Dime Community Bancshares Q1 2025 Earnings Report

Dime Community Bancshares EPS Results

• Actual EPS: $0.57
• Consensus EPS: $0.55
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $0.38

Dime Community Bancshares Revenue Results

• Actual Revenue: $103.83 million
• Expected Revenue: $105.83 million
• Beat/Miss: Missed by -$2.01 million
• YoY Revenue Growth: N/A

Dime Community Bancshares Announcement Details

• Quarter: Q1 2025
• Date: 4/22/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 22, 2025
• Conference Call Time: 8:30AM ET

Dime Community Bancshares (NASDAQ:DCOM) operates as the holding company for Dime Community Bank that engages in the provision of various commercial banking and financial services. The company accepts time, savings, and demand deposits from the businesses, consumers, and local municipalities. It also offers commercial real estate loans; multi-family mortgage loans; residential mortgage loans; letters of credit; secured and unsecured commercial and consumer loans; lines of credit; home equity loans; and construction and land loans. In addition, the company invests in Federal Home Loan Bank, Federal National Mortgage Association, Government National Mortgage Association, and Federal Home Loan Mortgage Corporation mortgage-backed securities, collateralized mortgage obligations, and other asset backed securities; U.S. Treasury securities; New York state and local municipal obligations; U.S. government-sponsored enterprise securities; and corporate bonds. Further, it offers certificate of deposit account registry services and insured cash sweep programs; federal deposit insurance corporation insurance; merchant credit and debit card processing, automated teller machines, cash management services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts; investment products and services through a third-party broker dealer; and title insurance broker services for small and medium sized businesses, and municipal and consumer relationships. The company was founded in 1910 and is headquartered in Hauppauge, New York.

Dime Community Bancshares Q1 2025 Earnings Call Transcript

Key Takeaways

• Core deposits rose by $1.3 billion year-over-year and deposit teams funded $1.9 billion since 2023, enabling the bank to reduce brokered deposits and FHLB borrowings, cut its cost of deposits to 2.09%, and lift net interest margin to the 2.9% range.
• Business loans grew by $60 million in Q1 and over $400 million year-over-year, the loan pipeline expanded to $1.1 billion at a 7.22% average yield, and new lenders have been hired to accelerate balance-sheet growth and lower CRE concentration.
• Core pre-tax income increased to $46 million from $28 million a year ago, producing a 77 bps core ROA, while adjusted EPS of $0.57 rose 50% year-over-year and net interest margin ex-accretion expanded by 19 bps.
• The bank has $1.95 billion of adjustable/fixed-rate loans repricing or maturing in H2 2025 at an average rate of 4%, which could boost NIM by ~35 bps, with an additional $1.75 billion repricing in 2027 for further margin expansion.
• Capital remains strong with a CET1 ratio of 11.1% and total capital ratio of 15.7%; full-year core cash non-interest expense guidance was raised to $236.5–$237.5 million, supported by prudent expense control and a one-time BOLI repositioning gain.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the Dime Community Bank Shares Inc. First Quarter Earnings Conference Call. Before we begin, the company would like to remind you that discussions during this call contain forward looking statements made under the Safe Harbor provisions of The U. S.

[Operator]

Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with The U. S. Securities And Exchange Commission to which we refer you. During this call, references will be made to non GAAP financial measures as supplemental measures to review and assess operating performance.

[Operator]

These non GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with The U. S. GAAP. For information about these non GAAP measures and for reconciliation to GAAP, please refer to today's earnings release. At this time, all participants are in a listen only mode.

[Operator]

After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stuart LeBeau, President and CEO. Please go ahead.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Good morning, and thank you, Shannon, and thank you all for joining us this morning for our first quarter earnings call. With me this morning is Avi Reddy, our CFO. In my prepared remarks, I will touch upon key highlights for the first quarter of twenty twenty five. Avi will then provide some details on the quarter and thoughts for the remainder of the year. Core deposits were up $1,300,000,000 on a year over year basis.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

The deposit teams hired since 2023 have grown their deposit portfolios to $1,900,000,000 This has allowed us to pay down our brokered deposits to a fairly minimal level as well as reduce our FHLB borrowing position. We have made significant progress in creating a core deposit funded balance sheet. We reduced our cost of deposits to 2.09% in the first quarter. Our NIM has now increased for the fourth consecutive quarter to the 2.9% range. We continue to have several catalysts to continue to grow our NIM over the medium to long term, including a significant back book loan repricing opportunity.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Even with the current uncertain rate environment, we remain very bullish on our continued NIM improvement over the medium and long term. I will Avi will get into that in more detail in his remarks. On the loan front, we continue to execute on our stated plan of growing business loans and reducing our CRE concentration. Business loans grew over $60,000,000 in the first quarter and over $400,000,000 on a year over year basis. Typically, our first quarter is our slowest growth quarter of the year.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

We have rebuilt our loan pipeline since year end and the pipeline currently stands at approximately $1,100,000,000 with an average yield of 7.22. This compares to $750,000,000 when we reported earnings in January. In addition, we have made several new hires who once they find their feet will contribute to the loan growth towards the year end. Our core earnings power has increased significantly over the past year. Core pre tax provision income was $46,000,000 in the first quarter of twenty twenty five compared to $28,000,000 a year ago.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

This translated into a core ROA of 77 basis points for the quarter. Finally, I will touch on our recruiting efforts. Disruption in our local marketplace remains very high, and our recruiting pipelines continue to be strong. As outlined in our earnings release, we have added numerous bankers across the organization. Our hiring efforts this year have been focused on growing both sides of the balance sheets.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Many of you who are familiar with the New York City banking area are familiar with Tom Geisel, who has who was a key part of the growth and success of Sterling. We expect Tom to be an integral part of our continued transformation to a highly profitable commercial bank. I'd also like to note that we recently announced plans to expand into the Lakewood, New Jersey marketplace. In conclusion, the momentum in our business is extremely strong, and we continue to execute on our business plan of growing the business loans and core deposits. We have clearly differentiated our from our local as it relates to our growth trajectory and ability to attract talented bankers.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

I'm looking forward to the remainder of 2025 and want to again thank all our dedicated employees for their efforts in positioning the bank as the best business bank of New York. With that, I will turn the call over to Avi.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Thank you, Stu. Excluding the impact of the previously mentioned legacy Bridgehampton National Bank pension plan termination, adjusted EPS was $0.57 per share. This represents a 36% linked quarter increase and a 50% year over year increase. The reported NIM increased by 16 basis points, and the NIM excluding purchase accounting accretion increased by 19 basis points to two ninety four. NIM expansion was driven by a significant reduction in our cost of deposits.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We did have around three to four basis points of prepayment fees in the first quarter NIM. Excluding prepayment fees and purchase accounting, the NIM would have been around two ninety for the first quarter. Non brokered deposits were up approximately $65,000,000 at March 31 versus year end levels. As I mentioned on our fourth quarter earnings call, year end twenty twenty four deposits were inflated by approximately $200,000,000 of title company related deposits that were tied to a closing that left the bank in early January. Said differently, we grew non brokered deposits by approximately $250,000,000 this quarter versus year end levels, if you exclude the title company deposits from year end totals.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We continue to manage expenses prudently. Core cash operating expenses for the first quarter, excluding intangible amortization, was $57,900,000 Non core items for the first quarter included $7,000,000 related to the previously disclosed termination of a legacy pension plan, which is now effectively complete. Non interest income of $9,600,000 for the first quarter reflected the full quarter impact of the BOLI repositioning transaction. We had a $9,600,000 credit loss provision for the quarter. Net charge offs to average loans decreased to 26 basis points and the allowance to loans increased to 83 basis points.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Capital levels continue to grow and our common equity Tier one ratio increased 11.1% and our total capital ratio grew to 15.7%. Having best in class capital ratios versus our local peer group allows us to take advantage of opportunities as they arise, and it speaks to Dime's strength and our ability to service our growing customer base. Next, I'll provide some thoughts on guidance for the remainder of 2025. As I mentioned previously, we had approximately three to four basis points of prepayment fee income in the first quarter NIM. Excluding this and purchase accounting accretion, the base NIM for the first quarter was closer to $2.90.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We would use this as a starting point for modeling going forward, as we don't expect the prepayment fees to repeat in that size in the coming quarter. We expect the second quarter NIM to remain range bound within a plus or minus three basis point range of the $2.90 base NIM. While we don't have a lot of low yielding repricing assets in the second quarter, starting in the second half of twenty twenty five, we have a meaningful increase in repricing assets and expect margin expansion to resume in the second half of the year. To give you a sense of the significant back book repricing opportunity in our adjustable and fixed rate loan portfolios, in the second half of 'twenty five and the full year 'twenty six, we have $1,950,000,000 of adjustable and fixed rate loans across the loan portfolio at a weighted average rate of 4% that either reprice or mature in that timeframe. Assuming a two twenty five basis point spread on those loans over the forward five year treasury, we could see a 35 basis point increase in NIM from the repricing of these loans.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

As we look into the back book for 2027, we have another $1,750,000,000 of loans at a weighted average rate of 4.25 that will lead to continued NIM expansion in 2027. Moving on to the short end of the curve. When the Federal Reserve cut short term rates in 2024, our NIM benefited by approximately five basis points for each 25 basis point rate cut. Should the Federal Reserve cut rates in the second half of twenty twenty five, we expect this trend to repeat, assuming the behavior in deposits and loans hold for each subsequent rate cut and competition remains rational. In summary, assuming the market consensus forward curve plays out, we have a path to a structurally higher NIM and enhanced earnings power over time.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

With respect to balance sheet growth, we expect net loans to remain relatively flat in the second quarter and growth to pick up in the back half of twenty twenty five. In the first quarter, attrition in CRE and multifamily masked the growth in our business loan portfolio. We expect this trend to moderate towards the end of twenty twenty five. In addition, as Stu mentioned, we have several new hires who once they find their feet will contribute to loan growth towards the end of the year. With respect to core cash non interest expenses, our previous full year 2025 guidance was between $234,000,000 to $235,000,000 The prior guidance was based on our existing employee base at the end of twenty twenty four.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Given the hires we have outlined in the press release, we are increasing our full year core cash noninterest expense guidance to 236,500,000.0 to 237,500,000.0 With that, I'll turn the call back to Shannon, and we'll be happy to take your questions.

[Operator]

Thank you. Our first question comes from the line of Steve Moss with Raymond James. Your line is now open.

[Steve Moss, Director at Raymond James Financial]

Good morning.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Hi Steve. Good morning.

[Steve Moss, Director at Raymond James Financial]

Hey Steve. Maybe just starting on the loan pipeline, as you mentioned, nice pickup here relative to where it was at year end. Just curious the underlying mix within the loan pipeline.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

The underlying mix of the loan pipeline?

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Oh, yes. So I mean, again, it really continues the theme of C and I, owner occupied CRE and healthcare. So at this point, we have about $350,000,000 in C and I, approximately $185,000,000 in owner occupied CRE and another $250,000,000 in healthcare. That's making up the bulk of the pipeline. We actually have about $200,000,000 in loans approved waiting to close at a yield of about seven twenty five.

[Steve Moss, Director at Raymond James Financial]

Okay. Great. Appreciate that. And you guys made a number of hires this quarter and obviously a year ago with the signature hires. Just curious in terms of how you're thinking about the pace of deposit growth and any updates around the cost of new deposits you guys are bringing on these days?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yes, Steve. So, you know, in terms of, you know, the teams, as Stu said, they're up to a billion 9 of deposits at this point. The total, you know, cost of deposits on them, including DDA is around $2.10 plus or minus. So they're bringing in stuff in the in the low twos. There's a very healthy mix of DDA in terms of what they're bringing in.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

It's around 35 to 40%. Like I said on the last, you know, earnings call, you know, it takes teams probably three to four years to probably reach a steady state. You know, most of the teams that we have have been with us, you know, probably a year or two, you know, a couple of years at this point. I think on the last earnings call, Stuart mentioned that we'd opened around 11,000 accounts and 7,000 customers. We've grown that now to around 12,500 accounts and and 7,800 customers.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

So we're continuing to see steady growth in account opening as well. Like I said in my remarks, if you exclude the title company deposits that went out at the end, at the beginning of the year, we would have grown core deposits by around $250,000,000. So basically, deposits ex broker would have grown them by $250,000,000 this quarter. So Q1's typically slow for us. Q2 starts off with tax payments as well.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

And then it starts picking up once we get into May, June, July timeframe. So we're pretty optimistic that we've got the right channels in place to fund a lot of the loan growth that

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

we have.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yeah, and our pipelines are we review our deposit pipelines and our loan pipelines. Our deposit pipelines are very strong, so we're very encouraged.

[Steve Moss, Director at Raymond James Financial]

Okay, great. And then just one on the credit front here, reserve build was maybe a little bit less than I

[Steve Moss, Director at Raymond James Financial]

was thinking this quarter. Just kind of curious, any updated thoughts and guidance around that?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yes. So I mean, Steve, we kept the CECL model relatively unchanged from your end levels. We kind of use Moody's forecast as of March that's out there. I mean, total loans were flattish to down a little bit this quarter. So I think it's over time as Moody's adjust the forecast as we close more of these C and I and business loans going forward, you'll see a natural uptick in the provision over time.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Again, our medium to longer term target is that 90 basis points to 1% area. But overall, it's hard to predict the provision every individual quarter. Like I said, we're headed higher over time.

[Steve Moss, Director at Raymond James Financial]

Okay, great. Nice quarter. Appreciate all the color here. Thanks.

[Operator]

You, Our next question comes from the line of Mark Fitzgibbon with Piper Sandler. Your line is now open.

[Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies]

Hey guys, good morning. Hi Mark. Avi, it strikes me that you guys are carrying a relatively large cash balance at a little over $1,000,000,000 Is that an opportunity for the margin as well? Do you think you could bring that cash level down over time? Is that the plan?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah, I think that's fair, Mark. However, I think, like a lot of banks that had our profile two to three years back when rates went up 500 basis points. Think we're trying to run the balance sheet for the medium to longer term and have the right mix of floating rate assets and cash versus fixed rate assets. I know we're all gearing towards the Fed cutting rates, but we also just want to keep our ALM profile in check a little bit. And I think as we start putting on loans, some of that cash will get used up and also some of the loans that we're putting on our floating rate.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

But in the interim, we don't want to rush out to buy securities and help the net interest income in the near term and hinder opportunities to grow loans in the longer term. But you're exactly right. Historically, we used to run the balance sheet with $200,000,000 to $300,000,000 of cash. We're running it with a multiple of that at this point.

[Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies]

Okay. And then on the deposit front, I know you had some purposeful runoff for the brokered deposits this quarter, I think 137,000,000. Given that there isn't as much loan growth here in the first part of the year, was there a conscious decision to kind of put your foot on the brake a little bit on deposit growth here

[Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies]

or just some seasonal patterns?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah, bit seasonal. First quarter is usually fairly weak. We have some seasonal tax receiver money as well go out, and then April's also a little weak just because of tax payments. But what we've tried to do, Mark, is really make sure that we have a keen discipline on the cost of deposits itself, right? So if there are new customers coming in at a rate in the mid fours, we're really not taking that at this point.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We're really trying to keep it sub fours on money market and making sure the overall cost is $2.25 to $2.50. I mean, over time, we're comfortable operating with the loan to deposit ratio between 9095% plus or minus. So you are right. As the loan growth picks up, we can put the pedal to the metal a little bit more on the deposit side.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yes. Also purposely we can manage our municipal portfolio a little bit more. So we had a significant municipal relationship that had in excess of $400,000,000 in deposits. They were relatively high cost funds based on Fed funds rate, etcetera. And we basically asked them if they would move 100,000,000 to $150,000,000 out in terms of those deposits and those costs, and we replaced them with cheaper cost business deposits that we had brought in.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

So we do have some levers that we can push and pull to manage cost of funds and deposit flows. And if we wanted that money back, we certainly could go get it. And it's a relationship we've had for a very long time. So those are the kind of levers that we have today that we didn't always have.

[Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies]

Okay. And then lastly, Stu, I wondered if you could just share any color on the 8,700,000.0 uptick in non owner occupied commercial real estate this quarter. Any was it one credit, couple of credits, anything special there?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yes. Yes, just one credit, Mark. So we actually had an exit of one credit that we previously identified, the legacy bridge loan that we exited this quarter. So we took that out and then we had one previously identified classified loan that we have. We have a purchase and sale agreement on that, and we expect to exit that in second quarter.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Nothing systemic. It was one item, but we do expect that credit to be gone by the end of the second quarter.

[Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Christopher O'Connell with KBW. Your line is now open.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Hey, good morning.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Hey, Chris.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

How are you?

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Hey, Sue. So just wanted to follow-up on the last question on the credit, the purchase and sale agreement in place. Was that is that marked to the expected purchase price in terms of either a charge offs or a specific reserve at this point?

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yes.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Great.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Then I was hoping just to dig in. You guys announced a number of hires over the course of the first quarter here that

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

were

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

highlighted in the release and hoping to dig in on just production policy on both the loan and deposit side from the various teams and hires here. And I guess with the updated expense guidance, just kind of a breakeven timeline.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah, I'll start with the second question here. I mean, typically, our experience, Chris, on the deposit side is that teams probably break even within six months, just because the deposits come in fairly quickly. Generally teams have a couple of franchise clients that they're able to bring on early on and they pay for themselves pretty quickly. On the loan side, it's going take a little bit longer because it does take time to move loans over. You got to wait for renewals, maturities, things like that on the other side.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

I think we'll just leave it at, as Stu mentioned, it's going to help with the pace of pickup, especially on the C and I and business side going forward into next year. It's probably gonna help us get closer to that mid single digits to high single digit growth that we want in 2026. It's obviously gonna take a little bit of time for them to get going over here. So I'd say, look for it to contribute to us starting in late 'twenty five into 'twenty six.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Okay. And I guess just without the production goals in place, just the breakdown percentage wise of the new hires of what you think is deposit versus loan hires out of those in the first quarter?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yes, sure. So we hired one deposit team that's focused on the Queens market. So that one was specific just for deposits. We hired Jim Legato, who's focused on building out our presence in Manhattan. That's gonna be on both the deposit and the loan side.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We've hired Tom in a senior executive leadership role at the bank. Tom's focused on bringing on teams to help build out our C and I and owner occupied franchises. So that's also on the loan side. And then Tony came to us from M and T, so she's focused on the loan side. So I'd say it's probably 70% to 80% focused on the loan side, at least the highest to date.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

And I think that's consistent with what we said when we reported our last quarter earnings that focus on both sides of the balance sheet now as opposed to just the deposit side.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Understood. And then just looking into the second quarter and some of the commentary on loans relatively flat and NIM kind of core NIM being range bound around that $2.90. Just hoping to flush out the dynamics there on why you're not a little bit more bullish even before the significant asset repricing begins in the second half of twenty five. Mostly just given, it sounds like the relatively strong pipeline at still give or take 200 basis points above the portfolio yield. If there's not that much fixed asset repricing in Q2, I guess I would think that that dynamic is kind of driving loan yields higher into the second quarter even without fixed asset repricing beginning in the second half of the year.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yes, Chris. So what we said was 2.9 is a base NIM and we expect to be plus or minus three to four basis points. So there is wiggle room up and down from that. It's just a math exercise, right? If you close $200,000,000 of loans in a quarter, you're probably going to get three basis points of NIM expansion out of that, just purely out of that piece, right?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

So we did take that into account. We only have around $100,000,000 of loans that are repricing in the second quarter. So it does come down to what's coming off the books versus what's coming on. Whereas if you go to the second quarter of this year, sorry, the second half of this year, the third quarter, for example, we have $400,000,000 of loans that are repricing. So it's a significant change in terms of that.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

And also these loans that are coming off the books, they're three fifty to 4% plus. So it's kind of addition by subtraction from that. So we're focused on doing classic community commercial bank credits over here within the bank. And that's probably going to be three to four basis points, we think. So I think we've provided a range on that.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

We just wanna be thoughtful around the fact that April typically is when people pay taxes as well. So it's gonna take a little bit of time to build back deposits. So we put all of that in there. I think the thing that I really focus on is really the destination on the NIM of where we think we're going to end up. If you factor in rate cuts, which may or may not happen, but if they do, we'll help us by five basis points.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

And then you take into account the volume of assets that are repricing, we're still, as Stu said, pretty bullish about the medium to longer term, getting to a NIM that's approaching the three fifty area in 2027.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yes. And with the pipeline we have and the teams we brought on board, we're very excited about the opportunity. I think we are generally being somewhat conservative for the second quarter. It will be predicated upon our loan closings and how quickly these deals get through the pipeline. But we are excited about the second half of the year into 2026.

[Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)]

Understood. Thanks, Avi. Thanks, Stu. That's all I had.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Thank you.

[Operator]

Our next question comes from the line of Manuel Navis with D. A. Davidson. Your line is now open.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

Hey, good morning. Just wanted to kind of expand and hear more color on what could the Lakeland, New Jersey branch kind of add and kind of how much more activity could there be around that branch going forward in terms of hiring

[Stuart Lubow, President & CEO at Dime Community Bancshares]

things like That's in Lakewood, Central Jersey. We've already hired a banker to a private banker for that group in that area. It's an area I know very well, very attached to the Brooklyn community as well. And so it's a natural jumping off point and our first foray into New Jersey.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

I actually ran a bank in that area years back, so I know the area very well. And there's a significant amount of deposit and loan opportunity available. And we thought that as our first foray, it was appropriate location because there's such it dovetails so well with an existing deposit base and customer base that we have in Brooklyn.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

Okay. You talked a little bit about hiring pipeline staying high. Is there any other color you can add to what parts of the footprint are kind of have the most activity? And is going to continue to be lending focused like the first quarter? Or is there still kind of some more deposit teams to come?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah, I think it's a mix of both, Manuel. I mean, obviously, we've identified growing in Manhattan, growing in New Jersey, and then complementing some of the Long Island areas that we have. Everything's gonna be in our existing footprint or in a targeted footprint that we have. I think we've tried to be very surgical about what works for DIAM over here. We have a client base, and we've seen what's worked for us, So we're very focused on what works for us.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Like I said, we're going to pick and choose what works for us. And also, it's important that the economics work for us. So we're very focused on making sure people that we bring on contribute to the bottom line within six to twelve months, and we want to stay with that discipline. So that's what we're going to do going forward.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

Can you speak a bit to the levels of competition in the region on those hires first, and then just kind of across pricing on loan and deposits?

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yeah, look, I think there are other banks that are interested in doing what we've done. They've seen our success. I think we've been the most successful out of the out of of cadre of institutions that have been somewhat more aggressive. I think we've done it in a much more, Obi said, surgical way. We've kept our sight on the profitability of these teams, and we have shown success.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Obviously, you can see it in our cost of funds and core deposit growth, etcetera. In terms of pricing, I think today it's rational. And I think some of the players who have had problems who have pushed some irrational deposit pricing are moderating. That's certainly helpful. And so from a loan and deposit standpoint, I think pricing is rational.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Although we are not in the market, I think multifamily pricing has come down dramatically. But I think overall, we are pretty happy with the current rate environment and the structure of our balance sheet. Will prove to be very profitable for us as time moves on, as we continue to reprice the book.

[Manuel Navas, MD & Senior Research Analyst at D.A. Davidson]

I appreciate that. Thank you for the commentary.

[Operator]

Thank Our next question comes from the line of Matthew Breese with Stephens Inc. Your line is now open.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Hey, good morning.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Good morning, Matt.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Wanted to

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

start on deposit costs and the trajectory excluding additional Fed cuts. So the last time we spoke in January, the spot cost and deposits was 2 to 2 0 5. Go in cost for the quarter was $2.00 9. So a modest, you know, a little bit of a pickup. Should we read into that at all?

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Are are deposit cost reductions nearing the end without additional rate cuts?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

No, so Matt, the way we typically operate with the deposit costs is we initially start by passing on the full amount to a lot of customers, and then over time, you have some customers that come back and say, hey, I got this other aid from this other bank, can you match it? And we never match it, but sometimes you meet in between. So there's other banks that follow different strategies where they wait a month or two and cut differently. So I would say, look, as we bring in DDA into the bank, our goal is to keep deposit costs in that low 2% area. We do have some CDs on the balance sheet that are repricing lower.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

So as that happens, we're probably retaining 80 to 90% of the CDs that we have at this point. We probably have around seven fifty million of CDs left, and the rates on those are probably three seventy five ish plus or minus. Those are probably repricing in the low threes at this point. So there is some, but I would say the best environment for us is if the Fed cuts 25 basis points every three months, we'll have an opportunity then to pass on that to customers on the other side. But I would say, absent that, given the Fed cuts that have happened, we still have a CD book that we're repricing down.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

But beyond that, most of the cuts are in there.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Got it. Okay. And then with all the tariff noise, have lending spreads, particularly on commercial real estate and C and I, have they changed at all to account for incremental risk? And what exposures on your book are you monitoring more carefully in light of the tariffs?

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yeah, look, it's a little too early. We haven't seen a lot of change in spreads on the book at this point, on commercial real estate in particular. Generally, we've done a deep dive into the portfolio. Look, we don't have a lot of importexport or manufacturing. We don't have a lot of retail.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

The things that or consumer for that matter that you would typically be concerned with. And it's a little early to see how it all plays out within the general economy, whether it's in the service industry or construction. Those are the areas that we're looking at very closely and monitoring. We're looking at line usage and things of that nature, but it's a little early yet.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Okay. Next one for me is just that we're we're just over the two year mark for the signature failure. Is that a significant milestone in any way? I I'm not thinking in terms of employee lockup agreements. Are there gonna be more opportunities this year to hire teams and individuals in the wake of that?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

No, I don't think so, Matt, in terms of specific lockup agreements. I mean, I can't comment on what the surviving bank there is doing. But I think for us, we identified early on what markets we wanted to augment. Obviously, there was certain areas of Long Island that we wanted to expand into, Staten Island, Westchester. So for us, it's more market based and who works for the business model that we have.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

There's still a lot of talented people over there. There's talented people at other banks, too. If you look at the hires that we've had year to date, they've come from multiple banks, right? It's not been just from one bank. So I think that the opportunity that was there two years back doesn't exist anymore, but there are talented people across the board here.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

And I think as they see the success that we've had, we're getting a lot of incoming calls going forward, not just from that bank, but from other banks as well.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Understood, okay. Two other quick ones for me. I don't know if I if you addressed it in your opening comments, Avi. Could you touch on the fee income guide for the year? I think it was 40 to 42,000,000.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Does that does that still hold?

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah. So this quarter, Matt, we didn't have any swap fee revenue. It was pretty close to zero. A lot of the deals got pushed to May and June type timeframe. So if you took the Q1 number and you assume there was some moderate level of swaps in there, we would have been pretty close to that 40,000,000 to $42,000,000 guide for the full year.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

So we can still keep that for the full year at this point.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

Okay. And then you had mentioned just strong capital levels, particularly your CET1 ratio. Curious your thoughts on buybacks with the stock down where it is and potentially a slower growth environment. That's all I had. Thank you.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Yeah, look, I mean, the corporate finance view is to be buying back stock at this point significantly. However, I just think given the overall environment, uncertainty with tariffs, things like it's important to have that, especially as we have this loan pipeline that we're looking to close. I mean, Tom's come on board to help us build out the C and I portfolio. So having that little bit of excess capital is helpful right now. The other marker that we've set out there is to get our CRE ratio into the low 400s.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

So we made further progress this quarter. We're probably at four forty at the end of the quarter. So we'd like to see that decline a little bit as well. So you put that all together, we feel good with where we're at. At some point, in latter half of this year, into 2026, we'll probably revisit the buyback piece.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

But it's more from an optics and managing the environment as opposed to the intrinsic value in the stock.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Yes. And clearly, with our pipeline and the teams we brought on board and the individual we brought on board, think there's going to be an opportunity to deploy that capital in meaningful way and improve earnings as well.

[Matt Breese, Managing Director & Research Analyst at Stephens Inc]

That's all I had. Thank you.

[Avinash Reddy, Senior EVP & CFO at Dime Community Bancshares]

Thanks, Matt. Appreciate it.

[Operator]

Thank you. And I'm currently showing no further questions at this time. I'd like to turn the call back over to Stuart Leveau for closing remarks.

[Stuart Lubow, President & CEO at Dime Community Bancshares]

Thank you, Shannon, and thank you all for joining us today and to our dedicated employees and shareholders for their continued support. We look forward to speaking with you after the second quarter.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Stuart Lubow, President & CEO
• Avinash Reddy, Senior EVP & CFO

Analysts

• Steve Moss, Director at Raymond James Financial
• Mark Fitzgibbon, Head of FSG Research at Piper Sandler Companies
• Christopher O'Connell, Director at Keefe, Bruyette & Woods (KBW)
• Manuel Navas, MD & Senior Research Analyst at D.A. Davidson
• Matt Breese, Managing Director & Research Analyst at Stephens Inc