Financial Asset (in thousands) | June 30, 2025 Total Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | | :----------------------------- | :----------------------------- | :------------- | :------------- | :------------- | | Securities available-for-sale | $703,461 | $0 | $703,461 | $0 | | Derivative – cash flow hedges | $5,277 | $0 | $5,277 | $0 | | Derivative – freestanding derivatives, net | $85,689 | $0 | $85,689 | $0 | | Individually evaluated loans (non-recurring) | $2,330 | $0 | $0 | $2,330 | - All securities available-for-sale and derivatives are measured at fair value on a recurring basis, predominantly using Level 2 inputs (observable market data)[104] - Individually evaluated loans, measured at fair value on a non-recurring basis, had a carrying amount of $2.3 million at June 30, 2025, utilizing Level 3 (unobservable) inputs[106] Note 11. OTHER INTANGIBLE ASSETS Other intangible assets, net, decreased to $3.41 million at June 30, 2025, from $3.90 million at December 31, 2024, due to $487 thousand in amortization expense | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Gross carrying value | $10,204 | $10,204 | | Accumulated amortization | $(6,795) | $(6,308) | | Net carrying amount | $3,409 | $3,896 | - Amortization expense for intangible assets was $487 thousand for the six months ended June 30, 2025, compared to $592 thousand for the same period in 2024[114] Note 12. FHLBNY ADVANCES FHLBNY advances decreased by $100.0 million to $508.0 million at June 30, 2025, with $1.75 billion in remaining borrowing capacity and no prepayment penalties | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total FHLBNY advances | $508,000 | $608,000 | | Remaining borrowing capacity | $1,750,000 | $1,840,000 | | Weighted average interest rate | 4.38% | 4.58% | - The Bank reduced FHLBNY advances by $100.0 million during the six months ended June 30, 2025, compared to a $680.0 million reduction in the prior year[171] Note 13. SUBORDINATED DEBENTURES Subordinated debentures totaled $272.4 million at June 30, 2025, with interest expense significantly increasing for both periods due to new issuances and higher rates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Subordinated debentures, net | $272,414 | $272,325 | | Interest expense (3 months) | $4,301 | $2,604 | | Interest expense (6 months) | $8,603 | $5,157 | - The Company issued $74.8 million in 9.00% fixed-to-floating rate subordinated notes due 2034 in June/July 2024[120][123] Note 14. RETIREMENT AND POSTRETIREMENT PLANS The Company terminated its defined-benefit pension plans by March 31, 2025, resulting in a $7.23 million settlement loss for H1 2025 Benefit Costs | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Total benefit cost (pension plans) | $7,272 | $(635) | | 401(k) Plan expense | $1,900 | $1,700 | - Both the Employee Retirement Plan and BNB Bank Pension Plan were terminated effective December 31, 2023, with the BNB Bank Pension Plan termination completed by March 31, 2025[128][129] - A settlement loss of $7.23 million was recognized for the BNB Bank Pension Plan during the six months ended June 30, 2025[130] Note 15. STOCK-BASED COMPENSATION The Company uses stock option, restricted stock (RSAs), and performance-based share awards (PSAs) for compensation, with unrecognized costs of $9.7 million for RSAs and $4.5 million for PSAs Compensation Expense | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | RSA compensation expense | $2,664 | $2,877 | | PSA compensation expense | $1,011 | $149 | | Total stock-based compensation | $3,675 | $3,026 | - As of June 30, 2025, 26,995 stock options were outstanding and vested, with a weighted-average exercise price of $35.39[134] - Unrecognized compensation cost for unvested RSAs is $9.7 million (weighted-average period of 2.2 years) and for PSAs is $4.5 million (weighted-average period of 2.0 years)[138][140] Note 16. INCOME TAXES The Company's effective tax rate for Q2 2025 was 26.1% (29.0% in 2024) and for H1 was 25.7% (28.1% in 2024), with no significant unusual income tax items 3 Months Ended June 30 | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Income tax expense (in thousands) | $10,475 | $7,552 | | Effective tax rate | 26.1% | 29.0% | 6 Months Ended June 30 | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Income tax expense (in thousands) | $17,726 | $14,137 | | Effective tax rate | 25.7% | 28.1% | Note 17. SEGMENT REPORTING The Company operates as a single reportable segment, 'Community Banking,' with all activities interrelated and performance evaluated based on consolidated financial results - The Company's Chief Executive Officer, as CODM, determines the Company operates as one reportable segment: "Community Banking"[142] - All revenues are derived from banking operations within the United States, and no single customer accounted for more than 10% of consolidated revenue[146] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and operating results, highlighting key trends, accounting estimates, liquidity, capital, and asset quality Overview Dime Community Bancshares functions primarily as a bank holding company for Dime Community Bank, with financial performance dependent on net interest income, non-interest income, and controlled non-interest expenses - The Holding Company's operations are minimal, primarily serving as the owner of Dime Community Bank, and is dependent on dividends from the Bank, its own earnings, additional capital raised, and borrowings[147] - The Bank's results are primarily driven by net interest income (interest income on loans/investments minus interest expense on deposits/borrowings) and non-interest income from various fees and services[147] Recent Developments The One Big Beautiful Bill Act (OBBBA) was signed on July 4, 2025, making bonus depreciation permanent, with an immaterial impact expected on the Company's Q3 2025 financial statements - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, making bonus depreciation permanent[148] - The Company anticipates an immaterial impact on its September 30, 2025, financial statements due to the deferred tax effects of the OBBBA[148] Selected Financial Highlights and Other Data Key financial highlights for Q2 2025 show improved profitability, including higher EPS, return on average assets and equity, and net interest margin, alongside increased non-performing loans and net charge-offs | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Reported EPS (Diluted) | $0.64 | $0.43 | $1.09 | $0.84 | | Return on average assets | 0.85% | 0.55% | 0.74% | 0.53% | | Return on average equity | 8.28% | 5.88% | 7.16% | 5.78% | | Net interest margin | 2.98% | 2.41% | 2.96% | 2.31% | | Non-performing loans (in thousands) | $53,214 | $24,843 | $53,214 | $24,843 | | Net charge-offs (in thousands) | $5,405 | $3,640 | $12,463 | $4,379 | | Allowance for credit losses/Total loans | 0.86% | 0.72% | 0.86% | 0.72% | Critical Accounting Estimates The Company's critical accounting estimates involve significant management judgment, particularly in determining the allowance for credit losses on loans held for investment, relying on complex models and forecasts - The allowance for credit losses on loans held for investment is a critical accounting estimate, requiring significant management judgment due to inherent uncertainties[152][155] - The estimation process involves a model comparing amortized cost to expected cash flows, incorporating assumptions on probability of default, loss given default, economic forecasts, and qualitative adjustments[155][156] - Changes in economic, market, or other conditions, or regulatory reviews, could necessitate future additions or reductions to the allowance, materially impacting net income[160][161] Liquidity and Capital Resources The Company manages liquidity through deposits, loan payments, and FHLBNY advances, with deposits increasing by $54.0 million and FHLBNY advances decreasing by $100.0 million, while maintaining substantial borrowing capacity and remaining well-capitalized Capital Ratios | Capital Ratio | Company June 30, 2025 | Bank June 30, 2025 | Basel III Minimum | "Well Capitalized" Minimum | | :---------------------- | :-------------------- | :----------------- | :---------------- | :------------------------- | | Tier 1 common equity ratio | 11.2% | 14.2% | 4.5% | 6.5% | | Tier 1 risk-based capital ratio | 12.3% | 14.2% | 6.0% | 8.0% | | Total risk-based capital ratio | 15.8% | 15.1% | 8.0% | 10.0% | | Tier 1 leverage ratio | 9.4% | 10.8% | 4.0% | 5.0% | - Total deposits (including mortgage escrow deposits) increased by $54.0 million during the six months ended June 30, 2025, primarily from non-interest-bearing checking, money market accounts, and CDs[168] - FHLBNY advances were reduced by $100.0 million during the six months ended June 30, 2025, with $1.75 billion in remaining borrowing capacity[171] Contractual Obligations The Bank's contractual obligations include FHLBNY advances, short-term borrowings, subordinated debt, and lease payments for branches and equipment, all with fixed contractual interest rates - The Bank's contractual obligations include FHLBNY advances, short-term borrowings, subordinated debt, and rental payments under leases for branches and equipment[178] Off-Balance Sheet Arrangements The Company has off-balance sheet arrangements primarily consisting of outstanding commitments to extend credit to borrowers, totaling $136.9 million, and a reimbursement agreement with FHLMC with a maximum exposure of $27.9 million - Outstanding commitments to extend credit to borrowers totaled $136.9 million at June 30, 2025[179] - A reimbursement agreement with FHLMC related to a 2017 loan securitization has a maximum exposure of $27.9 million for defaulted loans[180] Concentrations of Lending Activities Non-owner occupied commercial real estate and multifamily residential/residential mixed-use loans constitute 63% of total loans held for investment, with heightened risk management practices to mitigate associated risks Loan Portfolio Composition | Loan Type | June 30, 2025 Balance (in thousands) | Weighted Average LTV | | :-------------------------------- | :----------------------------------- | :------------------- | | Total investor commercial real estate | $3,128,120 | 55% | | Total multifamily residential and residential mixed-use | $3,693,425 | 57% | - Non-owner occupied commercial real estate and multifamily residential/residential mixed-use loans represent 63% of total loans held for investment at June 30, 2025[181] - The Company uses heightened risk management practices, including board oversight, portfolio management, underwriting standards, market analysis, and stress testing, to manage these concentrations[182][184] Asset Quality The Company maintains robust asset quality monitoring, with monthly reviews of delinquent loans and a policy of discontinuing interest accrual for loans 90 days or more past due General The Company does not originate or purchase subprime loans and evaluates impaired securities as discussed in Note 6 - The Company does not originate or purchase subprime loans[195] Monitoring and Collection of Delinquent Loans Management reviews delinquent loans monthly, sending automated late notices and attempting repayment schedules, generally discontinuing interest accrual for loans 90 days or more past due - Delinquent loans are reviewed monthly, with automated late notices sent after 10-15 days past due[196][197] - Interest accrual is generally discontinued for loans 90 days or more past due, or when full payment is not expected[198] - Foreclosure proceedings are initiated on non-accrual real estate loans, with updated appraisals to calculate potential collateral shortfalls[199] Non-accrual Loans Non-accrual loans within the held-for-investment portfolio increased to $53.2 million at June 30, 2025, from $49.5 million, primarily driven by non-owner-occupied commercial real estate and business loans Non-accrual Loans by Type | Loan Type (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Business loans | $18,007 | $22,624 | | One-to-four family residential and cooperative/condominium apartment | $1,642 | $3,213 | | Non-owner-occupied commercial real estate | $32,908 | $22,960 | | ADC | $657 | $657 | | Total non-accrual loans | $53,214 | $49,479 | Non-accrual Ratios | Ratio | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total non-accrual loans to total loans | 0.49% | 0.46% | | Total non-performing assets to total assets | 0.37% | 0.34% | Loan Restructurings The Company evaluates loan modifications to borrowers experiencing financial difficulty to determine if they result in a new loan or a continuation of an existing one, with losses estimated within the allowance for credit losses - Loan modifications for borrowers experiencing financial difficulty are evaluated to determine if they constitute a new loan or a continuation of an existing one[203] - Allowance for credit losses for restructured loans is measured on a pooled basis for accrual status and certain non-accrual loans, or individually for collateral-dependent non-accrual loans[204] OREO Property acquired through foreclosure is classified as OREO and carried at the lower of fair value or book balance, with no carrying value or provision for losses at June 30, 2025, or December 31, 2024 - OREO is carried at the lower of fair value or book balance, with write-downs recognized through a provision in non-interest expense[205] - There was no carrying value of OREO properties and no provision for losses on OREO properties for the six months ended June 30, 2025 and 2024[206] Past Due Loans Loans past due 30 to 59 days increased to $28.1 million at June 30, 2025, from $10.3 million, while 60 to 89 days past due increased to $33.4 million from $31.3 million, with no accruing loans 90 days or more past due | Delinquency Period (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | 30 to 59 Days Past Due | $28,148 | $10,330 | | 60 to 89 Days Past Due | $33,352 | $31,313 | | Accruing Loans 90 Days or More Past Due | $0 | $0 | Reserve for Unfunded Loan Commitments The Bank's reserve for unfunded loan commitments increased slightly to $2.8 million at June 30, 2025, from $2.7 million, with changes recognized in the provision for credit losses | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Reserve for unfunded loan commitments | $2,800 | $2,700 | Allowance for Credit Losses The provision for credit losses for H1 2025 was $18.8 million, a significant increase from $10.8 million, primarily due to updates in macroeconomic forecasts and loss driver models | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Provision for credit losses | $18,847 | $10,795 | | Allowance for credit losses balance at end of period | $93,189 | $77,812 | | Allowance for credit losses to total loans | 0.86% | 0.72% | | Allowance for credit losses to total non-performing loans | 175.12 | 313.21 | - The $18.8 million provision for credit losses for the six months ended June 30, 2025, included $1.8 million for an available-for-sale corporate security and was primarily driven by macroeconomic forecast updates[211] Comparison of Financial Condition at June 30, 2025 and December 31, 2024 Total assets decreased by $145.3 million, primarily due to reductions in cash and derivative assets, partially offset by increased BOLI, while total liabilities decreased by $179.8 million and stockholders' equity increased by $34.5 million | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total assets | $14,207,935 | $14,353,258 | $(145,323) | | Cash and due from banks | $1,156,754 | $1,283,571 | $(126,817) | | BOLI | $393,345 | $290,665 | $102,680 | | Total liabilities | $12,776,929 | $12,956,741 | $(179,812) | | FHLBNY advances | $508,000 | $608,000 | $(100,000) | | Total stockholders' equity | $1,431,006 | $1,396,517 | $34,489 | Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024 Net income for Q2 2025 increased significantly to $29.7 million from $18.5 million, driven by a $22.6 million increase in net interest income from higher interest income and lower interest expense Analysis of Net Interest Income Net interest income increased by $22.6 million to $98.1 million, and net interest margin rose to 2.98% from 2.41%, due to increased average interest-earning assets and a favorable shift in interest rates | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net interest income (in thousands) | $98,097 | $75,502 | $22,595 | | Net interest margin | 2.98% | 2.41% | 0.57% | | Net interest rate spread | 1.99% | 1.28% | 0.71% | | Average interest-earning assets (in thousands) | $13,195,116 | $12,624,556 | $570,560 | Rate/Volume Analysis The increase in net interest income was primarily driven by a $10.8 million increase due to volume and an $11.8 million increase due to rate changes, with interest income benefiting from volume and rate increases | Component (in thousands) | Increase / (Decrease) Due to Volume | Increase / (Decrease) Due to Rate | Total Increase / (Decrease) | | :----------------------- | :---------------------------------- | :-------------------------------- | :-------------------------- | | Total interest-earning assets | $9,974 | $(1,842) | $8,132 | | Total interest-bearing liabilities | $(811) | $(13,652) | $(14,463) | | Net change in net interest income | $10,785 | $11,810 | $22,595 | Interest Income Interest income increased by $8.1 million to $167.5 million, primarily due to higher income from other short-term investments, business loans, securities, and one-to-four family loans | Source (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total interest income | $167,550 | $159,418 | $8,132 | | Other short-term investments | $10,749 | $4,412 | $6,337 | | Business loans | $46,593 | $42,933 | $3,660 | | Securities | $11,353 | $7,907 | $3,446 | | One-to-four family residential and coop/condo apartment | $11,532 | $9,968 | $1,564 | | Multifamily residential and residential mixed-use | $42,462 | $45,775 | $(3,313) | | Non-owner-occupied commercial real estate | $41,822 | $44,728 | $(2,906) | Interest Expense Interest expense decreased by $14.4 million to $69.5 million, mainly due to a $12.7 million reduction in deposit interest expense and a $2.4 million decrease in FHLBNY advances interest expense | Source (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total interest expense | $69,453 | $83,916 | $(14,463) | | Deposits and escrow | $60,181 | $72,878 | $(12,697) | | FHLBNY advances | $4,053 | $6,429 | $(2,376) | | Derivative cash collateral | $918 | $2,005 | $(1,087) | | Subordinated debt | $4,301 | $2,604 | $1,697 | Provision for Credit Losses The provision for credit losses increased to $9.2 million from $5.6 million, primarily due to updates in macroeconomic forecasts and loss driver models | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Provision for credit losses | $9,221 | $5,585 | $3,636 | Non-Interest Income Non-interest income slightly decreased to $11.6 million from $11.8 million, mainly due to a $3.7 million reduction in gains from asset sales, partially offset by a $1.7 million increase in BOLI income | Source (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total non-interest income | $11,595 | $11,808 | $(213) | | Gain on sale of other assets | $0 | $3,695 | $(3,695) | | BOLI income | $4,186 | $2,484 | $1,702 | Non-Interest Expense Non-interest expense increased by $4.6 million to $60.3 million, primarily due to a $4.0 million increase in salaries and employee benefits, with non-interest expense as a percentage of average assets also increasing | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total non-interest expense | $60,299 | $55,694 | $4,605 | | Salaries and employee benefits | $36,218 | $32,184 | $4,034 | | Non-interest expense to average assets | 1.72% | 1.66% | 0.06% | Income Tax Expense Income tax expense increased to $10.5 million from $7.6 million, while the effective tax rate decreased to 26.1% from 29.0% | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Income tax expense | $10,475 | $7,552 | $2,923 | | Effective tax rate | 26.1% | 29.0% | -2.9% | Comparison of Operating Results for the Six Months Ended June 30, 2025 and 2024 Net income for H1 2025 increased to $51.2 million from $36.2 million, driven by a $45.3 million increase in net interest income, despite increased credit loss provision and non-interest expense Analysis of Net Interest Income Net interest income increased by $45.3 million to $192.3 million, and net interest margin rose to 2.96% from 2.31%, due to increased average interest-earning assets and a favorable shift in interest rates | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net interest income (in thousands) | $192,310 | $147,032 | $45,278 | | Net interest margin | 2.96% | 2.31% | 0.65% | | Net interest rate spread | 1.97% | 1.21% | 0.76% | | Average interest-earning assets (in thousands) | $13,079,859 | $12,820,156 | $259,703 | Rate/Volume Analysis The $45.3 million increase in net interest income was driven by a $20.2 million increase due to volume and a $25.1 million increase due to rate changes, with interest income benefiting from volume and rate increases | Component (in thousands) | Increase / (Decrease) Due to Volume | Increase / (Decrease) Due to Rate | Total Increase / (Decrease) | | :----------------------- | :---------------------------------- | :-------------------------------- | :-------------------------- | | Total interest-earning assets | $11,388 | $(2,400) | $8,988 | | Total interest-bearing liabilities | $(8,827) | $(27,463) | $(36,290) | | Net change in net interest income | $20,215 | $25,063 | $45,278 | Interest Income Interest income increased by $9.0 million to $329.4 million, primarily from business loans, securities, other short-term investments, and one-to-four family loans | Source (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total interest income | $329,415 | $320,427 | $8,988 | | Business loans | $91,640 | $82,157 | $9,483 | | Securities | $22,676 | $15,787 | $6,889 | | Other short-term investments | $18,586 | $13,976 | $4,610 | | One-to-four family residential and coop/condo apartment | $22,601 | $19,738 | $2,863 | | Multifamily residential and residential mixed-use | $84,791 | $91,794 | $(7,003) | | Non-owner-occupied commercial real estate | $83,148 | $89,504 | $(6,356) | | ADC | $5,915 | $7,330 | $(1,415) | Interest Expense Interest expense decreased by $36.3 million to $137.1 million, mainly due to reductions in deposit interest expense and FHLBNY advances interest expense, partially offset by a $3.4 million increase in subordinated debt interest expense | Source (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total interest expense | $137,105 | $173,395 | $(36,290) | | Deposits and escrow | $118,255 | $145,947 | $(27,692) | | FHLBNY advances | $8,119 | $18,572 | $(10,453) | | Derivative cash collateral | $2,115 | $3,718 | $(1,603) | | Subordinated debt | $8,603 | $5,157 | $3,446 | Provision for Credit Losses The provision for credit losses increased to $18.8 million from $10.8 million, primarily due to updates in macroeconomic forecasts and loss driver models | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Provision for credit losses | $18,847 | $10,795 | $8,052 | Non-Interest Income Non-interest income slightly decreased to $21.2 million from $22.3 million, mainly due to a $6.7 million reduction in gains on sale of Bank's premises, partially offset by a $3.2 million increase in BOLI income | Source (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total non-interest income | $21,228 | $22,275 | $(1,047) | | Gain on sale of other assets | $0 | $6,663 | $(6,663) | | BOLI income | $8,179 | $4,945 | $3,234 | Non-Interest Expense Non-interest expense increased by $17.6 million to $125.8 million, primarily due to a $7.6 million increase in salaries and employee benefits and a $7.2 million pension settlement loss | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Total non-interest expense | $125,810 | $108,205 | $17,605 | | Salaries and employee benefits | $71,869 | $64,221 | $7,648 | | Loss due to pension settlement | $7,231 | $0 | $7,231 | | Non-interest expense to average assets | 1.81% | 1.59% | 0.22% | Income Tax Expense Income tax expense increased to $17.7 million from $14.1 million, while the effective tax rate decreased to 25.7% from 28.1% | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Income tax expense | $17,726 | $14,137 | $3,589 | | Effective tax rate | 25.7% | 28.1% | -2.4% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's primary market risk is interest rate risk, monitored through EVE and income simulation analyses, showing improved EVE and moderate changes in net interest income under various rate shock scenarios General The Company's largest market risk is interest rate risk; it is not subject to foreign currency exchange or commodity price risk, and no derivative instruments requiring bifurcation were used to hedge interest rate or market risk - The Company's largest market risk is interest rate risk; it is not subject to foreign currency exchange or commodity price risk[259] - No transactions involving derivative instruments requiring bifurcation were conducted to hedge interest rate or market risk during the six months ended June 30, 2025[259] Interest Rate Risk Exposure Analysis The Company assesses interest rate risk using EVE and income simulation models, with EVE increasing marginally to $1.80 billion at June 30, 2025, and income simulation projecting moderate changes in net interest income under various rate shock scenarios Economic Value of Equity ("EVE") Analysis The Company's Pre-Shock Scenario EVE increased marginally from $1.76 billion to $1.80 billion at June 30, 2025, primarily due to an increase in the value of the Bank's loan and investment portfolios | Rate Shock Scenario | June 30, 2025 EVE (in thousands) | Percentage Change | | :------------------ | :------------------------------- | :---------------- | | +200 Basis Points | $1,959,621 | 9.1% | | +100 Basis Points | $1,914,186 | 6.5% | | Pre-Shock Scenario | $1,796,914 | — | | -100 Basis Points | $1,630,725 | (9.2)% | | -200 Basis Points | $1,392,212 | (22.5)% | - Pre-Shock Scenario EVE increased from $1.76 billion at December 31, 2024, to $1.80 billion at June 30, 2025, driven by increased value in loan and investment portfolios[266] Income Simulation Analysis Net interest income simulation projects a 1.7% increase in Year-One for a gradual +200 basis point rate change and a 5.9% increase for an instantaneous +200 basis point shock Gradual Change in Interest Rates | Gradual Change in Interest rates of: | Year-One % Change in Net Interest Income | Year-Two % Change in Net Interest Income | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | +200 Basis Points | 1.7% | 7.4% | | +100 Basis Points | 0.9% | 3.9% | | -100 Basis Points | 0.8% | (1.3)% | | -200 Basis Points | 1.0% | (4.2)% | Instantaneous Rate Shock Scenarios | Instantaneous Rate Shock Scenarios | Year-One % Change in Net Interest Income | Year-Two % Change in Net Interest Income | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | +200 Basis Points | 5.9% | 10.7% | | +100 Basis Points | 3.1% | 5.6% | | -100 Basis Points | (0.6)% | (3.3)% | | -200 Basis Points | (2.4)% | (8.7)% | Item 4. Controls and Procedures Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[272] - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[273] PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is routinely involved in legal actions, but management believes none will have a material adverse impact on its financial condition or results of operations - The Company is routinely involved in legal actions, but management believes none will have a material adverse impact on its financial condition or results of operations[274] Item 1A. Risk Factors Risk factors are detailed in the Company's Annual Report on Form 10-K for December 31, 2024, and subsequent Quarterly Reports on Form 10-Q - Risk factors are detailed in the Company's Annual Report on Form 10-K for December 31, 2024, and subsequent Quarterly Reports on Form 10-Q[275] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The Company did not repurchase any common stock during Q2 2025, with 1,566,947 shares remaining available for purchase under authorized stock repurchase programs - No repurchases of common stock occurred during the quarter ended June 30, 2025[280] - As of June 30, 2025, 1,566,947 shares remained available for purchase under authorized stock repurchase programs[280] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[277] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[278] Item 5. Other Information No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements for Company securities during Q2 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[279] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, indentures, certifications, and XBRL financial statements - Exhibits include Restated Certificate of Incorporation, Amended and Restated Bylaws, Indentures, Certifications of Principal Executive and Financial Officers, and XBRL financial statements[281][282] Signatures The report is signed by Stuart H. Lubow, President and CEO, and Avinash Reddy, Senior EVP and CFO, on August 5, 2025 - The report is signed by Stuart H. Lubow, President and CEO, and Avinash Reddy, Senior EVP and CFO, on August 5, 2025[286]