• Core Deposits: Increased by approximately $500 million in the fourth quarter.
• Loan Growth: Business loans increased by over $70 million in Q4 and $400 million for the full year.
• Loan to Deposit Ratio: Ended the year at less than 95%.
• Net Interest Margin (NIM): Increased by 29 basis points in Q4; core NIM excluding purchase accounting incretion was up 26 basis points.
• Common Equity Tier 1 Ratio: In excess of 11% at year-end.
• Total Capital Ratio: In excess of 15.5% at year-end.
• Allowance to Loans: Increased to 82 basis points.
• Adjusted EPS: Increased by 45% versus the prior quarter.
• Core Cash Operating Expenses: $57.7 million for Q4.
• Non-Interest Income Guidance for 2025: Expected between $40 million to $42 million.
• Core Cash Non-Interest Expenses Guidance for 2025: Between $234 million and $235 million.
• Tax Rate Guidance for 2025: Between 27% and 28%.

• Warning! GuruFocus has detected 4 Warning Signs with DCOM.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dime Community Bancshares Inc (NASDAQ:DCOM) successfully raised approximately $1.8 billion in core deposits, with 40% being non-interest bearing.
• The company achieved substantial year-over-year growth in core deposits, ending the year with a loan-to-deposit ratio of less than 95%.
• Dime Community Bancshares Inc (NASDAQ:DCOM) reported a significant expansion in net interest margin, increasing by 29 basis points in the fourth quarter.
• The company received its second consecutive outstanding CRA rating, achieving perfect scores on all three components of the CRA test.
• Dime Community Bancshares Inc (NASDAQ:DCOM) raised approximately $136 million from an oversubscribed common equity offering, enhancing its capital ratios.

Negative Points

• The company experienced higher than expected payoffs and refinances in its business loan portfolio, impacting loan growth.
• Dime Community Bancshares Inc (NASDAQ:DCOM) anticipates a $4.5 million pre-tax termination expense related to a legacy pension plan in the first quarter of 2025.
• The company faces challenges in maintaining its CRE concentration, aiming to reduce it to the low 400s.
• Dime Community Bancshares Inc (NASDAQ:DCOM) reported a $13.7 million loan loss provision in the fourth quarter, reflecting increased allowance for loan losses.
• The company expects low single-digit loan growth in 2025, with growth more weighted towards the back half of the year.

Q & A Highlights

Q: Can you confirm the guidance for non-interest income for 2025? A: Yes, the guidance for non-interest income is $40 million to $42 million for 2025. This increase is primarily due to the BOLI restructuring, which will add approximately $5 million to $5.5 million in income.

Q: What is the expected loan growth for 2025, and what factors are influencing this? A: We expect low single-digit loan growth in 2025. This is due to higher levels of payoffs and refinances, particularly in the CRE and multifamily sectors, which offset new business-related loans.

Q: Are there any plans for acquisitions given your outstanding CRA rating? A: We are open to strategic opportunities that enhance franchise value, particularly within the Tri-state area. However, we are also focused on significant organic growth with new teams and capital to support this.

Q: Can you provide details on the $1.9 billion of fixed-rate loans maturing in the second half of 2025 and 2026? A: Approximately $600 million will mature in the second half of 2025 at a rate of 4.25%, with the remaining $1.3 billion maturing in 2026 at a rate of 3.85%.

Q: How are you managing deposit costs in light of recent Federal Reserve rate cuts? A: We have been able to reduce deposit costs effectively, with new deposits coming in at a blended rate of 2% to 2.5%. Our overall cost of deposits is currently in the 2% to 2.5% range.

Q: What is the outlook for charge-offs and credit quality in 2025? A: We expect charge-offs to be in the range of 20 to 30 basis points, consistent with a commercial bank's typical range. We are not seeing any concerning trends in credit quality at this time.

Q: How do you see the non-bank sector impacting the CRE market? A: Non-bank entities are becoming more active in financing CRE and multifamily opportunities. However, we expect banks to re-enter the CRE market as they adjust their CRE ratios.

Q: What are your expectations for deposit growth and composition in 2025? A: We anticipate solid deposit growth, with a focus on maintaining and potentially increasing our DDA percentage, which is currently at 30%. We expect business deposits to continue growing, supported by new account openings and pipelines.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.