Dime Community Bancshares, Inc.

Good day and thank you for standing by. Welcome to the DIME Community Bank Shares first quarter earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Stuart LeBeau, President and CEO. Please go ahead.

Stuart LeBeau Thank you, Marvin, and thank you all for joining us this morning for our first quarter earnings call. With me today is Avi Reddy, our CFO. DIME has begun 2024 on solid footing and on a positive growth trajectory. In the first quarter, we grew core deposits by 19% on an annual basis, paid down our federal home loan bank borrowings by 41%, maintained solid asset quality, increased our risk-based capital ratios, prudently managed expenses, and importantly, saw our net interest margin expand in the month of March versus year-end and January levels. We have been active on the hiring front, and since the middle of March, we have added over 30 extremely talented revenue-producing bankers. I would like to provide some color on why these bankers joined Dime. As you know, the first group of bankers we hired in 2023 have been very strong advocates of Dime and have gotten the word out that Dime is the premier platform for talented bankers. They have seen firsthand how nimble we are as a bank, how our staff is aligned to make the customer experience outstanding, and how flat our organizational structure is. The bankers hired in 2023 have grown their deposit portfolios to approximately $600 million. Suffice to say, we have proved that our business model provides conducive environment for talented bankers to succeed. Secondly, our technology and treasury management systems are state-of-the-art and superior to all other local banks. We know this because all the groups that we recruited in 2024 did detailed demos of our systems and to a person, they were all significantly impressed. And our feedback from new customers has been outstanding. Finally, Dine's brand name and reputation in our local market is second to none. We have 60 branches from Montauk to Manhattan, and our reputation has always been that of a strong community bank. Customers like working with strong community banks where they have access to decision makers and get things done quickly. Four of the deposit groups that we hired are based in Brooklyn. One is based in the Five Towns area of Nassau County. We're also very excited to enter Westchester County, specifically White Plains. Westchester is a market we've looked at for a long time, and we finally found the right banker to lead our efforts there. In the first quarter, we closed the first health care loan in our new vertical. Our health care team is actively in the market at the moment, and our health care pipeline is robust at $150 million with a weighted average yield of 8%. We expect this vertical to contribute to our overall loan growth and aid in the diversification of our balance sheet. As I mentioned in our prior earnings call, this is an important component of our strategic plan. In summary, I am pleased that the investments that we've put into the business in 2023 are starting to pay off, and I am very optimistic about the hires we have just announced. Dinah has been navigating the macro environment well while simultaneously playing strategic offense and taking advantage of the opportunities in our market. With that, I will turn it over to Avi.

Thank you, Stu. Reported EPS was 41 cents per share. In line with our expectations, the NIM bottomed in January and expanded to 223 in the month of March. The exit NIM would have been even higher by around three basis points had we not carried some excess liquidity in February and March as a precaution given the disruption caused by a large regional bank in our footprint. We normalized our liquidity position towards the middle to the end of March, and as such, the second quarter should not have this liquidity-related drag going forward. We are cognizant of the overall environment and continue to manage expenses prudently. Our focus is on being as efficient as possible. Core cash operating expenses for the first quarter, excluding intangible amortization and extinguishment of debt, was 51.7 million, or down 3% versus the prior quarter. Non-interest income for the first quarter was 10.5 million. This included a gain on the sale of a branch that we did a sale lease back on. We had a $5 million loan loss provision this quarter. The allowance to loans increased to 71 basis points. In light of the overall environment, our posture as it relates to the balance sheet is to build capital methodically. This will in turn support our clients when they need it. Our common equity tier one ratio improved to 10%, which is an optically important benchmark in our mind. Our reported total capital ratio was 13.8%. Incorporating the full impact of AOCI, it would have been 13%. As you know, the focus these days is on capital with the AOCI impact, And in this regard, compared to banks between $10 and $100 billion of assets, our total capital ratio, inclusive of AOCI of 13%, would put us in the top third of our peers. Next, I'll provide some updated thoughts on our expense guide for 2024. For those who follow DIME closely, in 2023, we were able to absorb the cost of the new deposit gathering groups into our organization, along with the addition of various corporate staff to support them, by rationalizing expenses across the organization. As part of our 2023 efforts, we significantly expanded our treasury management and back office staff and intentionally built the bank for future expansion. As a result, we don't expect any meaningful additional staffing in corporate support areas to support the new hires we have made in 2024. Said differently, any expense bill in 2024 is primarily for revenue generating staff that is expected to pay for itself relatively quickly. At the start of the year, we had guided to a range of 210 to 212 million of core non-interest expense X intangible amortization. We are now increasing the guide to a range of 214 to 216 million. This represents the cost of all the new groups hired to date and is net of the benefits of additional bank-wide efficiency initiatives we have planned for 2024. On a standalone gross basis, we expect the new group hires to begin generating pre-tax income by the third quarter and be cumulatively breakeven inclusive of all the startup costs in the fourth quarter. Starting in 2025, they will contribute to growth in earnings and book value per share versus our prior standalone numbers without the 2024 new hires. With respect to our positioning on lending, our strategy is to ensure we continue to support our key clients and we continue to see growth in our business lending portfolio. Growth in the business portfolio will offset declines in multifamily and CREE where we are still servicing existing relationships. On an aggregate basis, we expect loans year over year to be up in the low single digits. With that, I'll turn the call back to Marvin, and we'll be happy to take your questions.