DCOM - Earnings call 1 2021 | Dime Community Bancshares, Inc.

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Operator

Good morning, and welcome to Dime Community Bancshares' First Quarter Earnings Call. [Operator Instructions] Please note that this event is being recorded.

Now I'd like to turn the call over to Mr. Kevin O'Connor, CEO of Dime Community. Please go ahead.

Kevin O'Connor

operator. you, Thank Community's Dime earnings call. Welcome first to quarter this thank for us everyone joining morning. We

today Avi and Stu will merger, quarter, the targets during and then Dime On and me about some progress of remarks, the with the business call made enterprise-wide some are key Chief Officer. In first Officer; questions. comments accomplishments at quarter I'll the guidance on the Reddy, end time I'll the details I the make our to. recently some managing call. Chief Avi forward what Lubow, believe the the some our we're on new McCaffery, CFO; summarize completed John investment leave for provide our then Risk and my are provide highlights Operating President our and

let's First, with merger. start the

we you July on and February April merger systems the our recall, X, “Why our transaction At we given to this now pandemic?” core XXXX. middle XX, year, As a answer of my next time now. announced on the tremendous our announced the asked, several the level, to on opportunities When we and completed strike to the X investors organization closed in move the transaction may merger, needed was successfully conversion. We integration

York's putting management, staff, see their of done. Ultimately, process, confidence our Board the New listening mantle culture, has gives me we to staff this winning Dime whom This many thank on want done clients job continued earning schedule for business and customer we premier and our got to legacy throughout proved and community again growth. the the our are the and making and new new the of Our me well They I client behalf call, growing throughout job priority. pandemic about is right. hours of relationships, integration effort They issues are countless tremendous to Directors bank. of dedication, the a #X tremendous flawlessly. and On our forged and worked aside

First, leading $XXX originated million again the on bank Island the newly PPP funds. PPP of We loans. with Long were approximately of community

As we've press deferred I'd us share of recognize, of $X.XX of or fees like to $XX provides in approximately million the to what this value. hidden release, think outlined per book

our over In the $XXX by we've closing February addition to our on deposits to merger PPP able million grow since success, of X. been

the in small Greater Our increased be positions us our market businesses choice appeal Island of entire and Long and mid-sized footprint. to coverage share, marketplace the brand to of bank

and plans the one As together put business in Stu I our for our thought resonated: of mission. year, thing this clarity really

of merger, community to this business-focused XX% of drive over deposits. pro driven this our grown deposits. to the balance profile we we'll DDA our made number success of XX%. confident frame, to announced needs. forma on months, In One have our we're X-year we improving a bank was time of are a XX% we last to And that X-plus the is When customers' sheet. measurement being progress the We responsive

that announced our XX%, was ratio we today transaction, this at XXX%. when And Additionally, loan-to-deposit PPP. stands almost excluding

items, sheet loan results portfolio. loss provision $XX been would reported this the for have were within core million. merger-related a was the million. $XX CECL-related income a of Included impact the acquired Our net positive on net loss first of for balance charges, and quarter Adjusting restructuring these the

systems, While did was our a our miss integrating busy not back frontline producers beat. office

and with our was clients. existing overlap merger deepen minimal the key win benefits customer expanded to allowing our new us and of the franchises to between base. This the our clients capital of One is relationships

pipeline $X is In approaching fact, our loan billion.

quality. Moving credit to

closing, loans. our several the we Through are credits loans, of total our and integration and of excuse me, loans, loss strength PCD due of have only -- comfortable third-party portfolio are Our and loan done our coverage. with X.XX%, excluding XX% reviews diligence, non-performing merger

lower loans. peers are total deferrals than Our our geographic basis points at XX only of

restaurants offices, have of and very we As limited deferrals. importantly, within industries COVID-sensitive hotels,

expect, we adverse stress-testing have threshold, sheet, crossing under would meaningful upon this more And the I'm $XX In the on billion results testing portfolios. scenario. that a you indicates our pleased stress As capital asset time excess we the have of regard, we Reddy, our even Directors authorized. At turn spent severely the balance our who point, shares has I'd results. of this Board on like call repurchase additional share approved some provide where of conference quarter will over our the first color CFO, announce to resumption Avi have our plan to XXX,XXX to COVID

Avinash Reddy

tune you, transaction acquired costs quarter's debt; and included million, items: of sheet onetime balance Included expenses terminations this approximately were in results of and for non-PCD following $XX merger which of charges Kevin. provision Thank and million; swap of restructuring extinguishment the approximately $XX the loans the book in $XX basis lower, in to reprice current rate able deposits points deposits continue of opportunity migrate The cost to quarter. first we of million. We on is were even lower. to CD the the and lower spot an XX to have our

quarter stability the $X was we for X.XX%, of PPP. dilutive the CDs rates reported at lower NIM NIM. clarity and provide impact income provides provided Purchase points. we that million the of XXXX. $XXX contributed in approximately approximately release, purchase XX to by PPP a have accretion press core million, the weighted margin. in us additive to points, Repricing XX are of the average we points NIM approximately The adjusted relative X.XX%. To these basis in basis maintain X loans, the of details accounting investors, accounting our CDs maturing confidence was interest outlined presence loans on have of on which while to of while the our for The basis at can second rate amount was approximately As NIM quarter in

run fairly $X $X rate million for are we associated of a the balances $XXX that accretion expect with XXXX million at fees are accounting respect remaining on unrecognized have quarters. With reasonable of be We next originations million whose loans of couple to PPP, purchase currently. to

between fees, off of were XXXX, or next million tranche to X-year the which the has $XX levels. loans unrecognized these respect payoffs time. We now first the subject the course we amortization strong the in of pay these term, of effectively these with recognized middle to X-year ended on With income in expect of capital to and originated the quarter expect loans come maturity over over as year loans. income to forgiveness the and on forgiven be and the We loans

ratio, X.X%. tangible was Our assets to tangible excluding PPP, equity

we the PPP. operating tangible X.X% low-risk equity at bank Given comfortable our excluding are business ratio, profile and an model, very simple

As remaining. soon Kevin blackout have share period as will ends. repurchase XXX,XXX shares be mentioned, our we currently approximately resuming plan We as our

be given earnings in the significant balance and profile. our as We as levels, our in possible expect sheet can. this market soon trading plan value complete quickly stock, as as trajectory to definitely see We we and

Given company. This the included March revenue, X that X in should was net combined, and months glimpse the provide a the legacy the have basis XX, our quarterly which an provided X earnings results also table standalone combined release of power million. month into we months of ended of $XX adjusted earnings go-forward pre-provision on a the Dime with

and turn to I guidance Next, targets. will

though now, lower reduce of our continue XX and deposit will you know that cost quantitative to we well deposits our costs quarterly by don't NIM expect to provide As we drive say from XX basis guidance. points next X.XX% our will course range basis the the allow year months. of the to below between a us and progresses. maintain NIM as points over XX to in I This core X.XX%

ancillary with year. As our second you the conversions core of over know, just we in quarter course system completed the expected conversion this

such, of rate approximately expect core we driving towards to $XXX by non-interest relatively into expenses quarter this of As are million, fourth which the annualized cash hold flat an run XXXX. on year, we

$XX trend expect We annualized of the income million. impact will fee $XX run approximately This Durbin inclusive full rate the towards of to is our Amendment. million

Given fee the seeing incorporated products away customers fixed-rate swap of loans, the we and development shape increasingly from swap into such, income the gravitate guidance. as that towards have current curve, are

upon briefly goals. Next, enterprise-wide two I to would like touch

is goal to Our frame. DDA XX% time approximately X-year in first growing a

The to XX% the range second equally is ratio goal over of efficiency term. XX% near the important bank an with medium managing to

at decisions efficiency ratios two economic result producing margins an in goals. Operating and stable across over these of cycles time risk-adjusted these centered ROE around at level the our XX-month key basis a enterprise of All points. horizon are should XXX and the interest rate approximately

both to basis, for as coming have organization, larger will ROE. goal Having the an the growth just infrastructure a accretive marginal on longer-term is front the $XX drive to billion the medium we we which asset crossed Our believe next us. such, in XXX, any place threshold, ROE milestone our years, to and profitability inorganic organic is in of be to and in the

by we basis. In multifamily PPP, terms over profitable we trend loans, an X% focus approximately loan time to relationships. having most down This annualized of risk-adjusted on the balance grow core overall as of expect is balances only growth, on sheet inclusive excluding

expect Finally, with approximately XX%. With remainder to tax to back rate we call to it the respect for I'll XXXX, the of be the that, effective turn Kevin.

Kevin O'Connor

Avi. you, Thank

share bank #X given call open and story thought to haven't with what we've and believe you among remind I the our Before unique been I'd banks. with a and community I We the conversion, merger compelling. of a take questions, to since moment we believe the road created on the market investors, makes we

highly a footprint in business and market We density. have brand a significant and desirable wealth strong appeal with

We have significant scarcity value.

of Our provides deliver. Island win on slow in billion the North the excess scale locally hasn't acquired. size to and Fork managed under of are capital. the bank capital respond, larger $X since banks and banks merger This was bank product smaller Long created opportunity where a billion $XX to has to a credits existed that with We're

We grow have to DDA XX%. XX% to and deposit best-in-class unique franchise a with

customer-focused a we business as highly have our responsive, We PPP. demonstrated simple, performance model in by

regulators. A transactions this significant acquirers Dime. of execution we there immediate over merger ability successful Stu Finally, the job and last of the announced presents the the time our done have credibility where both our to I the for not two are our new opportunities the to note, with believe validated and have get transactions, M&A headquartered footprint. with been point equal in

for these over are we turn call for and business leverage open We questions. ready the opportunities. With can to that,

Operator

at First Fitzgibbon Mark Sandler. Piper Instructions] question, [Operator

Mark Fitzgibbon

say couple that obviously to be made. Congrats excluding around you and Avi, deal million for expect expenses, points run on sort this to of a you quarter. expenses Did for charges? rate the you $XXX clarify of year, just first wanted

Avinash Reddy

the as may we're to guidance million fourth of there second few XXXX. hold the the $XXX Mark, this is run in was rate. pretty and annual merger now. just Obviously, merger run So quarter a rate the come at a right by year, charges quarter through closed guidance expect fourth be towards well. steady that the should the we But by million we driving $XXX that into quarter There's

Mark Fitzgibbon

Okay. and growth And Great. provisioning about upon think hard secondly, or to and it maybe do level how and then this But is credit loan answer you I of XQ? XQ of such. normalized a in sort depends because know

Avinash Reddy

Sure.

we now economic the mark reflects -- everything are provision that hand. result just the and at So on conditions based right the that know

really, a forecasts over there was in on economic so coming shift in Obviously, time. to really be mix loan And function it the those going of based how forecast be a the the stability growth should of now. Obviously, some Jan unemployment X some it's big rates changes until from and change Moody's in, going with forward.

levels points, XXX result excluding we've we stress given feel to So the have PPP, our compared contact very and peers, we result the basis last done. strong believe that testing good, we around pretty at

So, based very should the the be your portfolio in growth results comfortable, forward. just going on and

Mark Fitzgibbon

update systems this synergies like on of synergies? recognition of the the timing of year? completed Okay. And kind conversion of know recently. what then us of does those I cost extraction the you But the just the can sort you look

Avinash Reddy

Yes.

So the fourth full with synergies that's mark, by year. the quarter million the this of $XXX

we're we Obviously, in track rightsizing announced point. our XXX% If to with there. everything some you when be conversion expense in going remember on conversions for base, at this in we but ancillary the system transaction, We're that mentioned phased had on, and the XXXX. it'd be

Mark Fitzgibbon

So and a Or then? is do see you between sort straight line that of sort down of now --

Avinash Reddy

$XXX million terms Yes. of Yes. the then But year importantly, for this and an --. that's number, annualized in number XXXX. to get to end We're the by of going

Mark Fitzgibbon

the you a Okay. Could be synergies finding where about And side, curious. might talk the where the Kevin, then you're being little coming created, that I'm from? on are bit those revenue opportunities

Kevin O'Connor

Well, obviously, branch lot we've customers have didn't we to a had of that the service. network

since was places in sat able that. has branch committee able created The sort our SBA I of the been expanded, we've products of basically As management we meetings been loan at. grow. have been Dime business We've in were networks to relationships some been have we've think that a together that we've number common do It rolled out strong to strong from treasury come opportunities. at, where

just think actually of we've customers. have to were back to with And with able gratifying. the of been the Dime legacy the teams -- on the been from has been calls both I customers group seeing been overall, people and that some with coordination continue between some out our lenders. we on incredibly joint leverage SBA I've

Mark. working, really is this So

in thing In things with try working too, still some as is. figure from home, sort what out of people the you, that work growing been We've the the it's we to the have One separate they're just have back home, business. and got at integration share the they the a it's there people people building are of some basically and of consolidation. out ways I'll And better out frontline on to of from that been the interesting. lot worked out focused because people

it's So very out well. worked

Stuart Lubow

And ], X, really we servicing February our system. effort loan we really And single our in And on the customer-facing of businesses retail that converted, closed we banking. to the LB businesses, were a had even restructured concerted private switched sure [ fact, have a origination lending we and make Mark, our as out and customers. in teams organization, their to X made before

as that's hit really ground concerned. far the running as everyone So

Kevin that have those of that X, significant do But capital as that and business opportunity bit to the that to were more seen, we short the our we over at we there'd customers X as we've we happened with both be announcement together relationship opportunity because pipeline. months in grow thing, in talked billion mentioned, also the other continue The of And we already to enhance is what about has had, unable quite just to $X thought a were seeing size. what we're but relationships. was

Mark Fitzgibbon

the looking And Great. potentially what may kind about. partners? and hard think another in do then and But future be are last characteristics acquisition, do you of to when that you be question, for it could think you'd

Kevin O'Connor

Our systems today. converted are

there's of few really, had the things, mentioned. So of no ancillary short a as Avi

shape. We're take from -- with continue People operationally, couple a we'll we are we're I that at weekends think I -- a commercial a think in So I bank. good to And look think but standpoint. the not little things community may that a get off, bank. fit profile. We're

be So we'll that that fit for looking things profile.

Operator

The at Davidson. comes from Christopher next D.A. question Keith

Christopher Keith

on quarter again first consolidated results. the Congratulations

can room So on related update where and my FHLB progress first you paydown your left? just have the is might borrowings. much Avi, an how us of to you question is give

Avinash Reddy

February clean So we're was done a all going and done, forward. Chris. in of present the to We're Everything balance clean months income statement trying sheet, January.

pretty the it the as March. PPP We points is whole of portfolio rate is XX is that FHLB to FHLB only short. XX done. we around The spot press funding release basis loans. the the mentioned at end on now, So everything borrowings Right view

done. So everything is

Christopher Keith

you it. have we climb And then next longer-term loan several maybe just expect or where see us C&I Got we mix C&I? in should target? Dime contribution you quarters, Will to to through that remind be do can X% specifically for the related a the

Avinash Reddy

Yes.

multifamily portfolio I right think loans we obviously the at Chris, now. longer have term, XX% of

the utilization that in a low for C&I, the frame XX% us trend XX% the and is fairly X expect obviously, to time We over to across industry. to X-year area. line down

all will grow portfolio. up, that the the branches. on that a on market. side We'll So We'd business pick can active estate C&I our owner-occupied we to up. be we the Same commercial across now that picks like And in as team. real growth utilization residential have of spread

So between owner-occupied it's real and going be over trending a multifamily C&I time. mix down to with commercial estate

Christopher Keith

a more now. industry seems have rest deal to right to liquidity then compared the position the of And created Okay. the favorable

of the assets? So said, the earning feel the you portfolio need guess with that a to as contribution percent I securities do of increase

Avinash Reddy

to be to like between an We'd loan-to-deposit bank. No. XX% XX%

As be our is Kevin going pipeline going have loans. power over of to we Stuart the And with to replace loans relationship-based as loans PPP them time, margins. and a franchise tremendous and we're runoff, of earnings said, this grow

have to years. X the money as out course just over says, and not we're there to Kevin the So get have time prefer of funded over a here make we're borrowings not leverage core a going with on X-year book wholesale X X book, balance to always to sheet. And frame. a We to any

Christopher Keith

income, question. in include recognized fee Got it. income? $X And just out break The then quarter? fees last PPP just PPP and And can that total interest you in million does the the

Avinash Reddy

Yes.

around PPP in million, million and the was acceleration interest of from So that income was around $X total on $X.X forgiveness.

legacy If you part as recognized of the BNB's remember, purchase PPP was accounting. fees

interest That the not that's So of the was goodwill calculation. in part income.

of around income half on in and the forgiveness $X half income. million terms of So and

Christopher Keith

Got it.

Operator

The next Matthew is Inc. from question Stephens Breese,

Matthew Breese

to to I a go back wanted tough because time I'm expenses here. having

whether cost than we're kind the of kind you bit. help understand of Or saves gap little there me a million of less help the expected bridge was versus here expected the Could the I end a cost feel at legacy deal about similar around announcement, and then if the out that Dime in $XXX at in get take level, and million saves running time were like million, Bridge quarterly $XX I expenses, same the outlining run I $XXX or more of look at outlined just by year was So the today. and than rate just $XXX investment? like to million or me

Avinash Reddy

Yes.

at companies run So had. that got you've both Matt, core the rates to look

$XX expenses. of core in million Dime legacy So we were XXXX,

the there. in some was the XXXX. million larger all other and that the $XXX onetime stuff Legacy for that's So items charges excluding Bridge was of and

were Dime hiring add transforming as Same you those Bridge. legacy million. it, growing So expense the up, two was $XXX is people. legacy number bases both We -- our with

that rate, get had to So and million, all you $XXX are teams million. X% of going growth we then hiring, other you cost that $XX run million be was the you to it given the take announced there And we a at people $XXX savings.

the exactly million. that's $XXX So

We're it, teams in, the a we hire, million, on out put So year. to we're our get top put at practices. $XXX of end this of baked to building there the It's management risk going in going number. we in that and we're fully

Matthew Breese

that appreciate I Okay. explanation.

Next loan on does it you little estate? about me you tell just local and areas kind seeing the in one bit of And what for where perhaps, talk pipelines the in you're a we recovery process? Could different -- are and commercial growth. about real just C&I, strengths the the pipeline economy

Stuart Lubow

it's Island, the in is active as not commercial we're Matt, New and of significant boroughs some Stu. real Long a in Yes. estate, outside some construction but opportunity as other C&I active, is What sectors. Jersey. residential multifamily northern the in seeing of

a I liquidity think, there. out bit obviously, see there's of quite you

have side quite customers a kind that cash. use and have of down pay their put Those the had liquidity that have lines. on bit Our PPP to of that as

with about line usage. in reduction So at XX% year-over-year X% growth with looking even that, we're PPP we're a seeing forgiveness. a But

and activity. new but to get ] [ of purchases there's only on lot opportunity. seeing economic subdivision, Manhattan, term involved east So significant of The we're residential and market seeing refinances, financing. We're is in construction and not small a opportunities strong. very particularly growth We're

So generally economy. stronger a just getting and it's stronger

Matthew Breese

that. appreciate I

do sensitive, sense liability XXX The to an together, was how that and just points? or other balance look put in Could give of for the rate, points sensitive interest what is plus shift sheet now us interest asset one basis neutral extent? plus rate had basis sheet scenario the a you balance terms XXX you I

Avinash Reddy

we shift slightly up Very Dime was to asset The point, the had. point rates X% X% legacy so to to The December XX, this a the X% prior in at borrowings sheet, probably roughly balance was Matt. restructuring probably that sensitive modestly sheet balance was legacy X%. -- where at XXX rates interest of BNB basis

-- so positive. would in be to fairly the be with in And it the neutral year first second net-net, year

So again, institutions to the that's this the together. we did one two reasons transaction of manage

I went it's DDA, about think in DDA the So environment. to even XX%. plans XX% XX% on we rate having help with it's any more from just balance XX% to sheet, to you going from right? With get importantly, to though,

we're that's that focusing key the number on. So

Matthew Breese

deals, of you were change you for you for to in have willing last Island change up frame been And big a partnerships. recruitment, just There's the in the can to do that landscape that terms of time How does the it? now tied Then that out the you you? markets. Long put Okay. what one it disruption ton resources picture. deals? big are the players Does me, hiring, in where in of bigger midst players make two now of think Two

Kevin O'Connor

course. Of

it's I And Bridge create on to the to both think to of certainly will bankers, in a been This of what's afraid little in talk disruption of to a transformation built I built -- think has are customers opportunities our the talk about the future. lots also. -- going Dime it advantage as happen -- market. took of institutions, good well, was

ground. a might sometimes dialogue an to their concerned. to up on And bankers live get where spending gets thing understand more that But customer the are don't dialogue, be on. it's Stu They opportunities for to prospective are to for is customers So the We talking and we Probably very this that's follow it opportunity it's that's and and us we I important as time when have We live why that what have customers bankers, acquired. means on sometimes. all, us we to had. think the the bank we concerned. sometimes for

we done is we wanted so we that we that to that we the that's so and do yes, to are internally chance, So with why externally. -- sure the needed things this were be can make looking

Matthew Breese

it. I appreciate

Operator

from comes William [Operator Raymond Instructions] of Wallace question James. Next

William Wallace

just clarification. Quick point question, of

X%, does that different two the target, I That exclude loan growth think heard PPP? I things.

Avinash Reddy

PPP, Wally. excludes it Yes,

William Wallace

Okay.

Sorry. Thanks.

Avinash Reddy

from non-PPP growth in the, the portfolio. is X%

William Wallace

Yes.

had at grown guys that have combined XX/XX, quarter? would core you this portfolio If

Avinash Reddy

Wally. again, that Say

William Wallace

I'm sorry?

Stuart Lubow

Yes.

combined So year-to-date, loan the has originations. million commercial about new in to originated $XXX company million $XXX

a the started well. out pretty we pretty quarter. had good So quarter We -- year the

As we just million $X pipeline, and $XXX million billion another in waiting said, close. underwriting to $XXX Kevin probably probably have the in

together, opportunity. So systems really we're excited And ready about all now start are now really the to all operating we're the together, -- we're we're cylinders. that on

William Wallace

Okay. portfolio Great. And some the continue decline. it then assuming, sounds anticipation like that multifamily I'm will, there's to

guide guess, So with loan balance on FHLB that making about I mix if shifting opportunity of net with loan commentary repricings I'm guess prepay, the surprised away the and the multifamily, the kind less assumption then I that the some pressure CDs, here? I like to the from flattish and interest optimism on was or that margin the anticipating is margin side would It or give there you take. expand have meaningful wasn't loan guide the for couldn't pricing bias Is that really margin, expansion. that maybe really seems of give more from

Avinash Reddy

we're at portfolio, overall on the X.XX% average rate in X.X% of the overall going Right piece you're runoff But to looking the then the higher-yielding around is also to now, the have on of Wally, loans weighted portfolio. terms So, the portfolio. X.XX%-ish.

multifamily though off higher-yielding have over you're going pay first down, time. even to multifamily the So comes

should where result medium-term more importantly. providing we company. most as be my this conservative a range. interest of environment, so in we the this is as regardless want really down, of And quarter company particular of we range a that, here, I to be a to up But a rate operate may able being we're In range, be at think think again, or we're we range but

banks up, I with when come that we're down, to in the deposits stable forward. think a of able our footprint rates going ones a you I but rates lot be to when see of lower going go are cost margin think

William Wallace

noticed of then, that Is release. now sheet? with quarter much just I And don't penalty the disclosure from prepayment Okay. have that Avi, you think as the to quarter bigger something took swings balance will the you out

Avinash Reddy

pretty It's quarter. of Wally. was that this X fees disclosure, Exactly, was And it It was probably basis came small. full $XXX,XXX points for in. It $XXX,XXX, around obviously, prepayment a not Dime balance result On a it's number. a legacy of big billion terms an that. assets, loaning [ statement was as the income volatile in little sheet, $XX ] of --

William Wallace

that -- of question. is is kind then of And stupid line you last item base the a non-operating? maybe but there's the curtailment that on that operating makes you it for a base. question, out This had just expense backed What

Avinash Reddy

to way And accounting Wally. termination pension of just plans. It's pension there plans, that's related Yes, works. the just related the to pension certain a transaction, was

So forward. continue that won't going

Operator

our conference Kevin to concludes This like closing question-and-answer any turn session. Mr. over remarks. for O'Connor to the back I'd

Kevin O'Connor

and in Again, interest our everybody's patience I appreciate company.

multiple to number said excited company, prospects have the as one times As year beginning as we I we're think calls to conference today, of and about forward the this run really of progresses. look good a

have So, a great day. Thank you.

Operator

concluded. now is Conference Thank you for presentation. today's attending

may disconnect. now You

Dime Community Bancshares (DCOM) 30 Apr 212021 Q1 Earnings call transcript