Dime(US:DCOM)2021-05-09 16:00PART I – FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Dime Community Bancshares, Inc., reflecting the significant impact of the February 1, 2021, reverse merger and the adoption of the CECL standard Consolidated Statements of Financial Condition Total assets significantly increased to $13.02 billion at March 31, 2021, from $6.78 billion at December 31, 2020, primarily due to the merger, which also substantially grew loans, deposits, and stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $13,018,628 | $6,781,610 | | Total loans held for investment, net | $10,407,898 | $5,580,583 | | Total deposits | $10,810,812 | $4,525,122 | | Total Liabilities | $11,845,804 | $6,080,514 | | Total Stockholders' Equity | $1,172,824 | $701,096 | Consolidated Statements of Income The company reported a net loss of $22.9 million for Q1 2021, primarily due to $37.9 million in merger-related expenses and a $16.5 million loss on derivative terminations, despite a substantial increase in net interest income to $77.8 million Q1 2021 vs Q1 2020 Performance (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net Interest Income | $77,841 | $40,524 | | Provision for Credit Losses | $15,779 | $8,012 | | Total Non-interest (Loss) Income | ($7,383) | $4,236 | | Merger Expenses | $37,942 | $586 | | Net (Loss) Income | ($21,034) | $8,392 | | Diluted (Loss) Earnings Per Share | ($0.66) | $0.37 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of the financial statements, focusing on the reverse merger accounting, CECL standard adoption, and the composition of assets and liabilities, including disclosures on merger purchase price, fair value allocations, and the impact of CECL - On February 1, 2021, Legacy Dime merged with Bridge Bancorp, with Bridge as the legal survivor, but for accounting purposes, the transaction was treated as a reverse merger, with Legacy Dime as the accounting acquirer, and historical financial statements prior to the merger date are those of Legacy Dime2831 Merger Purchase Price Consideration (in thousands) | Component | Value | | :--- | :--- | | Purchase price determination of hypothetical Legacy Dime shares issued | $490,560 | | Value of Bridge stock options hypothetically converted | $643 | | Cash in lieu of fractional shares | $7 | | Total Purchase Price Consideration | $491,210 | - The merger resulted in the recognition of $99.7 million in goodwill, which is not deductible for tax purposes, and the company also recorded $10.2 million in core deposit intangibles5456 - The company adopted the CECL standard on January 1, 2021, resulting in a $3.9 million decrease to the allowance for credit losses and a $1.4 million increase to the reserve for unfunded commitments, with a net after-tax cumulative-effect adjustment of $1.7 million recorded to retained earnings6365 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant impact of the February 1, 2021, merger on the company's financial condition and operating results, highlighting the increased balance sheet size, a net loss driven by one-time expenses, and strong core performance, alongside asset quality, liquidity, and capital resources Comparison of Financial Condition Total assets grew by $6.24 billion to $13.02 billion at March 31, 2021, primarily due to the merger, which also significantly increased the loan portfolio, securities, deposits, and stockholders' equity, while reducing FHLBNY advances - Total assets increased to $13.02 billion at March 31, 2021, up $6.24 billion from year-end 2020, primarily due to the merger282 - Total liabilities increased by $5.77 billion, mainly from a $6.29 billion increase in deposits acquired in the merger, partially offset by a $670.1 million paydown of FHLBNY advances285286 - Stockholders' equity increased by $471.7 million, reflecting $491.2 million in shares issued for the merger, offset by a net loss and dividends paid288 Comparison of Operating Results The company reported a net loss of $22.9 million for Q1 2021, driven by one-time expenses like a $16.5 million loss on derivative terminations and $37.9 million in merger-related costs, despite a substantial increase in net interest income to $77.8 million and an expanded net interest margin of 3.14% Net Interest Margin Analysis | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Average Interest-Earning Assets | $10,057,598 | $5,949,363 | | Net Interest Income | $77,841 | $40,524 | | Net Interest Margin | 3.14% | 2.72% | - Non-interest loss was $7.4 million in Q1 2021, compared to income of $4.2 million in Q1 2020, primarily due to a $16.5 million loss on the termination of derivatives299 - Non-interest expense increased by $56.8 million to $82.8 million, largely due to $25.8 million in merger expenses and $12.0 million in severance costs300 Asset Quality Asset quality metrics remained sound with non-accrual loans at $35.5 million or 0.34% of total loans, $66.7 million in COVID-19 related deferrals, and a Q1 2021 provision for credit losses of $15.8 million primarily for acquired non-PCD loans Asset Quality Metrics | Metric | March 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Non-accrual loans | $35,549 | $17,928 | | Non-accrual loans to total loans | 0.34% | 0.32% | | Allowance for credit loss to total loans | 0.93% | 0.70% | - As of March 31, 2021, the company had 34 loans with balances of $66.7 million under COVID-19 related principal and interest deferrals257258 Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk using EVE and NII simulation models, with EVE significantly increasing to $1.04 billion post-merger and projected to rise by 11.61% in a +100 basis point rate shock, while NII is estimated to increase by 0.90% over 12 months in a gradual rate rise EVE Sensitivity Analysis (in thousands) | Rate Shock Scenario | EVE at March 31, 2021 | Percentage Change | | :--- | :--- | :--- | | +100 Basis Points | $1,157,079 | 11.61% | | Pre-Shock Scenario | $1,036,698 | - | - A net interest income simulation estimates that a gradual +100 basis point change in interest rates would increase net interest income by 0.90% over the 12-month period beginning March 31, 2021312 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes to 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 March 31, 2021313 - There were no material changes to the Company's internal control over financial reporting during the first quarter of 2021316 PART II - OTHER INFORMATION Legal Proceedings The company is involved in various legal actions in the ordinary course of business, none of which are expected to have a material adverse impact on its financial condition or results of operations - In the opinion of management, the Company was not involved in any legal actions or proceedings likely to have a material adverse impact on its financial condition as of March 31, 2021317 Risk Factors There have been no changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - There have been no changes to the risks disclosed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2020318 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the company's stock repurchase program during Q1 2021, with 797,780 shares remaining available for purchase under the authorized plan as of March 31, 2021 - No shares were purchased under the company's stock repurchase program during the three months ended March 31, 2021324 - As of the end of the quarter, 797,780 shares remained available for purchase under the existing repurchase plan324 Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the merger agreement, corporate governance documents, debt indentures, employment agreements, and officer certifications