Table of Contents
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-34096
DIME COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
N/A
(Former name or former address, if changed since last report)
New York
11-2934195
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification number)
898 Veterans Memorial Highway, Suite 560, Hauppauge, NY
11788
(Address of principal executive offices)
(Zip Code)
(631) 537-1000
(Registrant’s telephone number, including area code)
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 Par Value
DCOM
The NASDAQ Stock Market
Preferred Stock, Series A, $0.01 Par Value
DCOMP
9.000% Subordinated Notes, $25.00 Par Value
DCOMG
Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒
Accelerated Filer ☐
Non-Accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Classes of Common Stock
Number of shares outstanding at April 30, 2025
$0.01 Par Value
43,818,562
PART I – FINANCIAL INFORMATION
Page
Item 1.
Unaudited Condensed Consolidated Financial Statements
Consolidated Statements of Financial Condition at March 31, 2025 and December 31, 2024
4
Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024
5
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024
6
Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024
7
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024
8
Notes to Unaudited Condensed Consolidated Financial Statements
9
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
37
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
52
Item 4.
Controls and Procedures
54
PART II - OTHER INFORMATION
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
55
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
56
Signatures
57
2
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by use of words such as “annualized,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “seek,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar terms and phrases, including references to assumptions. Examples of forward-looking statements include, but are not limited to, the proposed use of proceeds from any offering, possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and our business, including earnings growth; revenue growth in retail banking, lending and other areas; origination volume in the consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title insurance subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies.
Forward-looking statements are based upon various assumptions and analyses made by Dime Community Bancshares, Inc. (together with its direct and indirect subsidiaries, the “Company”), in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual conditions or results to differ materially from those expressed or implied by such forward-looking statements. Such factors include, without limitation, the following:
Accordingly, you should not place undue reliance on forward-looking statements. The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.
3
Item 1. Condensed Consolidated Financial Statements
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Dollars in thousands except share amounts)
March 31,
December 31,
2025
2024
Assets:
Cash and due from banks
$
1,030,702
1,283,571
Securities available-for-sale, at fair value
710,579
690,693
Securities held-to-maturity
631,334
637,339
Loans held for sale
2,527
22,625
Loans held for investment, net of fees and costs
10,868,735
10,871,943
Allowance for credit losses
(90,455)
(88,751)
Total loans held for investment, net
10,778,280
10,783,192
Premises and fixed assets, net
33,650
34,858
Restricted stock
66,987
69,106
Bank Owned Life Insurance ("BOLI")
389,167
290,665
Goodwill
155,797
Other intangible assets
3,644
3,896
Operating lease assets
45,657
46,193
Derivative assets
98,740
116,496
Accrued interest receivable
56,044
55,970
Other assets
94,574
162,857
Total assets
14,097,682
14,353,258
Liabilities:
Interest-bearing deposits
8,282,373
8,275,591
Non-interest-bearing deposits
3,245,409
3,355,829
Deposits (excluding mortgage escrow deposits)
11,527,782
11,631,420
Non-interest-bearing mortgage escrow deposits
88,138
54,715
Interest-bearing mortgage escrow deposits
Total mortgage escrow deposits
88,142
54,721
Federal Home Loan Bank of New York ("FHLBNY") advances
508,000
608,000
Other short-term borrowings
—
50,000
Subordinated debt, net
272,370
272,325
Derivative cash collateral
85,230
112,420
Operating lease liabilities
48,432
48,993
Derivative liabilities
92,516
108,347
Other liabilities
63,197
70,515
Total liabilities
12,685,669
12,956,741
Commitments and contingencies
Stockholders' equity:
Preferred stock, Series A ($0.01 par, $25.00 liquidation value, 10,000,000 shares authorized and 5,299,200 shares issued and outstanding at March 31, 2025 and December 31, 2024)
116,569
Common stock ($0.01 par, 80,000,000 shares authorized, 46,141,361 shares issued at March 31, 2025 and December 31, 2024 respectively, and 43,799,076 shares and 43,622,292 shares outstanding at March 31, 2025 and December 31, 2024, respectively)
461
Additional paid-in capital
623,305
624,822
Retained earnings
803,202
794,526
Accumulated other comprehensive loss, net of deferred taxes
(39,045)
(45,018)
Unearned equity awards
(12,909)
(7,640)
Treasury stock, at cost (2,342,285 shares and 2,519,069 shares at March 31, 2025 and December 31, 2024, respectively)
(79,570)
(87,203)
Total stockholders' equity
1,412,013
1,396,517
Total liabilities and stockholders' equity
See Notes to unaudited condensed Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands except per share amounts)
Three Months Ended
Interest income:
Loans
142,705
143,565
Securities
11,323
7,880
Other short-term investments
7,837
9,564
Total interest income
161,865
161,009
Interest expense:
Deposits and escrow
58,074
73,069
Borrowed funds
8,381
14,697
1,197
1,713
Total interest expense
67,652
89,479
Net interest income
94,213
71,530
Provision for credit losses
9,626
5,210
Net interest income after provision for credit losses
84,587
66,320
Non-interest income:
Service charges and other fees
4,643
4,544
Title fees
98
133
Loan level derivative income
61
406
BOLI income
3,993
2,461
Gain on sale of SBA Loans
82
253
Gain on sale of residential loans
32
77
Fair value change in equity securities and loans held for sale
18
(842)
Gain on sale of other assets
2,968
Other
706
467
Total non-interest income
9,633
10,467
Non-interest expense:
Salaries and employee benefits
35,651
32,037
Severance
76
42
Occupancy and equipment
8,002
7,368
Data processing costs
4,794
4,313
Marketing
1,666
1,497
Professional services
2,116
1,467
Federal deposit insurance premiums
2,047
2,239
Loss from extinguishment of debt for FHLBNY advances
453
Loss due to pension settlement
7,231
Amortization of other intangible assets
252
307
3,676
2,788
Total non-interest expense
65,511
52,511
Income before income taxes
28,709
24,276
Income tax expense
7,251
6,585
Net income
21,458
17,691
Preferred stock dividends
1,822
1,821
Net income available to common stockholders
19,636
15,870
Earnings per common share:
Basic
0.45
0.41
Diluted
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in thousands)
Other comprehensive income:
Change in unrealized gain (loss) on securities:
Change in net unrealized gain during the period
7,960
3,344
Reclassification adjustment for net losses included in net loss on sale of securities and other assets
Accretion of net unrealized loss on securities transferred to held-to-maturity
724
718
Credit loss expense
893
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense
(87)
(317)
Change in the net actuarial gain
4,854
520
Change in unrealized gain (loss) on derivatives:
Change in net unrealized (loss) gain during the period
(7,567)
2,145
Reclassification adjustment for expense included in interest expense
1,840
2,435
Other comprehensive income before income taxes
8,617
8,845
Deferred tax expense
2,644
2,732
Total other comprehensive income, net of tax
5,973
6,113
Total comprehensive income
27,431
23,804
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Three Months Ended March 31, 2025
Accumulated
Comprehensive
Number of
Additional
Loss,
Unearned
Treasury
Total
Shares of
Preferred
Common
Paid-in
Retained
Net of Deferred
Equity
Stock,
Stockholders’
Common Stock
Stock
Capital
Earnings
Taxes
Awards
at cost
Beginning balance as of January 1, 2025
43,622,292
Other comprehensive income, net of tax
Release of shares, net of forfeitures
252,273
(1,514)
(7,153)
8,835
168
Stock-based compensation
1,884
Shares received related to tax withholding
(75,489)
(3)
(1,202)
(1,205)
Cash dividends declared to preferred stockholders
(1,822)
Cash dividends declared to common stockholders
(10,960)
Ending balance as of March 31, 2025
43,799,076
Three Months Ended March 31, 2024
Beginning balance as of January 1, 2024
38,822,654
416
494,454
813,007
(91,579)
(8,622)
(98,020)
1,226,225
Other comprehensive loss, net of tax
155,782
(1,619)
(3,299)
5,128
210
1,730
(46,603)
(1)
(1,029)
(1,030)
(1,821)
(9,747)
Ending balance as of March 31, 2024
38,931,833
492,834
819,130
(85,466)
(10,191)
(93,921)
1,239,371
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
(2,968)
(18)
842
Gain on sale of loans held for sale
(114)
(330)
Net depreciation, amortization and accretion
1,085
1,574
(Accretion) amortization of fair value hedge basis point adjustments
(622)
628
Loss on extinguishment of debt
Originations of loans held for sale
(3,062)
(2,432)
Proceeds from sale of loans originated for sale
3,603
6,439
Increase in cash surrender value of BOLI
(3,605)
(2,461)
Gain from death benefits from BOLI
(371)
Decrease (increase) in other assets
73,026
(10,955)
(Decrease) increase in other liabilities
(37,722)
15,009
Net cash provided by operating activities
65,420
30,737
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available-for-sale
(29,720)
Proceeds from calls and principal repayments of securities available-for-sale
17,709
29,679
Proceeds from calls and principal repayments of securities held-to-maturity
6,823
6,112
Purchase of BOLI
(97,317)
Loans purchased
(3,921)
(3,915)
Proceeds from the sale of portfolio loans transferred to held for sale
5,165
Decrease in loans
15,184
7,644
Purchases of fixed assets, net
(570)
(1,378)
Proceeds from the sale of fixed assets and premises held for sale
3,879
Sales of restricted stock, net
2,119
24,404
Net cash (used in) provided by investing activities
(84,528)
66,425
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in deposits
(70,212)
368,250
Repayments from FHLBNY advances, short-term, net
(100,000)
(540,000)
Repayments of other short-term borrowings, net
(50,000)
Release of stock for benefit plan awards
Payments related to tax withholding for equity awards
Cash dividends paid to preferred stockholders
Cash dividends paid to common stockholders
(10,690)
(9,466)
Net cash used in financing activities
(233,761)
(183,857)
Decrease in cash and cash equivalents
(252,869)
(86,695)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
457,547
CASH AND CASH EQUIVALENTS, END OF PERIOD
370,852
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes
3,999
6,684
Cash paid for interest
68,936
86,656
Loans transferred to held for sale
7,318
3,468
Loans transferred to held for investment
21,616
Operating lease assets in exchange for operating lease liabilities
2,750
2,224
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Dime Community Bancshares, Inc. (the “Holding Company”) is engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank (“the Bank”). The Bank was established in 1910 and is headquartered in Hauppauge, New York. The Holding Company was incorporated under the laws of the State of New York in 1988 to serve as the holding company for the Bank. The Holding Company functions primarily as the holder of all of the Bank’s common stock. Our bank operations also include Dime Abstract LLC (“Dime Abstract”), a wholly-owned subsidiary of the Bank, which is a broker of title insurance services. As of March 31, 2025, we operated 62 branch locations throughout Long Island and the New York City boroughs of Brooklyn, Queens, Manhattan, the Bronx, Staten Island, and Westchester County.
The unaudited Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity. The unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which remain significantly unchanged and have been followed similarly as in prior periods.
2. SUMMARY OF ACCOUNTING POLICIES
Summary of Significant Accounting Policies
In the opinion of management, the accompanying unaudited condensed Consolidated Financial Statements contain all adjustments necessary for a fair presentation of the Company’s financial condition as of March 31, 2025 and December 31, 2024, the results of operations and statements of comprehensive income for the three months ended March 31, 2025 and 2024, the changes in stockholders’ equity for the three months ended March 31, 2025 and 2024, and cash flows for the three months ended March 31, 2025 and 2024.
Please see “Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” for a discussion of areas in the accompanying unaudited condensed Consolidated Financial Statements utilizing significant estimates.
Adoption of Recent Accounting Standards
ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (Topic 280)
The Financial Accounting Standards Board issued Accounting Standards Update 2023-07 to improve reportable segment disclosures by requiring public business entities to disclose significant expense categories and amounts for each reportable segment, where significant expense categories are defined as those that are regularly reported to an entity’s chief operating decision-maker and included in a segment’s reported measures of profit or loss. ASU 2023-07 became effective for the Company for interim periods on January 1, 2025. The adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements. For a further discussion please see Note 17 to the condensed Consolidated Financial Statements.
ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, intended to enhance the transparency of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.
Specifically, the amendments in this ASU require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the amount determined by multiplying pretax income from continuing operations by the applicable statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The ASU also includes other amendments to improve the effectiveness of income tax disclosures.
ASU 2023-09 became effective for the Company on January 1, 2025 for annual reporting periods, on a prospective basis and is not anticipated to have a material effect on the Company’s consolidated financial statements.
3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity in accumulated other comprehensive income (loss), net of tax, was as follows:
Defined
Benefit
(In thousands)
Plans
Derivatives
Income (Loss)
Balance as of January 1, 2025
(43,767)
(7,499)
6,248
Other comprehensive income (loss) before reclassifications
6,136
3,364
(5,244)
4,256
Amounts reclassified from accumulated other comprehensive income (loss)
502
(60)
1,275
1,717
Net other comprehensive income (loss) during the period
6,638
3,304
(3,969)
Balance as of March 31, 2025
(37,129)
(4,195)
2,279
Balance as of January 1, 2024
(90,242)
(6,430)
5,093
Other comprehensive income before reclassifications
2,360
361
1,457
4,178
490
(216)
1,661
1,935
Net other comprehensive income during the period
2,850
145
3,118
Balance as of March 31, 2024
(87,392)
(6,285)
8,211
10
The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below for the periods indicated.
Net change
9,577
4,062
Tax expense
2,939
1,212
Net change in unrealized gain on securities, net of reclassification adjustments and tax
4,767
203
1,463
58
Net change in pension and other postretirement obligations
(5,727)
4,580
Tax (benefit) expense
(1,758)
1,462
Net change in unrealized gain (loss) on derivatives, net of reclassification adjustments and tax
4. EARNINGS PER COMMON SHARE
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the reporting period. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution that would occur if “in the money” stock options were exercised and converted into common stock. In determining the weighted-average shares outstanding for basic and diluted EPS, treasury shares are excluded. Vested restricted stock award (“RSA”) shares are included in the calculation of the weighted-average shares outstanding for basic and diluted EPS. Unvested RSA and performance-based share awards (“PSA”) shares not yet awarded are recognized as a special class of participating securities under ASC 260, and are included in the calculation of the weighted-average shares outstanding for basic and diluted EPS. Basic and diluted EPS on common stock and the basic and diluted EPS on participating securities are the same.
11
The following is a reconciliation of the numerators and denominators of basic and diluted EPS for the periods presented:
(In thousands except share and per share amounts)
Less: Dividends paid and earnings allocated to participating securities
(314)
(257)
Income attributable to common stock
19,322
15,613
Weighted-average common shares outstanding, including participating securities
43,642,621
38,884,434
Less: weighted-average participating securities
(693,931)
(628,876)
Weighted-average common shares outstanding
42,948,690
38,255,558
Basic EPS
Weighted-average common equivalent shares outstanding
Weighted-average common and equivalent shares outstanding
Diluted EPS
Common and equivalent shares resulting from the dilutive effect of “in-the-money” outstanding stock options are calculated based upon the excess of the average market value of the common stock over the exercise price of outstanding in-the-money stock options during the period.
There were 26,995 weighted-average stock options outstanding for the three months ended March 31, 2025 and 2024, which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.
5. PREFERRED STOCK
Dime Community Bancshares, Inc. has 5,299,200 shares currently outstanding, or $132.5 million in aggregate liquidation preference, of its 5.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $25.00 per share (the “Preferred Stock”).
The Company expects to pay dividends when, as, and if declared by its board of directors, at a fixed rate of 5.50% per annum, payable quarterly, in arrears, on February 15, May 15, August 15 and November 15 of each year. The Preferred Stock is perpetual and has no stated maturity. The Company may redeem the Preferred Stock at its option at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), subject to regulatory approval, on or after June 15, 2025, or within 90 days following a regulatory capital treatment event, as described in the prospectus supplement and accompanying prospectus relating to the offering.
12
6. SECURITIES
The following tables summarize the major categories of securities as of the dates indicated:
March 31, 2025
Gross
Allowance
Amortized
Unrealized
For Credit
Fair
Cost
Gains
Losses
Value
Securities available-for-sale:
Agency notes
10,000
(297)
9,703
Corporate securities
185,837
887
(10,295)
(893)
175,536
Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")
298,704
1,961
(1,152)
299,513
Agency CMOs
228,300
276
(25,570)
203,006
State and municipal obligations
24,112
(1,291)
22,821
Total securities available-for-sale
746,953
3,124
(38,605)
Unrecognized
Securities held-to-maturity:
90,082
(8,853)
81,229
13,000
200
(710)
12,490
Pass-through MBS issued by GSEs
295,309
99
(37,675)
257,733
232,943
209
(25,818)
207,334
Total securities held-to-maturity
508
(73,056)
558,786
December 31, 2024
(393)
9,607
173,972
755
(10,778)
163,949
303,303
30
(3,112)
300,221
220,314
16
(28,442)
191,888
26,545
(1,517)
25,028
734,134
801
(44,242)
89,977
(10,961)
79,016
140
(855)
12,285
298,697
(43,716)
254,981
235,665
29
(29,699)
205,995
169
(85,231)
552,277
There were no transfers to or from securities held-to-maturity during the three months ended March 31, 2025 and 2024.
The carrying value of securities pledged at March 31, 2025 and December 31, 2024 was $677.1 million and $622.7 million, respectively.
At March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders' equity.
13
The following table presents the amortized cost and fair value of securities by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
Available-for-sale
Within one year
8,012
7,909
One to five years
57,629
53,734
Five to ten years
149,415
142,407
Beyond ten years
4,000
4,010
Pass-through MBS issued by GSEs and agency CMOs
527,004
502,519
746,060
Held-to-maturity
19,841
18,893
83,241
74,826
528,252
465,067
There were no sales of securities available-for-sale or held-to-maturity during the three months ended March 31, 2025 and 2024, respectively.
The following table summarizes the gross unrealized losses and fair value of securities available-for-sale aggregated by investment category and the length of time the securities were in a continuous unrealized loss position as of the dates indicated:
Less than 12
12 Consecutive
Consecutive Months
Months or Longer
297
21,875
125
126,654
10,170
148,529
10,295
44,456
335
5,967
817
50,423
1,152
7,705
151,713
25,566
159,418
25,570
3,485
15
19,336
1,276
1,291
Agency Notes
393
2,925
141,124
10,762
144,049
10,778
289,095
2,170
6,119
942
295,214
3,112
32,101
357
154,770
28,085
186,871
28,442
3,469
31
21,559
1,486
1,517
14
As of March 31, 2025, the Company recognized a provision for credit losses of $893 thousand on an available-for-sale corporate security due to the issuer’s non-compliance with certain financial covenants, which was considered a credit deterioration event. Given the high-quality composition of the Company’s held-to-maturity portfolio, the Company did not record an allowance for credit losses on the held-to-maturity portfolio. With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Accrued interest receivable on securities totaling $4.1 million and $5.7 million at March 31, 2025 and December 31, 2024, respectively, was included in other assets in the Consolidated Statements of Financial Condition and excluded from the amortized cost and estimated fair value totals in the table above.
Management evaluates available-for-sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than amortized cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.
At March 31, 2025, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. The following major security types held by the Company are all issued by U.S. government entities and agencies and therefore either explicitly or implicitly guaranteed by the U.S. government: Agency Notes, Treasury Securities, Pass-through MBS issued by GSEs, Agency Collateralized Mortgage Obligations. None of the unrealized losses are related to credit quality of the issuer. A majority of the state and municipal obligations within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity.
The following table presents a rollforward of the allowance for credit losses for corporate securities available-for-sale for the three months ended March 31, 2025 and 2024:
Beginning balance
Ending balance
7. LOANS HELD FOR INVESTMENT, NET
The following table presents the loan categories for the period ended as indicated:
Business loans (1)
2,788,201
2,725,726
One-to-four family residential and cooperative/condominium apartment
961,069
951,528
Multifamily residential and residential mixed-use
3,779,923
3,820,283
Non-owner-occupied commercial real estate
3,190,898
3,230,535
Acquisition, development, and construction ("ADC")
140,309
136,172
Other loans
6,402
5,084
10,866,802
10,869,328
Fair value hedge basis point adjustments (2)
1,933
2,615
Total loans, net of fair value hedge basis point adjustments
Loans held for investment, net
The following tables present data regarding the allowance for credit losses activity on loans held for investment for the periods indicated:
At or for the Three Months Ended March 31, 2025
One-to-Four
Family
Multifamily
Residential and
Residential
Cooperative/
and
Non-Owner-Occupied
Business
Condominium
Commercial
Apartment
Mixed-Use
Real Estate
ADC
Allowance for credit losses:
42,898
9,501
11,946
21,876
2,323
207
88,751
Provision (recovery) for credit losses
931
288
1,141
6,281
84
8,762
Charge-offs
(176)
(44)
(7,082)
(35)
(7,337)
Recoveries
262
17
279
43,915
9,745
13,087
21,075
273
90,455
At or for the Three Months Ended March 31, 2024
35,962
6,813
7,237
19,623
1,989
119
71,743
734
160
3,934
(178)
333
81
5,064
(796)
(30)
(826)
87
35,981
6,973
11,171
19,445
2,322
176
76,068
The following tables present the amortized cost basis of loans on non-accrual status as of the periods indicated:
Non-accrual with
Related
No Allowance
Business loans
3,624
18,320
16,297
3,763
31,662
657
261
35,286
22,755
16,610
5,196
17,428
15,810
3,213
16,456
6,504
432
287
25
21,652
27,827
16,585
The Company did not recognize interest income on non-accrual loans held for investment during the three months ended March 31, 2025 and 2024.
The following tables summarize the past due status of the Company’s investment in loans as of the dates indicated:
Loans 90
Days or
30 to 59
60 to 89
More Past Due
Past Due
Days
and Still
Accruing Interest
Non-accrual
Current
6,287
151
21,944
28,382
2,759,819
One-to-four family residential, including condominium and cooperative apartment
7,406
494
11,663
949,406
31,357
3,748,566
927
1,867
31,677
34,471
3,156,427
139,652
45,977
2,512
58,041
106,530
10,760,272
3,385
2,441
22,624
28,450
2,697,276
1,919
1,271
6,403
945,125
3,759
27,601
31,360
3,788,923
1,265
22,960
24,225
3,206,310
135,515
27
5,057
10,330
31,313
49,479
91,122
10,778,206
Accruing Loans 90 Days or More Past Due:
There were no accruing loans 90 days or more past due at March 31, 2025 or at December 31, 2024.
Collateral Dependent Loans:
The Company had collateral dependent loans which were individually evaluated to determine expected credit losses as of the dates indicated:
Associated Allowance
Collateral Dependent
for Credit Losses
9,032
1,452
9,290
1,408
22,944
41,351
32,891
2,111
Loan Restructurings
The Company applies the loan refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.
The following tables show the amortized cost basis as of March 31, 2025 and 2024 of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of concession granted:
For the Three Months Ended March 31, 2025
Term Extension
Significant Payment Delay
% of
Significant
and Significant
and Interest
Total Class of
Payment Delay
Rate Reduction
Financing Receivable
521
14,188
14,709
0.5
%
27,603
0.7
27,752
15,205
42,957
1.3
55,876
85,269
0.8
For the Three Months Ended March 31, 2024
Payment Delay, Term Extension
1,889
1,207
304
3,429
0.1
404
0.0
61,832
1.5
31,157
0.9
12,253
7.0
94,196
708
109,075
1.0
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty as of the dates indicated:
Weighted Average
Interest Rate
Months of
Reductions
Term Extensions
1.25
103
407
3.75
1,131
5.0
146
306
561
2.0
411
The Bank monitors the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables describe the performance of loans that have been modified during the past 12 months.
30-59
60-89
90+
Days Past Due
Non-Accrual
18,899
245
19,144
892
46,651
16,342
90,596
19
March 31, 2024
13,694
240
2,140
16,074
3,262
91
3,353
27,631
12,651
21,550
55,864
100,451
21,790
14,484
149,376
As of March 31, 2025, there was one $15.2 million non-owner-occupied commercial loan that was modified to a borrower experiencing financial difficulty during the prior 12 months that subsequently defaulted. As of March 31, 2024, there were no loans modified to borrowers experiencing financial difficulty during the prior 12 months that subsequently defaulted. For the purposes of this disclosure, a payment default is defined as 90 or more days past due. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit structure, loan documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them based on credit risk. The Company uses the following definitions for risk ratings:
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of then existing facts, conditions, and values, highly questionable and improbable.
20
The following is a summary of the credit risk profile of loans by internally assigned grade as of the periods indicated, the years represent the year of origination for non-revolving loans:
2023
2022
2021
2020 and Prior
Revolving
Revolving-Term
Pass
46,415
397,937
226,203
311,457
195,007
498,755
927,718
58,722
2,662,214
Special mention
128
495
34,133
17,559
5,252
9,222
70,782
Substandard
378
3,952
2,482
15,109
3,749
28,923
54,593
Doubtful
612
Total business loans
398,065
227,076
349,542
201,482
532,035
936,719
96,867
YTD Gross Charge-Offs
47
129
One-to-four family residential, and condominium/cooperative apartment:
28,063
133,899
157,062
200,806
97,158
300,119
24,904
9,054
951,065
707
158
865
8,228
911
9,139
Total one-to-four family residential, and condominium/cooperative apartment
309,054
25,062
9,965
44
Multifamily residential and residential mixed-use:
21,661
251,744
1,278,949
556,818
1,487,533
4,848
4,251
3,605,804
1,202
12,349
84,708
98,259
75,860
Total multifamily residential and residential mixed-use
1,280,151
569,167
1,648,101
6,368
55,167
206,196
718,908
593,440
1,397,639
12,103
16,994
3,006,815
653
99,431
100,084
16,471
67,528
83,999
Total non-owner-occupied commercial real estate
610,564
1,564,598
5,259
1,823
7,082
ADC:
2,680
25,152
34,659
26,769
4,809
2,332
25,274
124,787
14,865
Total ADC
19,674
3,769
Total:
83,526
633,816
875,864
2,536,889
1,447,232
3,686,378
994,847
92,133
10,350,685
35,335
31,860
202,405
5,410
284,855
18,953
166,725
30,491
224,248
Total Loans
633,944
876,737
2,576,176
1,498,045
4,056,120
1,004,006
131,846
10,860,400
5,303
1,870
7,302
21
2020
2019 and Prior
400,607
232,017
327,174
201,799
164,834
348,388
828,287
67,238
2,570,344
135
754
36,740
4,220
4,333
17,226
26,292
14,497
104,197
398
1,985
3,944
11,298
30,467
50,574
611
400,742
233,169
365,899
208,501
173,111
377,523
854,579
112,202
166
267
586
89
6,785
8,051
134,804
159,300
202,706
98,491
63,093
247,952
26,724
8,364
941,434
711
159
870
984
7,326
914
9,224
64,077
255,989
26,883
9,278
21,810
252,975
1,285,619
560,039
286,653
1,239,261
4,285
4,267
3,654,909
12,369
14,172
73,778
101,521
63,853
1,286,821
572,408
300,825
1,376,892
400
1,292
2,985
4,677
57,280
215,279
724,041
601,508
408,361
1,020,137
11,937
8,966
3,047,509
658
75,802
29,564
106,024
34,236
26,295
77,002
618,637
518,399
1,075,996
2,797
4,033
96
6,926
16,154
34,169
25,950
4,810
2,468
24,868
12,122
120,541
14,974
19,784
12,779
630,655
893,740
2,565,490
1,466,647
922,941
2,858,206
896,101
100,957
10,334,737
37,942
32,221
94,307
121,279
26,451
327,586
39,164
108,772
32,038
201,310
630,790
894,892
2,605,417
1,517,821
1,056,412
3,088,868
922,552
147,492
10,864,244
2,963
5,592
3,571
6,881
19,654
For other loans, the Company evaluates credit quality based on payment activity. Other loans that are 90 days or more past due are placed on non-accrual status, while all remaining other loans are classified and evaluated as performing. The following is a summary of the credit risk profile of other loans by internally assigned grade:
Performing
5,059
22
8. LEASES
The following table presents the Company’s remaining maturities of undiscounted lease payments, as well as a reconciliation to the discounted operating lease liabilities in the Consolidated Statements of Financial Condition at March 31, 2025:
10,681
2026
14,047
2027
12,206
2028
5,921
2029
3,211
Thereafter
5,772
Total undiscounted lease payments
51,838
Less amounts representing interest
(3,406)
Other information related to the Company’s operating leases was as follows:
Operating lease cost
3,632
3,291
Cash paid for amounts included in the measurement of operating lease liabilities
3,651
3,276
As of March 31, 2025
As of December 31, 2024
Weighted average remaining lease term
4.3
years
4.4
Weighted average discount rate
2.84
2.72
9. DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loan portfolio.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. The Company engages in fair value hedges, cash flow hedges and freestanding derivatives.
23
Effect of Derivatives on the Consolidated Statements of Financial Condition
The tables below present the notional amounts and fair values of the Company’s derivative financial instruments as of March 31, 2025 and December 31, 2024.
Notional
Fair Value
Amount
Assets
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate products
150,000
6,591
8,318
Derivatives not designated as hedging instruments:
Interest rate products
1,644,759
92,149
1,665,949
108,178
Liabilities
Fair value hedges - interest rate products
500,000
39
400,000
313
350,000
Risk participations
140,853
141,080
Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Operations
The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2025 and 2024.
Interest
Income
Expense
Effects of fair value or cash flow hedges are recorded
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships
Interest contracts:
Hedged items
(683)
(5,273)
Derivatives designated as hedging instruments
5,901
Gain or (loss) on cash flow hedging relationships
Loss reclassified from AOCI into income
Fair Value Hedges
The Company uses fair value hedges to protect against changes in fair value of certain interest rate sensitive assets. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.
For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
24
As of March 31, 2025 and December 31, 2024, the Company posted $2.0 million and $2.7 million, respectively, to the Chicago Mercantile Exchange (“CME”) clearing house related to the fair value derivatives settled daily to market. The Company pays an average fixed rate of 4.82% and receives a floating rate based on the US federal funds effective rate for the life of the agreement without an exchange of the underlying notional amount.
The amortized cost basis of the closed portfolio of the fixed rate mortgage loans on March 31, 2025 totaled $685.4 million. The amount identified as the last-of-layer in the open hedge relationship was $500.0 million, which is the amount of loans in the closed portfolio anticipated to be outstanding for the designated hedge period. The basis adjustment associated with the hedge was a $1.9 million asset as of March 31, 2025, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedged relationship.
The amortized cost basis of the closed portfolio of the fixed rate mortgage loans on December 31, 2024 totaled $692.2 million. The amount identified as the last-of-layer in the open hedge relationship was $500.0 million, which is the amount of loans in the closed portfolio anticipated to be outstanding for the designated hedge period. The basis adjustment associated with the hedge was a $2.6 million asset as of December 31, 2024, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedged relationship.
During the three months ended March 31, 2025 and 2024, the Company recorded a $622 thousand debit and $628 thousand credit, respectively, from the swap transaction as a component of interest income in the consolidated statements of operations.
As of March 31, 2025 and December 31, 2024, the following amounts were recorded on the consolidated statements of financial condition related to cumulative basis adjustment for fair value hedges:
Carrying Amount of the Hedged Assets
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Fixed Rate Loans
687,307
694,774
Cash Flow Hedges
Cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company uses these types of derivatives to hedge the variable cash flows associated with existing or forecasted issuances of short-term borrowings.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s debt. During the next twelve months, the Company estimates that an additional $5.1 million will be reclassified as a decrease to interest expense.
The Company did not terminate any derivatives during the three months ended March 31, 2025 and March 31, 2024, respectively.
The table below presents the effect of the cash flow hedge accounting on accumulated other comprehensive income (loss) for the periods indicated:
(Loss) gain recognized in other comprehensive income (loss)
Loss reclassified from other comprehensive income into interest expense
(1,840)
(2,435)
All cash flow hedges are recorded gross on the Consolidated Statement of Financial Condition.
Certain cash flow hedges involve derivative agreements with third-party counterparties that contain provisions requiring the Company to post cash collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of March 31, 2025 and December 31, 2024, the Company did not post collateral to the third-party counterparties. As of March 31, 2025, the Company received $7.4 million in collateral from its third-party counterparties under the agreements in a net asset position. As of March 31, 2025, the Company posted $3.0 million to the CME clearing house that are accounted for as settlements of the derivative liabilities. As of December 31, 2024, the Company received $9.1 million in collateral from its third-party counterparties under the agreements in a net asset position. As of December 31, 2024, the Company posted $856 thousand to the CME clearing house that are accounted for as settlements of the derivative asset.
Freestanding Derivatives
The Company maintains an interest-rate risk protection program for its loan portfolio in order to offer loan level derivatives with certain borrowers and to generate loan level derivative income. The Company enters into interest rate swap or interest rate floor agreements with borrowers. These interest rate derivatives are designed such that the borrower synthetically attains a fixed-rate loan, while the Company receives floating rate loan payments. The Company offsets the loan level interest rate swap exposure by entering into an offsetting interest rate swap or interest rate floor with an unaffiliated and reputable bank counterparty. These interest rate derivatives do not qualify as designated hedges, under ASU 815; therefore, each interest rate derivative is accounted for as a freestanding derivative. The notional amounts of the interest rate derivatives do not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate derivative agreements. The following tables reflect freestanding derivatives included in the consolidated statements of financial condition as of the dates indicated:
Count
Included in derivative assets/liabilities:
Loan level interest rate swaps with borrower
48
539,938
9,396
171
1,104,821
82,753
Loan level interest rate swaps with third-party counterparties
321,745
3,704
202
1,344,204
104,474
26
Loan level derivative income is recognized on the mark-to-market of the interest rate swap as a fair value adjustment at the time the transaction is closed. Total loan level derivative income is included in non-interest income as follows:
The interest rate swap product with the borrower is cross collateralized with the underlying loan and, therefore, there is no posted collateral. Certain interest rate swap agreements with third-party counterparties contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of March 31, 2025 and December 31, 2024, the Company did not post collateral to its third-party counterparties, respectively. As of March 31, 2025, the Company received $77.8 million in collateral from its third-party counterparties under the agreements in a net asset position. As of December 31, 2024, the Company received $103.3 million in collateral from its third-party counterparties under the agreements in a net asset position.
Risk Participation Agreements
The Company enters into risk participation agreements to manage economic risks but does not designate the instruments in hedge relationships. As of March 31, 2025 and December 31, 2024, the notional amounts of risk participation agreements for derivative liabilities were $140.9 million and $141.1 million, respectively. The related fair values of the Company’s risk participation agreements as of March 31, 2025 and December 31, 2024 were $15 thousand and $10 thousand, respectively.
Credit Risk Related Contingent Features
The Company’s agreements with each of its derivative counterparties state that if the Company defaults on any of its indebtedness, it could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty.
The Company’s agreements with certain of its derivative counterparties state that if the Bank fails to maintain its status as a well-capitalized institution, the Bank could be required to terminate its derivative positions with the counterparty.
For derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, any breach of the above provisions by the Company may require settlement of its obligations under the agreements at the termination value with the respective counterparty. As of March 31, 2025, there were no derivatives in a net liability position, and therefore the termination value was zero. There were no provisions breached for the three months ended March 31, 2025.
10. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 Inputs – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs – Significant other observable inputs such as any of the following: (1) quoted prices for similar assets or liabilities in active markets, (2) quoted prices for identical or similar assets or liabilities in markets that are not active, (3) inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates),
or (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).
Level 3 Inputs – Significant unobservable inputs for the asset or liability. Significant unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Significant unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company’s available-for-sale securities are reported at fair value, which were determined utilizing prices obtained from independent parties. The valuations obtained are based upon market data, and often utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, pricing applications apply available information such as benchmarking and matrix pricing. The market inputs normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (obtained only from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Prioritization of inputs may vary on any given day based on market conditions.
All MBS, CMOs, treasury securities, and agency notes are guaranteed either implicitly or explicitly by GSEs as of March 31, 2025 and December 31, 2024. In accordance with the Company’s investment policy, corporate securities are rated “investment grade” at the time of purchase and the financials of the issuers are reviewed quarterly.
Derivatives represent interest rate swaps and estimated fair values are based on valuation models using observable market data as of the measurement date.
The following tables present financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value Measurements
at March 31, 2025 Using
Level 1
Level 2
Level 3
Inputs
Financial Assets:
Derivative – cash flow hedges
Derivative – freestanding derivatives, net
Financial Liabilities:
Derivative – fair value hedges
Derivative – risk participations
28
at December 31, 2024 Using
Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. That is, they are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis include certain individually evaluated loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.
Fair Value Measurements Using:
Quoted Prices
In Active
Markets for
Identical
Observable
Unobservable
Carrying
(Level 1)
(Level 2)
(Level 3)
Individually evaluated loans
1,958
7,584
Individually evaluated loans with an allowance for credit losses at March 31, 2025 had a carrying amount of $2.0 million, which is made up of the outstanding balance of $3.7 million, net of a valuation allowance of $1.7 million. There was a credit loss recovery of $398 thousand on collateral dependent individually evaluated loans during the three months ended March 31, 2025, which is included in the amounts reported in the Consolidated Statements of Operations.
Individually evaluated loans with an allowance for credit losses at December 31, 2024 had a carrying amount of $7.6 million, which is made up of the outstanding balance of $9.7 million, net of a valuation allowance of $2.1 million.
Financial Instruments Not Measured at Fair Value
The following tables present the carrying amounts and estimated fair values of financial instruments other than those measured at fair value on either a recurring or non-recurring basis for the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
10,776,322
10,419,587
6,438
49,606
Savings, money market and checking accounts (1)
10,494,856
Certificates of deposit ("CDs")
1,121,068
1,118,156
FHLBNY advances
510,485
256,150
Accrued interest payable
9,302
(1) Includes mortgage escrow deposits.
10,775,608
10,354,366
6,676
49,294
10,617,060
CDs
1,069,081
1,066,630
608,908
257,464
8,586
11. OTHER INTANGIBLE ASSETS
The following table presents the carrying amount and accumulated amortization of intangible assets that are amortizable.
Gross carrying value
10,204
Accumulated amortization
(6,560)
(6,308)
Net carrying amount
Amortization expense recognized on intangible assets was $252 thousand and $307 thousand for the three months ended March 31, 2025 and March 31, 2024, respectively.
Estimated amortization expense for the remainder of 2025 through 2029 and thereafter is as follows:
795
664
560
475
444
12. FHLBNY ADVANCES
The Bank had borrowings from the FHLBNY totaling $508.0 million and $608.0 million at March 31, 2025 and December 31, 2024, respectively, all of which were fixed rate. In accordance with FHLBNY advances, Collateral Pledge and Security Agreement with the FHLBNY, the Bank had remaining FHLBNY borrowing capacity of $1.91 billion as of March 31, 2025 and $1.84 billion as of December 31, 2024, and maintained sufficient qualifying collateral, as defined by the FHLBNY.
For the three months ended March 31, 2025, the Company did not incur any prepayment penalty expense related to the extinguishment of debt. During the three months ended March 31, 2024, the Company had $453 thousand of prepayment penalty expense recognized as a loss on extinguishment of debt.
The following table is a summary of FHLBNY extinguishments for the periods presented:
FHLBNY advances extinguished
-
1,655,000
Weighted average rate
5.28
The following table presents the contractual maturities of FHLBNY advances for each of the next five years.
Overnight, fixed rate at 4.67%
100,000
2025, fixed rate at rates from 0.59% to 4.43%
2027, fixed rate at 4.25%
36,000
2028, fixed rate at 4.04%
12,000
2029, fixed rate at rates from 3.98% to 4.03%
60,000
Total FHLBNY advances
Total FHLBNY advances had a weighted average interest rate of 4.40% and 4.58% at March 31, 2025 and December 31, 2024, respectively.
13. SUBORDINATED DEBENTURES
On June 28, 2024, the Company issued $65.0 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2034 (“the 2024 Notes”). The 2024 Notes are callable at par after five years, have a stated maturity of July 15, 2034, and bear interest at a fixed annual rate of 9.00% per year, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing on October 15, 2024. The last interest payment for the fixed rate period will be July 15, 2029. From and including July 15, 2029, to, but excluding the stated maturity date or any earlier redemption date, the interest rate will reset quarterly to an annual interest rate equal to the benchmark rate (which is expected to be Three-Month Term SOFR) plus 495.1 basis points, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing on October 15, 2029.
Subsequently, on July 9, 2024, the Company issued and sold an additional $9.8 million of the 2024 Notes, pursuant to an overallotment option granted to the underwriters of the offering. Including the overallotment option, the total gross proceeds from the offering were $74.8 million, before discounts and offering expenses.
On May 6, 2022, the Company issued $160.0 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2032 (“the 2022 Notes”). The 2022 Notes are callable at par after five years, have a stated maturity of May 15, 2032 and bear interest at a fixed annual rate of 5.00% per year, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2022. The last interest payment for the fixed rate period will be May 15, 2027. From and including May 15, 2027 to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the benchmark rate (which is expected to be Three-Month Term SOFR) plus 218-basis points, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2027. The Company used the net proceeds of the offering for the repayment of $115.0 million of the Company’s 4.50% fixed-to-floating rate subordinated notes due 2027 on June 15, 2022, and $40.0 million of the Company’s 5.25% fixed-to-floating rate subordinated debentures due 2025 on June 30, 2022. The repayment of the subordinated notes due 2027 resulted in a pre-tax write-off of debt issuance costs of $740 thousand, which was recognized in loss on extinguishment of debt in non-interest expense.
The remaining $40.0 million of fixed-to-floating rate subordinated debentures were issued by the Company in September 2015, are callable at par after ten years, have a stated maturity of September 30, 2030, and bear interest at a fixed annual rate of 5.75% per year, for the first ten years. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month CME Term SOFR plus 372 basis points.
The subordinated debentures totaled $272.4 million and $272.3 million at March 31, 2025 and December 31, 2024, respectively. Interest expense related to the subordinated debentures was $4.3 million and $2.6 million during the three months ended March 31, 2025 and 2024, respectively. The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.
14. RETIREMENT AND POSTRETIREMENT PLANS
The Bank maintains two noncontributory pension plans that existed before the Merger: (i) the Retirement Plan of Dime Community Bank (“Employee Retirement Plan”) and (ii) the BNB Bank Pension Plan, covering all eligible employees.
Employee Retirement Plan
The Bank sponsors the Employee Retirement Plan, a tax-qualified, noncontributory, defined-benefit retirement plan. Prior to April 1, 2000, substantially all full-time employees of at least 21 years of age were eligible for participation after one year of service. Effective April 1, 2000, the Bank froze all participant benefits under the Employee Retirement Plan. On December 21, 2023, the Company’s Board of Directors adopted a resolution to terminate the Employee Retirement Plan effective December 31, 2023. Retirement benefits of the plan were vested as they were earned. For the year ended December 31, 2024, the Bank used December 31st as its measurement date for the Employee Retirement Plan.
BNB Bank Pension Plan
During 2012, Bridge Bancorp, Inc., (“Bridge”) amended the BNB Bank Pension Plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered Bridge employees. Additionally, new Bridge employees hired on or after October 1, 2012 were not eligible for the BNB Bank Pension Plan. Effective December 31, 2023, the Bank froze all participant benefits under the BNB Pension Plan, the impact of which is reflected in the recorded curtailment as of December 31, 2023. On December 21, 2023, the Company’s Board of Directors adopted a resolution to terminate the BNB Bank Pension Plan effective December 31, 2023. The termination was effectively completed by March 31, 2025. Retirement benefits of the plan were vested as they were earned. For the year ended December 31, 2024, the Bank used December 31st as its measurement date for the BNB Bank Pension Plan.
The following tables represent the components of net periodic (credit) benefit cost associated with these plans:
BNB Bank
Employee
Pension Plan
Retirement Plan
Service cost
Interest cost
271
217
310
Expected return on assets
(534)
(323)
(680)
(360)
Amortization of unrealized loss
49
233
Net periodic (credit) benefit
(214)
127
(370)
53
Settlement loss recognized
Total benefit cost
7,017
There were no contributions to the BNB Bank Pension Plan or the Employee Retirement Plan for the three months ended March 31, 2025 and 2024.
401(k) Plan
The Company maintains a 401(k) Plan (the “401(k) Plan”) that existed before the Merger. The 401(k) Plan covers substantially all current employees. Newly hired employees are automatically enrolled in the plan on the first pay date following the 60th day of employment, unless they elect not to participate. Participants may contribute a portion of their pre-tax base salary, generally not to exceed $23,500 for the calendar year ended December 31, 2025. Under the provisions of the 401(k) Plan, Dime Community Bank provides an employer non-elective contribution to employee accounts equivalent to 3% of eligible compensation. Participants can invest their account balances into several investment alternatives. The 401(k) Plan does not allow for investment of new contributions in the Company’s common stock, nor does it allow participants to transfer existing balances into the Company’s common stock. The 401(k) Plan held Company common stock within the accounts of participants totaling $6.0 million and $4.4 million at March 31, 2025 and 2024, respectively. During the three months ended March 31, 2025, the Company did not recognize any expense as a component of salaries and employee benefits expense for the 401(k) Plan. During the three months ended March 31, 2024, total expense recognized as a component of salaries and employee benefits expense for the 401(k) Plan was $872 thousand.
15. STOCK-BASED COMPENSATION
In May 2021, the Company’s stockholders approved the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) to provide the Company with sufficient equity compensation to meet the objectives of appropriately incentivizing its officers, other employees, and directors to execute our strategic plan to build shareholder value, while providing appropriate shareholder protections. The Company no longer makes grants under the Legacy Stock Plans. Awards outstanding under the Legacy Stock Plans will continue to remain outstanding and subject to the terms and conditions of the Legacy Stock Plans. An additional 1,185,000 shares of common stock were reserved to be issued under the 2021 Equity Incentive Plan following stockholder approval at the Annual Meeting of Shareholders on May 23, 2024. At March 31, 2025, there were 1,250,943 shares reserved for issuance under the 2021 Equity Incentive Plan.
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Stock Option Awards
The following table presents a summary of activity related to stock options granted under the Legacy Stock Plans, and changes during the period then ended:
Weighted-
Average
Remaining
Aggregate
Average Exercise
Contractual
Intrinsic
(Dollars in thousands except share and per share amounts)
Options
Price
Years
Options outstanding at January 1, 2025
26,995
35.39
4.2
Options exercised
Options forfeited
Options outstanding at March 31, 2025
4.0
Options vested and exercisable at March 31, 2025
Information related to stock options during each period is as follows:
Cash received for option exercise cost
Income tax (expense) benefit recognized on stock option exercises
Intrinsic value of options exercised
The range of exercise prices and weighted-average remaining contractual lives of both outstanding and vested options (by option exercise cost) as of March 31, 2025 were as follows:
Outstanding Options
Vested Options
Weighted
Number
of
Exercise Prices:
$34.87
10,061
4.9
$35.35
9,802
3.9
$36.19
7,132
2.9
Restricted Stock Awards
The Company has made RSA grants to outside Directors and certain officers under the Legacy Stock Plans and the 2021 Equity Incentive Plan. Typically, awards to outside Directors fully vest on the first anniversary of the grant date, while awards to officers vest over a pre-determined requisite period. All awards were made at the fair value of the Company’s common stock on the grant date. Compensation expense on all RSAs is based upon the fair value of the shares on the respective dates of the grant.
34
The following table presents a summary of activity related to the RSAs granted, and changes during the period then ended:
Grant-Date
Shares
Unvested allocated shares outstanding at January 1, 2025
470,236
22.79
Shares granted
146,558
29.69
Shares vested
(207,898)
24.45
Shares forfeited
(575)
28.58
Unvested allocated shares outstanding at March 31, 2025
408,321
24.42
Information related to RSAs during each period is as follows:
Compensation expense recognized
1,406
1,373
Income tax benefit (expense) recognized on vesting of RSAs
322
(240)
As of March 31, 2025, there was $8.5 million of total unrecognized compensation cost related to unvested RSAs to be recognized over a weighted-average period of 2.1 years.
Performance-Based Share Awards
The Company maintains a Long-Term Incentive Plan (“LTIP”) for certain officers, which meets the criteria for equity-based accounting. For each award, threshold (50% of target), target (100% of target) and stretch (150% of target) opportunities are eligible to be earned over a three-year performance period based on the Company’s relative performance on certain goals that were established at the onset of the performance period and cannot be altered subsequently. Shares of common stock are issued on the grant date and held as unvested stock awards until the end of the performance period. Shares are issued at the stretch opportunity in order to ensure that an adequate number of shares are allocated for shares expected to vest at the end of the performance period. Compensation expense on PSAs is based upon the fair value of the shares on the date of the grant for the expected aggregate share payout as of the period end.
The following table presents a summary of activity related to the PSAs granted, and changes during the period then ended:
Maximum aggregate share payout at January 1, 2025
258,864
18.69
98,449
28.19
(1,789)
34.57
(7,166)
Maximum aggregate share payout at March 31, 2025
348,358
20.97
Minimum aggregate share payout
Expected aggregate share payout
340,830
20.91
Information related to PSAs during each period is as follows:
478
Income tax expense recognized on vesting of PSAs
(9)
35
As of March 31, 2025, there was $4.9 million of total unrecognized compensation cost related to unvested PSAs based on the expected aggregate share payout to be recognized over a weighted-average period of 2.2 years.
16. INCOME TAXES
During the three months ended March 31, 2025 and 2024, the Company’s consolidated effective tax rates were 25.3% and 27.1%, respectively. There were no significant unusual income tax items during the three months ended March 31, 2025 and 2024, respectively.
17. SEGMENT REPORTING
The Chief Executive Officer, who is designated as the chief operating decision maker (“CODM”), determines the Company’s reportable segment. The Chief Executive Officer along with others in the Company’s executive management evaluates performance and allocates resources based upon analysis of the Company as one operating segment or unit. The activities of the Company comprise one reportable segment, “Community Banking.” All of the Company’s activities are interrelated, and each activity is dependent and assessed based on the manner in which it supports the other activities of the Company. All the consolidated assets are attributable to the Community Banking segment. The accounting policies of the Community Banking segment are the same as those described in Note 1 “Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2024.
The Company provides a range of community banking services, including commercial and consumer lending, personal and business banking, treasury management and merchant services, and other financial services primarily to individuals, businesses, and municipalities in the Greater Long Island area.
The CODM is provided with the Company’s consolidated statements of financial condition and operations and evaluates the Company’s operating results based on consolidated net interest income, non-interest income, non-interest expense, and net income, which can be seen on the consolidated statement of operations. These results are used to benchmark the Company against its competitors. Other significant non-cash items assessed by the CODM are depreciation, amortization and provision for credit losses consistent with the reporting on the consolidated statements of cash flows. Expenditures for long-lived assets are also evaluated and are consistent with the reporting on the consolidated statements of cash flows. Strategic plans and budget to actual monitoring are evaluated as one reportable segment. The actual results are used in assessing performance of the segment and in establishing management’s compensation. All revenues are derived from banking operations within the United States, and for the three months ended March 31, 2025 and 2024, no customer accounted for more than 10% of the Company's consolidated revenue.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.
Selected Financial Highlights and Other Data
(Dollars in Thousands Except Per Share Amounts)
At or For the
Per Share Data:
Reported EPS (Diluted)
Cash dividends paid per common share
0.25
Book value per common share
29.58
28.84
Dividend payout ratio
55.56
60.98
Performance and Other Selected Ratios:
Return on average assets
0.62
0.51
Return on average equity
6.04
5.68
Net interest spread
1.95
1.15
Net interest margin
2.95
2.21
Average interest-earning assets to average interest-bearing liabilities
146.99
138.59
Non-interest expense to average assets
1.90
1.52
Efficiency ratio
63.1
64.0
Loan-to-deposit ratio at end of period
93.6
98.8
Effective tax rate
25.26
27.13
Asset Quality Summary:
Non-performing loans (1)
34,827
Non-performing assets
Net charge-offs
7,058
739
Non-performing assets/Total assets
0.26
Non-performing loans/Total loans
0.53
0.32
Allowance for credit losses/Total loans
0.83
0.71
Allowance for credit losses/Non-performing loans
155.85
218.42
Critical Accounting Estimates
Note 1. Summary of Significant Accounting Policies, to the Company’s Audited Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2024 contains a summary of significant accounting policies. These critical accounting estimates involve a significant degree of complexity and require management to make difficult subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. Policies with respect to the methodologies used to determine the allowance for credit losses on loans held for investment and are important to the presentation of the Company’s consolidated financial condition and results of operations. The use of different judgments, assumptions or estimates could result in material variations in the Company’s consolidated results of operations or financial condition.
Management has reviewed the following critical accounting estimates and related disclosures with its Audit Committee.
Allowance for Credit Losses on Loans Held for Investment
Methods and Assumptions Underlying the Estimate
The allowance for credit losses is established and maintained through a provision for credit losses based on expected losses inherent in our loan portfolio. Management evaluates the adequacy of the allowance on a quarterly basis, and additions to the allowance are charged to expense and realized losses, net of recoveries, are charged against the allowance.
Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods.
Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. Adjustments to the quantitative results are made using qualitative factors, which are subjective and require significant management judgment. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of our loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
Although management believes that it uses the best information available to establish the Allowance for Credit Loss, management assesses the sensitivity of key quantitative assumptions including macroeconomic forecasts and prepayment rate assumptions. Changes in quantitative inputs may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs may offset improvement in others.
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Uncertainties Regarding the Estimate
Estimating the timing and amounts of future losses is subject to significant management judgment as these projected cash flows rely upon the estimates discussed above and factors that are reflective of current or future expected conditions. These estimates depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected.
Customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs.
Impact on Financial Condition and Results of Operations
If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance through charges to earnings which would materially decrease our net income.
We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results.
In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for credit losses. Such agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.
Liquidity and Capital Resources
The Board of Directors has approved a liquidity policy that it reviews and updates at least annually. Senior management is responsible for implementing the policy. The Bank’s Asset Liability Committee (“ALCO”) is responsible for general oversight and strategic implementation of the policy and management of the appropriate departments are designated responsibility for implementing any strategies established by ALCO. On a daily basis, appropriate senior management receives a current cash position report and 30-day forecast to ensure that all short-term obligations are timely satisfied, and that adequate liquidity exists to fund future activities. Reports detailing the Bank’s liquidity reserves are presented to appropriate senior management on at least a monthly basis, and the Board of Directors at each of its meetings. In addition, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors no less than annually. Given recent banking industry events, management monitors the level of uninsured deposits on a regular basis.
Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise. The Bank’s primary sources of funding for its lending and investment activities include deposits, loan payments, investment security principal and interest payments and advances from the FHLBNY. The Bank may also sell or securitize selected multifamily residential, mixed-use or one-to-four family residential real estate loans to private sector secondary market purchasers and has in the past sold such loans to FNMA and Federal Home Loan Mortgage Corporation (“FHLMC”). The Company may additionally issue debt or equity under appropriate circumstances. Although maturities and scheduled amortization of loans and investments are predictable sources of funds, deposit flows and prepayments on real estate loans and MBS are influenced by interest rates, economic conditions and competition.
The Bank is a member of American Financial Exchange (“AFX”), through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. At March 31, 2025, the Bank did not have any such borrowings outstanding through the AFX. At December 31, 2024, the Bank had $50.0 million of such borrowings outstanding through the AFX, which is included in other short-term borrowings on the consolidated statements of financial condition.
The Bank utilizes repurchase agreements as part of its borrowing policy to add liquidity. Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities. As of March 31, 2025 and December 31, 2024, the Bank did not have any repurchase agreements.
The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation. It must additionally compete for deposit monies against the stock and bond markets, especially during periods of strong performance in those arenas. The Bank’s deposit flows are affected primarily by the pricing and marketing of its deposit products compared to its competitors, as well as the market performance of depositor investment alternatives such as the U.S. bond or equity markets. To the extent that the Bank is responsive to general market increases or declines in interest rates, its deposit flows should not be materially impacted. However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.
Total deposits (including mortgage escrow deposits) decreased $70.2 million during the three months ended March 31, 2025, compared to an increase of $368.2 million during the three months ended March 31, 2024. The decrease in deposits during the current period was primarily due to a decrease in interest bearing and non-interest-bearing checking accounts, offset by the growth in money market accounts, CD’s and savings accounts deposits.
In the event that the Bank should require funds beyond its ability or desire to generate them internally, additional sources of funds are available through a borrowing line at the FHLBNY, borrowing capacity at the AFX, lines of credit with unaffiliated correspondent banks, and various brokered deposit sources. At March 31, 2025, the Bank had remaining borrowing capacity of $1.91 billion through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements (i.e., 4.5% of the Bank’s outstanding FHLBNY borrowings). The Bank also had access to the FRB Discount Window. At March 31, 2025, an available line of credit totaling $395.9 million was in place at the FRB backed by investment securities with no advances drawn. Additionally, at March 31, 2025, a line of credit totaling $3.16 billion was in place at the FRB secured by certain qualifying 1-4 family residential mortgage loans, construction loans and CRE loans with no amounts drawn.
The Bank reduced its outstanding FHLBNY advances by $100.0 million during the three months ended March 31, 2025, compared to a reduction of $540.0 million during the three months ended March 31, 2024. See Note 12. “FHLBNY Advances” for further information.
Subordinated debentures totaled $272.4 million at March 31, 2025 compared to $272.3 million at December 31, 2024. See Note 13. “Subordinated Debentures” to our Consolidated Financial Statements for further information.
During the three months ended March 31, 2025 and 2024, business loan originations totaled $42.6 million and $49.0 million, respectively. During the three months ended March 31, 2025, and 2024, real estate loan originations (excluding owner-occupied commercial real estate) totaled $28.9 million and $49.2 million, respectively.
The Company and the Bank are subject to minimum regulatory capital requirements imposed by their primary federal regulators. As a general matter, these capital requirements are based on the amount and composition of an institution’s assets. At March 31, 2025, both the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered “well capitalized” for all regulatory purposes.
40
The following table summarizes Company and Bank capital ratios calculated under the Basel III Capital Rules framework as of the period indicated:
Actual Ratios at March 31, 2025
Basel III
Consolidated
Minimum
To Be Categorized as
Bank
Company
Requirement
“Well Capitalized” (1)
Tier 1 common equity ratio
14.0
11.1
4.5
6.5
Tier 1 risk-based capital ratio
12.2
6.0
8.0
Total risk-based capital ratio
14.9
15.7
10.0
Tier 1 leverage ratio
10.8
9.5
During the three months ended March 31, 2025 and 2024, the Holding Company did not repurchase any shares of its common stock. As of March 31, 2025, 1,566,947 shares remained available for purchase under the authorized share repurchase programs. See “Part II - Item 2. Other Information - Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities” for additional information about repurchases of common stock.
The Holding Company paid $1.8 million in cash dividends on its preferred stock during the three months ended March 31, 2025, and 2024, respectively.
The Holding Company paid $10.7 million and $9.7 million in cash dividends on its common stock during the three months ended March 31, 2025, and 2024, respectively.
Contractual Obligations
The Bank generally has borrowings outstanding in the form of FHLBNY advances, short-term or overnight borrowings, subordinated debt, as well as customer CDs with fixed contractual interest rates. In addition, the Bank is obligated to make rental payments under leases on certain of its branches and equipment.
Off-Balance Sheet Arrangements
As part of its loan origination business, the Bank generally has outstanding commitments to extend credit to borrowers, which are originated pursuant to its regular underwriting standards. Available lines of credit may not be drawn on or may expire prior to funding, in whole or in part, and amounts are not estimates of future cash flows. As of March 31, 2025, the Bank had $156.9 million of firm loan commitments that were accepted by the borrowers.
Additionally, in connection with a loan securitization completed in December 2017, the Bank executed a reimbursement agreement with FHLMC that obligates the Company to reimburse FHLMC for any contractual principal and interest payments on defaulted loans, not to exceed 10% of the original principal amount of the loans comprising the aggregate balance of the loan pool at securitization. The maximum exposure under this reimbursement obligation is $28.0 million. The Bank has pledged $28.0 million of pass-through MBS issued by GSEs as collateral.
Concentrations of Lending Activities
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans have collectively represented the largest percentage of the Company’s loan portfolio, accounting for 64% and 65% of total loans held for investment as of March 31, 2025 and December 31, 2024, respectively. Non-owner occupied commercial real estate loans represent 29% and 30% of total loans held for investment as of March 31, 2025 and December 31, 2024, respectively. Multifamily residential and residential mixed-use loans made up 35% of total loans held for investment as of March 31, 2025 and December 31, 2024, respectively. The Company expects that non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans will continue to be a significant portion of the Company’s total loan portfolio.
41
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans are subject to a varying degree of risk associated with changing general economic conditions. The Company employs heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of appropriate capital levels as needed to support lending activities.
Despite the Company's concentration in non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, the properties securing these portfolios are diversified in terms of type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. As a matter of policy, the non-owner occupied commercial real estate loan and the multifamily residential and residential mixed-use loan portfolios are subject to risk exposure limits by individual asset classes as well as geographic collateral locations outside of our market areas.
We regularly identify and assess concentration levels through ongoing reporting to our Board of Directors as well as committees at both the Board and Management levels. The management team has extensive knowledge and experience in underwriting non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans. Management has established the Credit Risk Management Committee which meets quarterly to review all policies and procedures, large lending exposures, and emerging trends including trends related to delinquency, debt service coverage ratios, loan-to-value, and loan ratings to aid in early detection and escalation of potential issues. The Company has a dedicated team responsible for conducting comprehensive annual reviews of the portfolios, ensuring consistent oversight. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in major real estate markets in which we lend. In response to the current dynamic interest rate environment and changes in the benchmark rates that determine loan pricing, the Company has enhanced its stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest loan rates and measure the resiliency of the portfolios. As a general rule, Management takes a selective approach to originating non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, prioritizing quality and strategic alignment.
The following tables present the composition by property type and weighted average loan-to-value (“LTV”) of the Company’s non-owner occupied commercial real estate loans:
Average Rate
NY
NJ
Balance
LTV
Investor commercial real estate:
Retail
1,060,170
67,252
3,561
1,130,983
51
Investor office
442,701
135,243
3,108
581,052
Warehouse/ Industrial
336,783
41,459
69,024
447,266
Hotels
354,287
424
11,877
366,588
Supportive housing
160,278
59
Medical office
101,537
28,314
129,851
Educational facility or library
113,755
Medical facility
60,745
71
Other (1)
194,944
2,738
2,698
200,380
Total investor commercial real estate
2,825,200
247,116
118,582
1,085,618
62,990
3,594
1,152,202
439,359
135,584
3,127
578,070
337,288
43,458
69,314
450,060
356,450
425
11,934
368,809
161,207
106,403
28,470
134,873
62
120,719
60,866
196,304
2,763
4,662
203,729
2,864,214
245,220
121,101
The following tables present the composition by property type and weighted average LTV of the Company’s multifamily residential and residential mixed-use loans:
New York City (1)
100% rent regulated (2)
561,283
Majority rent regulated (2)
638,100
Majority free market
1,839,105
Total New York City
3,038,488
Outside New York City
741,435
572,054
643,908
1,846,525
3,062,487
757,796
43
Additional information related to the granularity in the non-owner occupied commercial real estate and multifamily residential and residential mixed-use portfolios is presented in the tables below as of March 31, 2025 and December 31, 2024:
loans
Loan Size
> $20 million
2,606
Investor Office
6,053
3,958
8,728
20,035
6,183
10,341
7,593
1
1,908
New York City (2)
100% rent regulated (3)
2,473
Majority rent regulated (3)
3,798
3,921
4,577
2,613
5,781
3,983
8,781
20,151
6,423
10,060
7,608
1,922
2,487
3,810
3,864
4,521
Asset Quality
General
We do not originate or purchase loans, either whole loans or loans underlying MBS, which would have been considered subprime loans at origination, i.e., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 6 to our unaudited condensed Consolidated Financial Statements for a discussion of evaluation for impaired securities.
Monitoring and Collection of Delinquent Loans
Our management reviews delinquent loans on a monthly basis and reports to our Board of Directors or Committees of the Board of Directors at each regularly scheduled Board or Committee meeting regarding the status of all non-performing and otherwise delinquent loans in our loan portfolio.
Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of business loans, multifamily residential and mixed use, non-owner-occupied commercial real estate loans, and ADC loans, or fifteen days late in connection with one-to-four family and consumer loans. Thereafter, periodic letters are mailed and phone calls placed to the borrower until payment is received or the loan is transferred to workout. When contact is made with the borrower at any time prior to foreclosure, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.
Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation. Upon entering non-accrual status, the system will reverse all outstanding accrued interest receivable.
We generally initiate foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, unless the borrower is paying in accordance with an agreed upon modified payment agreement. We obtain an updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. We generally attempt to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and has made at least six months of payments.
The C&I portfolio, which is within our business loans, is actively managed by our lenders. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also required to update their financial reporting on an annual basis or alternative schedule as provided in their loan documents. All exposures are credit risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny and monitoring. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.
45
Non-accrual Loans
Within our held-for-investment loan portfolio, non-accrual loans totaled $58.0 million at March 31, 2025 and $49.5 million at December 31, 2024.
The following is a reconciliation of non-accrual loans as of the dates indicated:
Non-accrual loans:
18,213
3,689
12,910
Total non-accrual loans
Ratios:
Total non-accrual loans to total loans
0.46
Total non-performing assets to total assets
0.34
Within the allowance for credit losses, losses are estimated for restructured loans on accrual status as well as restructured loans on non-accrual status that are one-to-four family loans or consumer loans, on a pooled basis with loans that share similar risk characteristics. Restructured loans on non-accrual status excluding one-to-four family and consumer loans are individually evaluated to determine expected credit losses. For restructured loans that are collateral-dependent where the Bank has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and we expect repayment of the loan to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of collateral, less the estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. For non-collateral-dependent loans, the allowance for credit losses is measured based on the difference between the present value of expected cash flows and the amortized cost basis of the loan as of the measurement date.
OREO
Property acquired by the Bank, or a subsidiary, as a result of foreclosure on a mortgage loan or a deed in lieu of foreclosure is classified as OREO. Upon entering OREO status, we obtain a current appraisal on the property and reassess the likely realizable value (a/k/a fair value) of the property quarterly thereafter. OREO is carried at the lower of the fair value or book balance, with any write downs recognized through a provision recorded in non-interest expense. Only the appraised value, or either a contractual or formal marketed value that falls below the appraised value, is used when determining the likely realizable value of OREO at each reporting period. We typically seek to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.
There was no carrying value of OREO properties on our Consolidated Statement of Financial Condition at March 31, 2025 or December 31, 2024. We did not recognize any provisions for losses on OREO properties during the three months ended March 31, 2025 or 2024.
46
Past Due Loans
Loans Delinquent 30 to 59 Days
At March 31, 2025, there were $46.0 million of loans that were past due between 30 and 59 days, compared to $10.3 million at December 31, 2024. The 30 to 59-day delinquency levels fluctuate monthly and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Loans Delinquent 60 to 89 Days
At March 31, 2025, there were $2.5 million of loans that were past due between 60 and 89 days past due, compared to $31.3 million at December 31, 2024. The 60 to 89-day delinquency levels fluctuate monthly and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Accruing Loans 90 Days or More Past Due
Reserve for Unfunded Loan Commitments
The Bank maintains a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of our reserve was $2.6 million and $2.7 million at March 31, 2025 and December 31, 2024, respectively. This reserve is determined based upon the outstanding volume of unfunded loan commitments at each period end. Any increases or reductions in this reserve are recognized in provision for credit losses.
Allowance for Credit Losses
Provision for credit losses for the three months ended March 31, 2025 and 2024 was $9.6 million and $5.2 million, respectively. The $9.6 million credit loss provision for the three months ended March 31, 2025, was primarily associated with provisioning for individually analyzed loans. The $5.2 million credit loss provision for the three months ended March 31, 2024, was primarily associated with provisioning for the Bank’s pooled multifamily loan portfolio.
For a further discussion of the allowance for credit losses and related activity during the three months ended March 31, 2025 and 2024, please see Note 7 to the condensed Consolidated Financial Statements.
The following table presents our allowance for credit losses allocated by loan type and the percent of loans in each category to total loans as of the dates indicated.
Percent
of Loans
in Each
Category
Allocated
to Total
25.66
25.08
8.84
8.75
34.79
35.16
29.36
29.72
1.29
0.06
0.04
100.00
The following table sets forth information about our allowance for credit losses at or for the dates indicated:
At or for the Three Months Ended March 31,
Total loans outstanding at end of period (1)
10,763,265
Average total loans outstanding during the period (2)
10,865,868
10,742,050
Allowance for credit losses balance at end of period
Allowance for credit losses to total loans at end of period
Non-performing loans to total loans at end of period
Allowance for credit losses to total non-performing loans at end of period
Ratio of net charge-offs to average loans outstanding during the period:
(0.01)
0.27
0.02
0.88
1.73
0.03
Comparison of Financial Condition at March 31, 2025 and December 31, 2024
Assets. Assets totaled $14.10 billion at March 31, 2025, $255.6 million below their level at December 31, 2024, primarily due to decreases of $252.9 million in cash and due from banks, $68.3 million in other assets, $20.1 million in loans held for sale, $17.8 million in derivative assets and $4.9 million in the loan portfolio, partially offset by increases of $98.5 million in BOLI and $13.9 million in total investment securities.
Total loans, net of allowance decreased $4.9 million during the three months ended March 31, 2025, to $10.78 billion at period end. During the three months ended March 31, 2025, we had loan originations of $71.5 million.
Total investment securities increased $13.9 million during the three months ended March 31, 2025, to $1.34 billion at period end, primarily due to purchases of $29.7 million and a decrease in unrealized losses of $8.9 million, offset by proceeds from principal payments, calls and maturities of $23.8 million. There were no transfers to or from securities held-to-maturity during the three months ended March 31, 2025.
BOLI increased $98.5 million during the three months ended March 31, 2025, to $389.2 million. The increase in BOLI is primarily due to completion of the restructuring initiative that begun in late 2024, as well as purchases of new BOLI assets.
Liabilities. Total liabilities decreased $271.1 million during the three months ended March 31, 2025, to $12.69 billion at period end, primarily due to decreases of $100.0 million in FHLBNY advances, $70.2 million in deposits (including mortgage escrow accounts), $50.0 million in short-term borrowings, $27.2 million in derivative cash collateral, $15.8 million in derivative liabilities and $7.3 million in other liabilities.
Stockholders’ Equity. Stockholders’ equity increased $15.5 million during the three months ended March 31, 2025, to $1.41 billion at period end, primarily due to net income of $21.5 million and other comprehensive income of $6.0 million, partially offset by common stock dividends of $11.0 million, and preferred stock dividends of $1.8 million.
Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024
General. Net income was $21.5 million during the three months ended March 31, 2025, compared to net income of $17.7 million for the three months ended March 31, 2024. During the three months ended March 31, 2025, net interest income increased by $22.7 million, non-interest expense increased by $13.0 million, the credit loss provision increased by $4.4 million, non-interest income decreased by $834 thousand and income tax expense increased by $666 thousand, compared to the three months ended March 31, 2024.
The discussion of net interest income for the three months ended March 31, 2025 and 2024 should be read in conjunction with the following tables, which set forth certain information related to the Consolidated Statements of Operations for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Net loan fees included in interest income were $1.1 million during the three months ended March 31, 2025, compared to a net loan cost of $297 thousand during the three months ended March 31, 2024. The increase in net loan fees was primarily due to increases in prepayment penalty fees and deferred fees on loans in 2025.
Analysis of Net Interest Income
Yield/
Interest-earning assets:
Business loans (1) (3) (6)
2,748,142
45,047
6.65
2,308,319
39,224
6.83
One-to-four family residential, including condo and coop (3) (6)
962,046
11,069
4.67
886,588
9,770
4.43
Multifamily residential and residential mixed-use (3) (6)
3,796,754
42,329
4.52
4,000,510
46,019
4.63
Non-owner-occupied commercial real estate (3) (6)
3,214,758
41,326
5.21
3,371,438
44,776
5.34
ADC (3)
138,428
2,906
8.51
169,775
3,692
Other loans (3)
5,740
1.98
5,420
6.23
1,372,563
3.35
1,578,330
2.01
724,889
4.38
695,375
5.53
Total interest-earning assets
12,963,320
5.06
13,015,755
4.98
Non-interest earning assets
814,345
779,169
13,777,665
13,794,924
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking (2)
912,852
4,164
1.85
582,047
1,223
0.85
Money market
4,076,612
31,294
3.11
3,359,884
30,638
3.67
Savings (2)
1,970,338
14,185
2.92
2,368,946
22,810
3.87
973,108
8,431
3.51
1,655,882
18,398
4.47
Total interest-bearing deposits
7,932,910
2.97
7,966,759
3.69
509,111
4,066
3.24
1,094,209
12,143
4.46
272,341
4,302
6.41
200,188
2,553
5.13
633
8.33
5.22
Total borrowings
782,085
4.35
1,294,474
4.57
104,126
4.66
130,166
5.29
Total interest-bearing liabilities
8,819,121
9,391,399
3.83
Non-interest-bearing checking (2)
3,322,583
2,909,776
Other non-interest-bearing liabilities
213,876
247,717
12,355,580
12,548,892
Stockholders' equity
1,422,085
1,246,032
Net interest rate spread (4)
Net interest-earning assets
4,144,199
3,624,356
Net interest margin (5)
Ratio of interest-earning assets to interest-bearing liabilities
Deposits (including non-interest-bearing checking accounts) (2)
11,255,493
2.09
10,876,535
2.70
50
Rate/Volume Analysis
Compared to Three Months Ended March 31, 2024
Increase / (Decrease) Due to:
Volume
Rate
Business loans (1) (2)
7,128
(1,305)
5,823
One-to-four family residential, including condo and coop
799
500
1,299
(2,466)
(1,226)
(3,692)
(2,216)
(1,234)
(3,450)
(681)
(105)
(786)
(59)
(56)
(1,396)
4,839
3,443
323
(2,051)
(1,728)
1,494
(641)
853
Interest-bearing checking
1,099
1,842
2,941
5,891
(5,235)
656
Savings
(3,440)
(5,185)
(8,625)
(6,786)
(3,181)
(9,967)
(5,609)
(2,468)
(8,077)
1,017
731
1,748
(327)
(189)
(516)
(8,146)
(13,682)
(21,828)
Net change in net interest income
9,640
13,041
22,681
Net interest income. Net interest income was $94.2 million during the three months ended March 31, 2025, an increase of $22.7 million from the three months ended March 31, 2024. Average interest-earning assets were $12.96 billion for the three months ended March 31, 2025, a decrease of $52.4 million from $13.02 billion for the three months ended March 31, 2024. Net interest margin was 2.95% during the three months ended March 31, 2025, up from 2.21% during the three months ended March 31, 2024.
Interest Income. Interest income was $161.9 million during the three months ended March 31, 2025, compared to $161.0 million during the three months ended March 31, 2024. During the three months ended March 31, 2025, interest income increased $856 thousand from the three months ended March 31, 2024, primarily reflecting increases in interest income of $5.8 million on business loans, $3.4 million in securities and $1.3 million on one-to-four family loans, partially offset by a decrease of $3.7 million on multifamily residential and residential mixed-use loans and a decrease of $3.5 million on non-owner-occupied commercial real estate loans.
The increased interest income on business loans was due to a $439.8 million increase in the average balances, partially offset by an 18-basis point decrease in the yield of such loans in the period. The increased interest income on one-to-four family loans was related to a $75.5 million increase in the average balances and a 24-basis point increase in the yield of such loans in the period. The increased interest income on securities was related to a 134-basis point increase in the yield, partially offset by a decrease of $205.8 million in the average balances of such securities in the period. The decreased interest income on multifamily residential and residential mixed-use loans was related to a $203.8 million decrease in the average balance and an 11-basis point decrease in the yield of such loans in the period. The decreased interest income on non-owner-occupied commercial real estate loans reflected a $156.7 million decrease in the average balance and a 13-basis point decrease in the yield of such loans in the period.
Interest Expense. Interest expense was $67.7 million during the three months ended March 31, 2025, compared to $89.5 million during the three months ended March 31, 2024. During the three months ended March 31, 2025, interest expense decreased $21.8 million, primarily reflecting a decrease in interest expense of $15.0 million on deposits, a decrease in interest expense of $8.1 million on FHLBNY advances and a decrease of $516 thousand in interest expense on derivative cash collateral, partially offset by a $1.7 million increase in interest expense on subordinated debt. The decreased interest
expense on deposits was primarily due to a $682.8 million decrease in the average balance of CDs and a 96-basis point decrease in such deposits in the period, and due to a 95-basis point decrease in rates paid on savings accounts and a $398.6 million decrease in average balances of such deposits. The decreased interest expense on FHLBNY advances was due to a $585.1 million decrease in the average balance of such advances and a 122-basis point decrease in the cost of FHLBNY advances in the period. The decreased interest expense on derivative cash collateral was due to a $26.0 million decrease in the average balance and a 63-basis point decrease in the cost of such derivatives in the period. The increased interest expense on subordinated debt was due to a $72.2 million increase in the average balance and a 127-basis point increase in the cost of such debt in the period.
Provision for Credit Losses. We recorded a credit loss provision of $9.6 million and $5.2 million during the three months ended March 31, 2025 and 2024, respectively. The $9.6 million credit loss provision for the three months ended March 31, 2025, was primarily associated with provisioning for individually analyzed loans. The $5.2 million credit loss provision for the three months ended March 31, 2024, was primarily associated with increased provisioning for our pooled multifamily loan portfolio.
Non-Interest Income. Non-interest income was $9.6 million during the three months ended March 31, 2025, compared to $10.5 million during the three months ended March 31, 2024. During the three months ended March 31, 2025, non-interest income decreased $834 thousand from the three months ended March 31, 2024, reflecting a decrease of $3.0 million related to a gain on sale of other assets, partially offset by an increase of $1.5 million in BOLI income.
Non-Interest Expense. Non-interest expense was $65.5 million during the three months ended March 31, 2025, compared to $52.5 million during the three months ended March 31, 2024. During the three months ended March 31, 2025, non-interest expense increased $13.0 million from the three months ended March 31, 2024, primarily due to the Company recording a $7.2 million loss due to pension settlement and a $3.6 million increase in salaries and employee benefits.
Non-interest expense was 1.90% and 1.52% of average assets during the three months ended March 31, 2025 and 2024, respectively.
Income Tax Expense. Income tax expense was $7.3 million during the three months ended March 31, 2025, compared to income tax expense of $6.6 million during the three months ended March 31, 2024. The reported effective tax rate for the three months ended March 31, 2025 was 25.3%, and 27.1% for the three months ended March 31, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Quantitative and qualitative disclosures about market risk were presented at December 31, 2024 in Item 7A of the Holding Company’s Annual Report on Form 10-K, filed with the SEC on February 20, 2025. The following is an update of the discussion provided therein.
General. The Company’s largest component of market risk remains interest rate risk. The Company is not subject to foreign currency exchange or commodity price risk. During the three months ended March 31, 2025, we conducted zero transactions involving derivative instruments requiring bifurcation in order to hedge interest rate or market risk.
Interest Rate Risk Exposure Analysis
Economic Value of Equity (“EVE”) Analysis. In accordance with agency regulatory guidelines, the Company simulates the impact of interest rate volatility upon EVE using several interest rate scenarios. EVE is the difference between the present value of the expected future cash flows of the Company’s assets and liabilities and the value of any off-balance sheet items, such as derivatives, if applicable.
Traditionally, the fair value of fixed-rate instruments fluctuates inversely with changes in interest rates. Increases in interest rates thus result in decreases in the fair value of interest-earning assets, which could adversely affect the Company’s consolidated results of operations in the event they were to be sold, or, in the case of interest-earning assets classified as available-for-sale, reduce the Company’s consolidated stockholders’ equity, if retained. The changes in the value of assets and liabilities due to fluctuations in interest rates measure the interest rate sensitivity of those assets and liabilities.
In order to measure the Company’s sensitivity to changes in interest rates, EVE is calculated under market interest rates prevailing at a given quarter-end (“Pre-Shock Scenario”), and under various other interest rate scenarios (“Rate Shock Scenarios”) representing immediate, permanent, parallel shifts in the term structure of interest rates from the actual term structure observed in the Pre-Shock Scenario, with this shift occurring equally across all points on the yield curve. An increase in the EVE is considered favorable, while a decline is considered unfavorable. The changes in EVE between the Pre-Shock Scenario and various Rate Shock Scenarios due to fluctuations in interest rates reflect the interest rate sensitivity of the Company’s assets, liabilities, and off-balance sheet items that are included in the EVE. Management reports the EVE results to the Board of Directors on a quarterly basis. The report compares the Company’s estimated Pre-Shock Scenario EVE to the estimated EVE calculated under the various Rate Shock Scenarios.
The Company’s valuation model makes various estimates regarding cash flows from principal repayments on loans and deposit decay rates at each level of interest rate change. The Company’s estimates for loan repayment levels are influenced by the recent history of prepayment activity in its loan portfolio, as well as the interest rate composition of the existing portfolio, especially in relation to the existing interest rate environment. Regarding deposit decay rates, the Company tracks and analyzes the decay rate of its deposits over time, with the assistance of a reputable third-party, and over various interest rate scenarios. Such results are utilized in determining estimates of deposit decay rates in the valuation model. The Company also generates a series of spot discount rates that are integral to the valuation of the projected monthly cash flows of its assets and liabilities. The valuation model employs discount rates that it considers representative of prevailing market rates of interest with appropriate adjustments it believes are suited to the heterogeneous characteristics of the Company’s various asset and liability portfolios. No matter the care and precision with which the estimates are derived, actual cash flows could differ significantly from the Company’s estimates resulting in significantly different EVE calculations.
The analysis that follows presents, as of March 31, 2025 and December 31, 2024, the estimated EVE at both the Pre-Shock Scenario and the -200 Basis Point, -100 Basis Point, +100 Basis Point, and +200 Basis Point Rate Shock Scenarios.
Dollar
Percentage
EVE
Change
Rate Shock Scenarios
+ 200 Basis Points
1,850,089
142,980
8.4
1,862,712
101,644
5.8
+ 100 Basis Points
1,810,693
103,584
6.1
1,843,160
82,092
4.7
Pre-Shock Scenario
1,707,109
1,761,068
- 100 Basis Points
1,573,858
(133,251)
(7.8)
1,636,011
(125,057)
(7.1)
- 200 Basis Points
1,358,991
(348,118)
(20.4)
1,439,251
(321,817)
(18.3)
The Company’s Pre-Shock Scenario EVE decreased from $1.76 billion at December 31, 2024 to $1.71 billion at March 31, 2025. The primary factor contributing to the decrease in EVE is a decrease in the value of the Bank’s non-maturity deposit base, partially offset by an increase in value of the loan portfolio.
The Company’s EVE in the +100 Basis Point Rate and +200 Basis Point Rate Shock Scenarios decreased from $1.84 billion and $1.86 billion, respectively, at December 31, 2024, to $1.81 billion and $1.85 billion, respectively, at March 31, 2025. In the -100 Basis Point Rate and -200 Basis Point Rate Shock Scenario the Company’s EVE decreased from $1.64 billion and $1.44 billion, respectively, at December 31, 2024, to $1.57 billion and $1.36 billion, respectively, at March 31, 2025.
Income Simulation Analysis. As of the end of each quarterly period, the Company also monitors the impact of interest rate changes through a net interest income simulation model. This model estimates the impact of interest rate changes on the Company’s net interest income over forward-looking periods typically not exceeding 36 months (a considerably shorter
period than measured through the EVE analysis). Management reports the net interest income simulation results to the Company’s Board of Directors on a quarterly basis. The following table discloses the estimated changes to the Company’s net interest income in various time periods assuming gradual changes in interest rates occurring equally across all points on the yield curve over a 12-month period beginning March 31, 2025, for the given rate scenarios:
Percentage Change in Net Interest Income
Gradual Change in Interest rates of:
Year-One
Year-Two
0.6
0.4
2.7
1.6
0.2
2.5
(1.4)
Management also examines the potential impact to net interest income by simulating the impact of instantaneous changes to interest rates occurring equally across all points on the yield curve. The following table discloses the estimated changes to the Company’s net interest income in various time periods associated with the given interest rate shock scenarios.
Instantaneous Rate Shock Scenarios
4.1
8.3
2.1
(1.8)
(6.1)
iIte
Item 4.Controls and Procedures
Management of the Company, with the participation of its Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness, as of March 31, 2025, of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025 in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, such controls.
PART II – OTHER INFORMATION
Item 1.Legal Proceedings
In the ordinary course of business, the Company is routinely named as a defendant in or party to various pending or threatened legal actions or proceedings. Certain of these matters may seek substantial monetary damages. In the opinion of management, the Company was not involved in any actions or proceedings that were likely to have a material adverse impact on its financial condition and results of operations as of March 31, 2025.
Item 1A. Risk Factors
For information regarding the Company’s risk factors, see Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2024, and Part II, Item 1A “Risk Factors” in our subsequent Quarterly Reports on Form 10-Q, each as filed with the Securities and Exchange Commission.
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities
(c) In May 2022, we announced the adoption of a new stock repurchase program of up to 1,948,314 shares, upon the completion of our existing authorized stock repurchase program. The stock repurchase program may be suspended, terminated, or modified at any time for any reason, and has no termination date. As of March 31, 2025, there were 1,566,947 shares remaining to be purchased in the program. There were no repurchases of common stock during the quarter ended March 31, 2025.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not Applicable.
Item 5.Other Information
On March 6, 2025, Kenneth J. Mahon, Chairman of the Board, adopted a Rule 10b5-1 trading plan for the purpose of selling up to 75,000 shares of the Company’s common stock. The plan was adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1924 and is designed to allow for transaction to be made according to the pre-established terms without violating insider trading laws. The adoption of the plan was made at a time when Chairman Mahon was not in possession of any material non-public information regarding the Company. The plan specifies the transactions may occur beginning on or after March 6, 2025, and ending on the earlier of December 31, 2025, or the date on which all shares authorized for sale have been sold in conformance with the terms of the plan.
Item 6.Exhibits
3.1
Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed February 2, 2021 (File No. 001-34096))
3.2
Amended and Restated Bylaws of Dime Community Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed October 25, 2024 (File No. 001-34096))
Indenture, dated May 6, 2022, between Dime Community Bancshares, Inc. and Wilmington Trust National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed May 6, 2022 (File No. 001-34096))
First Supplemental Indenture, dated May 6, 2022, between Dime Community Bancshares, Inc. and Wilmington Trust National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed May 6, 2022 (File No. 001-34096))
Second Supplemental Indenture, dated June 28, 2024, between Dime Community Bancshares, Inc. and Wilmington Trust National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed June 28, 2024 (File No. 001-34096))
10.1
Amendment Two to the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (incorporated by reference to the Registrant’s Definitive Proxy Statement, File No. 001-34096, filed April 4, 2024)
10.2
Amendment Three to the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)
31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
101
The following financial statements from Dime Community Bancshares, Inc.'s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2025, filed on May 6, 2025, formatted in XBRL: (i) Consolidated Statements of Financial Condition as of March 31, 2025 and December 31, 2024, (ii) Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024, (iii) Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024, (iv) Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2025 and 2024, (v) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024, and (vi) the Condensed Notes to Consolidated Financial Statements.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definitions Linkbase Document
104
Cover page to this Quarterly Report on Form 10-Q, formatted in Inline XBRL
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dime Community Bancshares, Inc.
Dated: May 6, 2025
By:
/s/ Stuart H. Lubow
Stuart H. Lubow
President and Chief Executive Officer
/s/ Avinash Reddy
Avinash Reddy
Senior Executive Vice President and Chief Financial Officer