Dime(US:DCOM)2021-08-08 16:00PART I – FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements Presents unaudited consolidated financial statements, reflecting the significant impact of the reverse merger with Bridge Bancorp, Inc Consolidated Statements of Financial Condition Assets grew to $12.70 billion and liabilities to $11.50 billion, primarily due to the Bridge Bancorp merger Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | $12,703,685 | $6,781,610 | | Cash and due from banks | $1,184,183 | $243,603 | | Total loans held for investment, net | $9,453,871 | $5,580,583 | | Goodwill | $155,339 | $55,638 | | Total Liabilities | $11,499,409 | $6,080,514 | | Total deposits | $11,066,193 | $4,525,122 | | FHLBNY advances | $25,000 | $1,204,010 | | Total Stockholders' Equity | $1,204,276 | $701,096 | Consolidated Statements of Income Q2 2021 net income rose to $49.5 million, driven by increased net interest and non-interest income Key Income Statement Data (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $93,254 | $43,556 | $171,095 | $84,080 | | (Credit) Provision for Credit Losses | ($4,248) | $6,060 | $11,531 | $14,072 | | Non-Interest Income | $29,544 | $8,386 | $22,161 | $12,622 | | Non-Interest Expense | $54,882 | $29,346 | $137,687 | $55,386 | | Net Income | $51,278 | $12,966 | $30,244 | $21,358 | | Net Income Available to Common | $49,456 | $11,826 | $26,601 | $20,218 | | Diluted EPS | $1.19 | $0.55 | $0.70 | $0.91 | Consolidated Statements of Cash Flows Cash and cash equivalents increased by $940.6 million, primarily from investing activities, partially offset by financing outflows Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $57,721 | $23,581 | | Net cash provided by (used in) investing activities | $1,306,545 | ($119,799) | | Net cash (used in) provided by financing activities | ($423,686) | $57,743 | | Increase (decrease) in cash and cash equivalents | $940,580 | ($38,475) | Notes to Unaudited Condensed Consolidated Financial Statements Notes provide critical details on financial statement presentation, merger accounting, CECL adoption, and key line item breakdowns - On February 1, 2021, Legacy Dime merged with Bridge Bancorp in a reverse merger, with Legacy Dime being the accounting acquirer. Consequently, Legacy Dime's historical financial statements are presented as the historical statements of the combined company for periods prior to the merger date283146 - The company adopted the Current Expected Credit Loss (CECL) standard on January 1, 2021. The adoption resulted 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 in retained earnings6264 Merger Purchase Price Allocation (in thousands) | Item | Amount | | :--- | :--- | | Purchase price consideration | $491,210 | | Fair value of assets acquired | $6,239,014 | | Fair value of liabilities assumed | $5,847,505 | | Fair value of net identifiable assets | $391,509 | | Goodwill resulting from Merger | $99,701 | - As of June 30, 2021, the company had 25 loans with outstanding balances of $44.5 million under COVID-19 related principal and interest (P&I) deferral programs. These modifications are exempt from TDR classification under the CARES Act136137 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operating results, highlighting the merger's impact on balance sheet, income, and asset quality Comparison of Financial Condition Total assets increased by $5.92 billion to $12.70 billion, primarily due to the merger's impact on loans, securities, and deposits - The significant increase in assets to $12.70 billion and liabilities to $11.53 billion was mainly due to the acquisition of assets and assumption of liabilities from the merger with Bridge Bancorp304306 - The company utilized excess liquidity to pay down FHLBNY advances and other borrowings by $1.18 billion during the first six months of 2021308 - Stockholders' equity grew by $503.2 million, primarily due to $491.2 million in share issuances associated with the merger, supplemented by net income and other comprehensive income, partially offset by dividends309 Comparison of Operating Results Q2 2021 net income rose to $51.3 million, driven by increased net interest and non-interest income, despite merger costs - Q2 2021 net income surged to $51.3 million, compared to $13.0 million in Q2 2020, largely due to the full-quarter impact of the merger and a significant gain on sale of SBA PPP loans310311 - Net interest margin (NIM) for Q2 2021 was 3.12%, an increase from 2.86% in Q2 2020, benefiting from a lower cost of funds316 - Non-interest expense for H1 2021 increased by $82.3 million year-over-year, primarily due to a $38.1 million increase in merger-related expenses and higher compensation and occupancy costs post-merger337 Liquidity and Capital Resources The company maintains strong liquidity and capital, with deposits increasing and FHLBNY advances reduced, remaining well capitalized - Core deposits (non-CDs) increased by $6.56 billion during the first six months of 2021, primarily due to the merger257 - The company had an additional unused borrowing capacity of $2.9 billion through the FHLBNY as of June 30, 2021258 Capital Ratios as of June 30, 2021 | Ratio | Bank | Company | Well Capitalized Minimum | | :--- | :--- | :--- | :--- | | Tier 1 common equity ratio | 12.6% | 10.1% | 6.5% | | Tier 1 risk-based capital ratio | 12.6% | 11.3% | 8.0% | | Total risk-based capital ratio | 13.7% | 14.5% | 10.0% | | Tier 1 leverage ratio | 9.2% | 8.2% | 5.0% | Asset Quality Asset quality remains stable with non-accrual loans at $28.3 million and a $4.2 million credit loss recovery in Q2 2021 Asset Quality Metrics | Metric | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Non-accrual loans (in thousands) | $28,286 | $17,928 | | Non-accrual loans to total loans | 0.30% | 0.32% | | Allowance for credit loss/Total loans | 0.97% | 0.74% (pre-CECL) | | Allowance for credit loss/Non-performing loans | 327.94% | 231.26% (pre-CECL) | - The company recorded a credit loss recovery of $4.2 million in Q2 2021, compared to a provision of $6.1 million in Q2 2020, primarily due to improved economic forecasts and releases of reserves on acquired PCD loans319 Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate risk, with EVE analysis indicating an asset-sensitive balance sheet and projected net interest income increase EVE Sensitivity Analysis (in thousands) | Scenario | June 30, 2021 EVE | % Change | | :--- | :--- | :--- | | Pre-Shock | $1,059,142 | - | | +100 bps | $1,229,834 | 16.12% | - A net interest income simulation estimates a 0.72% increase over the next 12 months assuming a gradual +100 basis point rise in interest rates, indicating a slightly asset-sensitive position from an income perspective351 Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2021, despite Material changes to internal controls from CECL and merger accounting - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2021352353 - Material changes to internal controls over financial reporting occurred during the period due to the implementation of CECL and accounting for the merger355 PART II - OTHER INFORMATION Legal Proceedings The company is involved in ordinary course legal actions, none expected to materially impact financial condition or results - 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 June 30, 2021356 Risk Factors No material changes were reported to risk factors previously disclosed in the Annual Report on Form 10-K for December 31, 2020 - No changes were reported to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2020357363 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 424,121 shares at $34.28 per share in Q2 2021, with 373,659 shares remaining for repurchase Share Repurchases in Q2 2021 | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2021 | 0 | $0.00 | | May 2021 | 206,827 | $34.22 | | June 2021 | 217,294 | $34.34 | | Total Q2 | 424,121 | $34.28 | - As of June 30, 2021, 373,659 shares remained available for repurchase under the company's stock repurchase plan362 Exhibits This section lists the exhibits filed with the Form 10-Q, including merger agreement and officer certifications