Dime Community Bancshares, Inc. Q2 FY2025 earnings call

• Core earnings power increased significantly; core pretax pre-provision income was $49 million in Q2 2025 vs $28 million a year ago.
• Core deposits up $1.2 billion YOY, deposit teams hired since 2023 grew portfolios to ~$2.2 billion.
• NIM increased for the fifth consecutive quarter, approaching 3%, with catalysts like back book repricing.
• Business loans grew over $110 million in Q2 and ~$370 million YOY; loan originations $450 million, pipeline $1.2 billion.
• Executed commercial lending diversification strategy with senior hires; expect verticals to contribute in Q4 and beyond.
• Made progress on regulatory approvals for new branches in Lakewood, NJ and Manhattan in Q4.

Core pretax pre-provision income was $49 million in Q2 2025, up from $28 million a year ago. Core ROA was 85 basis points. Core deposits increased by $1.2 billion year-over-year. Cost of total deposits was 2.09% in Q2. Business loans grew over $110 million in Q2 and $370 million (15%) year-over-year. Loan originations were $450 million for the quarter with a weighted average rate of ~7%, and the loan pipeline stood at $1.2 billion with a weighted average rate of ~6.85%.

• Excluding prepayment fees, Q2 NIM would have been 2.95%, using this as a starting point for modeling; expect gradual NIM increase in Q3 with more pronounced expansion in Q4 as asset repricing unfolds.
• Back book repricing opportunity: ~$1.95 billion of loans reprice or mature in H2 2025 and 2026, potentially increasing NIM by 30 basis points; ~$1.7 billion of loans in 2027 will continue NIM expansion.
• If Fed cuts rates, expect ~5 basis points NIM expansion per 25 basis point cut, assuming deposit and loan behavior hold.
• Core cash noninterest expense guidance for Q3 2025 (excluding intangible amortization) is ~$61.5 million; swap fee income ~$0.5 million, total noninterest income ~$10.5 million.
• Effective tax rate expected to be between 27% and 27.5% for Q3.

• Disruption in local commercial lending market remains high.
• Impact of Mamdani narrow win on New York City multifamily rent-regulated book; no guarantee of specific outcome, but monitoring the situation.
• Uncertainty around market conditions and potential M&A targets being limited.

Q: Thomas Reid asked about DDA balances trajectory.

A: Avinash Reddy said nothing one-time, Stuart Lubow mentioned continued strength in retail and private banking with new accounts and growth.

Q: Thomas Reid asked about loan pipeline rate.

A: Avinash Reddy said it's around 20-25 basis points mix shift, not substantial.

Q: Mark Fitzgibbon asked about operating expenses guidance.

A: Avinash Reddy said core cash noninterest expense guidance for Q3 is ~$61.5 million excluding intangible amortization.

Q: Mark Fitzgibbon asked about impact of 25 basis point rate cut on NIM.

A: Avinash Reddy said historically around 5 basis points.

Q: Mark Fitzgibbon asked about hiring and expense growth.

A: Avinash Reddy said Q3 run rate for expenses, Stuart Lubow said comfortable with verticals and pipelines.

Q: Mark Fitzgibbon asked about M&A.

A: Stuart Lubow said interested in opportunities if present, but focused on organic growth.

Q: Mark Fitzgibbon asked about impact of Mamdani narrow win on multifamily book.

A: Stuart Lubow said monitoring, portfolio strong with granular loans.

Q: Matthew Breese asked about deposit costs.

A: Avinash Reddy said deposit costs reasonable, NIM expansion on asset repricing.

Q: Matthew Breese asked about new verticals loan pricing.

A: Avinash Reddy said primarily floating rate, spreads 225-300 over SOFR, low loss content.

Q: Matthew Breese asked about loan growth potential of verticals.

A: Avinash Reddy said medium to long term, verticals to be $300-500 million, mid to high single-digit growth long term.

Q: Manuel Navas asked about loan growth potential.

A: Avinash Reddy said mid to high single-digit growth long term, managing CRE ratio down.

Q: David Konrad asked about capital deployment.

A: Avinash Reddy said priority is organic growth, will reevaluate capital deployment later.

Q: Matthew Breese asked about cash, cash equivalents, liquidity deployment.

A: Avinash Reddy said not focused on buying securities near term, will deploy excess liquidity over 6-9 months for NIM improvement.