Dime(DCOM) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Core EPS for Q4 2025 was $0.79, representing an 88% increase year-over-year, driven by record total revenues of $124 million [5][23] - NIM increased by 10 basis points to 311 basis points, with average earning assets up over $650 million on a linked-quarter basis [6][24] - Core deposits rose by $1.2 billion year-over-year, with a significant liquidity position allowing for future lending opportunities [6][7] Business Line Data and Key Metrics Changes - Business loans grew by over $175 million on a linked-quarter basis and over $500 million year-over-year, with approximately $400 million of this growth coming from new specialized industries [8][44] - Non-interest income for Q4 was $11.5 million, exceeding guidance [28] - The loan loss provision declined to $10.9 million, with the allowance to loans increasing to 91 basis points [28] Market Data and Key Metrics Changes - The company reported strong deposit growth across all channels, with total deposits up approximately $800 million versus the prior quarter [24] - Non-interest-bearing deposits reached nearly 31% of total deposits, with a goal to increase this ratio over time [66][68] Company Strategy and Development Direction - The company is focused on organic growth, with a strategy to build out its commercial banking platform and industry verticals [10][11] - Plans for 2026 include significant loan repricing opportunities and a target to operate at a sub-50% efficiency ratio [12][13] - The company aims to diversify its balance sheet and loan portfolio, expecting significant growth in both areas [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong organic growth environment and the execution of their strategy, anticipating continued momentum into 2026 [11][14] - The company highlighted a target-rich environment for lending opportunities and expects to see a path to a structurally higher NIM and enhanced earnings power over time [34][31] Other Important Information - The company has a total capital ratio of more than 16%, positioning it favorably against local peers [10][28] - The Manhattan branch is operational, with additional locations expected to open by the end of the first year [11] Q&A Session Summary Question: What industries accounted for the growth in business loan balances? - Approximately $400 million of the $500 million year-over-year growth in business loans came from new specialized industries, particularly healthcare [44] Question: What is the current loan and deposit situation in New Jersey? - About 8% to 10% of the loan portfolio is in Northern New Jersey, with a deposit-to-loan ratio of 15%-20% [46] Question: How is the deposit pipeline looking and what are the pricing strategies? - New customer acquisition requires offering high twos to low threes on money market accounts, with an overall cost of deposits around 168 basis points [51][52] Question: What is the status of the rent-regulated loan book? - The 100% rent-regulated book is around $350 million, down from $500 million two years ago, with maturities and repricings expected to be around $250 million for 2026 [58] Question: What is the strategy for deploying cash and securities? - The company is not rushing to deploy cash but is looking for opportunities in the market, with a focus on maintaining a flexible balance sheet [72][75]