Dime Community Bancshares Q4 2025 Earnings Report

Dime Community Bancshares EPS Results

• Actual EPS: $0.79
• Consensus EPS: $0.70
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $0.42

Dime Community Bancshares Revenue Results

• Actual Revenue: $123.85 million
• Expected Revenue: $118.14 million
• Beat/Miss: Beat by +$5.71 million
• YoY Revenue Growth: N/A

Dime Community Bancshares Announcement Details

• Quarter: Q4 2025
• Date: 1/21/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 21, 2026
• Conference Call Time: 8:30AM ET

Dime Community Bancshares (NASDAQ:DCOM) is the parent company of Dime Community Bank, a community-focused commercial bank serving businesses, individuals and local organizations. The bank provides deposit accounts, commercial and residential real estate lending, multifamily and small-business financing, consumer loans, treasury and cash-management services, and wealth-management solutions.

Dime Community Bank’s market is concentrated primarily in Long Island and the New York City metropolitan area, including Brooklyn, Queens, and Manhattan. Through its branch network and digital banking services, the bank supports personal banking customers as well as commercial clients such as property owners, operating businesses, nonprofit organizations and municipalities.

The company traces its banking heritage to the 19th century and has expanded through organic growth and strategic combinations. Dime Community Bancshares was formed through the combination of Bridge Bancorp, the parent of Bridgehampton National Bank, and Dime Community Bancshares, the parent of Dime Community Bank, with the merger completed in 2021. The combined institution operates under the Dime Community Bank name and is led by President and Chief Executive Officer Stuart H. Lubow.

Dime Community Bancshares Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Core EPS was $0.79 in Q4, up 88% year-over-year, driven by record total revenue of $124 million and a reported NIM of ~3.11% (3.09% excluding prepayment fees).
• Positive Sentiment: Core deposits grew about $1.2 billion year-over-year with non-interest-bearing DDA at ~31%, and the company reports a strong liquidity position and lower cost of deposits (185 bps) to fund loan opportunities.
• Positive Sentiment: Business loans increased roughly $500 million YoY (about $175 million linked-quarter) with a loan pipeline >$1.3 billion at ~6.25–6.5%; management expects sizable backbook repricing (~$1.4B in 2026 and $1.7B in 2027) that could add ~20–25 bps to quarterly NIM across 2026–27.
• Neutral Sentiment: For 2026 management guides to low-single-digit loan growth (flat H1, growth H2), core cash operating expenses of $255–257 million, a target to return to a sub-50% efficiency ratio, and plans to reduce CRE concentration to the mid-350% area while maintaining strong capital (CET1 ~11.66%).

Presentation

[Operator]

Good day, and welcome to the Dime Community Bancshares, Inc. Q4 earnings call. At this time, all participants are in listen-only mode. After the speakers prepare remarks, we will conduct a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. 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. Private Securities Litigation Reform Act of 1995.

[Operator]

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.

[Operator]

During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. 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 reconciliations to GAAP, please refer to today's earnings release. At this time, I would like to turn the call over to Stuart Lubow, President and CEO. You may begin.

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

Good morning. Thank you, Michelle, and thank you all for joining us this morning for a quarterly earnings call. With me this morning, as usual, are Avi Reddy, our Chief Operating Officer and CFO, and also Tom Geisel, our Chief Commercial Officer. Today, I will touch upon the progress we made in 2025 as we executed on all aspects of our strategic plan.

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

I will then touch upon some bank-wide goals for 2026. Tom will talk about the progress we made in building out our commercial banking platform and industry verticals. Avi will then provide some details on the fourth quarter and guidance for 2026. Our core earnings power continues its upward trajectory. Core EPS was $0.79 for the fourth quarter, representing an 88% increase versus the prior year. The growth in EPS was driven by record total revenues of $124 million for the fourth quarter.

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

The NIM was up 10 basis points, and average earning assets were up over $650 million on a linked-quarter basis. All our growth has been organic, built by our existing bankers and new hires. As you know, we do not have any purchase accounting in our numbers that tends to inflate results at banks that have engaged in M&A. Core deposits were up $1.2 billion on a year-over-year basis.

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

Deposit growth has been strong across all our channels. In addition, we have been successful in continuing to drive down our cost of funds and growing our non-interest-bearing DDA to 31% of deposits. As such, we have a core funded balance sheet with a significant liquidity position, which will allow us to take advantage of lending opportunities as they arise.

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

Speaking of loans, we continue to execute on our stated plan of growing business loans and managing our CRE concentration ratio, which is now below 400%. Business loans grew over $175 million on a linked-quarter basis and over $500 million on a year-over-year basis. We were very happy to be able to bring Tom Geisel in in the first quarter of 2025 and have already made great progress in terms of building out various industry verticals that Tom will talk about more in his remarks.

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

Our loan pipeline continues to be strong and is more than $1.3 billion, with a weighted average rate between 6.25 and 6.5. As we mentioned on last quarter's call, NPAs moved down nicely in the fourth quarter and now represent only 34 basis points of total assets. Multifamily credit continues to be very strong with zero NPAs.

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

Our capital levels are best in class with a total capital ratio of more than 16%. Disruption in our marketplace remains very high. As you saw, there was another merger transaction where an out-of-state bank bought a local thrift at year-end. We were not involved in this transaction in any way. We remain focused on our organic growth strategy and hiring teams.

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

The environment for organic growth continues to be very strong with an extremely target-rich environment, and the execution of our strategy is now showing up in our quarterly results. Our Manhattan branch is up and running, and we expect the same for our Lakewood and Locust Valley locations toward the end of the first year. As we look forward to 2026, the momentum in our business continues to be strong, and we are focused on the following.

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

As we have discussed previously and as Avi will mention in his remarks, we have a significant amount of repricing assets in the next two years, which provides a tailwind for revenue growth. As the loan repricing story plays out, Dime's inherent earnings power will be displayed. In 2025, we put in place the building blocks to create a more diversified balance sheet and loan portfolio. I expect to see significant growth in both in 2026.

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

As we grow revenues faster than expenses, we expect to operate at a sub-50% efficiency ratio. Being efficient has always been a hallmark of Dime, and we expect to return to the sub-50% level in 2026. Lastly, we continue to attract talented bankers who can help us grow core deposits and grow business loans. In conclusion, Dime has clearly differentiated our franchise from our local competitors as it relates to our organic growth.

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

We have an outstanding deposit franchise, strong liquidity, and robust capital, which bodes well for the future, driven by significant loan repricing opportunities over the next two years. I want to end by thanking all our dedicated employees for their efforts in 2025 and in positioning Dime as the best commercial bank in the New York Metro Area. With that, I will turn it over to Tom.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Thank you, Stuart. And good morning. In my prepared remarks, I'll provide some background and color on our commercial banking initiatives. As many of you know, I was part of the leadership team at Sterling that helped transform that balance sheet from $5 billion to $25 billion diversified commercial bank balance sheet. When I began speaking with Dime in the second half of 2024, it was apparent that Dime had a number of strengths that were attractive in recruiting talented bankers.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

First, an entrepreneurial and growth mindset, which is valued by commercial bankers. Second, the best deposit franchise in Metro New York, both from a cost perspective as well as a growth profile, which can be utilized for funding. Third, the back office was staffed with strong managers who had experience managing larger and more diversified commercial portfolios.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

And finally, Dime had developed a reputation in the marketplace as a company where talent wanted to work. It was perceived and is perceived as a winner. Even before I started, we outlined a strategy as to which industries and geographies we wanted to strengthen, build out, and focus on. Our goal was to create a platform that had all the industry expertise of a $50-$100 billion bank, but that operated nimbly like a $15 billion bank with access to senior management and quick decision-making.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Of note, right around the time I joined, we added a new Chief Credit Officer, Rob Rowe, who was previously the Chief Credit Officer at Sterling. Since I came on board in February, we have added the following capabilities: Fund Finance, which is exclusively focused on capital call lines. Lender Finance, our focus is on lending to institutions that are focused on business credit. We do not intend to be active on the consumer credit side.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Mid-Corporate, our focus is on companies that are larger than a typical middle-market company. Sponsor Finance, our focus is on non-cyclical industries with good risk-adjusted returns supporting sponsors and family offices. Syndications, we added a team to focus on syndicating self-originated loans, allowing us to service larger clients while staying within our established risk tolerances. And lastly, geographic expansion.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Dime has always had a dominant presence on Long Island, and we are focused on expanding that to Manhattan and New Jersey. For example, in the fourth quarter, we hired a well-known banker to cover middle-market relationships in New Jersey. All of our commercial bankers and industry specialists are focused on direct relationship lending with the occasional club deal to manage our exposure.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

We're not building a business based on SNCs or participations as many small to medium-sized banks often do. The bankers that we have hired have added significant industry knowledge and a high level of expertise to Dime's offerings. As we look to 2026, each of these new commercial banking teams will contribute to loan growth and operating leverage. We also have our eyes on one or two industries where we already have a presence, but where we could add some additional depth. With that overview, I'll turn it over to Avi for his prepared remarks.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Thank you, Tom. Core EPS for the fourth quarter was $0.79 per share. This represents an 88% year-over-year increase. Core EPS excludes the impact of severance, which was approximately $2.4 million on a pre-tax basis, and a couple of discrete tax items, which were $2.7 million. These items have been described in the GAAP to non-GAAP reconciliation tables in our earnings release.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Core pre-tax pre-provision net revenue of $61.5 million for the fourth quarter of 2025 represents approximately 163 basis points of average assets. The reported fourth quarter NIM increased to 311 basis points. We had approximately two basis points of benefit from prepayment fees. Excluding prepayment fees, the fourth quarter NIM would have been 309 basis points. As a reminder, the third quarter NIM excluding prepayment fees was 298 basis points. Total deposits were up approximately $800 million versus the prior quarter. We saw strong inflows across all of our major channels.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Deposit growth for the fourth quarter included approximately $100 million of seasonal Tax Receiver municipal deposits that typically arrive in the month of December and leave in mid-January, and approximately $225 million of deposits from a municipality tied to a bond offering that we expect to leave the bank at the end of February.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Excluding these items and typical seasonality in our branch network on the East End of Long Island, core deposit growth for the fourth quarter would have been closer to $400 million. Similarly, the overall balance sheet size and cash position was elevated at quarter end by approximately $400 million due to the previously mentioned municipal deposits and seasonality. Our cost of total deposits was 185 basis points in the fourth quarter, down 24 basis points versus the prior quarter.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

By maintaining a strong focus on cost of funds management, our NIM has now increased for a seventh consecutive quarter and has surpassed the 3% mark. We continue to have catalysts for growing our NIM over the medium to long term, including a significant backbook loan repricing opportunity that I will talk about later. Core cash operating expenses, excluding intangible amortization of $62.3 million for the fourth quarter, was below our guidance of approximately $63 million.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Non-interest income of $11.5 million was above our fourth quarter guidance of approximately $10 to $10.5 million. The loan loss provision declined to $10.9 million, and the allowance to loans increased to 91 basis points, which is within our stated range of operating between 90 basis points and 1%. Capital levels continue to grow, and our common equity tier 1 ratio grew to 11.66%.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Having best-in-class capital ratios versus our local peer group is a competitive advantage and will allow us to take advantage of opportunities as they arise and speaks to our strength and ability to service our growing customer base. Next, I'll provide some guidance for 2026.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

As I mentioned previously, excluding prepayment fees, the NIM for the fourth quarter would have been 3.09%. We would use this as a starting point for modeling focuses going forward. We expect modest NIM expansion in the first half of the year and more substantial NIM expansion in the back half of the year as the pace of the backbook loan repricing picks up.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

We believe our large cash position is a competitive advantage that will allow us to take advantage of lending opportunities as they arise and will help us create a sustainable NIM that is not subject to cyclical moves based on the trajectory of short-term rates. Given our current cash position, every future 25 basis point reduction or increase in short-term interest rates will not have more than a two to three basis point impact on our NIM. Our NIM expansion in future quarters will be driven more by the backbook loan repricing as well as core deposit growth and business loan growth.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

To give you a sense of the significant backbook repricing opportunity in our adjustable and fixed-rate loan portfolios, for the full year 2026, we have approximately $1.4 billion of adjustable and fixed-rate loans across the loan portfolio at a weighted average rate of 4% that either reprice or mature in that time frame.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Assuming a 250 basis points spread on those loans over the forward five-year treasury, we could see a 20 basis points increase in the quarterly NIM by the end of 2026 from the repricing of these loans. As we look into the backbook for 2027, we have another $1.7 billion of loans at a weighted average rate of 4.25% that will lead to continued NIM expansion in 2027.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Assuming a 250 basis point spread on those loans over the forward five-year treasury, we could see another 20-25 basis point increase in the quarterly NIM by the end of 2027. 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. Now that our NIM is at the $310 level, the next marker in front of us is $325, and after that, $350.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

With respect to the balance sheet, we expect a relatively flat balance sheet for the first half of 2026. The first quarter of the year is typically seasonally slow, and there's always a rush to get loans closed by year-end. In addition, we expect to continue to reduce our CRE concentration ratio lower to the mid-350% area, driven by a reduction in transactional multifamily and transactional CRE.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

This will offset the strong growth we are seeing on the business loan side. We expect to reach an inflection point on CRE balances probably in the third quarter of the year, and once we reach this inflection point, the overall balance sheet should start growing again at a mid-single-digit growth rate. If we put that all together, our point-to-point total loan growth estimate for 2026 is in the lowest single digits, with flatish balances in the first half of the year and growth in the second half of the year.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

For 2027, we are internally modeling mid-to-high single-digit end-of-year loan growth as business loans continue to grow and our industry verticals hit their stride. Next, I'll turn to expenses. We expect core cash operating expenses, excluding intangible amortization for 2026, to be between $255 million and $257 million.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

This includes the full-year impact of our de novo locations in Manhattan, Lakewood, and Locust Valley, and all the private and commercial banking teams that we hired throughout 2025. With respect to the provision for loan losses, we expect the next couple of quarters to be in the $10-$11 million area as we move towards the midpoint of our allowance range of between 90 basis points and 1%, and as we continue to aggressively work down NPAs and classified assets.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

For the second half of the year, we expect provisioning levels to trend down into the single digits and just cover charge-offs. Turning to non-interest income, we expect full year 2026 to be between $45 and $46 million. Factors that will determine the individual quarters will be the timing of swap fee income, which can be hard to predict, as well as SBA fees and title revenue.Finally, we expect the tax rate for the full year of 2026 of approximately 28%. With that, I'll turn the call back to Michelle, and we'll be happy to take your questions.

[Operator]

Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. And our first question comes from Mark Fitzgibbon with Piper Sandler. Your line is open.

[Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler]

Hey, guys. Good morning and nice quarter.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Hi, Mark. Thanks.

[Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler]

Maybe first question is for Tom. Tom, could you share with us what industries accounted for the nice sequential quarter growth in the business loan balances this quarter, just to give us a sense where that growth's coming from?

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

Yeah. All of those verticals are pretty much new, so we started out at a base of zero, right? So I think Stu mentioned we grew business loans about $500 million year over year. About 400 of that came from these specialty groups. That includes healthcare, lender finance, fund finance, sponsor, and not-for-profit.

[Tom Geisel, Chief Commercial Officer at Dime Community Bancshares]

The business that has probably most of the momentum in 2025 was healthcare. I think you know that Dime entered into healthcare probably about two years ago, and that portfolio has built over time. So I would say probably out of the $500 million, about $400 million was the new specialized industries, and probably 50% of that was healthcare.

[Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler]

Okay. And then secondly, I was curious, how much business do you have today roughly? And I won't hold any exact numbers, but roughly in New Jersey, loans and deposits, sort of the $10 billion of loans and call it $12 billion of deposits, how much of that is sort of Jersey domiciled?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah, Mark. So it's probably around somewhere between eight% to 10% of our portfolio is Northern New Jersey. A lot of clients that we followed over there. I'd say on the deposit side, it's less substantial than that. I mean, we're probably running at a 15%-20% deposit-to-loan ratio for New Jersey. But in terms of overall loans, I'd say somewhere between eight% and 10%. But that's something that's been consistent at the bank for the last four or five years since Stu got to the bank. As you know, Stu ran a couple of banks in New Jersey, and a lot of relationships have followed since he got to Dime back in 2017.

[Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler]

Okay. The last question I had, SBA loan sale gains were strong this quarter. I would have expected maybe they'd be a bit less given the government shutdown in 4Q. I guess I'm curious, are you sort of fully caught back up on the pipeline for these loans, or maybe any thoughts you have on what 1Q activity levels might look like?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah. I'd say the latter, Mark. We're probably caught up at this point. We were very close to recognizing some of these gains in Q3, and then once the government opened up, we kind of did that. So it's kind of hard to predict that line. I think that one and the swap fee line, it's just up and down, basically. So I wouldn't expect the first quarter to be as large as Q4. Q4 was probably two quarters into one, basically, is how I'd characterize it.

[Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler]

Great. Thank you.

[Operator]

Thank you. Our next question comes from Steve Moss with Raymond James. Your line is open.

[Steve Moss, Managing Director at Raymond James]

Good morning. Maybe just on the deposit growth here, nice quarter for deposit growth, and I hear you obviously in terms of some of the municipal deposits. Just curious how you guys are, what the deposit pipeline kind of looks like, and kind of where are you pricing those deposits these days?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah. So I'd say in terms of pricing, nothing's really changed there, Steve, where we've got a lot of influx of new deposits coming into the bank. So I'd say to get a new customer in the door, you probably got to offer high twos to low threes on a money market, but it's probably coming with 20%-30% DDA. So the all-in cost is probably in the low twos of stuff coming into the bank.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

The actual cost of deposits, the spot rate on deposits at the end of the year was $168. So that's lower than our overall cost of deposits, and that should help with the NIM going forward. I'd say just if you look back at our history, we just wanted to point out the seasonality just because we have a municipal business.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

We have an East End business, and then this quarter we had the one transactional municipal deposit that did come in. And so the point of that guidance was more along the lines of, "Don't use our average earning assets for Q4 as a proxy for Q1 and grow it off of that base. You probably have to take out $300 to 400 million." But over the course of the year, and if you look at year-over-year growth, we had $1 billion of core deposit growth last year. And I think Stu would attest to this as well, that our teams haven't really matured yet, and we continue to see the pace of account opening pick up, basically.

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

Yeah. I mean, just to give you a little color, I mean, those teams that we brought on at year-end crossed the $3 billion mark and opened up in total over 15,000 accounts. And we're still seeing monthly and quarterly growth in all our teams. So we're still very bullish on deposit growth. We just had a very outsized fourth quarter, very happy with it.

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

All the channels, both the commercial group, the private banking group, our retail bank, and our municipal group were all up. So we're excited about that and, as I said, very bullish. But the teams have really proven to be quite an asset, and we're still seeing quite a bit of new account opening. So we're expecting through this year continued growth in that market.

[Steve Moss, Managing Director at Raymond James]

Okay. Great. Really appreciate all that color there. My other question here, just on the 100% rent-regulated piece, I know that was about $500 million at the end of third quarter, and it came down pretty healthily, at a pretty good pace in the third quarter. Just kind of wondering where that is now, and if you have any color around the scheduled maturities over the next year or two for that book?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah. So, Steve, we didn't have a lot of maturities in that book in Q4, so it was relatively stable linked-quarter basis. It's kind of hard to go quarter over quarter for some of these items. The way we really look at it is the pre-2019 book and the post-2019 book, just because the stuff that was originated pre-2019 was prior to the rent-regulated rule changes, as you know.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

And so we look at that book. That book's around $350 million at year-end 2025. That book used to be $450 million a year ago, and that book was $500 million two years ago, right? So that's the path that we had our eyes the most on. That book is fully reset at this point.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

I think in terms of maturities and repricings in the entire multifamily book that's rent-regulated, so both the 100% rent-regulated and the majority rent-regulated book, maturities and repricings are around $250 million for 2026. That's probably split $150 million and $100 million between the 100% and the 50 to 99% bucket. So, look, we're not seeing any issues there.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

As loans come up for maturity, they're paying off. As loans come up for repricing, I'd say a bigger proportion of them are staying with us and paying market rates, basically. But I think you'll continue to see attrition in that book. The one thing we've always pointed out is it's a very granular book. We don't have any big loans in that portfolio.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

As opposed to the free market portfolio where you could see a few tens and fifteens in terms of size, in terms of credits. In terms of the rent-regulated book, it's very granular. So it's just going to take time for that to continue to wind down, but we're pretty comfortable with what we have right now.

[Steve Moss, Managing Director at Raymond James]

Okay. Great. I appreciate all the color there, and I'll step back in the queue. Thank you very much.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yep.

[Operator]

Thank you. Our next question comes from David Konrad with KBW. Your line is open.

[David Konrad, Managing Director of Equity Research at KBW]

Yeah. Thanks. Good morning. Just a follow-up question on the deposits. I know you had a lot of the municipality and seasonality this quarter, but non-interest-bearing deposits were almost 31% mix. Where do you think 2026 will look like in terms of the mix of deposits, in terms of non-interest-bearing deposits?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah. Look, Dave, if you go back in time, this company had a non-interest-bearing deposit pace somewhere between 35% and 40% when we completed our merger. Obviously, some of that was tied to PPP, and then we came all the way back down to 25%, right? So I'd say the starting point really should be in 2023, once you saw deposits leave the system, we were at 25%.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

We've built that up to 30% to 31% right now. I think we'd like to continue growing that over time. What we've really tried to do with the deposit base is focus on low-cost deposits, and so I think what we really try to manage to is getting the overall cost of deposits down, and right now, like I said, it's $168 plus or minus, the spot cost over there.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

But we're not really bringing on new relationships to the bank unless they bring us their full operating accounts and have 20%-30% DDA, right? So I think at a minimum, seeing a floor of around 30% is probably reasonable, and we'd like to have that ratio eke up slowly over time.

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

Yeah. And you should note that, again, getting back to the teams, that $3 billion balance that they have, 38% of that balance is DDA. So, I mean, they really focus on the DDA side. And obviously, while quarter-end was slightly higher due to some of the municipal deposits, those were not DDA deposits. Those were money market and whatnot. So I think there's a good chance that we're going to see 31% move up nicely during the year. And really, that's what we've been focusing on with our new team hires as well.

[David Konrad, Managing Director of Equity Research at KBW]

Great. Thank you.

[Operator]

Thank you. As a reminder, to ask a question, please press star 11. And our next question comes from Matthew Breese with Stephens Inc. Your line is open.

[Matthew Breese, Managing Director and Research Analyst at Stephens]

Hey, good morning. I wanted to focus first maybe on just the cash and then securities. Obviously, I heard you in your opening comments, but could you give us just some better idea of what the timeline and strategy is for deploying that cash? And what level do you think is kind of the "normalized level"?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yeah. So there's no specific timeline, Matt, in terms of us rushing out to buy securities. We probably bought around $150 million in the fourth quarter. We're looking at rates consistently. I think we like having the flexibility on the balance sheet, like I said at the start. What it really does is it creates a neutral balance sheet that's not tied to short-term rates, right?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Over time, as we make more business loans, have more floating-rate assets, that automatically will take care of the ALM profile of the bank. But in the near term, it just helps us having cash in that we don't have to go out and hedge the balance sheet in different ways. So I don't see that cash balance coming down significantly in the near term, absent some of the seasonality that I talked about in Q4.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

I think if you read between the lines on the loan growth, we said loan growth's probably flat for the first half of the year and then starts growing in the second half of the year. So in terms of use of cash, in terms of loans, starting the second half of the year, there will be a use of cash for loans.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

But in the first half of the year, it's going to be in cash, and we're going to look at the market for securities and whether there's an opportunity to add some. We will, but we're not running out to put $500 million to work or $750 to work overnight in something. We're building the balance sheet more for the longer term, and we're pretty happy with the liquidity position and our loan-to-deposit ratio.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

I mean, it's in the mid-80s at this point, which is very consistent with what a national bank operates at. Obviously, the banks in our local peer group are much more overlent and somewhere between 90% and 100%. But I think we're comparing ourselves really to a national bank, and we like the fact that we have this excess liquidity at this moment.

[Matthew Breese, Managing Director and Research Analyst at Stephens]

Okay. I appreciate that. And then you'd mentioned in there adding floating-rate loans. Could you just give me an update of somewhere, I'm sorry, where floating-rate loans stand today as a percentage of total loans? These are loans priced off of SOFR or prime, and the expectation for a year from now?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Sure. So, look, I think in terms of the new business and Tom's verticals, a majority of that is floating rate. So if you think about the fund finance business, that's a floating-rate portfolio. When we're doing healthcare loans, those are priced off of SOFR. So anything coming on the books is likely more floating rate than fixed rate, right? Right now, floating rate's probably somewhere between 35%-40% of the balance sheet. Fixed is probably around 25%, and adjustable is probably the difference over there.

[Matthew Breese, Managing Director and Research Analyst at Stephens]

Got it. Okay. And then could you just comment? Prepayment activity in 2025 was a big headwind for commercial real estate multifamily growth. What did you see in the fourth quarter, and do you feel like there's some light at the end of that tunnel? Should we see or expect prepayment activity to start to decline?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Look, I think it really depends, and it's loan by loan, and it's whether we want to be in the market or not in the market for that type of asset, right? And I think our guidance was we're focused on getting the CRE ratio to the mid-350s by maybe exiting some transactional multifamily and transactional CRE that doesn't have deposits, right?

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Third quarter, we probably saw payoff rates in the 20%-25% area. In the fourth quarter, it was probably 15%, right? If you look over the cycle, it's somewhere between 15%-20%. So I think short-term rates probably have to drop a little bit more for there to be a big payoff wave over there. Right now, it's kind of working in our favor because our goal is to get our CRE ratio down to the mid-350s.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

That being said, for relationship CRE that has deposits, we're very competitive with our rates, and we're able to retain them and their core customers at the bank, so I would delineate it between transactional and relationship CRE, and on the relationship CRE side, I think we are seeing pretty strong retention.

[Matthew Breese, Managing Director and Research Analyst at Stephens]

Great. Appreciate it. Just last one for me. The muni deposit outflows you talked about, what categories of deposits will that impact? That's all I had. Thanks.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yep. So the $225 million that I talked about and the Stu mentioned, that's an interest-bearing deposit. It's probably in the 3% area plus or minus. So that's interest-bearing. Some of the tax receiver money that comes in, that's in the DDA piece. So that's probably called $60 million-$70 million over there. So it's a split of categories, more of it in the interest-bearing side than on the non-interest-bearing side.

[Matthew Breese, Managing Director and Research Analyst at Stephens]

Thank you.

[Avinash Reddy, COO and CFO at Dime Community Bancshares]

Yep.

[Operator]

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

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

Thank you, Michelle, and thank you to all our dedicated employees and our shareholders for their continued support. We look forward to speaking with you at the end of the first quarter.

[Operator]

Thank you for your participation. You may now disconnect. Everyone, have a great day.

Participants

Executives

• Avinash Reddy, COO and CFO
• Stuart Lubow, President and CEO
• Tom Geisel, Chief Commercial Officer

Analysts

• David Konrad, Managing Director of Equity Research at KBW
• Mark Fitzgibbon, Managing Director and Head of FSG Research at Piper Sandler
• Matthew Breese, Managing Director and Research Analyst at Stephens
• Steve Moss, Managing Director at Raymond James