EDGAR 10-K Filing

Company CIK: 846617
Filing Year: 2025
Filename: 846617_10-K_2025_0000846617-25-000013.json

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ITEM 1. BUSINESS
Item 1. Business
General
Dime Community Bancshares, Inc. (the “Holding Company”) is engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank (the “Bank”). The Bank was established in 1910 and is headquartered in Hauppauge, New York. The Holding Company was incorporated under the laws of the State of New York in 1988 to serve as the holding company for the Bank. The Holding Company functions primarily as the holder of all of the Bank’s common stock. Our bank operations also include Dime Abstract LLC (“Dime Abstract”), a wholly-owned subsidiary of the Bank, which is a broker of title insurance services.
For over a century, we have maintained our focus on building customer relationships in our market area. Our mission is to grow through the provision of exceptional service to our customers, our employees, and the community. We strive to achieve excellence in financial performance and build long-term shareholder value. We engage in providing full service commercial and consumer banking services, including accepting time, savings and demand deposits from the businesses, consumers, and local municipalities in our market area. These deposits, together with funds generated from operations and borrowings, are invested primarily in: (1) commercial real estate (“CRE”) loans; (2) multi-family mortgage loans; (3) residential mortgage loans; (4) secured and unsecured commercial and consumer loans; (5) home equity loans; (6) construction and land loans; (7) Federal Home Loan Bank (“FHLB”), Federal National Mortgage Association (“Fannie Mae”), Government National Mortgage Association (“Ginnie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage-backed securities, collateralized mortgage obligations and other asset backed securities; (8) U.S. Treasury securities; (9) New York State and local municipal obligations; (10) U.S. government-sponsored enterprise (“U.S. GSE”) securities; and (11) corporate bonds. We also offer the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) programs, providing multi-millions of dollars of Federal Deposit Insurance Corporation (“FDIC”) insurance on deposits to our customers. In addition, we offer merchant credit and debit card processing, automated teller machines, cash and treasury management services, escrow account services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts. We also offer investment services through Dime Financial Services LLC, which offers a full range of investment products and services through a third-party broker dealer. Through its title insurance subsidiary Dime Abstract, the Bank acts as a broker for title insurance services. Our customer base is comprised principally of small and medium sized businesses, municipal relationships and consumer relationships.
As of December 31, 2024, we operated 62 branch locations throughout Long Island, the New York City boroughs of Brooklyn, Queens, Manhattan, Staten Island and the Bronx, and Westchester County.
Human Capital Resources
Demographics and Culture
As of December 31, 2024, we employed 887 full-time equivalent employees. Our employees are not represented by a collective bargaining agreement. Our culture in the workplace encourages employees to care about each other, the communities they serve, and the work they do. We believe strong community ties, customer focus, accountability, and development of the communities in which we operate will have a favorable long-term impact on our business performance. Our employees are passionate and empowered to build relationships and provide customized banking solutions to the communities we serve. We believe in hiring well-qualified people from a wide range of backgrounds who align to values like integrity, innovation, and teamwork. As an equal opportunity employer, our decisions to select and promote employees are unbiased as we seek to build a diverse and inclusive team of employees.
Labor Policies and Benefits
We offer our employees a comprehensive benefits package that will support, maintain, and protect their physical, mental, and financial health. We sponsor various wellness programs that promote the health and wellness of our employees.
Training, Development and Retention
We are committed to retaining employees by being competitive in providing cash and non-cash rewards, benefits, recognition, and professional development opportunities. We offer an 8-week summer internship program through local colleges that provide students with valuable experience in the professional fields they are considering as career paths. It also provides a post-graduation pipeline of future employees. In addition, we maintain equity incentive plans under which we may issue shares of our common stock. Refer to Note 17. “Stock-Based Compensation” of the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further details of our equity incentive plans. We promote career development and continuing education by offering internal training programs and tuition reimbursement for programs that develop skills related to our business.
Competition and Principal Market Areas
All phases of our business are highly competitive. We face direct competition from a significant number of financial institutions operating in our market area, many with a statewide or regional presence, and in some cases, a national presence. There is also competition for banking business from competitors outside of our market areas. Most of these competitors are significantly larger than us, and therefore have greater financial and marketing resources and lending limits than us. The fixed cost of regulatory compliance remains high for community banks as compared to their larger competitors that are able to achieve economies of scale. We consider our major competition to be local commercial banks as well as other commercial banks with branches in our market area. Other competitors include savings banks, credit unions, mortgage brokers and other financial services firms, such as investment and insurance companies. Increased competition within our market areas may limit growth and profitability. The title insurance subsidiary also faces competition from other title insurance brokers as well as directly from the companies that underwrite title insurance. In New York State, title insurance is obtained on most transfers of real estate and mortgage transactions.
Our principal market area is Greater Long Island, which includes the counties of Kings, Queens, Nassau and Suffolk, and Manhattan. Industries represented across the principal market areas include retail establishments; construction and trades; restaurants and bars; lodging and recreation; professional entities; real estate; health services; passenger transportation; high-tech manufacturing; and agricultural and related businesses. Given its proximity, Long Island’s economy is closely linked with New York City’s and major employers in the area include municipalities, school districts, hospitals, and financial institutions.
Taxation
The Holding Company, the Bank and its subsidiaries, report their income on a consolidated basis using the accrual method of accounting and are subject to federal taxation as well as income tax of the State and City of New York, and the State of New Jersey. In general, banks are subject to federal income tax in the same manner as other corporations. However, gains and losses realized by banks from the sale of available-for-sale securities are generally treated as ordinary income, rather than capital gains or losses. The taxation of net income is similar to federal taxable income subject to certain modifications.
Regulation and Supervision
Dime Community Bank
The Bank is a New York State-chartered trust company and a member of the Federal Reserve System (a “member bank”). The lending, investment, and other business operations of the Bank are governed by New York and federal laws and regulations. The Bank is subject to extensive regulation by the New York State Department of Financial Services (“NYSDFS”) and, as a member bank, by the Board of Governors of the Federal Reserve System (“FRB”). The Bank’s deposit accounts are insured up to applicable limits by the FDIC under its Deposit Insurance Fund (“DIF”), and the FDIC has certain regulatory authority as deposit insurer. A summary of the primary laws and regulations that govern the Bank’s operations are set forth below.
Loans and Investments
The powers of a New York commercial bank (which include, for this purpose, trust companies such as the Bank) are established by New York law and applicable federal law. New York commercial banks have authority to originate and purchase any type of loan, including commercial, commercial real estate, residential mortgage, and consumer loans. Aggregate loans by a state commercial bank to any single borrower or group of related borrowers are generally limited to 15% of the Bank’s capital and surplus, plus an additional 10% if secured by specified readily marketable collateral.
Federal and state law and regulations limit the Bank’s investment authority. Generally, a state member bank is prohibited from investing in corporate equity securities for its own account other than the equity securities of companies through which the bank conducts its business. Under federal and state regulations, a New York state member bank may invest in investment securities for its own account up to a specified limit depending upon the type of security. “Investment Securities” are generally defined as marketable obligations that are investment grade and not predominantly speculative in nature. Applicable regulations classify investment securities into five different types and, depending on its type, a state member bank may have the authority to deal in and underwrite the security. New York state member banks may also purchase certain non-investment securities that can be reclassified and underwritten as loans.
Lending Standards
The federal banking agencies adopted uniform regulations prescribing standards for extensions of credit that are secured by liens on interests in real estate or made for the purpose of financing the construction of a building or other improvements to real estate. Under these regulations, all insured depository institutions, like the Bank, adopted and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures, and documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the Interagency Guidelines for Real Estate Lending Policies that have been adopted by the federal bank regulators.
Federal Deposit Insurance
The Bank is a member of the DIF, which is administered by the FDIC. Our deposit accounts are insured by the FDIC. The deposit insurance available on all deposit accounts (for each depositor) is $250,000 per depositor for each account ownership category.
The FDIC assesses insured depository institutions to maintain the DIF. Under the FDIC’s risk-based assessment system, institutions deemed less risky pay lower assessments. Assessments for institutions with $10 billion or more of assets are primarily based on a scorecard approach by the FDIC, including factors such as examination ratings, financial measures, and modeling measuring the institution’s ability to withstand asset-related and funding-related stress and potential loss to the DIF in the event of the institution’s failure. The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with total assets of more than $10 billion is 2.5 to 42 basis points, effective January 1, 2023. In 2023, the FDIC approved a final rule to implement a special assessment to recover the loss to the DIF associated with the closures of Silicon Valley Bank and Signature Bank, which the Bank continues to pay.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order, rule or condition imposed by the FDIC. The Company does not know of any practice, condition or violation that might lead to termination of deposit insurance.
Capitalization
Federal regulations require FDIC insured depository institutions, including state member banks, to meet several minimum capital standards: a common equity tier 1 capital to risk-based assets ratio of 4.5%, a tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a tier 1 capital to total assets leverage ratio of 4.0%. The existing capital requirements were effective January 1, 2015 and are the result of a final rule implementing regulatory
amendments based on recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the “Dodd-Frank Act”). Common equity tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity tier 1 and additional tier 1 capital. Additional tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes tier 1 capital (common equity tier 1 capital plus additional tier 1 capital) and tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock, mandatory convertible securities, and subordinated debt. Also included in tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of accumulated other comprehensive income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated into common equity tier 1 capital (including unrealized gains and losses on available-for-sale-securities). The Bank has exercised this opt-out election. Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.
In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by the regulations based on the risks believed inherent in the type of asset. Higher levels of capital are required for asset categories believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one-to-four family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
Safety and Soundness Standards
Each federal banking agency, including the FRB, has adopted guidelines establishing general standards relating to internal controls, information and internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation, fees, and benefits. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. The guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director, or principal shareholder.
In 2016, the federal regulatory agencies approved a proposed joint rulemaking to implement Section 956 of the Dodd-Frank Act, which prohibits incentive-based compensation that encourages inappropriate risk taking. In May 2024, several federal banking agencies reproposed the incentive compensation regulation, but the FRB did not endorse the 2024 proposal. In addition, the NYSDFS issued guidance applicable to incentive compensation in October 2016.
Prompt Corrective Action
Federal law requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For these purposes, the statute establishes five capital tiers: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
The FRB may order member banks which have insufficient capital to take corrective actions. For example, a bank which is categorized as “undercapitalized” would be subject to other growth limitations, would be required to submit a capital restoration plan, and a holding company that controls such a bank would be required to guarantee that the bank complies with the capital restoration plan. A “significantly undercapitalized” bank would be subject to additional restrictions.
Member banks deemed by the FRB to be “critically undercapitalized” would be subject to the appointment of a receiver or conservator.
Under the prompt corrective action requirements, insured depository institutions are required to meet the following in order to qualify as “well capitalized”: (1) a common equity tier 1 risk-based capital ratio of 6.5%; (2) a tier 1 risk-based capital ratio of 8.0%; (3) a total risk-based capital ratio of 10.0%; and (4) a tier 1 leverage ratio of 5.0%.
Dividends
Under federal law and applicable regulations, a New York state member bank may generally declare a dividend, without prior regulatory approval, in an amount equal to its year-to-date retained net income plus the prior two years’ retained net income that is still available for dividend. Dividends exceeding those amounts require application to and approval by the NYSDFS and FRB. In addition, a member bank may be limited in paying cash dividends if it does not maintain the capital conservation buffer described previously under “Capitalization.”
Liquidity
Pursuant to federal regulations, the Bank is required to maintain sufficient liquidity to ensure its safe and sound operation.
Branching
Subject to certain limitations, with approval of the FRB, New York state-chartered banks and trust companies can open their initial branches in other states by establishing a de novo branch at any location at which a bank chartered by that state could also establish a branch. Federal law also permits an interstate merger transaction involving the acquisition of a branch without the acquisition of the bank only if the law of the state in which the branch is located permits out-of-state banks to acquire a branch of a bank in such state without acquiring the bank.
Acquisitions
Under the federal Bank Merger Act, prior approval of the FDIC is required for the Bank to merge with or purchase the assets or assume the deposits of another insured depository institution. In reviewing applications seeking approval of merger and acquisition transactions, the FDIC will consider, among other factors, the competitive effect and public benefits of the transactions, the capital position of the combined organization, the risks to the stability of the U.S. banking or financial system, the applicant’s performance record under the CRA (see “Community Reinvestment”) and its compliance with fair housing and other consumer protection laws, and the effectiveness of the subject organizations in combating money laundering activities.
Privacy and Security Protection
The federal banking agencies have adopted regulations for consumer privacy protection that require financial institutions to adopt procedures to protect customers and their “non-public personal information.” The regulations require the Bank to disclose its privacy policy, including identifying with whom it shares “non-public personal information,” to customers at the time of establishing the customer relationship, and annually thereafter if there are changes to its policy. In addition, the Bank is required to provide its customers the ability to “opt-out” of: (1) the sharing of their personal information with unaffiliated third parties if the sharing of such information does not satisfy any of the permitted exceptions; and (2) the receipt of marketing solicitations from Bank affiliates.
The Bank is additionally subject to regulatory guidelines establishing standards for safeguarding customer information. The guidelines describe the federal banking agencies’ expectations for the creation, implementation and maintenance of an information security program, including administrative, technical and physical safeguards appropriate for the size and complexity of the institution and the nature and scope of its activities. The standards set forth in the guidelines are intended to ensure the security and confidentiality of customer records and information, and protect against anticipated threats or hazards to the security or integrity of such records and unauthorized access to or use of such records or information that could result in substantial customer harm or inconvenience.
Federal law additionally permits each state to enact legislation that is more protective of consumers’ personal information. There are periodically privacy bills considered by the New York legislature. Management of the Company cannot predict the impact, if any, of these bills if enacted.
Cybersecurity more broadly has become a focus of federal and state banking agencies, including during the regulators’ examinations. In March 2017, the NYSDFS issued regulations requiring financial institutions regulated by the NYSDFS, including the Bank, to, among other things, (i) establish and maintain a cyber security program designed to ensure the confidentiality, integrity and availability of their information systems; (ii) implement and maintain a written cyber security policy setting forth policies and procedures for the protection of their information systems and nonpublic information; and (iii) designate a Chief Information Security Officer. In November 2023, NYSDFS amended these regulations to include heightened governance requirements and an expansion of the breadth and depth of required policies and procedures, among other things.
Transactions with Affiliates and Insiders
Sections 23A and 23B of the Federal Reserve Act govern transactions between a member bank and its affiliates, which includes the Company. The FRB has adopted Regulation W, which comprehensively implements and interprets Sections 23A and 23B, and codifies prior FRB interpretations under those sections.
An affiliate of a bank includes, among other things, any company or entity that controls, is controlled by or is under common control with the bank. A subsidiary of a bank that is not also a depository institution or a “financial subsidiary” under federal law is generally not treated as an affiliate of the bank for the purposes of Sections 23A and 23B and Regulation W; however, the FRB has the discretion to treat subsidiaries of a bank as affiliates on a case-by-case basis. Section 23A and Regulation W limit the extent to which a bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such bank’s capital stock and surplus, and limit all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus. Section 23A and Regulation W also require that all “covered transactions” be on terms that are consistent with safe and sound banking practices. The term “covered transaction” includes the making of loans, purchase of assets, issuance of guarantees and other similar types of transactions. Further, most loans by a bank to any of its affiliates must be secured by collateral in amounts ranging from 100 to 130 percent of the loan amounts. In addition, under Section 23B and Regulation W, bank transactions with affiliates, including “covered transactions,” sales of assets, and the furnishing of services, must be on terms that are substantially the same, or at least as favorable, to the bank as those prevailing at the time for comparable transactions with or involving a non-affiliate.
A bank’s loans to its affiliates’ executive officers, directors, any owner of more than 10% of its stock (each, an insider) and entities controlled by such person (an insider’s related interest) are subject to the conditions and limitations imposed by Section 22(h) of the Federal Reserve Act and the FRB’s Regulation O implemented thereunder. Under these restrictions, the aggregate amount of the loans to any insider and the insider’s related interests may not exceed the loans-to-one-borrower limit applicable to national banks. All loans by a bank to all insiders and insiders’ related interests in the aggregate may not exceed the bank’s unimpaired capital and unimpaired surplus. With certain exceptions, loans to an executive officer, other than loans for the education of the officer’s children and certain loans secured by the officer’s residence, may not exceed the greater of $25,000 or 2.5% of the bank’s unimpaired capital and unimpaired surplus, and in no event can be more than $100,000. Regulation O also requires that any proposed loan to an insider or a related interest of that insider be approved in advance by a majority of the board of directors of the bank, with any interested director not participating in the voting, if such loan, when aggregated with any existing loans to that insider and the insider’s related interests, would exceed either $500,000 or the greater of $25,000 or 5% of the bank’s unimpaired capital and surplus. Generally, such loans must be made on substantially the same terms as, and follow credit underwriting procedures that are no less stringent than, those that are prevailing at the time for comparable transactions with other persons and must not present more than a normal risk of repayment or present other unfavorable features. An exception is made for extensions of credit made pursuant to a benefit or compensation plan of a bank that is widely available to employees of the bank and that does not give any preference to insiders of the bank over other employees of the bank.
Examinations and Assessments
The Bank is required to file periodic reports with and is subject to periodic examination by the NYSDFS and the FRB. Applicable laws and regulations generally require periodic on-site examinations and annual audits by independent public
accountants for all insured institutions. The Bank is required to pay an annual assessment to the NYSDFS to fund its supervision.
Federal law provides that institutions with more than $10 billion in total assets, such as the Bank, are examined by the Consumer Financial Protection Bureau (“CFPB”) as to compliance with certain federal consumer protection and fair lending laws and regulations.
Community Reinvestment Act
Under the federal Community Reinvestment Act (“CRA”), the Bank has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA requires the FRB, in connection with its examination of the Bank, to assess its record of meeting the credit needs of its community and to take that record into account in its evaluation of certain applications by the Bank. For example, the regulations specify that a bank’s CRA performance will be considered in its expansion (e.g., branching or mergers) proposals and may be the basis for approving, denying or conditioning the approval of an application. As of the date of its most recent CRA examination, on July 15, 2024, the Bank was rated “Outstanding” by the Federal Reserve Bank of New York.
On October 24, 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations. Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under three performance tests: Lending Test, Investment Test, and Service Test. The applicability date for the majority of the provisions set by the CRA regulations is January 1, 2026, and additional requirements are applicable under the regulations on January 1, 2027. On March 29, 2024, a federal court in the Northern District of Texas issued a preliminary injunction of the new CRA regulations, enjoining the federal banking agencies from enforcing the regulations against the plaintiff bank industry trade groups, and extending the regulations’ implementation dates day-for-day for each day the injunction is in place.
New York law imposes a similar obligation on the Bank to serve the credit needs of its community. New York law contains its own community invested-related provisions, which are substantially similar to federal law.
The Bank Secrecy Act and USA PATRIOT Act
The Bank Secrecy Act (“BSA”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) require the Bank to implement a compliance program to detect and prevent money laundering, terrorist financing, and crime. Together, the BSA and USA PATRIOT Act require the Bank to implement internal controls, conduct customer due diligence, maintain records, and file reports. The USA PATRIOT Act also required the federal banking agencies to take into consideration the effectiveness of controls designed to combat money laundering activities in determining whether to approve a merger or other acquisition application. Accordingly, if the Bank engages in a merger or other acquisition, its controls designed to combat money laundering would be considered as part of the application process. The Bank has established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and regulations implemented thereunder.
Dime Community Bancshares, Inc.
The Holding Company, as a bank holding company controlling the Bank, is subject to the Bank Holding Company Act of 1956, as amended (“BHCA”), and the rules and regulations of the FRB under the BHCA applicable to bank holding companies. We are required to file reports with, and otherwise comply with the rules and regulations of the FRB.
The FRB previously adopted consolidated capital adequacy guidelines for bank holding companies structured similarly, but not identically, to those applicable to the Bank. The Dodd-Frank Act directed the FRB to issue consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. The FRB subsequently issued regulations amending its regulatory capital requirements to implement the Dodd-Frank Act as to bank holding company capital
standards. Consolidated regulatory capital requirements identical to those applicable to the subsidiary banks applied to bank holding companies as of January 1, 2015. As is the case with institutions themselves, the capital conservation buffer was phased-in between 2016 and 2019. The Company met all capital adequacy requirements under the FRB’s capital rules on December 31, 2024.
The policy of the FRB is that a bank holding company must serve as a source of strength to its subsidiary banks by providing capital, managerial and other support in times of distress. The Dodd-Frank Act codified the source of strength policy.
Under the prompt corrective action provisions of federal law, a bank holding company parent of an undercapitalized subsidiary bank is required to guarantee, within specified limits, the capital restoration plan that is required of an undercapitalized bank. If an undercapitalized bank fails to file an acceptable capital restoration plan or fails to implement an accepted plan, the FRB may prohibit the bank holding company parent of the undercapitalized bank from paying dividends or making any other capital distribution.
As a bank holding company, we are required to obtain the prior approval of the FRB to acquire more than 5% of a class of voting securities of any additional bank or bank holding company or to acquire all, or substantially all, the assets of any additional bank or bank holding company. In addition, bank holding companies may generally only engage in activities that are closely related to banking as determined by the FRB. Bank holding companies that meet certain criteria may opt to become a financial holding company and thereby engage in a broader array of financial activities. The Company has elected not to become a financial holding company.
FRB policy is that a bank holding company should pay cash dividends only to the extent that the company’s net income is sufficient to fund the dividends and the prospective rate of earnings retention that is consistent with the company’s capital needs, asset quality and overall financial condition. In addition, FRB guidance sets forth the supervisory expectation that bank holding companies will inform and consult with FRB staff in advance of issuing a dividend that exceeds earnings for the quarter and should inform the FRB and should eliminate, defer or significantly reduce dividends if (i) net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends, (ii) prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition, or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. Moreover, the guidance indicates that a bank holding company should notify the FRB in advance of declaring or paying a dividend that exceeds earnings for the period (e.g., quarter) for which the dividend is being paid or that could result in a material adverse change to the organization’s capital structure. FRB guidance also provides for consultation and nonobjection for material increases in the amount of a bank holding company’s common stock dividend.
Current FRB regulations provide that a bank holding company that is not well capitalized or well managed, as such terms are defined in the regulations, or that is subject to any unresolved supervisory issues, is required to give the FRB prior written notice of any repurchase or redemption of its outstanding equity securities if the gross consideration for repurchase or redemption, when combined with the net consideration paid for all such repurchases or redemptions during the preceding 12 months, will be equal to 10% or more of the company’s consolidated net worth. The FRB may disapprove such a repurchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice or violate a law or regulation. FRB guidance generally provides for bank holding company consultation with FRB staff prior to engaging in a repurchase or redemption of a bank holding company’s stock, even if a formal written notice is not required. The guidance provides that the purpose of such consultation is to allow the FRB to review the proposed repurchases or redemption from a supervisory perspective and possibly object.
The NYSDFS and FRB have extensive enforcement authority over the institutions and holding companies that they regulate to prohibit or correct activities that violate law, regulation or written agreements with the agencies or which are deemed to be unsafe or unsound banking practices. Enforcement actions may include: the appointment of a conservator or receiver for an institution; the issuance of a cease and desist order; the termination of deposit insurance; the imposition of civil money penalties on the institution, its directors, officers, employees and institution-affiliated parties; the issuance of directives to increase capital; the issuance of formal and informal agreements; the removal of or restrictions on directors, officers, employees and institution-affiliated parties; and the enforcement of any such mechanisms through restraining orders or other court actions. Any change in applicable New York or federal laws and regulations could have a material adverse impact on us and our operations and stockholders.
We file certain reports with the Securities and Exchange Commission (“SEC”) under the federal securities laws. Our operations are also subject to extensive regulation by other federal, state and local governmental authorities and the Company is subject to various laws and judicial and administrative decisions imposing requirements and restrictions on part or all of its operations. We believe that we are in substantial compliance, in all material respects, with applicable federal, state and local laws, rules and regulations. Because our business is highly regulated, the laws, rules and regulations applicable to it are subject to regular modification and change. There can be no assurance that laws, rules and regulations currently proposed, or any other laws, rules or regulations, will not be adopted in the future, which could make compliance more difficult or expensive or otherwise adversely affect our business, financial condition or prospects.
Other Information
Through a link on the Investor Relations section of our website of www.dime.com, copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) for 15(d) of the Exchange Act, are made available, free of charge, as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the SEC. Copies of such reports and other information also are available at no charge to any person who requests them or at www.sec.gov. Such requests may be directed to Dime Community Bancshares, Inc., Investor Relations, 898 Veterans Memorial Highway, Suite 560, Hauppauge, NY 11788, (631) 537-1000. Information on our website is not incorporated by reference and is not a part of this annual report on Form 10-K.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
Risks Related to our Loan Portfolio
The concentration of our loan portfolio in loans secured by commercial, multi-family and residential real estate properties located in Greater Long Island and Manhattan could materially adversely affect our financial condition and results of operations if general economic conditions or real estate values in this area decline.
Unlike larger banks that are more geographically diversified, our loan portfolio consists primarily of real estate loans secured by commercial, multi-family and residential real estate properties located in Greater Long Island and Manhattan. The local economic conditions in Greater Long Island and Manhattan have a significant impact on the volume of loan originations and the quality of loans, the ability of borrowers to repay these loans, and the value of collateral securing these loans. A considerable decline in the general economic conditions caused by inflation, recession, unemployment or other factors beyond our control would impact these local economic conditions and could negatively affect our financial condition and results of operations. Additionally, decreases in tenant occupancy may also have a negative effect on the ability of borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.
If our regulators impose limitations on our commercial real estate lending activities, earnings could be adversely affected.
In 2006, the federal bank regulatory agencies (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”). Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure may receive increased supervisory scrutiny where total non-owner occupied CRE loans, including loans secured by apartment buildings, investor CRE and construction and land loans, represent 300% or more of an institution’s total risk-based capital and the outstanding balance of the CRE loan portfolio has increased by 50% or more during the preceding 36 months. The Consolidated Company’s non-owner occupied CRE level equaled 447% of total risk-based capital at December 31, 2024.
If our regulators were to impose restrictions on the amount of CRE loans we can hold in our portfolio, or require higher capital ratios as a result of the level of CRE loans held, our earnings would be adversely affected.
The performance of our multi-family real estate loans could be adversely impacted by regulation.
Multi-family real estate loans generally involve a greater risk than residential real estate loans because of legislation and government regulations involving rent control and rent stabilization, which are outside the control of the borrower or the Bank, and could impair the value of the security for the loan or the future cash flow of such properties. For example, on June 14, 2019, the State of New York enacted legislation increasing the restrictions on rent increases in a rent-regulated apartment building, including, among other provisions, (i) repealing the vacancy bonus and longevity bonus, which allowed a property owner to raise rents as much as 20% each time a rental unit became vacant, (ii) eliminating high rent vacancy deregulation and high-income deregulation, which allowed a rental unit to be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon renewal. The legislation still permits a property owner to charge up to the full legal rent once the tenant vacates. As a result of this legislation as well as previously existing laws and regulations, it is possible that rental income might not rise sufficiently over time to satisfy increases in the loan rate at repricing or increases in overhead expenses (e.g., utilities, taxes, maintenance, etc.). For example, the New York City Rent Guidelines Board established the maximum rent increase on certain apartments at 2.75% for a one-year lease and 5.25% for a two-year lease, beginning on or after October 1, 2024 and through September 30, 2025, and while the overall inflation rate increased at a greater rate. In addition, overhead (including maintenance) expenses often increase significantly during inflationary periods. Finally, if the cash flow from a collateral property is reduced (e.g., if leases are not obtained or renewed), the borrower’s ability to repay the loan and the value of the security for the loan may be impaired.
If we experience greater credit losses than anticipated, earnings may be adversely impacted.
As a lender, we are exposed to the risk that customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Additionally, at December 31, 2024, our portfolio of business loans, totaled $2.73 billion, or 25.1% of our total loan portfolio. We plan to continue to emphasize the origination of these types of loans, which generally expose us to a greater risk of nonpayment and loss than residential real estate loans because repayment of such loans often depends on the successful operations and income stream of the borrowers. Additionally, such loans typically involve larger loan balances to single borrowers or groups of related borrowers compared to consumer loans or residential real estate loans. Hence, we may experience significant credit losses, which could have a material adverse effect on our operating results.
Since the first quarter of 2021, we have been required to determine periodic estimates of lifetime expected credit losses on loans and recognize the expected credit losses as allowances for credit losses. This method of loan loss accounting represents a change from the previous method of providing allowances for loan losses that are probable, and greatly increased the types of data we need to collect and review to determine the appropriate level of the allowance for credit losses. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. In determining the amount of the allowance for credit losses, we rely on loan quality reviews, our past loss experience and that of our peer group, and the accuracy of macro-economic forecasts over a reasonable and supportable forecast period, among other factors. If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance for credit losses. Material additions to the allowance for credit losses through charges to earnings would materially decrease our net income.
Additionally, bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs. Any increase in our allowance for credit losses or loan charge-offs as required by these regulatory authorities could have a material adverse effect on our results of operations and/or financial condition.
We are subject to the CRA and fair lending laws, and failure to comply with these laws could lead to material penalties.
The CRA, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. With respect to the Bank, the NYSDFS, FRB, CFPB, the United States Department of Justice and other federal and state agencies are responsible for enforcing these laws and regulations. A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions on expansion. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.
The Company is subject to environmental liability risk associated with lending activities.
A significant portion of the Company’s loan portfolio is secured by real property. During the ordinary course of business, the Company may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If hazardous or toxic substances are found, the Company may be liable for remediation costs, as well as for personal injury and property damage. Environmental laws may require the Company to incur substantial expenses and may materially reduce the affected property’s value or limit the Company’s ability to use or sell the affected property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase the Company’s exposure to environmental liability. Environmental reviews of real property before initiating foreclosure may not be sufficient to detect all potential environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on the Company’s business, financial condition and results of operations.
Risks Related to Interest Rates
Changes in interest rates could affect our profitability.
Our ability to earn a profit, like most financial institutions, depends primarily on net interest income, which is the difference between the interest income that we earn on our interest-earning assets, such as loans and investments, and the interest expense that we pay on our interest-bearing liabilities, such as deposits and borrowings. Our profitability depends on our ability to manage our assets and liabilities during periods of changing market interest rates.
During 2022 and 2023, in response to accelerated inflation, the Federal Reserve implemented monetary tightening policies, resulting in significantly increased interest rates. In a period of rising interest rates, the interest income earned on our assets may not increase as rapidly as the interest paid on our liabilities, demand for loan products may decline, and borrower defaults on loan payments may increase.
A sustained decrease in market interest rates could also adversely affect our earnings. When interest rates decline, borrowers tend to refinance higher-rate, fixed-rate loans at lower rates. Under those circumstances, we may not be able to reinvest those prepayments in assets earning interest rates as high as the rates on those prepaid loans or in investment securities.
Changes in interest rates also affect the fair value of the securities portfolio. Generally, the fair value of securities moves inversely with changes in interest rates. As of December 31, 2024, the carrying value of the securities portfolio totaled $1.32 billion.
Management is unable to predict fluctuations of market interest rates, which are affected by many factors, including inflation, recession, unemployment, monetary policy, domestic and international disorder and instability in domestic and foreign financial markets, and investor and consumer demand.
Risks Related to Regulation
We operate in a highly regulated environment, Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings.
The FRB and the NYSDFS periodically examine our business, including our compliance with laws and regulations. If, as a result of an examination, a federal banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, we may take a number of different remedial actions as we deem appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to assess civil monetary penalties against our officers or directors, to remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate our deposit insurance and place it into receivership or conservatorship. If we become subject to any regulatory actions, it could have a material adverse effect on our business, results of operations, financial condition and growth prospects.
Additionally, the CFPB has the authority to issue consumer finance regulations and is authorized, individually or jointly with bank regulatory agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates new and existing consumer financial laws or regulations. Banks with assets in excess of $10 billion are subject to requirements imposed by the Dodd-Frank Act and its implemented regulations, including the examination authority of the CFPB to assess our compliance with federal consumer financial laws, imposition of higher FDIC premiums, reduced debit card interchange fees, and enhanced risk management frameworks, all of which increase operating costs and reduce earnings. In addition, in accordance with a memorandum of understanding entered into between the CFPB and U.S.
Department of Justice, the two agencies have agreed to coordinate efforts related to enforcing the fair lending laws, which includes information sharing and conducting joint investigations, and have done so on a number of occasions.
We face a risk of noncompliance and enforcement action with the federal Bank Secrecy Act (the “BSA”) and other anti-money laundering and counter terrorist financing statutes and regulations.
The BSA, the USA PATRIOT Act and other laws and regulations require financial institutions, among others, to institute and maintain an effective anti-money laundering compliance program and to file reports such as suspicious activity reports and currency transaction reports. Our products and services, including our debit card issuing business, are subject to an increasingly strict set of legal and regulatory requirements intended to protect consumers and to help detect and prevent money laundering, terrorist financing and other illicit activities. We are required to comply with these and other anti-money laundering requirements. The federal banking agencies and the U.S. Treasury Department’s Financial Crimes Enforcement Network are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control. If we violate these laws and regulations, or our policies, procedures and systems are deemed deficient, we would be subject to liability, including fines and regulatory actions, which may include restrictions on our ability to pay dividends and the ability to obtain regulatory approvals to proceed with certain aspects of our business plan, including acquisitions.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Risks Related to our Debt Securities
The subordinated debentures that we issued have rights that are senior to those of our common shareholders.
In 2015, the Company issued $40.0 million of 5.75% Fixed-to-Floating Rate Subordinated Debentures due 2030. In 2022, the Company issued $160.0 million of 5.00% Fixed-to-Floating Rate Subordinated Debentures due 2032. In 2024, the Company issued $74.8 million of 9.00% Fixed-to-Floating Rate Subordinated Debentures due 2034. Because these subordinated debentures rank senior to our common stock, if we fail to make timely principal and interest payments on the subordinated debentures, we may not pay any dividends on our common stock. Further, if we declare bankruptcy, dissolve or liquidate, we must satisfy all of our subordinated debenture obligations before we may pay any distributions on our common stock.
Strategic Risks
Expansion of our branch network may adversely affect our financial results.
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The Bank has in the past and may in the future establish new branch offices. We cannot be certain that the opening of new branches will be accretive to earnings or that it will be accretive to earnings within a reasonable period of time. Numerous factors contribute to the performance of a new branch, such as suitable location, qualified personnel, and an effective marketing strategy. Additionally, it takes time for a new branch to gather sufficient loans and deposits to generate income sufficient to cover its operating expenses. Difficulties we experience in opening new branches may have a material adverse effect on our financial condition and results of operations.
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Mergers and acquisitions involve numerous risks and uncertainties.
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The Company has in the past and may in the future pursue mergers and acquisitions opportunities. Mergers and acquisitions involve a number of risks and challenges, including the expenses involved; potential diversion of management’s attention from other strategic matters; integration of branches and operations acquired; outflow of customers from the acquired branches; retention of personnel from acquired companies or branches; competing effectively in geographic areas not
previously served; managing growth resulting from the transaction; and dilution in the acquirer's book and tangible book value per share.
Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed or the cost of that capital may be very high.
We are required by federal and state regulatory authorities to maintain adequate levels of capital to support our operations. While we anticipate that our capital resources will satisfy our capital requirements for the foreseeable future, we may at some point need to raise additional capital to support our operations or continued growth, both internally and through acquisitions. Any capital we obtain may result in the dilution of the interests of existing holders of our common stock, or otherwise adversely affect your investment.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on our financial condition and performance. Accordingly, we cannot make assurances of our ability to raise additional capital if needed, or if the terms will be acceptable to us. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired and our financial condition and liquidity could be materially and adversely affected.
Operational Risk Factors
A lack of liquidity could adversely affect the Company’s financial condition and results of operations.
Liquidity is essential to our business. The Company relies on its ability to generate deposits and effectively manage the repayment of its liabilities to ensure that there is adequate liquidity to fund operations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity. The Company’s most important source of funds is its deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk adjusted return, which are strongly influenced by such external factors as the direction of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments. Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the Federal Reserve or regulatory actions that decrease customer access to particular products. If customers move money out of bank deposits and into other investments such as money market funds, the Company would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income. Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB and/or FRB discount window, and unsecured borrowings. The Company also may borrow funds from third-party lenders, such as other financial institutions. The Company’s access to funding sources in amounts adequate to finance or capitalize its activities, or on terms that are acceptable, could be impaired by factors that affect the Company directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of the Company’s business activity as a result of a downturn in markets or by one or more adverse regulatory actions against the Company or the financial sector in general. Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations.
Our business may be adversely affected by conditions in the financial markets, the economic environment and governmental policies.
A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, declines in housing and real estate valuations, business activity or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; increases in inflation; changes in market interest rates; tariffs; geopolitical conflicts; natural disasters; or a combination of these or other factors.
The Company's performance could be negatively affected to the extent there is deterioration in business and economic conditions, including persistent inflation, an inverted yield curve, rising prices, unemployment rates, supply chain issues, or labor shortages, which have direct or indirect material adverse impacts on us, our customers, and our counterparties. Recessionary conditions may significantly affect the markets in which we do business, the financial condition of our borrowers, the value of our loans and investments, and our ongoing operations, costs and profitability. Declines in real estate values and sales volumes and increased unemployment levels may result in higher than expected loan delinquencies, increases in our levels of nonperforming and classified assets and a decline in demand for our products and services. Such events may cause us to incur losses and may adversely affect our capital, liquidity, and financial condition.
Governmental policies, including, but not limited to, changes in government spending, the freezing of government funding or grants, or changes to the government workforce could have an adverse affect on consumers’ or businesses’ ability to pay their debts and/or affect the demand for loans and deposits.
Strong competition within our market area may limit our growth and profitability.
Our primary market area is located in Greater Long Island and Manhattan. Competition in the banking and financial services industry remains intense. Our profitability depends on the continued ability to successfully compete. We compete with commercial banks, savings banks, credit unions, insurance companies, and brokerage and investment banking firms. Many of our competitors have substantially greater resources and lending limits than us and may offer certain services that we do not provide. In addition, competitors may offer deposits at higher rates and loans with lower fixed rates, more attractive terms and less stringent credit structures than we have been willing to offer.
Our future success depends on the success and growth of Dime Community Bank.
Our primary business activity for the foreseeable future will be to act as the holding company of the Bank. Therefore, our future profitability will depend on the success and growth of this subsidiary. The continued and successful implementation of our growth strategy will require, among other things that we increase our market share by attracting new customers that currently bank at other financial institutions in our market area. In addition, our ability to successfully grow will depend on several factors, including favorable market conditions, the competitive responses from other financial institutions in our market area, and our ability to maintain good asset quality. While we believe we have the management resources, market opportunities and internal systems in place to obtain and successfully manage future growth, growth opportunities may not be available, and we may not be successful in continuing our growth strategy. In addition, continued growth requires that we incur additional expenses, including salaries, data processing and occupancy expense related to new branches and related support staff. Many of these increased expenses are considered fixed expenses. Unless we can successfully continue our growth, our results of operations could be negatively affected by these increased costs.
The loss of key personnel could impair our future success.
Our future success depends in part on the continued service of our executive officers, other key management, and staff, as well as our ability to continue to attract, motivate, and retain additional highly qualified employees. The loss of services of one or more of our key personnel or our inability to timely recruit replacements for such personnel, or to otherwise attract, motivate, or retain qualified personnel could have an adverse effect on our business, operating results and financial condition.
Our business may be adversely affected by fraud and other financial crimes.
Our loans to businesses and individuals and our deposit relationships and related transactions are subject to exposure to the risk of loss due to fraud and other financial crimes. While we have policies and procedures designed to prevent such losses, losses may still occur. In the past, we have experienced losses due to fraud.
Risks associated with system failures, interruptions, or breaches of security could negatively affect our operations and earnings.
Information technology systems are critical to our business. We collect, process and store sensitive customer data by utilizing computer systems and telecommunications networks operated by us and third-party service providers. We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, but such events may still occur or may not be adequately addressed if they do occur. Although we take numerous protective measures and otherwise endeavor to protect and maintain the privacy and security of confidential data, these systems may be vulnerable to unauthorized access, computer viruses, other malicious code, cyberattacks, including distributed denial of service attacks, hacking, social engineering and phishing attacks, cyber-theft and other events that could have a security impact. Cyber threats are rapidly evolving, and we may not be able to anticipate or prevent all such attacks. If one or more of such events were to occur, this potentially could jeopardize confidential and other information processed and stored in, and transmitted through, our systems or otherwise cause interruptions or malfunctions in our operations or our customers' operations.
In addition, we maintain interfaces with certain third-party service providers. If these third-party service providers encounter difficulties, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.
The occurrence of any system failures, interruption, or breach of security could damage our reputation and result in a loss of customers and business, subject us to additional regulatory scrutiny, and expose us to litigation and possible financial liability. We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are not fully covered by our insurance. Any of these events could have a material adverse effect on our financial condition and results of operations.
Severe weather, acts of terrorism and other external events could impact our ability to conduct business.
Weather-related events have adversely impacted our market area in recent years, especially areas located near coastal waters and flood prone areas. Such events that may cause significant flooding and other storm-related damage may become more common events in the future. Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and the metropolitan New York area remains a central target for potential acts of terrorism. Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of borrowers to repay their loans, reduce the value of collateral securing repayment of loans, and result in the loss of revenue. While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition.
Additionally, global markets may be adversely affected by natural disasters, the emergence of widespread health emergencies or pandemics like COVID-19, cyberattacks or campaigns, military conflict, terrorism or other geopolitical events. Global market fluctuations may affect our business liquidity. Also, any sudden or prolonged market downturn in the U.S. or abroad, as a result of the above factors or otherwise could result in a decline in revenue and adversely affect our results of operations and financial condition, including capital and liquidity levels.
Damage to the Company’s reputation could adversely impact our business.
The Company's reputation is important to our success. Our ability to attract and retain customers, investors, employees and advisors may depend upon external perceptions of the Company. Damage to the Company's reputation could cause significant harm to our business and prospects and may arise from numerous sources, including litigation or regulatory actions, compliance failures, customer services failures, or unethical behavior or misconduct of employees, advisors and counterparties. Adverse developments with respect to the financial services industry may also, by association, negatively impact the Company's reputation or result in greater regulatory or legislative scrutiny of or litigation against the Company.
Furthermore, shareholders and other stakeholders have begun to consider how corporations are addressing environmental, social and governance (“ESG”) issues. Governments, investors, customers and the general public are increasingly focused
on ESG practices and disclosures, and views about ESG are diverse and rapidly changing. These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if the Company, or our relationships with certain customers, vendors or suppliers became the subject of negative publicity.
Accounting-Related Risks
Changes in our accounting policies or in accounting standards could materially affect how we report our financial results.
Our accounting policies are fundamental to understanding our financial results and condition. Some of these policies require the use of estimates and assumptions that may affect the value of our assets or liabilities and financial results. Some of our accounting policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect, we may experience material losses.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our external financial statements. These changes are beyond our control, can be hard to predict and could materially impact how we report our results of operations and financial condition. We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts.
If we determine our goodwill or other intangible assets to be impaired, the Company’s financial condition and results of operations would be negatively affected.
When the Company completes a business combination, a portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. At least annually (or more frequently if indicators arise), the Company evaluates goodwill for impairment. If the Company determines goodwill or other intangible assets are impaired, the Company will be required to write down these assets. Any write-down would have a negative effect on the consolidated financial statements.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
Not applicable.

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ITEM 2. PROPERTIES
Item 2. Properties
The Company’s corporate headquarters is located at 898 Veterans Memorial Highway in Hauppauge, New York. The Bank’s main office is located at 2200 Montauk Highway in Bridgehampton, New York.
As of December 31, 2024, we operated 62 branch locations throughout Greater Long Island, the New York City boroughs of Brooklyn, Queens, Manhattan, Staten Island and the Bronx, and Westchester County, of which 51 were leased and 11 were owned.
For additional information on our premises and equipment, see Note 6. “Premises and Fixed Assets, net and Premises Held for Sale” in the Notes to the Consolidated Financial Statements.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
In the ordinary course of business, the Holding Company and the Bank are routinely named as a defendant in or party to various pending or threatened legal actions or proceedings. Certain of these matters may seek substantial monetary damages against the Holding Company or the Bank. In the opinion of management, as of December 31, 2024, neither the Holding Company nor the Bank were involved in any actions or proceedings that were likely to have a material adverse impact on the Company’s consolidated financial condition and results of operations.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock trades on the NASDAQ® Stock Market under the symbol “DCOM”. Prior to the Merger, our common shares were traded under the symbol “BDGE”. At February 13, 2025, we had approximately 1,075 shareholders of record, not including the number of persons or entities holding stock in nominee or the street name through various banks and brokers.
DCOM Performance Graph
Pursuant to the regulations of the SEC, the graph below compares our performance with that of the total return for the NASDAQ® Composite Index and the S&P SmallCap 600 Banks Index from December 31, 2019 through December 31, 2024. The graph assumes the reinvestment of dividends in additional shares of the same class of equity securities as those listed below. The following performance graph reflects the performance of BDGE prior to the Merger.
Year Ended December 31,
Index
Dime Community Bancshares, Inc.
100.00
75.51
112.73
105.06
92.97
110.65
S&P SmallCap 600 Banks Index
100.00
89.23
119.79
107.95
107.99
123.79
NASDAQ Composite Index
100.00
144.92
177.06
119.45
172.77
223.87
Issuer Purchases of Equity Securities
In May 2022, we announced the adoption of a new stock repurchase program of up to 1,948,314 shares, upon the completion of our existing authorized stock repurchase program. The stock repurchase program may be suspended, terminated, or modified at any time for any reason, and has no termination date. As of December 31, 2024, there were 1,566,947 shares remaining to be purchased in the program. There were no repurchases of common stock during the year ended December 31, 2024.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Annual Report on Form 10-K, unless otherwise mentioned, the terms the “Company”, “we”, “us” and “our” refer to Dime Community Bancshares, Inc. and our wholly-owned subsidiary, Dime Community Bank (the “Bank”). We use the term “Holding Company” to refer solely to Dime Community Bancshares, Inc. and not to our consolidated subsidiary.
Overview
Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans and other assets. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.
Critical Accounting Estimates
Critical accounting estimates are those estimates made in accordance with Generally Accepted Accounting Principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or the results of the operations of the Registrant. Note 1 Summary of Significant Accounting Policies (page 53), to the Company’s Audited Consolidated Financial Statement for the year ended December 31, 2024 contains a summary of significant accounting policies. These critical accounting estimates involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. Policies with respect to the methodologies used to determine the allowance for credit losses on loans held for investment are important to the presentation of the Company’s consolidated financial condition and results of operations. The use of different judgments, assumptions or estimates could result in material variations in the Company’s consolidated results of operations or financial condition.
Management has reviewed the following critical accounting estimates and related disclosures with its Audit Committee.
Allowance for Credit Losses on Loans Held for Investment
Methods and Assumptions Underlying the Estimate
On January 1, 2021, we adopted the Current Expected Credit Losses (“CECL”) Standard, which requires that loans held for investment be accounted for under the current expected credit losses model. The allowance for credit losses is established and maintained through a provision for credit losses based on expected losses inherent in our loan portfolio. Management evaluates the adequacy of the allowance on a quarterly basis, and additions to the allowance are charged to expense and realized losses, net of recoveries, are charged against the allowance.
Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods.
Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. Adjustments to the quantitative results are made using qualitative factors, which are subjective and require significant management judgment. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of our loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
Although management believes that it uses the best information available to establish the Allowance for Credit Loss, management assesses the sensitivity of key quantitative assumptions including macroeconomic forecasts and prepayment rate assumptions. Changes in quantitative inputs may not occur in the same direction or magnitude across all segments of our loan portfolio and deterioration in some quantitative inputs may offset improvement in others. At June 30, 2024, if the four-quarter national unemployment rate forecast had increased 100 basis points our quantitative ACL reserve would have increased 11.8%. The sensitivity analysis does not represent a change to our expectations of the economic environment but provides a hypothetical result to assess the sensitivity of the ACL to a change in a key quantitative input. Additionally, the sensitivity analysis described above does not incorporate changes to management’s judgment of qualitative loss factors.
Uncertainties Regarding the Estimate
Estimating the timing and amounts of future losses is subject to significant management judgment as these projected cash flows rely upon the estimates discussed above and factors that are reflective of current or future expected conditions. These estimates depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected.
Customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs.
Impact on Financial Condition and Results of Operations
If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary
based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance through charges to earnings and would materially decrease our net income.
We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results.
In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for credit losses. Such agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.
Comparison of Operating Results For The Years Ended December 31, 2024, 2023 and 2022
General. Net income was $29.1 million in 2024, compared to $96.1 million in 2023, and $152.6 million in 2022. During 2024, non-interest income decreased by $40.2 million, provision for credit losses increased by $33.3 million and non-interest expense increased by $13.4 million, partially offset by an increase in net interest income of $1.5 million and a decrease in income tax expense of $18.4 million. During 2023, net interest income decreased by $63.3 million, non-interest expense increased by $12.4 million and non-interest income decreased by $2.0 million, partially offset by a decrease of $18.6 million in income tax expense and a decrease of $2.6 million in provision for credit losses. During 2022, net interest income increased by $22.3 million, provision for credit losses decreased by $839 thousand, and non-interest expense decreased by $44.6 million, partially offset by a non-interest income decrease of $3.9 million and an income tax expense increase of $15.2 million.
The discussion of net interest income for the years ended December 31, 2024, 2023, and 2022 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of operations for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from Federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Loan fees included in interest income were $1.0 million in 2024, $1.5 million in 2023, and $3.1 million in 2022. The decrease in loan fees in 2024 was primarily due to a decline in loan prepayment fees. There are no out-of-period adjustments included in the rate/volume analysis in the following table.
Average Balance Sheets
Year Ended December 31,
Average
Average
Average
Average
Yield/
Average
Yield/
Average
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
Balance
Interest
Cost
Assets:
(Dollars in thousands)
Interest-earning assets:
Business loans (1) (3) (6)
$
2,500,904
$
175,604
7.02
%
$
2,246,442
$
147,530
6.57
%
$
2,006,287
$
99,296
4.95
%
One-to-four family residential, including condo and coop (3) (6)
910,096
41,823
4.60
847,706
35,148
4.15
703,055
24,705
3.51
Multifamily residential and residential mixed-use (3) (6)
3,927,197
181,736
4.63
4,096,025
180,286
4.40
3,675,595
139,562
3.80
Non-owner-occupied commercial real estate (3) (6)
3,323,299
177,173
5.33
3,353,805
171,475
5.11
3,071,837
125,659
4.09
ADC (3)
155,279
13,936
8.97
214,106
19,656
9.18
279,620
16,752
5.99
Other loans (3)
5,046
4.36
6,514
6.03
11,493
5.46
Securities
1,515,962
33,563
2.21
1,640,066
32,179
1.96
1,687,835
29,224
1.73
Other short-term investments
499,633
26,094
5.22
442,574
22,693
5.13
248,779
3,400
1.37
Total interest-earning assets
12,837,416
650,149
5.06
%
12,847,238
609,360
4.74
%
11,684,501
439,225
3.76
%
Non-interest earning assets
781,373
777,977
782,261
Total assets
$
13,618,789
$
13,625,215
$
12,466,762
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking (2)
$
731,709
$
12,472
1.70
%
$
775,904
$
8,562
1.10
%
$
851,931
$
3,115
0.37
%
Money market
3,650,266
134,367
3.68
2,882,859
83,950
2.91
2,971,312
10,879
0.37
Savings (2)
2,177,372
80,239
3.69
2,311,275
73,270
3.17
1,815,198
15,906
0.88
CDs
1,351,408
57,667
4.27
1,444,554
53,263
3.69
926,837
8,533
0.92
Total interest-bearing deposits
7,910,755
284,745
3.60
7,414,592
219,045
2.95
6,565,278
38,433
0.59
FHLBNY advances
699,940
27,268
3.90
1,251,871
56,140
4.48
252,838
7,062
2.79
Subordinated debt, net
236,738
13,765
5.81
200,243
10,212
5.10
217,753
10,616
4.88
Other short-term borrowings
1.59
3,150
3.81
56,030
1,439
2.57
Total borrowings
936,867
41,036
4.38
1,455,264
66,472
4.57
526,621
19,117
3.63
Derivative cash collateral
116,567
6,314
5.42
143,735
7,272
5.06
97,225
1,812
1.86
Total interest-bearing liabilities
8,964,189
332,095
3.70
%
9,013,591
292,789
3.25
%
7,189,124
59,362
0.83
%
Non-interest-bearing checking (2)
3,140,423
3,126,575
3,890,642
Other non-interest-bearing liabilities
230,910
270,033
218,194
Total liabilities
12,335,522
12,410,199
11,297,960
Stockholders' equity
1,283,267
1,215,016
1,168,802
Total liabilities and stockholders' equity
$
13,618,789
$
13,625,215
$
12,466,762
Net interest income
$
318,054
$
316,571
$
379,863
Net interest rate spread (4)
1.36
%
1.49
%
2.93
%
Net interest-earning assets
$
3,873,227
$
3,833,647
$
4,495,377
Net interest margin (5)
2.48
%
2.46
%
3.25
%
Ratio of interest-earning assets to interest-bearing liabilities
143.21
%
142.53
%
162.53
%
Deposits (including non-interest-bearing checking accounts) (2)
$
11,051,178
$
284,745
2.58
%
$
10,541,167
$
219,045
2.08
%
$
10,455,920
38,433
0.37
%
(1) Business loans include commercial and industrial loans (“C&I”), owner-occupied commercial real estate loans and SBA Paycheck Protection Program (“PPP”) loans.
(2) Includes mortgage escrow deposits.
(3) Amounts are net of deferred origination costs/(fees) and allowance for credit losses, and include loans held for sale.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average interest-earning assets.
(6) At December 31, 2024 and 2023, the loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged one-to-four family residential mortgage loans, multifamily residential mortgage loans and CRE loans.
Rate/Volume Analysis
Years Ended December 31,
2024 over 2023
2023 over 2022
Increase/(Decrease) Due to
Increase/(Decrease) Due to
Volume
Rate
Total
Volume
Rate
Total
Interest-earning assets:
(In thousands)
Business loans (1) (2)
$
17,341
$
10,733
$
28,074
$
13,860
$
34,374
$
48,234
One-to-four family residential, including condo and coop
2,724
3,951
6,675
5,510
4,933
10,443
Multifamily residential and residential mixed-use
(7,700)
9,150
1,450
17,323
23,401
40,724
Non-owner-occupied commercial real estate
(1,620)
7,318
5,698
13,007
32,809
45,816
ADC
(5,335)
(385)
(5,720)
(4,970)
7,874
2,904
Other loans
(76)
(97)
(173)
(286)
(234)
Securities
(2,574)
3,958
1,384
(877)
3,832
2,955
Other short-term investments
2,965
3,401
6,297
12,996
19,293
Total interest-earning assets
5,725
35,064
40,789
49,864
120,271
170,135
Interest-bearing liabilities:
Interest-bearing checking
(616)
4,526
3,910
(527)
5,974
5,447
Money market
25,275
25,142
50,417
(1,364)
74,435
73,071
Savings
(4,648)
11,617
6,969
10,080
47,284
57,364
CDs
(3,706)
8,110
4,404
11,909
32,821
44,730
FHLBNY advances
(23,169)
(5,703)
(28,872)
36,339
12,739
49,078
Subordinated debt, net
1,996
1,557
3,553
(869)
(404)
Other short-term borrowings
(80)
(37)
(117)
(1,687)
(1,319)
Derivative cash collateral
(1,425)
(958)
1,607
3,853
5,460
Total interest-bearing liabilities
(6,373)
45,679
39,306
55,488
177,939
233,427
Net change in net interest income
$
12,098
$
(10,615)
$
1,483
$
(5,624)
$
(57,668)
$
(63,292)
(1) Business loans include C&I loans, owner-occupied commercial real estate loans and PPP loans.
(2) Amounts are net of deferred origination costs/(fees) and allowance for credit losses, and include loans held for sale.
Net Interest Income. Net interest income was $318.1 million in 2024, $316.6 million in 2023, and $379.9 million in 2022. Average interest-earning assets were $12.84 billion in 2024, $12.85 billion in 2023 and $11.68 billion in 2022. Net interest margin was 2.48% in 2024, 2.46% in 2023, and 3.25% in 2022.
Interest Income. Interest income was $650.1 million in 2024, $609.4 million in 2023, and $439.2 million in 2022. During 2024, interest income increased $40.7 million from 2023, primarily reflecting increases in interest income of $28.1 million on business loans, $6.7 million on one-to-four family loans, $5.7 million on non-owner-occupied CRE loans, $3.4 million on other short-term investments, $1.5 million on multifamily loans, and $1.4 million in securities. The increased interest income on business loans was primarily due to an increase of $254.5 million in the average balances of business loans and a 45-basis point increase in yield of such loans in the period. The increased interest income on one-to-four family loans was primarily due to a 45-basis point increase in the yield of one-to four family loans and an increase of $62.4 million in the average balances of such loans in the period. The increased interest income on non-owner-occupied CRE loans was primarily due to a 22-basis point increase in yield of non-owner-occupied CRE loans, offset by a decrease of $30.5 million in the average balances of such loans in the period. The increased interest income from short-term investments was primarily due to an increase of $57.1 million in the average balances of short-term investments and a 9-basis point increase in yield of such investments in the period. The increased interest income on multifamily loans was primarily due to a 23-basis point increase in yield of multifamily loans, offset by a decrease of $168.9 million in the average balances of such loans in the period. The increased interest income on securities was primarily due to a 25-basis point increase in yield of securities, offset by a decrease of $124.1 million in the average balances of such securities in the period. During 2023, interest income increased $170.2 million from 2022, primarily reflecting increases in interest income of $48.2 million on business loans, $45.8 million on non-owner occupied CRE loans, $40.7 million on multifamily loans and $19.3 million on short-term investments. The increased interest income on business loans was primarily due to an increase of $240.2 million in the average balances of business loans and a 162-basis point increase in the yield of such loans. The increased interest income on non-owner occupied CRE loans was primarily due to an increase of $282.0 million in the average balances of non-owner occupied CRE loans and a 102-basis point increase in the yield of such loans. The increased interest income on multifamily loans was primarily due to an increase of $420.4 million in the average balances of multifamily loans and a 60-basis point increase in the yield of such loans. The increased interest income from short-term investments was primarily due to an increase of $193.8 million in the average balances of short-term investments and a 376-basis point increase in the yield of such investments.
Interest Expense. Interest expense was $332.1 million in 2024, $292.8 million in 2023, and $59.4 million in 2022. During 2024, interest expense increased $39.3 million from 2023, primarily reflecting increases in interest expense of $50.4 million on money market accounts, $7.0 million on savings accounts, $4.4 million on CDs, $3.9 million on interest-bearing checking accounts and $3.6 million on subordinated debt. The increase in interest expense on money market accounts primarily reflects a $767.4 million increase in the average balances of money market accounts and a 77-basis point increase in rates paid on such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 52-basis point increase in rates paid on saving accounts, offset by a decrease of $133.9 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 58-basis point increase in rates paid on CDs, offset by a decrease of $93.1 million in the average balances of such deposits in the period. The increase in interest expense on interest-bearing checking accounts was primarily due to a 60-basis point increase in rates paid on interest-bearing checking accounts, offset by a decrease of $44.2 million in the average balances of such deposits in the period. The increase in interest expense on subordinated debt primarily reflects a $36.5 million increase in the average balances of subordinated debt and a 71-basis point increase in rates paid on such debt. During 2023, interest expense increased $233.4 million from 2022, primarily reflecting increases in interest expense of $73.1 million on money market accounts, $57.4 million on savings accounts, $49.1 million on FHLBNY advances and $44.7 million on CDs. The increase in interest expense on money market accounts was primarily due to a 254-basis point increase in rates paid on money market accounts, offset by a decrease of $88.5 million in the average balances of such deposits in the period. The increase in interest expense on savings accounts was primarily due to a 229-basis point increase in rates paid on savings accounts and an increase of $496.1 million in the average balances of such deposits in the period. The increase in interest expense on CDs was primarily due to a 277-basis point increase in rates paid on CDs and an increase of $517.7 million in the average balances of such deposits in the period.
Provision for Credit Losses. The Company recognized a provision for credit losses of $36.1 million in 2024, $2.8 million in 2023 and $5.4 million in 2022. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. The $2.8 million provision for credit losses recognized in 2023 was associated with increased provisioning for individually analyzed loans. The $5.4 million provision for credit losses recognized in 2022 was associated with growth in the loan portfolio and a deterioration of forecasted macroeconomic conditions, offset by a reduction in reserves on individually analyzed loans and unfunded commitments.
Non-Interest Income. Non-interest income was a loss of $4.0 million in 2024, compared to income of $36.2 million in 2023, and income of $38.2 million in 2022. During 2024, non-interest income decreased $40.2 million from 2023, primarily due to a increase of $41.4 million from net loss on sale of securities as a result of a securities portfolio restructuring in 2024 and a decrease of $5.0 million in loan level derivative income, partially offset by an increase of $7.2 million from a gain on sale of other assets. During 2023, non-interest income decreased $2.0 million from 2022, due primarily to a decrease of $2.9 million from net gain on sale of securities and other assets, partially offset by a $3.4 million increase in loan level derivative income.
Non-Interest Expense. Non-interest expense was $226.5 million in 2024, $213.1 million in 2023, and $200.7 million in 2022. During 2024, non-interest expense increased $13.4 million from 2023, primarily due to a $18.7 million increase in salaries and employee benefits as the Bank continued to add business teams and a $2.5 million increase in professional services, partially offset by a $7.8 million decrease in severance expense. In addition, during 2024, the Company recorded a $1.2 million loss from a pension settlement. During 2023, non-interest expense increased $12.4 million from 2022, primarily due to a $6.9 million increase in severance expense, a $5.0 million increase in federal deposit insurance premiums (including $1.0 million of pre-tax expense related to the FDIC special assessment for the recovery of losses related to the closures of Silicon Valley Bank and Signature Bank), partially offset by a $2.7 million decrease in salaries and employee benefits.
Non-interest expense was 1.66%, 1.56%, and 1.61% of average assets during 2024, 2023, and 2022, respectively.
Income Tax Expense. Income tax expense was $22.4 million in 2024, $40.8 million in 2023, and $59.4 million in 2022. Income tax expense decreased $18.4 million during 2024 compared to 2023, primarily as a result of $85.4 million of lower pre-tax income during 2024. Income tax expense during 2024 included $9.1 million of expense related to the taxable gain and Modified Endowment Contract (“MEC”) Tax on the surrender of legacy BOLI assets. Income tax expense decreased $18.6 million during 2023 compared to 2022, primarily as a result of $75.0 million of lower pre-tax income during 2023.
The Company’s consolidated tax rate was 43.5%, 29.8% and 28.0% in 2024, 2023, and 2022, respectively.
Comparison of Financial Condition at December 31, 2024 and December 31, 2023
Assets. Assets totaled $14.35 billion at December 31, 2024, $717.3 million above their level at December 31, 2023, primarily due to an increase in cash and due from banks of $826.0 million, an increase in the loan portfolio of $81.5 million and an increase in other assets of $62.8 million, partially offset by a decrease in total securities of $152.8 million, a decrease in BOLI of $59.2 million and a decrease in restricted stock of $29.6 million.
Total net loans held for investment increased $81.5 million during the year ended December 31, 2024, to $10.78 billion at period end. During the period, the Bank had originations of $570.9 million.
Total securities decreased $152.8 million during the year ended December 31, 2024, to $1.32 billion at period end, primarily due to proceeds from principal payments, calls, maturities and sales of $621.6 million offset in part by purchases of $402.8 million and a decrease in unrealized losses of $66.0 million. There were no transfers to or from securities held-to-maturity for the year ended December 31, 2024 or 2023.
BOLI decreased $59.2 million during the year ended December 31, 2024, to $290.7 million. The decrease in BOLI is primarily due to the surrender of legacy BOLI assets of $84.5 million, offset by $15.0 million in purchases of new assets and an increase in cash surrender value of $10.3 million.
Premises and fixed assets decreased $10.0 million during the year ended December 30, 2024, to $34.8 million at period end, primarily due to the sale of Bank’s premises and other assets which resulted in a $7.2 million net gain in the current period.
Total restricted stock decreased $29.6 million during the year ended December 30, 2024, to $69.1 million at period end, primarily due to a reduction in FHLBNY advances.
Liabilities. Total liabilities increased $547.0 million during the year ended December 31, 2024, to $12.96 billion at period end, primarily due to an increase in deposits of $1.16 billion, an increase in subordinated debt of $72.1 million and an increase in other short-term borrowings of $50.0 million, partially offset by a decrease in FHLBNY advances of $705.0 million, and a decrease in derivative liabilities of $12.9 million.
Subordinated debt increased $72.1 million during the year ended December 31, 2024, to $272.3 million at period end, due to a registered public offering of the Company’s 9.000% fixed-to-floating rate subordinated notes due 2034 (the “Notes”).
Stockholders’ Equity. Stockholders’ equity increased $170.3 million during the year ended December 31, 2024, to $1.40 billion at period end, primarily due to $135.8 million in net proceeds raised in connection with a common equity offering, net income for the period of $29.1 million and a decrease in accumulated other comprehensive loss of $46.6 million, offset in part by common stock dividends of $40.3 million and preferred stock dividends of $7.3 million.
Additional paid-in capital increased $130.4 million during the year ended December 31, 2024, to $624.8 million at period end, due to the Company completing a public offering of 4,492,187 shares of common stock at a price of $32.00 per share, for gross proceeds of approximately $144.0 million. The net proceeds of the offering, after deducting underwriting discounts and commissions, and offering expenses, were $135.8 million.
Loan Portfolio Composition
The following table presents an analysis of outstanding loans by loan type, excluding loans held for sale, net of unearned discounts and premiums and deferred origination fees and costs, at the dates presented:
December 31,
(In thousands)
Business loans (1)
$
2,725,726
25.1
%
$
2,308,171
21.4
%
$
2,211,857
20.9
%
One-to-four family residential and cooperative/condominium apartment
951,528
8.8
887,555
8.2
773,321
7.3
Multifamily residential and residential mixed-use
3,820,283
35.1
4,017,176
37.3
4,026,826
38.1
Non-owner-occupied commercial real estate
3,230,535
29.7
3,379,667
31.4
3,317,485
31.4
Acquisition, development, and construction ("ADC")
136,172
1.3
168,513
1.6
229,663
2.2
Other loans
5,084
0.0
5,755
0.1
7,679
0.1
Total
10,869,328
100.0
%
10,766,837
100.0
%
10,566,831
100.0
%
Fair value hedge basis point adjustments (2)
2,615
6,591
-
Total loans, net of fair value hedge basis point adjustments
10,871,943
10,773,428
10,566,831
Allowance for credit losses
(88,751)
(71,743)
(83,507)
Loans held for investment, net
$
10,783,192
10,701,685
10,483,324
(1) Business loans include C&I loans and owner-occupied commercial real estate loans.
(2) The loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged owner-occupied commercial real estate in business loans, one-to-four family residential mortgage loans, multifamily residential mortgage loans and non-owner occupied commercial real estate loans.
During the year ended December 31, 2024, business loans increased $417.6 million and one-to-four family loans increased $64.0 million, multifamily loans decreased $196.9 million, non-owner-occupied CRE loans decreased $149.1 million, and ADC loans decreased $32.3 million.
Loan Purchases, Sales and Servicing
In the event that the Bank sells loans in the secondary market or through securitization, it generally retains servicing rights on the loans sold. Servicing fees are typically derived based upon the difference between the actual origination rate and contractual pass-through rate of the loans at the time of sale. At December 31, 2024 and 2023, the Bank had recorded servicing right assets ("SRAs") of $2.4 million and $2.9 million, respectively, associated with the sale of loans to third-party institutions in which the Bank retained the servicing of the loan. The Bank outsources the servicing of a portion of our one-to-four family mortgage loan portfolio to an unrelated third-party under a sub-servicing agreement. Fees paid under the sub-servicing agreement are reported as a component of other non-interest expense in the consolidated statements of operations.
Loan Maturity and Repricing
The following table presents the portfolio of fixed and adjustable rate loans (“ARMs”) by the earlier of the maturity or next reprice date as of December 31, 2024. ARMs have repricing frequencies of greater than or equal to one year and are included in the period during which their interest rates are next scheduled to adjust or mature. The table does not include scheduled principal amortization.
Less than
(In thousands)
1 year
1 to 2 years
2 to 3 years
3 to 5 years
Over 5 years
Total
Business loans
$
130,693
$
119,458
$
167,411
$
342,897
$
327,814
$
1,088,273
One-to-four family residential and cooperative/condominium apartment
85,594
75,316
61,083
234,418
492,040
948,451
Multifamily residential and residential mixed-use
356,666
724,962
1,014,426
733,903
300,802
3,130,759
Non-owner-occupied commercial real estate
396,163
436,320
508,746
722,595
453,480
2,517,304
ADC
2,445
-
-
3,245
Other loans
3,833
4,909
Total
$
969,265
$
1,358,591
$
1,751,911
$
2,034,550
$
1,578,624
$
7,692,941
Variable rate loans have repricing frequencies less than one year. The following table presents variable rate loans by time to maturity as of December 31, 2024:
Less than
(In thousands)
1 year
1 to 2 years
2 to 3 years
3 to 5 years
Over 5 years
Total
Variable rate loans
$
854,910
$
272,840
$
391,706
$
522,095
$
1,134,836
$
3,176,387
Concentrations of Lending Activities
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans have collectively represented the largest percentage of the Company’s loan portfolio, accounting for 65% and 69% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. Non-owner occupied commercial real estate loans represent 30% and 31% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. Multifamily residential and residential mixed-use loans made up 35% and 37% of total loans held for investment as of December 31, 2024 and December 31, 2023, respectively. The Company expects that non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans will continue to be a significant portion of the Company’s total loan portfolio.
Non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans are subject to a varying degree of risk associated with changing general economic conditions. The Company employs heightened risk management practices that address key elements, including board and management oversight and strategic planning, portfolio management, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing, and maintenance of appropriate capital levels as needed to support lending activities.
Despite the Company's concentration in non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, the properties securing these portfolios are diversified in terms of type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. As a matter of policy, the non-owner occupied commercial real estate loan and the multifamily residential and residential mixed-use loan portfolios are subject to risk exposure limits by individual asset classes as well as geographic collateral locations outside of our market areas.
We regularly identify and assess concentration levels through ongoing reporting to our Board of Directors as well as committees at both the Board and Management levels. The management team has extensive knowledge and experience in underwriting non-owner occupied commercial real estate loans and multifamily residential and residential mixed-use loans. Management has established the Credit Risk Management Committee which meets quarterly to review all policies and procedures, large lending exposures, and emerging trends including trends related to delinquency, debt service coverage ratios, loan-to-value, and loan ratings to aid in early detection and escalation of potential issues. The Company has a dedicated team responsible for conducting comprehensive annual reviews of the portfolios, ensuring consistent oversight. Credit underwriting standards are periodically reviewed and adjusted based upon observations from our ongoing monitoring of economic conditions in major real estate markets in which we lend. In response to the current dynamic interest rate environment and changes in the benchmark rates that determine loan pricing, the Company has enhanced its stress testing and loan review activities to mitigate interest rate reset risk with a specific emphasis on borrowers' abilities to absorb the impact of higher interest loan rates and measure the resiliency of the portfolios. As a general rule, Management takes a selective approach to originating non-owner occupied commercial real estate and multifamily residential and residential mixed-use loans, prioritizing quality and strategic alignment.
The following tables present the composition by property type and weighted average loan-to-value (“LTV”) of the Company’s non-owner occupied commercial real estate loans:
December 31, 2024
Weighted
Average Rate
(Dollars in thousands)
NY
NJ
Other
Balance
LTV
Investor commercial real estate:
Retail
$
1,085,618
$
62,990
$
3,594
$
1,152,202
%
Investor office
439,359
135,584
3,127
578,070
Warehouse/ Industrial
337,288
43,458
69,314
450,060
Hotels
356,450
11,934
368,809
Supportive housing
161,207
-
-
161,207
Medical office
106,403
-
28,470
134,873
Educational facility or library
120,719
-
-
120,719
Medical facility
60,866
-
-
60,866
Other (1)
196,304
2,763
4,662
203,729
Total investor commercial real estate
$
2,864,214
245,220
121,101
$
3,230,535
%
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
December 31, 2023
Weighted
Average Rate
(Dollars in thousands)
NY
NJ
Other
Balance
LTV
Investor commercial real estate:
Retail
$
1,119,896
$
64,577
$
3,722
$
1,188,195
%
Investor office
476,958
140,713
3,195
620,866
Warehouse/ Industrial
351,863
47,577
70,523
469,963
Hotels
340,656
12,016
353,098
Supportive housing
166,356
-
-
166,356
Medical office
114,211
-
29,063
143,274
Educational facility or library
105,541
-
-
105,541
Medical facility
91,391
3,573
18,483
113,447
Other (1)
204,573
3,675
10,679
218,927
Total investor commercial real estate
$
2,971,445
260,541
147,681
$
3,379,667
%
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
The following tables present the composition by property type and weighted average LTV of the Company’s multifamily residential and residential mixed-use loans:
December 31, 2024
Weighted
Total
Average Rate
(Dollars in thousands)
Balance
LTV
Multifamily residential and residential mixed-use:
New York City (1)
100% rent regulated (2)
$
572,054
%
Majority rent regulated (2)
643,908
Majority free market
1,846,525
Total New York City
3,062,487
Outside New York City
757,796
Total multifamily residential and residential mixed-use
$
3,820,283
%
(1) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(2) Composition based on revenue.
December 31, 2023
Weighted
Total
Average Rate
(Dollars in thousands)
Balance
LTV
Multifamily residential and residential mixed-use:
New York City (1)
100% rent regulated (2)
$
547,977
%
Majority rent regulated (2)
687,424
Majority free market
2,025,511
Total New York City
3,260,912
Outside New York City
756,264
Total multifamily residential and residential mixed-use
$
4,017,176
%
(1) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(2) Composition based on revenue.
Additional information related to the granularity in the non-owner occupied commercial real estate and multifamily residential and residential mixed-use portfolios is presented in the tables below as of December 31, 2024 and December 31, 2023:
December 31, 2024
Number of
Average
loans
(Dollars in thousands)
Loan Size
> $20 million
Investor commercial real estate:
Retail
$
2,613
Investor Office
5,781
Warehouse/ Industrial
3,983
Hotels
8,781
Supportive housing
20,151
Medical office
6,423
Educational facility or library
10,060
-
Medical facility
7,608
Other (1)
1,922
-
Multifamily residential and residential mixed-use:
New York City (2)
100% rent regulated (3)
2,487
-
Majority rent regulated (3)
3,810
Majority free market
3,864
Outside New York City
4,521
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
(2) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(3) Composition based on revenue.
December 31, 2023
Number of
Average
loans
(Dollars in thousands)
Loan Size
> $20 million
Investor commercial real estate:
Retail
$
2,577
Investor Office
5,749
Warehouse/ Industrial
3,949
Hotels
8,025
Supportive housing
23,765
Medical office
6,823
Educational facility or library
9,595
-
Medical facility
9,454
Other (1)
2,027
-
Multifamily residential and residential mixed-use:
New York City (2)
100% rent regulated (3)
2,502
-
Majority rent regulated (3)
3,819
Majority free market
3,964
Outside New York City
4,201
(1) Includes various property types such as gas stations, restaurants, storage facilities, and other special use properties.
(2) New York City includes the Bronx, Brooklyn, Queens, Staten Island and Manhattan.
(3) Composition based on revenue.
Asset Quality
General
We do not originate or purchase loans, either whole loans or loans underlying mortgage-backed securities (“MBS”), which would have been considered subprime loans at origination, i.e., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 3 of our Consolidated Financial Statements for a discussion of evaluation for impaired securities.
Monitoring and Collection of Delinquent Loans
Our management reviews delinquent loans on a monthly basis and reports to our Board of Directors or Committees of the Board of the Directors at each regularly scheduled Board or Committee meeting regarding the status of all non-performing and otherwise delinquent loans in our loan portfolio.
Our loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of business loans, multifamily residential and mixed use, non-owner-occupied commercial real estate loans, and ADC loans, or fifteen days late in connection with one-to-four family and consumer loans. Thereafter, periodic letters are mailed and phone calls are placed to the borrower until payment is received or the loan is transferred to workout. When contact is made with the borrower at any time prior to foreclosure, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.
Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation. Upon entering non-accrual status, the system will reverse all outstanding accrued interest receivable.
We generally initiate foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, unless the borrower is paying in accordance with an agreed upon modified payment agreement. We obtain an
updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. We generally attempt to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and has made at least six months of payments.
The C&I portfolio, which is within our business loans, is actively managed by our lenders. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also required to update their financial reporting on an annual basis or alternative schedule as provided in their loan documents. All exposures are credit risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny and monitoring. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.
Non-accrual Loans
Within our held-for-investment loan portfolio, non-accrual loans totaled $49.5 million at December 31, 2024 and $29.1 million at December 31, 2023.
Loan Restructurings
The Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows, include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.
Please refer to Note 4 of our condensed Consolidated Financial Statements for further discussion on loan restructurings.
OREO
Property acquired by the Bank, or a subsidiary, as a result of foreclosure on a mortgage loan or a deed in lieu of foreclosure is classified as OREO. Upon entering OREO status, we obtain a current appraisal on the property and reassesses the likely realizable value (a/k/a fair value) of the property quarterly thereafter. OREO is carried at the lower of the fair value or book balance, with any write downs recognized through a provision recorded in non-interest expense. Only the appraised value, or either a contractual or formal marketed value that falls below the appraised value, is used when determining the likely realizable value of OREO at each reporting period. We typically seek to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.
There was no carrying value of OREO properties on our consolidated statements of financial condition at December 31, 2024 or December 31, 2023. We did not recognize any provisions for losses on OREO properties during the years ended December 31, 2024, 2023 or 2022.
Past Due Loans
Loans Delinquent 30 to 59 Days
At December 31, 2024, we had loans totaling $10.3 million that were past due between 30 and 59 days, compared to $12.0 million at December 31, 2023. The 30 to 59-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Loans Delinquent 60 to 89 Days
At December 31, 2024, we had loans totaling $31.3 million that were past due between 60 and 89 days, compared to $1.3 million at December 31, 2023. The 60 to 89-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.
Accruing Loans 90 Days or More Past Due
There were no accruing loans 90 days or more past due at December 31, 2024 or 2023.
Reserve for Unfunded Loan Commitments
We maintain a reserve, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of reserve was $2.7 million at December 31, 2024 and 2023, respectively. This reserve is determined based upon the outstanding volume of unfunded loan commitments at each period end. Any increases or reductions in this reserve are recognized in provision for credit losses.
Allowance for Credit Losses
Provision for credit losses of $36.1 million and $2.8 million were recorded during the twelve-month periods ended December 31, 2024 and 2023, respectively. The $36.1 million provision for credit losses recognized in 2024 was related to additional provisioning for the pooled multifamily, C&I, and criticized loan portfolios. The $2.8 million provision for credit losses recognized in 2023 was associated with provisioning for individually analyzed loans.
For further discussion of the allowance for credit losses and related activity during the years ended December 31, 2024, 2023 and 2022, please see Note 4 to the Consolidated Financial Statements.
The following table presents our allowance for credit losses allocated by loan type and the percent of each to total loans at the dates indicated.
December 31,
Percent
Percent
Percent
of Loans
of Loans
of Loans
in Each
in Each
in Each
Category
Category
Category
Allocated
to Total
Allocated
to Total
Allocated
to Total
(Dollars in thousands)
Amount
Loans
Amount
Loans
Amount
Loans
Business loans
$
42,898
25.08
%
$
35,962
21.44
%
47,029
20.93
One-to-four family residential and cooperative/condominium apartment
9,501
8.75
6,813
8.24
5,969
7.32
Multifamily residential and residential mixed-use
11,946
35.16
7,237
37.31
8,360
38.11
Non-owner-occupied commercial real estate
21,876
29.72
19,623
31.39
20,153
31.40
ADC
2,323
1.25
1,989
1.57
1,723
2.17
Other loans
0.04
0.05
0.07
Total
$
88,751
100.00
%
$
71,743
100.00
%
$
83,507
100.00
%
The following table sets forth information about our allowance for credit losses at or for the dates indicated:
At or for the Year Ended December 31,
(Dollars in thousands)
Total loans outstanding at end of period (1)
$
10,869,328
$
10,766,837
$
10,566,831
Average total loans outstanding during the period (2)
10,821,821
10,764,598
9,747,887
Allowance for credit losses balance at end of period
88,751
71,743
83,507
Allowance for credit losses to total loans at end of period
0.82
%
0.67
%
0.79
%
Non-performing loans to total loans at end of period
0.46
0.27
0.32
Allowance for credit losses to total non-performing loans at end of period
179.37
246.55
243.91
Ratio of net charge-offs to average loans outstanding during the period:
Business loans
0.30
%
1.37
%
0.77
%
One-to-four family residential and cooperative/condominium apartment
-
-
-
Multifamily residential and residential mixed-use
0.12
-
-
Non-owner-occupied commercial real estate
0.21
-
-
ADC
-
-
-
Other loans
1.80
4.34
0.42
Total
0.18
0.14
0.07
(1) Total loans represent gross loans (excluding loans held for sale), fair value hedge basis point adjustments, inclusive of deferred fees/costs and premiums/discounts.
(2) Total average loans represent gross loans (including loans held for sale and fair value hedge basis point adjustments), inclusive of deferred loan fees/costs and premiums/discounts.
Investment Activities
Securities available-for-sale
The following table presents the amortized cost, fair value and weighted average yield of our securities available-for-sale at December 31, 2024, categorized by remaining period to contractual maturity:
Weighted
Amortized
Fair
Average
(Dollars in thousands)
Cost
Value
Yield
Due within 1 year
$
6,717
$
6,597
1.13
%
Due after 1 year but within 5 years
158,420
153,169
3.98
Due after 5 years but within 10 years
165,772
157,104
4.73
Due after ten years
403,225
373,823
3.74
Total
$
734,134
$
690,693
3.99
%
The entire carrying amount of each security at December 31, 2024 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities available-for-sale approximated 2.9 years as of December 31, 2024, when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.
The following table presents the weighted average contractual maturity of our securities available-for-sale:
December 31,
(In years)
Agency notes
1.85
Corporate securities
5.90
Pass-through MBS issued by U.S. GSEs and agency collateralized mortgage obligations ("CMOs")
18.24
State and municipal obligations
3.18
Securities held-to-maturity
The following table presents the amortized cost, fair value and weighted average yield of our securities held-to-maturity at December 31, 2024, categorized by remaining period to contractual maturity:
Weighted
Amortized
Fair
Average
(Dollars in thousands)
Cost
Value
Yield
Due within 1 year
$
-
$
-
-
%
Due after 1 year but within 5 years
44,898
42,359
2.64
Due after 5 years but within 10 years
180,658
157,523
2.71
Due after ten years
411,783
352,395
2.98
Total
$
637,339
$
552,277
2.88
%
The entire carrying amount of each security at December 31, 2024 is reflected in the above table in the maturity period that includes the final security payment date and, accordingly, no effect has been given to periodic repayments or possible prepayments. The weighted average duration of our securities held-to-maturity approximated 5.1 years as of December 31, 2024 when giving consideration to anticipated repayments or possible prepayments, which is significantly less than their weighted average maturity.
The following table presents the weighted average contractual maturity of our securities held-to-maturity at the date indicated below:
December 31,
(In years)
Agency notes
5.26
Corporate securities
8.14
Pass-through MBS issued by GSEs and agency CMOs
20.88
Sources of Funds
Deposits
The following table presents our deposit accounts and the related weighted average interest rates at the dates indicated (Dollars in thousands):
December 31, 2024
December 31, 2023
December 31, 2022
Percent
Percent
Percent
of
Weighted
Of
Weighted
Of
Weighted
Total
Average
Total
Average
Total
Average
Amount
Deposits
Rate
Amount
Deposits
Rate
Amount
Deposits
Rate
Savings accounts
$
1,927,909
16.5
%
2.98
%
$
2,335,490
22.2
%
3.67
%
$
2,260,101
22.0
%
2.24
%
CDs
1,069,081
9.1
3.73
1,607,683
15.3
4.43
1,115,364
10.9
2.25
Money market accounts
4,198,784
36.0
3.01
3,125,996
29.6
3.46
2,532,270
24.7
1.50
Interest-bearing checking accounts
1,079,823
9.2
1.92
515,987
4.9
0.77
827,454
8.1
1.01
Non-interest-bearing checking accounts
3,410,544
29.2
-
2,945,499
28.0
-
3,519,218
34.3
-
Totals
$
11,686,141
100.00
%
2.09
%
$
10,530,655
100.00
%
2.56
%
$
10,254,407
100.00
%
1.19
%
The weighted average maturity of our CDs at December 31, 2024 was 5.8 months, compared to 5.1 months at December 31, 2023.
Non-insured deposits (excluding collateralized deposits and deposits with pass through insurance) represented 31.2% and 28.9% of total deposits as of December 31, 2024 and 2023, respectively. The Bank had $1.89 billion and $1.88 billion of public funds collateralized by securities and Municipal Letters of Credit (“MULOC”), and $1.55 billion and $680.8 million of deposits with pass through insurance as of December 31, 2024, and 2023, respectively.
The following table presents the time deposits with balances exceeding the $250,000 FDIC insurance limit by maturity at December 31, 2024:
(Dollars in thousands)
Three months or less
$
92,786
Over three through six months
73,233
Over six through twelve months
44,118
Over twelve months
24,432
Total
$
234,569
As of December 31, 2024, the portion of uninsured time deposits in excess of the $250,000 FDIC insurance limit was $93.3 million.
Our Board of Directors authorized the Bank to accept brokered deposits up to an aggregate limit of 10.0% of total assets. Brokered deposits totaled $422.8 million and $898.7 million at December 31, 2024 and 2023, respectively. Core deposit growth was used to reduce the brokered deposit position over the course of 2024.
Borrowings
The Bank’s total borrowing line with FHLBNY equaled $3.87 billion at December 31, 2024. The Bank had $608.0 million of FHLBNY advances outstanding at December 31, 2024, and $1.31 billion at December 31, 2023. The Bank maintained sufficient collateral, as defined by the FHLBNY (principally in the form of real estate loans), to secure such advances.
The Company had no outstanding securities sold under agreements to repurchase (“repurchase agreements”) at December 31, 2024 or December 31, 2023.
Liquidity and Capital Resources
The Board of Directors of the Bank has approved a liquidity policy that it reviews and updates at least annually. Senior management is responsible for implementing the policy. The Bank’s Asset Liability Committee (“ALCO”) is responsible for general oversight and strategic implementation of the policy and management of the appropriate departments are designated responsibility for implementing any strategies established by ALCO. On a daily basis, appropriate senior management receives a current cash position report and 30-day forecast to ensure that all short-term obligations are timely satisfied, and that adequate liquidity exists to fund future activities. Reports detailing the Bank’s liquidity reserves are presented to appropriate senior management on at least a monthly basis, and the Board of Directors at each of its meetings. In addition, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors no less than annually. Given recent banking industry events, management monitors the level of uninsured deposits on a regular basis.
Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise. The Bank’s primary sources of funding for its lending and investment activities include deposits, loan payments, investment security principal and interest payments and advances from the FHLBNY. The Bank may also sell or securitize selected multifamily residential, mixed-use or one-to-four family residential real estate loans to private sector secondary market purchasers and has in the past sold such loans to FNMA and Federal Home Loan Mortgage Corporation (“FHLMC”). The Company may additionally issue debt or equity under appropriate circumstances. Although maturities and scheduled amortization of loans and investments are predictable sources of funds, deposit flows and prepayments on real estate loans and MBS are influenced by interest rates, economic conditions and competition.
The Bank is a member of American Financial Exchange (“AFX”), through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. At December 31, 2024, the Bank had $50.0 million of such borrowings outstanding through the AFX, which is included in other short-term borrowings on the consolidated statements of financial condition. At December 31, 2023, the Bank did not utilize funds available through the AFX.
The Bank utilizes repurchase agreements as part of its borrowing policy to add liquidity. Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities. As of December 31, 2024 and December 31, 2023, the Bank did not have any repurchase agreements.
The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation. It must additionally compete for deposit monies against the stock and bond markets, especially during periods of strong performance in those arenas. The Bank’s deposit flows are affected primarily by the pricing and marketing of its deposit products compared to its competitors, as well as the market performance of depositor investment alternatives such as the U.S. bond or equity markets. To the extent that the Bank is responsive to general market increases or declines in interest rates, its deposit flows should not be materially impacted. However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.
Total deposits (including mortgage escrow deposits) increased $1.16 billion during the year ended December 31, 2024 compared to an increase of $276.2 million during the year ended December 31, 2023. Within deposits, core deposits (i.e., non-CDs) increased $1.74 billion during the year ended December 31, 2024 and decreased $216.1 million during the year ended December 31, 2023. The increase in core deposits during the 2024 period was primarily due to an increase in money market deposits, interest bearing checking and non interest-bearing checking accounts. During 2024, the Company made significant investments in its Private and Commercial Bank, including the hiring and onboarding of several deposit-gathering teams. CDs decreased $538.6 million during the year ended December 31, 2024 compared to an increase of $492.3 million during the year ended December 31, 2023. The decrease in CDs during the current period was primarily due to a $475.9 million decrease in brokered CDs.
The Bank reduced its outstanding FHLBNY advances by $705.0 million during the year ended December 31, 2024, compared to a $182.0 million increase during the year ended December 31, 2023. See Note 12. “Federal Home Loan Bank Advances” to our Consolidated Financial Statements for further information.
Subordinated debentures totaled $272.3 million at December 31, 2024 compared to $200.2 million at December 31, 2023. The increase in subordinated debentures was due to the Company’s issuance of subordinated notes that are described in more detail in Note 13, “Subordinated Debentures” to our Consolidated Financial Statements for further information.
In the event that the Bank should require funds beyond its ability or desire to generate them internally, additional sources of liquidity are available through its collateralized borrowing lines at the FHLBNY and the FRB, as well as unsecured borrowing capacity through the AFX and lines of credit with unaffiliated correspondent banks. At December 31, 2024, the Bank had remaining borrowing capacity of $1.84 billion through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements (i.e., 4.5% of the Bank’s drawn FHLBNY borrowings). The Bank also had access to the FRB Discount Window. At December 31, 2024, an available line of credit totaling $394.6 million was in place at the FRB backed by investment securities with no advances drawn. Additionally, at December 31, 2024, a line of credit totaling $3.04 billion was in place at the FRB secured by certain qualifying 1-4 family residential mortgage loans, construction loans and CRE loans with no amounts drawn.
During the year ended December 31, 2024 and 2023, business loan originations totaled $371.2 million and $343.9 million, respectively. During the year ended December 31, 2024 and 2023, real estate loan originations (excluding owner-occupied commercial real estate) totaled $199.6 million and $653.7 million, respectively.
The Company and the Bank are subject to minimum regulatory capital requirements imposed by its primary federal regulator. As a general matter, these capital requirements are based on the amount and composition of an institution’s assets. At December 31, 2024, each of the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered "well capitalized" for all regulatory purposes.
The Holding Company did not repurchase any shares of its common stock during the year ended December 31, 2024. The Holding Company repurchased 36,813 shares of its common stock at an aggregate cost of $947 thousand during the year ended December 31, 2023. As of December 31, 2024, up to 1,566,947 shares remained available for purchase under the authorized share repurchase programs. See "Part II - Item 5, Issuer Purchases of Equity Securities" for additional information about repurchases of common stock.
The Holding Company paid $7.3 million in cash dividends on its preferred stock during the years ended December 31, 2024 and 2023, respectively.
The Holding Company paid $38.0 million and $37.3 million in cash dividends on its common stock during the years ended December 31, 2024 and 2023, respectively.
Contractual Obligations
The Bank generally has borrowings outstanding in the form of FHLBNY advances, short-term or overnight borrowings, subordinated debt, as well as customer CDs with fixed contractual interest rates. In addition, the Bank is obligated to make rental payments under leases on certain of its branches and equipment.
Off-Balance Sheet Arrangements
As part of its loan origination business, the Bank generally has outstanding commitments to extend credit to borrowers, which are originated pursuant to its regular underwriting standards. Available lines of credit may not be drawn on or may expire prior to funding, in whole or in part, and amounts are not estimates of future cash flows. As of December 31, 2024, the Bank had $77.8 million of firm loan commitments that were accepted by the borrowers.
Additionally, in connection with a loan securitization completed in 2017, the Bank executed a reimbursement agreement with FHLMC that obligates the Company to reimburse FHLMC for any contractual principal and interest payments on defaulted loans, not to exceed 10% of the original principal amount of the loans comprising the aggregate balance of the loan pool at securitization. The maximum exposure under this reimbursement obligation is $28.0 million. The Bank has pledged $28.0 million of pass-through MBS issued by GSEs as collateral.
Recently Issued Accounting Standards
For a discussion of the impact of recently issued accounting standards, please see Note 1 to the Company’s Consolidated Financial Statements.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
General
The Company’s largest component of market risk remains interest rate risk. The Company is not subject to foreign currency exchange or commodity price risk. During the year ended December 31, 2024, we conducted zero transactions involving derivative instruments requiring bifurcation in order to hedge interest rate or market risk.
Asset/Liability Management
Management considers interest rate risk to be the most significant market risk for the Company. Market risk is the risk of losses from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in net income as a result of changes in interest rates.
The Company’s primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and the credit quality of earning assets. Our asset and liability management objectives are to maintain a strong, stable net interest margin, to utilize its capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of our operations to changes in interest rates.
Our Asset and Liability Management Committee evaluates periodically, but no less than four times annually, the impact of changes in market interest rates on assets and liabilities, net interest margin, capital and liquidity. Risk assessments are governed by policies and limits established by senior management, which are reviewed and approved by the Board of Directors at least annually. The economic environment continually presents uncertainties as to future interest rate trends.
The Asset and Liability Management Committee regularly utilizes a model that projects net interest income based on increasing or decreasing interest rates, in order to be better able to respond to changes in interest rates.
At December 31, 2024, $273.1 million, or 20.6%, of our available-for-sale and held-to-maturity securities had adjustable interest rates. At December 31, 2024, $7.98 billion, or 73.4%, of the loan portfolio had contractual terms with adjustable or floating interest rates. Changes in interest rates affect the value of interest-earning assets and, in particular, the securities portfolio. Generally, the value of securities fluctuates inversely with changes in interest rates. Increases in interest rates could result in decreases in the market value of interest-earning assets, which could adversely affect stockholders’ equity and the results of operations if sold. The Company is also subject to reinvestment risk associated with changes in interest rates. Changes in market interest rates also could affect the type (fixed-rate or adjustable-rate) and amount of loans originated and the average life of loans and securities, which can impact the yields earned on loans and securities. In periods of decreasing interest rates, the average life of loans and securities held may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such prepayments in lower yielding assets. Under these circumstances, the Company is subject to reinvestment risk to the extent that management is unable to reinvest the cash received from such prepayments at rates that are comparable to the rates on existing loans and securities. Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and, therefore, an increase in the average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans. In addition, increases in interest rates may result in the extensions of the average life of securities which may result in lower cash flows to the Bank.
Interest Rate Risk Exposure Analysis
Economic Value of Equity ("EVE") Analysis. In accordance with agency regulatory guidelines, the Company simulates the impact of interest rate volatility upon EVE using several interest rate scenarios. EVE is the difference between the present value of the expected future cash flows of the Company’s assets and liabilities and the value of any off-balance sheet items, such as derivatives, if applicable.
Traditionally, the fair value of fixed-rate instruments fluctuates inversely with changes in interest rates. Increases in interest rates thus result in decreases in the fair value of interest-earning assets, which could adversely affect the Company’s consolidated results of operations in the event they were to be sold, or, in the case of interest-earning assets classified as available-for-sale, reduce the Company’s consolidated stockholders’ equity, if retained. The changes in the value of assets and liabilities due to fluctuations in interest rates measure the interest rate sensitivity of those assets and liabilities.
In order to measure the Company’s sensitivity to changes in interest rates, EVE is calculated under market interest rates prevailing at a given quarter-end ("Pre-Shock Scenario"), and under various other interest rate scenarios ("Rate Shock Scenarios") representing immediate, permanent, parallel shifts in the term structure of interest rates from the actual term structure observed in the Pre-Shock Scenario. An increase in the EVE is considered favorable, while a decline is considered unfavorable. The changes in EVE between the Pre-Shock Scenario and various Rate Shock Scenarios due to fluctuations in interest rates reflect the interest rate sensitivity of the Company’s assets, liabilities, and off-balance sheet items that are included in the EVE. Management reports the EVE results to the Board of Directors on a quarterly basis. The report compares the Company’s estimated Pre-Shock Scenario EVE to the estimated EVE calculated under the various Rate Shock Scenarios.
The Company’s valuation model makes various estimates regarding cash flows from principal repayments on loans and deposit decay rates at each level of interest rate change. The Company’s estimates for loan repayment levels are influenced by the recent history of prepayment activity in its loan portfolio, as well as the interest rate composition of the existing portfolio, especially in relation to the existing interest rate environment. Regarding deposit decay rates, the Company tracks and analyzes the decay rate of its deposits over time, with the assistance of a reputable third-party, and over various interest rate scenarios. Such results are utilized in determining estimates of deposit decay rates in the valuation model. The Company also generates a series of spot discount rates that are integral to the valuation of the projected monthly cash flows of its assets and liabilities. The valuation model employs discount rates that it considers representative of prevailing market rates of interest with appropriate adjustments it believes are suited to the heterogeneous characteristics of the Company’s various asset and liability portfolios. No matter the care and precision with which the estimates are derived, actual cash flows could differ significantly from the Company’s estimates resulting in significantly different EVE calculations.
The analysis that follows presents, as of December 31, 2024 and 2023, the estimated EVE at both the Pre-Shock Scenario and the -200 Basis Point Rate, -100 Basis Point Rate, +100 Basis Point Rate and +200 Basis Point Rate Shock Scenarios.
December 31, 2024
December 31, 2023
Dollar
Percentage
Dollar
Percentage
(Dollars in thousands)
EVE
Change
Change
EVE
Change
Change
Rate Shock Scenarios
+ 200 Basis Points
$
1,862,712
$
101,644
5.8
%
$
1,414,548
$
79,745
6.0
%
+ 100 Basis Points
1,843,160
82,092
4.7
%
1,375,777
40,974
3.1
%
Pre-Shock Scenario
1,761,068
-
-
1,334,803
-
-
- 100 Basis Points
1,636,011
(125,057)
(7.1)
%
1,247,956
(86,847)
(6.5)
%
- 200 Basis Points
1,439,251
(321,817)
(18.3)
%
1,112,110
(222,693)
(16.7)
%
The Company’s Pre-Shock Scenario EVE increased from $1.33 billion at December 31, 2023, to $1.76 billion at December 31, 2024. The primary factors contributing to the increase in EVE is an increase in the value of the Bank’s non-maturity deposit base as well as down streaming some of the proceeds of a common stock offering to the Bank.
The Company’s EVE in the +100 Basis Point Rate and +200 Basis Point Rate Shock Scenarios increased from $1.38 billion and $1.41 billion, respectively, at December 31, 2023, to $1.84 billion and $1.86 billion, respectively, at December 31, 2024. In the -100 Basis Point Rate and -200 Basis Point Rate Shock Scenarios the Company’s EVE increased from $1.25 billion and $1.11 billion, respectively, at December 31, 2023, to $1.64 billion and $1.44 billion, respectively, at December 31, 2024.
Income Simulation Analysis. As of the end of each quarterly period, the Company also monitors the impact of interest rate changes through a net interest income simulation model. This model estimates the impact of interest rate changes on the Company’s net interest income over forward-looking periods typically not exceeding 36 months (a considerably shorter period than measured through the EVE analysis). Management reports the net interest income simulation results to the Company’s Board of Directors on a quarterly basis. The following table discloses the estimated changes to the Company’s net interest income in various time periods assuming gradual changes in interest rates over a 12-month period beginning December 31, 2024, for the given rate scenarios:
Percentage Change in Net Interest Income
Gradual Change in Interest rates of:
Year-One
Year-Two
+ 200 Basis Points
0.8
%
4.5
%
+ 100 Basis Points
0.5
%
2.5
%
- 100 Basis Points
1.6
%
0.6
%
- 200 Basis Points
2.4
%
(0.8)
%
Management also examines the potential impact to net interest income by simulating the impact of instantaneous changes to interest rates. The following table discloses the estimated changes to the Company’s net interest income in various time periods associated with the given interest rate shock scenarios:
Percentage Change in Net Interest Income
Instantaneous Rate Shock Scenarios
Year-One
Year-Two
+ 200 Basis Points
3.4
%
7.2
%
+ 100 Basis Points
1.8
%
3.9
%
- 100 Basis Points
0.9
%
(1.1)
%
- 200 Basis Points
0.4
%
(4.8)
%

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
For the Company’s Consolidated Financial Statements with the notes thereto, see pages hereafter.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands except share amounts)
December 31,
Assets:
Cash and due from banks
$
1,283,571
$
457,547
Securities available-for-sale, at fair value
690,693
886,240
Securities held-to-maturity
637,339
594,639
Loans held for sale
22,625
10,159
Loans held for investment, net of fees and costs
10,871,943
10,773,428
Allowance for credit losses
(88,751)
(71,743)
Total loans held for investment, net
10,783,192
10,701,685
Premises and fixed assets, net
34,858
44,868
Premises held for sale
-
Restricted stock
69,106
98,750
BOLI
290,665
349,816
Goodwill
155,797
155,797
Other intangible assets
3,896
5,059
Operating lease assets
46,193
52,729
Derivative assets
116,496
122,132
Accrued interest receivable
55,970
55,666
Other assets
162,857
100,013
Total assets
$
14,353,258
$
13,636,005
Liabilities:
Interest-bearing deposits
$
8,275,591
$
7,585,020
Non-interest-bearing deposits
3,355,829
2,884,378
Deposits (excluding mortgage escrow deposits)
11,631,420
10,469,398
Non-interest-bearing mortgage escrow deposits
54,715
61,121
Interest-bearing mortgage escrow deposits
Total mortgage escrow deposits
54,721
61,257
FHLBNY advances
608,000
1,313,000
Other short-term borrowings
50,000
-
Subordinated debt, net
272,325
200,196
Derivative cash collateral
112,420
108,100
Operating lease liabilities
48,993
55,454
Derivative liabilities
108,347
121,265
Other liabilities
70,515
81,110
Total liabilities
12,956,741
12,409,780
Commitments and contingencies
-
Stockholders' equity:
Preferred stock, Series A ($0.01 par, $25.00 liquidation value, 10,000,000 shares authorized and 5,299,200 shares issued and outstanding at December 31, 2024 and December 31, 2023)
116,569
116,569
Common stock ($0.01 par, 80,000,000 shares authorized, 46,141,361 shares and 41,637,256 shares issued at December 31, 2024 and December 31, 2023 respectively, and 43,622,292 shares and 38,822,654 shares outstanding at December 31, 2024 and December 31, 2023, respectively)
Additional paid-in capital
624,822
494,454
Retained earnings
794,526
813,007
Accumulated other comprehensive loss, net of deferred taxes
(45,018)
(91,579)
Unearned equity awards
(7,640)
(8,622)
Treasury stock, at cost (2,519,069 shares and 2,814,602 shares at December 31, 2024 and December 31, 2023, respectively)
(87,203)
(98,020)
Total stockholders' equity
1,396,517
1,226,225
Total liabilities and stockholders' equity
$
14,353,258
$
13,636,005
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
Year Ended December 31,
Interest income:
Loans
$
590,492
$
554,488
$
406,601
Securities
33,563
32,179
29,224
Other short-term investments
26,094
22,693
3,400
Total interest income
650,149
609,360
439,225
Interest expense:
Deposits and escrow
284,745
219,045
38,433
Borrowed funds
41,036
66,472
19,117
Derivative cash collateral
6,314
7,272
1,812
Total interest expense
332,095
292,789
59,362
Net interest income
318,054
316,571
379,863
Provision for credit losses
36,113
2,770
5,374
Net interest income after provision for credit losses
281,941
313,801
374,489
Non-interest income:
Service charges and other fees
16,725
16,437
16,206
Title fees
1,295
2,031
Loan level derivative income
2,114
7,081
3,637
BOLI income
10,376
9,748
10,346
Gain on sale of SBA Loans
1,592
1,797
Gain on sale of residential loans
Fair value change in equity securities and loans held for sale
(1,204)
(758)
-
Net loss on sale of securities
(42,810)
(1,447)
-
Gain (loss) on sale of other assets
7,219
(22)
1,397
Other
2,150
2,165
2,294
Total non-interest (loss) income
(3,955)
36,206
38,156
Non-interest expense:
Salaries and employee benefits
136,114
117,437
120,108
Severance
1,296
9,093
2,198
Occupancy and equipment
29,794
29,055
30,220
Data processing costs
17,745
16,474
15,175
Marketing
6,660
6,781
5,900
Professional services
8,614
6,155
8,069
Federal deposit insurance premiums
8,710
8,853
3,900
Loss from extinguishment of debt for FHLBNY advances and subordinated debt
-
Loss due to pension settlement
1,215
-
-
Amortization of other intangible assets
1,163
1,425
1,878
Other
14,782
17,855
12,542
Total non-interest expense
226,547
213,128
200,730
Income before income taxes
51,439
136,879
211,915
Income tax expense
22,355
40,785
59,359
Net income
29,084
96,094
152,556
Preferred stock dividends
7,286
7,286
7,286
Net income available to common stockholders
$
21,798
$
88,808
$
145,270
Earnings per common share:
Basic
$
0.55
$
2.29
$
3.73
Diluted
$
0.55
$
2.29
$
3.73
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands except per share amounts)
Year Ended December 31,
Net income
$
29,084
$
96,094
$
152,556
Other comprehensive income (loss):
Change in unrealized gain (loss) on securities:
Change in net unrealized gain (loss) during the period
23,218
10,355
(138,630)
Reclassification adjustment for net losses included in net loss on sale of securities and other assets
42,810
1,447
-
Accretion of net unrealized loss on securities transferred to held-to-maturity
3,028
3,142
2,953
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense
(1,547)
(3,715)
Change in the net actuarial gain
(1,426)
(190)
(2,062)
Change in unrealized gain (loss) on derivatives:
Change in net unrealized (loss) gain during the period
(8,453)
(11,782)
14,412
Reclassification adjustment for expense included in interest expense
10,008
2,092
(1,621)
Other comprehensive income (loss) before income taxes
69,211
3,517
(128,663)
Deferred tax expense (benefit)
22,650
(40,465)
Total other comprehensive income (loss), net of tax
46,561
2,800
(88,198)
Total comprehensive income
$
75,645
$
98,894
$
64,358
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Dollars in thousands except per share data)
Accumulated
Other
Comprehensive
Number of
Additional
Loss,
Unearned
Treasury
Total
Shares of
Preferred
Common
Paid-in
Retained
Net of Deferred
Equity
Stock,
Stockholders’
Common Stock
Stock
Stock
Capital
Earnings
Taxes
Awards
at cost
Equity
Balance as of January 1, 2022
39,877,833
$
116,569
$
$
494,125
$
654,726
$
(6,181)
$
(7,842)
$
(59,193)
$
1,192,620
Net income
-
-
-
-
152,556
-
-
-
152,556
Other comprehensive loss, net of tax
-
-
-
-
-
(88,198)
-
-
(88,198)
Release of shares, net of forfeitures
171,838
-
-
1,287
-
-
(4,514)
4,394
1,167
Stock-based compensation
-
-
-
-
-
-
4,278
-
4,278
Shares received related to tax withholding
(45,430)
-
-
(2)
-
-
-
(1,556)
(1,558)
Cash dividends declared and paid to preferred stockholders
-
-
-
-
(7,286)
-
-
-
(7,286)
Cash dividends declared and paid to common stockholders
-
-
-
-
(37,234)
-
-
-
(37,234)
Purchase of treasury stock
(1,431,241)
-
-
-
-
-
-
(46,762)
(46,762)
Ending balance as of December 31, 2022
38,573,000
116,569
495,410
762,762
(94,379)
(8,078)
(103,117)
1,169,583
Net income
-
-
-
-
96,094
-
-
-
96,094
Other comprehensive income, net of tax
-
-
-
-
-
2,800
-
-
2,800
Release of shares, net of forfeitures
331,395
-
-
(955)
-
-
(5,182)
7,301
1,164
Stock-based compensation
-
-
-
-
-
-
4,638
-
4,638
Shares received related to tax withholding
(44,928)
-
-
(1)
-
-
-
(1,257)
(1,258)
Cash dividends declared to preferred stockholders
-
-
-
-
(7,286)
-
-
-
(7,286)
Cash dividends declared to common stockholders
-
-
-
-
(38,563)
-
-
-
(38,563)
Purchase of treasury stock
(36,813)
-
-
-
-
-
-
(947)
(947)
Ending balance as of December 31, 2023
38,822,654
116,569
494,454
813,007
(91,579)
(8,622)
(98,020)
1,226,225
Net income
-
-
-
-
29,084
-
-
-
29,084
Other comprehensive income, net of tax
-
-
-
-
-
46,561
-
-
46,561
Shares issued in common stock offering, net of offering costs
4,492,187
-
135,719
-
-
-
-
135,764
Release of shares, net of forfeitures
369,563
-
-
(5,350)
-
-
(5,708)
12,163
1,105
Stock-based compensation
-
-
-
-
-
-
6,690
-
6,690
Shares received related to tax withholding
(62,112)
-
-
(1)
-
-
-
(1,346)
(1,347)
Cash dividends declared to preferred stockholders
-
-
-
-
(7,286)
-
-
-
(7,286)
Cash dividends declared to common stockholders
-
-
-
-
(40,279)
-
-
-
(40,279)
Ending balance as of December 31, 2024
43,622,292
$
116,569
$
$
624,822
$
794,526
$
(45,018)
$
(7,640)
$
(87,203)
$
1,396,517
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
29,084
$
96,094
$
152,556
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss on sale of securities available-for-sale
42,810
1,447
-
(Gain) loss on sale of other assets
(7,219)
(1,397)
Fair value change in equity securities and loans held for sale
1,204
-
Gain on sale of loans held for sale
(632)
(1,707)
(2,245)
Net depreciation, amortization and accretion
5,694
6,025
8,314
Amortization of fair value hedge basis point adjustments
1,607
-
Amortization of other intangible assets
1,163
1,425
1,878
Loss on extinguishment of debt
-
Stock-based compensation
6,690
4,638
4,278
Provision for credit losses
36,113
2,770
5,374
Originations of loans held for sale
(12,531)
(8,219)
(20,709)
Proceeds from sale of loans originated for sale
18,786
32,433
46,474
Increase in cash surrender value of BOLI
(10,376)
(9,103)
(8,190)
Gain from death benefits from BOLI
-
(645)
(2,156)
Decrease (increase) in other assets
9,224
10,332
(35,170)
(Decrease) increase in other liabilities
(23,015)
(45,957)
145,425
Net cash provided by operating activities
99,056
90,874
295,172
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available-for-sale
379,053
77,804
-
Purchases of securities available-for-sale
(335,167)
(86,084)
(39,232)
Purchases of securities held-to-maturity
(67,560)
(28,328)
(63,210)
Proceeds from calls and principal repayments of securities available-for-sale
172,767
76,858
165,097
Proceeds from calls and principal repayments of securities held-to-maturity
28,285
22,986
31,736
Purchase of BOLI
(15,000)
(8,000)
(30,000)
Proceeds received from cash surrender value of BOLI
-
1,224
2,843
Loans purchased
(6,594)
-
-
Proceeds from the sale of portfolio loans transferred to held for sale
18,310
5,000
13,201
Increase in loans
(152,623)
(259,805)
(1,359,782)
Purchases of fixed assets, net
(6,258)
(5,721)
(3,745)
Proceeds from the sale of fixed assets and premises held for sale
19,268
1,914
Sales (purchases) of restricted stock, net
29,644
(10,005)
(51,013)
Net cash provided by (used in) investing activities
64,125
(214,046)
(1,332,191)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits
1,155,559
276,411
(204,233)
(Repayments) proceeds from FHLBNY advances, short-term, net
(615,000)
20,000
1,070,000
(Repayments) proceeds of FHLBNY advances, long-term
(150,000)
162,000
-
Proceeds (repayments) from FHLBNY advances, long-term
60,000
(1,360)
36,000
Proceeds (repayments) of other short-term borrowings, net
50,000
-
(502)
Proceeds from subordinated debentures issuance, net
72,084
-
157,559
Redemption of subordinated debentures
-
-
(155,000)
Proceeds from common stock issuance, net
135,764
-
-
Release of stock for benefit plan awards
1,105
1,164
1,167
Payments related to tax withholding for equity awards
(1,347)
(1,258)
(1,558)
Purchase of treasury stock
-
(947)
(46,762)
Cash dividends paid to preferred stockholders
(7,286)
(7,286)
(7,286)
Cash dividends paid to common stockholders
(38,036)
(37,302)
(36,791)
Net cash provided by financing activities
662,843
411,422
812,594
Increase in cash and cash equivalents
826,024
288,250
(224,425)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
457,547
169,297
393,722
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
1,283,571
457,547
169,297
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in thousands)
Year Ended December 31,
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes
$
28,828
37,910
43,518
Cash paid for interest
343,249
280,815
54,910
Securities available-for-sale transferred to securities held-to-maturity
-
-
372,154
Loans transferred to loans held for sale
37,334
37,346
34,997
Loans transferred to loans held for investment
2,912
-
4,051
Premises transferred to held for sale
9,227
-
Operating lease assets in exchange for operating lease liabilities
5,855
6,333
5,098
Surrender of BOLI assets
84,527
-
-
See Notes to Consolidated Financial Statements.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except for share amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Principles of Consolidation
The audited consolidated financial statements presented in this Annual Report on Form 10-K include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”
As of December 31, 2024, we operated 62 branch locations throughout Long Island and the New York City boroughs of Brooklyn, Queens, Manhattan, Staten Island and the Bronx, and Westchester County.
The Company is a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank. The Bank was established in 1910 and is headquartered in Hauppauge, New York. The Holding Company was incorporated under the laws of the State of New York in 1988 to serve as the holding company for the Bank. The Company functions primarily as the holder of all of the Bank’s common stock. Our bank operations include Dime Community Inc., a real estate investment trust subsidiary which was formerly known as Bridgehampton Community, Inc., as an operating subsidiary. Our bank operations also include Dime Abstract LLC (“Dime Abstract”), a wholly-owned subsidiary of the Bank, which is a broker of title insurance services.
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and general practices within the financial institution industry. The accompanying consolidated financial statements include the accounts of the Holding Company and the Bank and its subsidiaries. Inter-company accounts and transactions have been eliminated in consolidation.
The following is a description of the significant accounting policies that the Company follows in preparing its consolidated financial statements.
Use of Estimates
To prepare consolidated financial statements in conformity with GAAP, management makes judgments, estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
Summary of Significant Accounting Policies
Cash and Cash Equivalents - Cash and cash equivalents include cash and deposits with other financial institutions with original maturities fewer than 90 days. Net cash flows are reported for customer loan and deposit transactions, and interest bearing deposits in other financial institutions.
Securities - Debt securities are classified as held-to-maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax (“OCI”). Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting in observable price changes in orderly transactions for the identical or a similar investment.
Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest separately in accrued interest receivable in the consolidated statements of financial condition. A debt security is placed on non-accrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on non-accrual is reversed against interest income. There were no non-accrual debt securities at December 31, 2024
and 2023, and there was no accrued interest related to debt securities reversed against interest income for the year ended December 31, 2024 and 2023. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.
Restricted Stock - Restricted stock represents FHLBNY capital stock, FRB capital stock, and Atlantic Community Bankers Bank (“ACBB”) capital stock, which are reported at cost. The Bank is a member of the FHLB system. Members are required to own a particular amount of stock based on the level of borrowings and other factors and may invest in additional amounts. FHLB stock is periodically evaluated for impairment based on ultimate recovery of par value. The Bank is a member of the FRB. Membership requires the purchase of shares of FRB capital stock. The Bank has a relationship with ACBB. The relationship requires the purchase of shares of ACBB capital stock. Both cash and stock dividends are reported as income.
Loans Held for Sale - Loans originated and intended for sale in the secondary market, as well as identified problem loans which are subject to an executed note sale agreement, are carried at the lower of aggregate cost or net realizable proceeds. Loans originated and intended for sale are generally sold with servicing rights retained. Problem loans in which the borrower does not adhere to all of the terms and conditions of the legal contract are generally resolved through the sale of the loan rather than through litigation through our workout department.
Loans - Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal amount outstanding, net of partial charge-offs, deferred origination costs and fees and purchase premiums and discounts. Loan origination, commitment fees and certain direct and indirect costs incurred in connection with loan originations are deferred and amortized to income over the life of the related loans as adjustments to yield. When a loan prepays, the remaining unamortized net deferred origination fees or costs are recognized in the current year. Interest on loans is credited to income based on the principal outstanding during the period. The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and report accrued interest separately from the related loan balance in accrued interest receivable on the consolidated statements of financial condition. Past due status is based on the contractual terms of the loan. Loans that are 90 days past due are automatically placed on non-accrual and previously accrued interest is reversed and charged against interest income. However, if the loan is in the process of collection and the Bank has reasonable assurance that the loan will be fully collectable based upon an individual loan evaluation assessing such factors as collateral and collectability, accrued interest will be recognized as earned. If a payment is received when a loan is non-accrual, the payment is applied to the principal balance. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms.
Unless otherwise noted, the above policy is applied consistently to all loan segments.
Allowance for Credit Losses - The CECL Standard requires that the measurement of all expected credit losses for financial assets at amortized cost, such as loans receivable, securities, and off-balance sheet credit exposures, held as of the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts to cover lifetime expected credit losses. Accrued interest receivable is excluded from amortized cost basis. The allowance for credit losses is established and maintained through a provision for credit losses based on expected losses inherent within the financial asset holdings. Management evaluates the adequacy of the allowance on a quarterly basis, and additions to the allowance are charged to expense and realized losses, net of recoveries, are charged against the allowance.
Allowance for credit losses on held-to-maturity securities - Management classifies its held-to-maturity portfolio into the following major security types: Pass-through MBS issued by GSEs, Agency Collateralized Mortgage Obligations, Agency Notes and Corporate Securities. The majority of the securities in the held-to-maturity portfolio are issued by U.S. government-sponsored entities or agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. To the extent that debt securities in the held-to-maturity portfolio share common risk characteristics, expected credit losses are calculated by pools of such debt securities. The historical lifetime probability of default and severity of loss in the event of default is derived or obtained from external sources and adjusted for the expected effects of reasonable and supportable forecasts over the expected lifetime of the securities.
For a debt security in the held-to-maturity portfolio that does not share common risk characteristics with any of the pools of debt securities, expected credit loss on each security is individually measured based on net realizable value, or the
difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the recorded amortized cost basis of the security.
With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities or agencies, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Therefore, for those securities, the Company does not record expected credit losses.
Allowance for credit losses on available-for-sale securities - Management evaluates available-for-sale debt securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. For securities in an unrealized loss position, management considers the extent of the unrealized loss, and the near-term prospects of the issuer. Impairment may result from credit deterioration of the issuer or collateral underlying the security. In performing an assessment of whether any decline in fair value is due to a credit loss, all relevant information is considered at the individual security level. For asset-backed securities performance indicators considered related to the underlying assets include default rates, delinquency rates, percentage of non-performing assets, debt-to-collateral ratios, third party guarantees, current levels of subordination, vintage, geographic concentration, analyst reports and forecasts, credit ratings and other market data. In assessing whether a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount the fair value is less than amortized cost basis. Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are excluded from earnings and reported, net of tax, in OCI. Management also assesses whether it intends to sell or is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.
Allowance for credit losses on loans held for investment - The Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. The methodology for determining the allowance for credit losses on loans held for investment is considered a critical accounting policy by management given the judgment required for determining assumptions used, uncertainty of economic forecasts, and subjectivity of any qualitative factors considered.
The Company evaluates its loan pooling methodology at least annually. The Company has identified the following loan pools used to measure the allowance for credit losses as follows:
Business loans - Loans in this classification consist of commercial and industrial and owner-occupied commercial real estate loans. Commercial, and industrial loans consist of lines of credit, revolving lines of credit, and term loans, generally to businesses or high net worth individuals. The owners of these businesses typically provide recourse such that they guarantee the debt. The lines of credit are generally secured by the assets of the business, though they may at times be issued on an unsecured basis. Generally speaking, they are subject to renewal on an annual basis based upon review of the borrower’s financial statements. Term loans are generally secured by either specific or general asset liens of the borrower’s business. These loans are granted based upon the strength of the cash generation ability of the borrower. Included in C&I loans are also certain SBA loans in which the loan is secured by underlying assets of the business. The Bank may sell a portion of the loan, guaranteed by the SBA, to a third-party investor. The credit quality of this portfolio is largely dependent on economic factors, such as unemployment rates. Owner-occupied commercial real estate may have a residential component of less than 50% of the property’s rental income. The Bank’s underwriting standards generally require: (1) a maximum loan-to-value ratio of 75% based upon an appraisal performed by an independent, state licensed appraiser, and (2) sufficient rental income from the underlying property to adequately service the debt, represented by a minimum debt service ratio of 1.25x. Included in owner-occupied loans are also certain SBA loans in which the loan is secured by underlying real estate as collateral. The Bank may sell a portion of the loan, guaranteed by the SBA, to a third-party investor. Repayment of the loans is often dependent upon the success of the business occupying the properties. The credit quality of this portfolio is largely dependent on economic factors, such as unemployment rates.
One-to-four family residential, including condominium and cooperative apartment loans - Loans in this classification consist of residential real estate and one-to-four family real estate properties, and may have a mixed-use commercial aspect. Included in one-to-four family loans are also certain SBA loans in which the loan is secured by underlying real estate as collateral. The Bank may sell a portion of the loan, guaranteed by the SBA, to a third-party investor. Owner-occupied properties are generally underwritten based upon an appraisal performed by an independent, state licensed appraiser and the credit quality of the individual borrower. Investment properties require: (1) a maximum loan-to-value ratio of 75% based upon an appraisal performed by an independent, state licensed appraiser, and (2) sufficient rental income from the underlying property to adequately service the debt, represented by a minimum debt service ratio of 1.25x. The credit quality of this portfolio is largely dependent on economic factors, such as unemployment rates and housing prices.
Multifamily residential and residential mixed-use loans - Loans in this classification consist of multifamily residential real estate with a minimum of five residential units, and may have a mixed-use commercial aspect of less than 50% of the property’s rental income. The Bank’s underwriting standards for multifamily residential loans generally require: (1) a maximum loan-to-value ratio of 75% based upon an appraisal performed by an independent, state licensed appraiser, and (2) sufficient rental income from the underlying property to adequately service the debt, represented by a minimum debt service ratio of 1.20x. Repayment of multifamily residential loans is dependent, in significant part, on cash flow from the collateral property sufficient to satisfy operating expenses and debt service. Future increases in interest rates, increases in vacancy rates on multifamily residential or commercial buildings, and other economic events, such as unemployment rates, which are outside the control of the borrower or the Bank could negatively impact the future net operating income of such properties. Similarly, government regulations, such as the existing New York City Rent Regulation and Rent Stabilization laws, could limit future increases in the revenue from these buildings.
Non-owner-occupied commercial real estate loans - Loans in this classification consist of mortgage loans on nonresidential properties. Nonresidential properties may have a residential aspect of less than 50% of the property’s rental income. Nonresidential properties include investor owned assets such as retail, warehouses/ industrial facilities, hotels, supportive housing, non-medical and medical offices, educational facilities and medical facilities among others. The Bank’s underwriting standards for non-owner occupied commercial real estate loans generally require: (1) a maximum loan-to-value ratio of 75% based upon an appraisal performed by an independent, state licensed appraiser, and (2) sufficient rental income from the underlying property to adequately service the debt, represented by a minimum debt service ratio of 1.25x. Repayment of non-owner occupied commercial real estate loans is often dependent upon successful operation or management of the collateral properties, as well as the success of the business and retail tenants occupying the properties. Repayment of such loans is generally dependent on economic factors such as unemployment rates and commercial real estate prices.
Acquisition, development, and construction loans - Loans in this classification consist of loans to purchase land intended for further development, including single-family homes, multi-family housing, and commercial income properties. In general, the maximum loan-to-value ratio for a land acquisition loan is 50% of the appraised value of the property. The credit quality of this portfolio is largely dependent on economic factors, such as unemployment rates and CRE prices.
Other loans - Loans in this classification consist of installment and consumer loans. Repayment is dependent on the credit quality of the individual borrower. The credit quality of this portfolio is largely dependent on economic factors, such as unemployment rates.
Loan restructurings - The Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.
Management estimates the allowance for credit losses on each loan pool using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historically
observed credit loss experience of peer banks within our geography provide the basis for the estimation of expected credit losses on similar loan pools. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods. Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of the peer group. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. The Company considers qualitative adjustments to expected credit loss estimates for information not already captured in the loss estimation process. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of our loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.
Individually evaluated loans - Loans that do not share risk characteristics are evaluated on an individual basis based on various factors and are not included in the collective pool evaluation. Factors that may be considered are borrower delinquency trends and non-accrual status, probability of foreclosure or note sale, changes in the borrower’s circumstances or cash collections, borrower’s industry, or other facts and circumstances of the loan or collateral. For a loan that does not share risk characteristics with other loans, expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For these loans, the Company recognizes expected credit loss equal to the amount by which the net realizable value of the loan is less than the amortized cost basis of the loan (which is net of previous charge-offs), except when the loan is collateral dependent, that is, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In these cases, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral. The fair value of the collateral is adjusted for the estimated costs to sell the collateral if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.
The fair value of real estate collateral is determined based on recent appraised values. Appraisals are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Appraisals undergo a second review process to ensure that the methodology employed, and the values derived are reasonable. Generally, collateral values for real estate loans for which measurement of expected losses is dependent on collateral values are updated every twelve months. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation and management’s expertise and knowledge of the borrower and its business. Once the expected credit loss amount is determined, an allowance is provided for equal to the calculated expected credit loss and included in the allowance for credit losses. Pursuant to the Company’s policy, credit losses must be charged-off in the period the loans, or portions thereof, are deemed uncollectable.
Allowance for credit losses on off-balance sheet credit exposures - The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit losses on off-balance sheet credit exposures, which is included in other liabilities on the consolidated statements of financial condition, is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life, which is the same as the expected loss factor as determined based on the corresponding portfolio segment.
For further discussion of our loan accounting, see Note 4 - Loans.
Derivatives - The Company may engage in three types of derivatives depending on the Company’s intentions and belief as to the likely effectiveness as a hedge. These three types are (1) a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), (2) a hedge with the exposure to changes in fair value of an asset, liability, or firm commitment attributable to particular risk, such as interest risk (“fair value hedge”) or (3) an instrument with no hedging designation (“freestanding derivatives”). For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which
the hedged transaction affects earnings. Changes in fair value of the fair value derivative and the hedged item related to the hedged risk are recognized in earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings as non-interest income.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement same as the cash flows of the items being hedged.
The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking cash flow hedges to specific liabilities on the consolidated statements of financial condition. The Company also formally assesses, both at the hedge’s inception and on an on-going basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in cash flows of the hedged item, or treatment of the derivative as a hedge is no longer appropriate or intended.
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a cash flow hedge is discontinued but the hedged cash flows are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transaction will affect earnings.
The Company is exposed to losses if a counterparty fails to make its payments under a contract in which the Company is in the net receiving position. The Company anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. All the contracts to which the Company is a party settle monthly. In addition, the Company obtains collateral above certain thresholds of the fair value of its hedges from each counterparty based upon their credit standing and the Company has netting agreements with the dealers with which it does business.
Other Real Estate Owned (“OREO”) - Properties acquired as a result of foreclosure on a real estate loan or a deed in lieu of foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate collateralizing a one-to-four family residential loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through execution of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Declines in the recorded balance subsequent to acquisition by the Company are recorded through expense. Operating costs after acquisition are expensed.
Premises and Fixed Assets, Net - Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Buildings and related components are depreciated using the straight-line method with useful lives generally ranging from forty to fifty years. Furniture, fixtures and equipment are depreciated using the straight-line method with useful lives generally ranging from three to ten years.
Leases - Leases are classified as operating or finance leases at the lease commencement date. The Company recorded leases on the consolidated statements of financial condition with the operating lease asset and lease liability determined at the commencement date of the lease based on the present value of the remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of inception.
The Company made a policy election to exclude the recognition requirements of ASC 2016-02 on short-term leases with original terms of 12 months or less. Short-term lease payments are recognized in the Company’s consolidated statements of operations on a straight-line basis over the lease term. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion, and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. Lease expenses are included in occupancy and equipment on the Company’s consolidated statements of operations. The Company does not sublease any of its leased properties and does not lease properties from any related parties. Disclosures about the Company’s leasing activities are presented in Note 7.
Goodwill and Other Intangible Assets - Goodwill resulting from business combinations is generally determined as the excess of the fair value of the consideration transferred over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and indefinite-lived intangible assets are not amortized, but tested for impairment at least annually, or more frequently if events and circumstances exist that indicate the carrying amount of the asset may be impaired. The Company performs its annual goodwill impairment test in the fourth quarter of every year, or more frequently if events or changes in circumstance indicate the asset might be impaired.
Other intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible assets are amortized on an accelerated method over their estimated useful lives of ten years.
Servicing Right Assets (“SRAs”) - When real estate or C&I loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. SRAs are carried at the lower of cost or fair value and are amortized in proportion to, and over the period of, anticipated net servicing income. All separately recognized SRAs are required to be initially measured at fair value, if practicable. The estimated fair value of loan servicing assets is determined by calculating the present value of estimated future net servicing cash flows, using assumptions of prepayments, defaults, servicing costs and discount rates derived based upon actual historical results for the Bank, or, in the absence of such data, from historical results for the Bank’s peers. Capitalized loan servicing assets are stratified based on predominant risk characteristics of the underlying loans (i.e., collateral, interest rate, servicing spread and maturity) for the purpose of evaluating impairment. A valuation allowance is then established in the event the recorded value of an individual stratum exceeds its fair value. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds, default rates, and losses.
Transfers of Financial Assets - Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been legally isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Bank Owned Life Insurance (“BOLI”) - BOLI is carried at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement. Increases in the contract value are recorded as non-interest income in the consolidated statements of operations and insurance proceeds received are recorded as a reduction of the contract value.
Income Taxes - Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount deemed more likely than not to be realized.
A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not satisfying the "more likely than not" test, no tax benefit is recorded. The Company recognizes interest and/or penalties related to tax matters in income tax expense. The Company had no unrecognized tax positions at December 31, 2024 or 2023.
Employee Benefits - The Bank maintains two noncontributory pension plans: (i) the Retirement Plan of Dime Community Bank (“Employee Retirement Plan”) and (ii) the BNB Bank Pension Plan, covering all eligible employees. As the sponsor of a single employer defined benefit plan, the Company must do the following for the Employee Retirement Plan and BNB Bank Pension Plan: (1) recognize the funded status of the benefit plans in its statements of financial condition, measured as the difference between plan assets at fair value (with limited exceptions) and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation; (2) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit or cost. Amounts recognized in accumulated other comprehensive income, including the gains or losses, prior service costs or credits, and the transition asset or obligation are adjusted as they are subsequently recognized as components of net periodic benefit cost; (3) measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statements of financial condition (with limited exceptions); and (4) disclose in the notes to financial statements additional information about certain effects on net periodic
benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation.
The Company provides a 401(k) plan, which covers substantially all current employees. Newly hired employees are automatically enrolled in the plan on the 60th day of employment, unless they elect not to participate.
The Holding Company and Bank maintain the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”), the Dime Community Bancshares, Inc. 2019 Equity Incentive Plan, (the “2019 Equity Incentive Plan”), and the 2012 Stock-Based Compensation Plan (the “2012 Equity Incentive Plan”), (collectively the “Stock Plans”); which are discussed more fully in Note 17 Stock-Based Compensation. Under the Stock Plans, compensation cost is recognized for stock options and restricted stock awards issued to employees based on the fair value of the awards at the date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Holding Company’s common stock (“Common Stock”) at the date of grant is used for restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.
Basic and Diluted EPS - Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution that would occur if "in the money" stock options were exercised and converted into common stock. In determining the weighted average shares outstanding for basic and diluted EPS, treasury shares are excluded. Vested restricted stock award ("RSA") shares are included in the calculation of the weighted average shares outstanding for basic and diluted EPS. Unvested RSA and performance-based share awards (“PSA”) shares are recognized as a special class of participating securities under ASC 260, and are included in the calculation of the weighted average shares outstanding for basic and diluted EPS.
Comprehensive Income - Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income includes unrealized gains and losses on available-for-sale securities, unrealized gains and losses on cash flow hedges, and changes in the funded status of the pension plan, which are also recognized as separate components of equity. Comprehensive and accumulated comprehensive income are summarized in Note 2.
Disclosures about Segments of an Enterprise and Related Information - The Company has one reportable segment, "Community Banking." All of the Company’s activities are interrelated, and each activity is dependent and assessed based on the manner in which it supports the other activities of the Company. For example, lending is dependent upon the ability of the Bank to fund itself with retail deposits and other borrowings and to manage interest rate and credit risk. Accordingly, all significant operating decisions are based upon analysis of the Company as one operating segment or unit.
For the years ended December 31, 2024, 2023 and 2022, there was no customer that accounted for more than 10% of the Company's consolidated revenue.
Reclassifications - There have been no material reclassifications to prior year amounts to conform to their current presentation.
Adoption of New Accounting Standards
Standards Adopted in 2024
ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (Topic 280)
The Financial Accounting Standards Board issued Accounting Standards Update 2023-07 to improve reportable segment disclosures by requiring public business entities to disclose significant expense categories and amounts for each reportable segment, where significant expense categories are defined as those that are regularly reported to an entity’s chief operating decision-maker and included in a segment’s reported measures of profit or loss. ASU 2023-07 became effective for the
Company on January 1, 2024. The adoption of ASU 2023-07 did not have a material effect on the Company’s consolidated financial statements.
Standards That Have Not Yet Been Adopted
ASU No. 2023-09-Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09-Income Taxes (Topic 740)-Improvements to Income Tax Disclosures, intended to enhance the transparency of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information.
Specifically, the amendments in this ASU require disclosure of: (i) a tabular reconciliation, using both percentages and reporting currency amounts, with prescribed categories that are required to be disclosed, and the separate disclosure and disaggregation of prescribed reconciling items with an effect equal to 5% or more of the amount determined by multiplying pretax income from continuing operations by the applicable statutory rate; (ii) a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income taxes; and (iii) amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions that comprise 5% or more of total income taxes paid, net of refunds received. The ASU also includes other amendments to improve the effectiveness of income tax disclosures.
The update is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The transition method is prospective with retrospective method permitted. The adoption of ASU 2023-09 will not have a material impact on the Company's income tax disclosures.
2. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity in accumulated other comprehensive income (loss), net of tax, was as follows:
Total
Accumulated
Securities
Defined
Other
Available-
Benefit
Comprehensive
(In thousands)
for-Sale
Plans
Derivatives
Loss
Balance as of January 1, 2023
$
(100,870)
$
(5,266)
$
11,757
$
(94,379)
Other comprehensive income (loss) before reclassifications
7,498
(109)
(8,091)
(702)
Amounts reclassified from accumulated other comprehensive income (loss)
3,130
(1,055)
1,427
3,502
Net other comprehensive income (loss) during the period
10,628
(1,164)
(6,664)
2,800
Balance as of December 31, 2023
$
(90,242)
$
(6,430)
$
5,093
$
(91,579)
Other comprehensive income (loss) before reclassifications
14,703
(1,087)
(5,782)
7,834
Amounts reclassified from accumulated other comprehensive income
31,772
6,937
38,727
Net other comprehensive income (loss) during the period
46,475
(1,069)
1,155
46,561
Balance as of December 31, 2024
$
(43,767)
$
(7,499)
$
6,248
$
(45,018)
The before and after tax amounts allocated to each component of other comprehensive income (loss) are presented in the table below for the periods indicated.
Year Ended December 31,
(In thousands)
Change in unrealized gain (loss) on securities:
Change in net unrealized gain (loss) during the period
$
23,218
$
10,355
$
(138,630)
Reclassification adjustment for net losses included in net loss on sale of securities and other assets
42,810
1,447
-
Accretion of net unrealized loss on securities transferred to held-to-maturity
3,028
3,142
2,953
Net change
69,056
14,944
(135,677)
Tax expense (benefit)
22,581
4,316
(42,671)
Net change in unrealized gain (loss) on securities, net of reclassification adjustments and tax
46,475
10,628
(93,006)
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense
(1,547)
(3,715)
Change in the net actuarial gain
(1,426)
(190)
(2,062)
Net change
(1,400)
(1,737)
(5,777)
Tax benefit
(331)
(573)
(1,817)
Net change in pension and other postretirement obligations
(1,069)
(1,164)
(3,960)
Change in unrealized gain (loss) on derivatives:
Change in net unrealized (loss) gain during the period
(8,453)
(11,782)
14,412
Reclassification adjustment for expense included in interest expense
10,008
2,092
(1,621)
Net change
1,555
(9,690)
12,791
Tax expense (benefit)
(3,026)
4,023
Net change in unrealized gain (loss) on derivatives, net of reclassification adjustments and tax
1,155
(6,664)
8,768
Other comprehensive income (loss), net of tax
$
46,561
$
2,800
$
(88,198)
3. SECURITIES
The following tables summarize the major categories of securities as of the dates indicated:
December 31, 2024
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
(In thousands)
Cost
Gains
Losses
Value
Securities available-for-sale:
Agency notes
$
10,000
-
(393)
$
9,607
Treasury securities
-
-
-
-
Corporate securities
173,972
(10,778)
163,949
Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")
303,303
(3,112)
300,221
Agency CMOs
220,314
(28,442)
191,888
State and municipal obligations
26,545
-
(1,517)
25,028
Total securities available-for-sale
$
734,134
$
$
(44,242)
$
690,693
December 31, 2024
Gross
Gross
Amortized
Unrecognized
Unrecognized
Fair
(In thousands)
Cost
Gains
Losses
Value
Securities held-to-maturity:
Agency notes
$
89,977
$
-
$
(10,961)
$
79,016
Corporate securities
13,000
(855)
12,285
Pass-through MBS issued by GSEs
298,697
-
(43,716)
254,981
Agency CMOs
235,665
(29,699)
205,995
Total securities held-to-maturity
$
637,339
$
$
(85,231)
$
552,277
December 31, 2023
Gross
Gross
Amortized
Unrealized
Unrealized
Fair
(In thousands)
Cost
Gains
Losses
Value
Securities available-for-sale:
Agency notes
$
10,000
$
-
$
(629)
$
9,371
Treasury securities
245,877
-
(11,687)
234,190
Corporate securities
174,978
-
(23,808)
151,170
Pass-through MBS issued by GSEs
230,253
(24,978)
205,285
Agency CMOs
305,860
(46,491)
259,415
State and municipal obligations
28,741
-
(1,932)
26,809
Total securities available-for-sale
$
995,709
$
$
(109,525)
$
886,240
December 31, 2023
Gross
Gross
Amortized
Unrecognized
Unrecognized
Fair
(In thousands)
Cost
Gains
Losses
Value
Securities held-to-maturity:
Agency notes
$
89,563
$
-
$
(11,300)
$
78,263
Corporate securities
9,000
-
(1,825)
7,175
Pass-through MBS issued by GSEs
279,853
-
(37,579)
242,274
Agency CMOs
216,223
(27,021)
189,218
Total securities held-to-maturity
$
594,639
$
$
(77,725)
$
516,930
There were no transfers of securities from available-for-sale to securities held-to-maturity during the years ended December 31, 2024 or 2023. There were no transfers of securities from held-to-maturity to available-for-sale during the years ended December 31, 2024 or 2023. The Company reassessed classification of certain investments and transferred securities from available-for-sale to securities held-to-maturity during the year ended December 31, 2022. The amount remaining in OCI from this transfer as of December 31, 2024 and 2023 was $19.7 million and $22.7 million, respectively. The unrealized losses recorded in other comprehensive income are amortized out of other comprehensive income through interest income on a level-yield method over the remaining term of securities, with no net change to interest income. No gain or loss was recorded at the time of transfer. There were no transfers from securities held-to-maturity to available-for-sale during the year ended December 31, 2022.
The carrying amount of securities pledged at December 31, 2024 and 2023 was $622.7 million and $457.7 million, respectively. The pledged securities are mainly used as collateral for a portion of the Company’s municipal deposit portfolio.
At December 31, 2024 and 2023, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.
The following table presents the amortized cost and fair value of securities by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
December 31, 2024
Amortized
Fair
(In thousands)
Cost
Value
Available-for-sale
Within one year
$
6,717
$
6,597
One to five years
54,401
50,984
Five to ten years
149,399
141,003
Beyond ten years
-
-
Pass-through MBS issued by GSEs and agency CMOs
523,617
492,109
Total
$
734,134
$
690,693
Held-to-maturity
Within one year
$
-
$
-
One to five years
19,829
18,598
Five to ten years
83,148
72,703
Beyond ten years
-
-
Pass-through MBS issued by GSEs and agency CMOs
534,362
460,976
Total
$
637,339
$
552,277
The following table presents the information related to sales of securities available-for-sale for the periods indicated:
Year Ended December 31,
(In thousands)
Securities available-for-sale
Proceeds
$
379,053
$
77,804
$
-
Gross gains
-
-
Tax expense on gains
-
-
Gross losses
42,810
1,577
-
Tax benefit on losses
13,139
-
Equity securities included in other assets in the consolidated statements of financial condition had a fair value of $2.5 million and $2.2 million as of December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the Company recognized a net gain of $281 thousand and a net loss of $758 thousand, respectively.
There were no sales of securities held-to-maturity during the years ended December 31, 2024, 2023, or 2022.
The following tables summarize the gross unrealized losses and fair value of securities aggregated by investment category and the length of time the securities were in a continuous unrealized loss position for the periods indicated:
December 31, 2024
Less than 12
12 Consecutive
Consecutive Months
Months or Longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(In thousands)
Value
Losses
Value
Losses
Value
Losses
Securities available-for-sale:
Agency notes
$
-
$
-
$
9,607
$
$
9,607
$
Corporate securities
2,925
141,124
10,762
144,049
10,778
Pass-through MBS issued by GSEs
289,095
2,170
6,119
295,214
3,112
Agency CMOs
32,101
154,770
28,085
186,871
28,442
State and municipal obligations
3,469
21,559
1,486
25,028
1,517
December 31, 2023
Less than 12
12 Consecutive
Consecutive Months
Months or Longer
Total
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(In thousands)
Value
Losses
Value
Losses
Value
Losses
Securities available-for-sale:
Agency Notes
$
-
$
-
$
9,371
$
$
9,371
$
Treasury securities
-
-
234,190
11,687
234,190
11,687
Corporate securities
20,935
130,235
22,891
151,170
23,808
Pass-through MBS issued by GSEs
-
-
203,469
24,978
203,469
24,978
Agency CMOs
-
-
251,900
46,491
251,900
46,491
State and municipal obligations
1,796
21,513
1,878
23,309
1,932
As of December 31, 2024, none of the Company’s available-for-sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available-for-sale debt securities was required. Additionally, given the high-quality composition of the Company’s held-to-maturity portfolio, the Company did not record an allowance for credit losses on the held-to-maturity portfolio. With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Accrued interest receivable on securities totaled $5.7 million and $5.3 million at December 31, 2024 and 2023 respectively, and was excluded from the amortized cost and estimated fair value totals in the table above.
Management evaluates available-for-sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than amortized cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability
of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.
At December 31, 2024, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. The following major security types held by the Company are all issued by U.S. government entities and agencies and therefore either explicitly or implicitly guaranteed by the U.S. government: Agency Notes, Treasury Securities, Pass-through MBS issued by GSEs, Agency Collateralized Mortgage Obligations. None of the unrealized losses are related to credit losses. The majority of the state and municipal obligations within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity.
4. LOANS HELD FOR INVESTMENT, NET
The following table presents the loan categories for the period ended as indicated:
(In thousands)
December 31, 2024
December 31, 2023
Business loans (1)
$
2,725,726
$
2,308,171
One-to-four family residential and cooperative/condominium apartment
951,528
887,555
Multifamily residential and residential mixed-use
3,820,283
4,017,176
Non-owner-occupied commercial real estate
3,230,535
3,379,667
Acquisition, development, and construction ("ADC")
136,172
168,513
Other loans
5,084
5,755
Total
10,869,328
10,766,837
Fair value hedge basis point adjustments (2)
2,615
6,591
Total loans, net of fair value hedge basis point adjustments
10,871,943
10,773,428
Allowance for credit losses
(88,751)
(71,743)
Loans held for investment, net
$
10,783,192
$
10,701,685
(1) Business loans include C&I loans, owner-occupied commercial real estate loans and PPP loans.
(2) The loan portfolio included a fair value hedge basis point adjustment to the carrying amount of hedged owner-occupied commercial real estate in business loans, one-to-four family residential mortgage loans, multifamily residential mortgage loans and non-owner occupied commercial real estate loans.
The following tables present data regarding the allowance for credit losses activity for the periods indicated:
One-to-Four
Family
Multifamily
Residential and
Residential
Non-Owner
Cooperative/
and
Occupied
Business
Condominium
Residential
Commercial
Other
(In thousands)
Loans
Apartment
Mixed-Use
Real Estate
ADC
Loans
Total
Beginning balance as of January 1, 2022
62,366
5,932
7,816
2,131
4,857
83,853
(Credit) provision for credit losses
(8,073)
17,968
(3,134)
(430)
6,910
Charge-offs
(11,401)
-
-
-
-
(53)
(11,454)
Recoveries
4,137
-
-
4,198
Ending balance as of December 31, 2022
$
47,029
$
5,969
$
8,360
$
20,153
$
1,723
$
$
83,507
Provision (credit) for credit losses
3,273
(1,121)
(530)
2,875
Charge-offs
(15,364)
(14)
(2)
-
-
(300)
(15,680)
Recoveries
1,024
-
-
-
-
1,041
Ending balance as of December 31, 2023
$
35,962
$
6,813
$
7,237
$
19,623
$
1,989
$
$
71,743
Provision for credit losses
14,435
2,688
9,385
9,176
36,197
Charge-offs
(8,051)
-
(4,677)
(6,926)
-
(110)
(19,764)
Recoveries
-
-
Ending balance as of December 31, 2024
$
42,898
$
9,501
$
11,946
$
21,876
$
2,323
$
$
88,751
The following tables present the amortized cost basis of loans on non-accrual status as of the periods indicated:
December 31, 2024
Non-accrual with
Non-accrual with
Related
(In thousands)
No Allowance
Allowance
Allowance
Business loans
$
5,196
$
17,428
$
15,810
One-to-four family residential and cooperative/condominium apartment
-
3,213
Non-owner-occupied commercial real estate
16,456
6,504
ADC
-
Other loans
-
Total
$
21,652
$
27,827
$
16,585
December 31, 2023
Non-accrual with
Non-accrual with
Related
(In thousands)
No Allowance
Allowance
Allowance
Business loans
$
3,780
$
14,794
$
13,228
One-to-four family residential and cooperative/condominium apartment
-
3,248
Non-owner-occupied commercial real estate
-
6,620
ADC
-
Total
$
3,780
$
25,319
$
14,202
The Company did not recognize interest income on non-accrual loans held for investment during the years ended December 31, 2024 or 2023.
The following tables summarize the past due status of the Company’s investment in loans as of the dates indicated:
December 31, 2024
Loans 90
Days or
Total
30 to 59
60 to 89
More Past Due
Past Due
Days
Days
and Still
and
Total
(In thousands)
Past Due
Past Due
Accruing Interest
Non-accrual
Non-accrual
Current
Loans
Business loans
$
3,385
$
2,441
$
-
$
22,624
$
28,450
$
2,697,276
$
2,725,726
One-to-four family residential, including condominium and cooperative apartment
1,919
1,271
-
3,213
6,403
945,125
951,528
Multifamily residential and residential mixed-use
3,759
27,601
-
-
31,360
3,788,923
3,820,283
Non-owner-occupied commercial real estate
1,265
-
-
22,960
24,225
3,206,310
3,230,535
ADC
-
-
-
135,515
136,172
Other loans
-
-
5,057
5,084
Total
$
10,330
$
31,313
$
-
$
49,479
$
91,122
$
10,778,206
$
10,869,328
December 31, 2023
Loans 90
Days or
Total
30 to 59
60 to 89
More Past Due
Past Due
Days
Days
and Still
and
Total
(In thousands)
Past Due
Past Due
Accruing Interest
Non-accrual
Non-accrual
Current
Loans
Business loans
$
7,139
$
1,217
$
-
$
18,574
$
26,930
$
2,281,241
$
2,308,171
One-to-four family residential, including condominium and cooperative apartment
4,071
-
3,248
7,392
880,163
887,555
Multifamily residential and residential mixed-use
-
-
-
-
-
4,017,176
4,017,176
Non-owner-occupied commercial real estate
-
-
6,620
6,957
3,372,710
3,379,667
ADC
-
-
1,087
167,426
168,513
Other loans
-
-
-
-
-
5,755
5,755
Total
$
11,977
$
1,290
$
-
$
29,099
$
42,366
$
10,724,471
$
10,766,837
Accruing Loans 90 Days or More Past Due:
The Company did not have accruing loans 90 days or more past due at December 31, 2024 and 2023.
Collateral Dependent Loans:
The Company had collateral dependent loans which were individually evaluated to determine expected credit losses as of the dates indicated:
December 31, 2024
December 31, 2023
Real Estate
Associated Allowance
Real Estate
Associated Allowance
(In thousands)
Collateral Dependent
for Credit Losses
Collateral Dependent
for Credit Losses
Business loans
$
9,290
$
1,408
$
3,742
$
-
Non-owner-occupied commercial real estate
22,944
6,605
ADC
Total
$
32,891
$
2,111
$
11,004
$
Related Party Loans
Certain directors, executive officers, and their related parties, including their immediate families and companies in which they are principal owners, were loan customers of the Bank during 2024.
The following table sets forth selected information about related party loans:
Year Ended December 31,
(In thousands)
Beginning balance
$
4,922
$
4,956
New loans
Effect of changes in composition of related parties
(1,146)
-
Repayments
(39)
(565)
Balance at end of period
$
3,745
$
4,922
Loan Restructurings
The Company applies the loan refinancing and restructuring guidance to determine whether a modification or other forms of restructuring result in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combination of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.
The following tables show the amortized cost basis as of December 31, 2024 and 2023 of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of concession granted:
For the Year Ended December 31, 2024
Significant
Payment
Significant
Delay,
Term
Payment
Term
Term
Extension
Delay
Extension
Extension
% of
and
and
and
and
Total
Significant
Significant
Interest
Interest
Interest
Class of
Term
Payment
Payment
Rate
Rate
Rate
Financing
(Dollars in thousands)
Extension
Delay
Delay
Reduction
Reduction
Reduction
Total
Receivable
Business loans
$
19,668
$
$
$
$
-
$
-
$
20,064
0.7
%
One-to-four family residential, including condominium and cooperative apartment
-
-
-
-
-
0.1
Multifamily residential and residential mixed-use
-
34,087
-
-
-
-
34,087
0.9
Non-owner-occupied commercial real estate
-
31,102
-
-
-
-
31,102
1.0
Total
$
19,668
$
65,371
$
$
$
$
-
$
86,149
0.8
%
For the Year Ended December 31, 2023
Significant
Payment
Significant
Delay,
Term
Payment
Term
Term
Extension
Delay
Extension
Extension
% of
and
and
and
and
Total
Significant
Significant
Interest
Interest
Interest
Class of
Term
Payment
Payment
Rate
Rate
Rate
Financing
(Dollars in thousands)
Extension
Delay
Delay
Reduction
Reduction
Reduction
Total
Receivable
Business loans
$
1,789
$
12,020
$
$
$
-
$
-
$
14,627
0.6
%
One-to-four family residential, including condominium and cooperative apartment
-
2,856
-
-
-
2,948
0.3
Non-owner-occupied commercial real estate
-
24,706
-
-
-
-
24,706
0.7
Total
$
1,789
$
39,582
$
$
$
-
$
-
$
42,281
0.4
%
The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty as of the dates indicated:
For the Year Ended December 31, 2024
Weighted Average
Weighted Average
Interest Rate
Months of
Weighted Average
(Dollars in thousands)
Reductions
Term Extensions
Payment Delay
Business loans
5.00
%
$
One-to-four family residential, including condominium and cooperative apartment
1.00
-
Multifamily residential and residential mixed-use
-
-
Non-owner-occupied commercial real estate
-
-
For the Year Ended December 31, 2023
Weighted Average
Weighted Average
Interest Rate
Months of
Weighted Average
(Dollars in thousands)
Reductions
Term Extensions
Payment Delay
Business loans
4.27
%
$
2,406
One-to-four family residential, including condominium and cooperative apartment
-
Non-owner-occupied commercial real estate
-
-
The Bank monitors the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables describe the performance of loans that have been modified during the years ended December 31, 2024 and 2023.
December 31, 2024
30-59
60-89
90+
(In thousands)
Current
Days Past Due
Days Past Due
Days Past Due
Non-Accrual
Total
Business loans
$
19,668
$
$
-
$
-
$
$
20,064
One-to-four family residential, including condominium and cooperative apartment
-
-
-
-
Multifamily residential and residential mixed-use
6,486
-
27,601
-
-
34,087
Non-owner-occupied commercial real estate
31,102
-
-
-
-
31,102
Total
$
57,256
$
$
27,601
$
-
$
1,163
$
86,149
December 31, 2023
30-59
60-89
90+
(In thousands)
Current
Days Past Due
Days Past Due
Days Past Due
Non-Accrual
Total
Business loans
$
12,496
$
-
$
-
$
-
$
2,131
$
14,627
One-to-four family residential, including condominium and cooperative apartment
2,856
-
-
-
2,948
Non-owner-occupied commercial real estate
24,706
-
-
-
-
24,706
Total
$
40,058
$
-
$
-
$
-
$
2,223
$
42,281
There were no loans held for investment made to borrowers experiencing financial difficulty that were modified during the year ended December 31, 2024 and 2023, that subsequently defaulted. For the purposes of this disclosure, a payment default is defined as 90 or more days past due. Non-accrual loans that are modified to borrowers experiencing financial difficulty remain on non-accrual status until the borrower has demonstrated performance under the modified terms.
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit structure, loan documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them as to credit risk. The Company uses the following definitions for risk ratings:
Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.
Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of then existing facts, conditions, and values, highly questionable and improbable.
The following is a summary of the credit risk profile of loans by internally assigned grade as of the periods indicated, the years represent the year of origination for non-revolving loans:
December 31, 2024
(In thousands)
2019 and Prior
Revolving
Revolving-Term
Total
Business loans
Pass
$
400,607
$
232,017
$
327,174
$
201,799
$
164,834
$
348,388
$
828,287
$
67,238
$
2,570,344
Special mention
36,740
4,220
4,333
17,226
26,292
14,497
104,197
Substandard
-
1,985
2,482
3,944
11,298
-
30,467
50,574
Doubtful
-
-
-
-
-
-
-
Total business loans
400,742
233,169
365,899
208,501
173,111
377,523
854,579
112,202
2,725,726
YTD Gross Charge-Offs
-
-
6,785
8,051
One-to-four family residential, and condominium/cooperative apartment:
Pass
134,804
159,300
202,706
98,491
63,093
247,952
26,724
8,364
941,434
Special mention
-
-
-
-
-
-
Substandard
-
-
-
-
7,326
-
9,224
Doubtful
-
-
-
-
-
-
-
-
-
Total one-to-four family residential, and condominium/cooperative apartment
134,804
159,300
202,706
98,491
64,077
255,989
26,883
9,278
951,528
YTD Gross Charge-Offs
-
-
-
-
-
-
-
-
-
Multifamily residential and residential mixed-use:
Pass
21,810
252,975
1,285,619
560,039
286,653
1,239,261
4,285
4,267
3,654,909
Special mention
-
-
1,202
12,369
14,172
73,778
-
-
101,521
Substandard
-
-
-
-
-
63,853
-
-
63,853
Doubtful
-
-
-
-
-
-
-
-
-
Total multifamily residential and residential mixed-use
21,810
252,975
1,286,821
572,408
300,825
1,376,892
4,285
4,267
3,820,283
YTD Gross Charge-Offs
-
-
-
1,292
2,985
-
-
4,677
Non-owner-occupied commercial real estate
Pass
57,280
215,279
724,041
601,508
408,361
1,020,137
11,937
8,966
3,047,509
Special mention
-
-
-
75,802
29,564
-
-
106,024
Substandard
-
-
-
16,471
34,236
26,295
-
-
77,002
Doubtful
-
-
-
-
-
-
-
-
-
Total non-owner-occupied commercial real estate
57,280
215,279
724,041
618,637
518,399
1,075,996
11,937
8,966
3,230,535
YTD Gross Charge-Offs
-
-
-
2,797
4,033
-
-
6,926
ADC:
Pass
16,154
34,169
25,950
4,810
-
2,468
24,868
12,122
120,541
Special mention
-
-
-
14,974
-
-
-
-
14,974
Substandard
-
-
-
-
-
-
-
Doubtful
-
-
-
-
-
-
-
-
-
Total ADC
16,154
34,169
25,950
19,784
-
2,468
24,868
12,779
136,172
YTD Gross Charge-Offs
-
-
-
-
-
-
-
-
-
Total:
Pass
630,655
893,740
2,565,490
1,466,647
922,941
2,858,206
896,101
100,957
10,334,737
Special mention
37,942
32,221
94,307
121,279
26,451
14,497
327,586
Substandard
-
1,985
18,953
39,164
108,772
-
32,038
201,310
Doubtful
-
-
-
-
-
-
-
Total Loans
$
630,790
$
894,892
$
2,605,417
$
1,517,821
$
1,056,412
$
3,088,868
$
922,552
$
147,492
$
10,864,244
YTD Gross Charge-Offs
$
$
-
$
$
2,963
$
5,592
$
3,571
$
$
6,881
$
19,654
December 31, 2023
(In thousands)
2018 and Prior
Revolving
Revolving-Term
Total
Business loans
Pass
$
258,699
$
390,760
$
196,790
$
144,796
$
150,871
$
305,258
$
633,719
$
35,079
$
2,115,972
Special mention
41,682
1,199
13,567
7,125
3,150
21,108
25,306
113,618
Substandard
-
1,857
2,180
6,729
2,803
30,248
15,567
18,449
77,833
Doubtful
-
-
-
-
-
-
-
Total business loans
259,180
434,299
200,169
165,092
160,799
339,404
670,394
78,834
2,308,171
YTD Gross Charge-Offs
-
-
4,166
2,229
5,464
3,390
15,364
One-to-four family residential, and condominium/cooperative apartment:
Pass
170,601
213,479
102,684
69,524
62,356
213,131
31,205
12,493
875,473
Special mention
-
-
-
-
-
Substandard
-
-
-
1,005
8,711
-
1,061
11,114
Doubtful
-
-
-
-
-
-
-
-
-
Total one-to-four family residential, and condominium/cooperative apartment
170,601
213,479
102,684
70,529
62,693
221,875
31,364
14,330
887,555
YTD Gross Charge-Offs
-
-
-
-
-
-
-
Multifamily residential and residential mixed-use:
Pass
256,822
1,340,197
578,352
283,633
384,937
981,820
4,841
4,325
3,834,927
Special mention
-
-
9,334
3,880
3,886
64,273
-
-
81,373
Substandard
-
-
-
28,799
5,089
66,988
-
-
100,876
Doubtful
-
-
-
-
-
-
-
-
-
Total multifamily residential and residential mixed-use
256,822
1,340,197
587,686
316,312
393,912
1,113,081
4,841
4,325
4,017,176
YTD Gross Charge-Offs
-
-
-
-
-
-
-
Non-owner-occupied commercial real estate
Pass
220,045
738,133
645,246
447,002
359,201
756,921
11,919
7,926
3,186,393
Special mention
-
-
19,872
75,378
4,563
2,763
-
-
102,576
Substandard
-
-
60,272
6,254
24,156
-
-
90,698
Doubtful
-
-
-
-
-
-
-
-
-
Total non-owner-occupied commercial real estate
220,045
738,133
665,134
582,652
370,018
783,840
11,919
7,926
3,379,667
YTD Gross Charge-Offs
-
-
-
-
-
-
-
-
-
ADC:
Pass
16,735
17,534
59,202
9,900
2,665
22,444
129,142
Special mention
-
11,500
14,961
-
12,253
-
-
-
38,714
Substandard
-
-
-
-
-
-
-
Doubtful
-
-
-
-
-
-
-
-
-
Total ADC
16,735
29,034
74,163
9,900
14,918
22,444
168,513
YTD Gross Charge-Offs
-
-
-
-
-
-
-
-
-
Total:
Pass
922,902
2,700,103
1,582,274
954,855
960,030
2,257,567
704,128
60,048
10,141,907
Special mention
53,182
45,366
92,825
27,827
70,219
21,267
26,082
337,249
Substandard
-
1,857
2,196
96,805
14,483
130,103
15,567
20,167
281,178
Doubtful
-
-
-
-
-
-
-
Total Loans
$
923,383
$
2,755,142
$
1,629,836
$
1,144,485
$
1,002,340
$
2,458,637
$
740,962
$
106,297
$
10,761,082
YTD Gross Charge-Offs
$
-
$
-
$
$
$
4,166
$
2,231
$
5,464
$
3,404
$
15,380
For other loans, the Company evaluates credit quality based on payment activity. Other loans that are 90 days or more past due are placed on non-accrual status, while all remaining other loans are classified and evaluated as performing. The following is a summary of the credit risk profile of other loans by internally assigned grade:
(In thousands)
December 31, 2024
December 31, 2023
Performing
$
5,059
$
5,755
Non-accrual
-
Total
$
5,084
$
5,755
5. LOAN SERVICING ACTIVITIES
The Bank services real estate and C&I loans for others having principal balances outstanding of approximately $329.1 million and $346.1 million at December 31, 2024 and 2023, respectively. Loans serviced for others are not reported as assets. Servicing loans for others generally consists of collecting loan payments, maintaining escrow accounts, disbursing payments to investors, paying taxes and insurance and processing foreclosures. In connection with loans serviced for others, the Bank held borrowers’ escrow balances of $1.3 million at December 31, 2024 and 2023.
There are no restrictions on the Company’s consolidated assets or liabilities related to loans sold with servicing rights retained. Upon sale of these loans, the Company recorded an SRA in other assets, and has elected to account for the SRA under the "amortization method" prescribed under GAAP. The activity for SRAs for the periods indicated are as follows:
Year Ended December 31,
(In thousands)
Servicing right assets:
Beginning of year
$
3,168
$
3,349
$
3,856
Additions
Amortized to expense
(668)
(639)
(907)
Sold
-
-
(259)
End of year
2,701
3,168
3,349
Valuation allowance:
Beginning of year
(237)
(201)
(80)
Additions expensed
(45)
(36)
(121)
End of year
(282)
(237)
(201)
Servicing right assets, net
$
2,419
$
2,931
$
3,148
The fair value of SRAs was $3.0 million and $3.4 million, at December 31, 2024 and 2023, respectively. The fair value at December 31, 2024 was determined using discount rates ranging from 10.0% to 13.9%, prepayment speeds ranging from 6.1% to 12.3%, depending on the stratification of the specific servicing right, and a weighted average default rate of 0.62%. The fair value at December 31, 2023 was determined using discount rates ranging from 10.0% to 14.5%, prepayment speeds ranging from 6.5% to 12.2%, depending on the stratification of the specific servicing right, and a weighted average default rate of 0.67%.
6. PREMISES AND FIXED ASSETS, NET AND PREMISES HELD FOR SALE
Premises and Fixed Assets, Net
The following is a summary of premises and fixed assets, net:
December 31,
(In thousands)
Land
$
5,808
$
10,824
Buildings
14,417
21,173
Leasehold improvements
29,817
28,307
Furniture, fixtures and equipment
28,690
25,909
Premises and fixed assets, gross
$
78,732
$
86,213
Less: accumulated depreciation and amortization
(43,874)
(41,345)
Premises and fixed assets, net
$
34,858
$
44,868
Depreciation and amortization expense amounted to $7.0 million, $6.7 million and $7.4 million during the years ended December 31, 2024, 2023 and 2022, respectively.
Premises Held for Sale
During the year ended December 31, 2024, the Company transferred two real estate properties utilized as retail branches to premises held for sale totaling $9.2 million. During the year ended December 31, 2023, the Company transferred one real estate property utilized as a retail branch to premises held for sale totaling $905 thousand.
During the year ended December 31, 2024, the Company sold three real estate properties utilized as retail branches for $19.3 million and recorded an associated gain of $9.1 million in gain on sale of other assets in the consolidated statements of operations. There were no premises held for sale as of December 31, 2024.
7. LEASES
The following table presents the Company’s remaining maturities of undiscounted lease payments, as well as a reconciliation to the discounted operating lease liabilities in the Consolidated Statements of Financial Condition at December 31, 2024:
(In thousands)
$
13,972
13,374
11,528
5,547
3,029
Thereafter
4,787
Total undiscounted lease payments
52,237
Less amounts representing interest
(3,244)
Operating lease liabilities
$
48,993
Other information related to our operating leases was as follows:
Year Ended December 31,
(In thousands)
Operating lease cost
$
13,712
$
12,801
$
11,428
Cash paid for amounts included in the measurement of operating lease liabilities
13,684
12,560
10,574
As of December 31, 2024
As of December 31, 2023
Weighted average remaining lease term
4.4
years
5.0
years
Weighted average discount rate
2.72
%
2.34
%
8. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
At December 31, 2024 and 2023, the carrying amount of the Company’s goodwill was $155.8 million, respectively.
The Company performs its annual goodwill impairment test in the fourth quarter of every year, or more frequently if events or changes in circumstance indicate the asset might be impaired. It was determined during the annual impairment testing that no impairment was needed for the years ended December 31, 2024, 2023 and 2022.
The following table presents the change in Goodwill for the years ended December 31, 2024, 2023 and 2022:
Year Ended December 31,
(In thousands)
Beginning of year
$
155,797
$
155,797
$
155,797
Impairment
-
-
-
End of year
$
155,797
$
155,797
$
155,797
Other Intangible Assets
The following table presents the carrying amount and accumulated amortization of intangible assets that are amortizable, all of which are core deposit intangibles:
(In thousands)
December 31, 2024
December 31, 2023
Gross carrying value
$
10,204
$
10,204
Accumulated amortization
(6,308)
(5,145)
Net carrying amount
$
3,896
$
5,059
Amortization expense recognized on intangible assets was $1.2 million, $1.4 million and $1.9 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Estimated amortization expense for 2025 through 2029 and thereafter is as follows:
(In thousands)
$
Thereafter
Total
$
3,896
9. RESTRICTED STOCK
The following is a summary of restricted stock:
Year Ended December 31,
(In thousands)
FHLBNY capital stock
$
41,794
$
73,475
FRB capital stock
27,147
25,110
ACBB capital stock
Restricted stock
$
69,106
$
98,750
FHLBNY Capital Stock
The Bank is a member of the FHLBNY. Membership requires the purchase of shares of FHLBNY capital stock at $100 per share. Members are required to own a particular amount of stock based on the level of borrowings and other factors. The Bank decreased its outstanding FHLBNY advances by $705.0 million during the year ended December 31, 2024, resulting in a decrease of required FHLBNY stock. The Bank owned 417,937 shares and 734,751 shares at December 31, 2024 and 2023, respectively. The Bank recorded dividend income on the FHLBNY capital stock of $5.1 million, $5.4 million and $853 thousand during the years ended December 31, 2024, 2023 and 2022, respectively.
FRB Capital Stock
The Bank is a member of the FRB. Membership requires the purchase of shares of FRB capital stock at $50 per share. The Bank owned 542,943 shares at December 31, 2024 and 502,197 shares at December 31, 2023. The Bank recorded dividend income on the FRB capital stock of $1.1 million, $1.0 million, and $828 thousand during the years ended December 31, 2024, 2023, and 2022, respectively.
ACBB Capital Stock
The Bank has a relationship with ACBB. The relationship requires the purchase of shares of ACBB capital stock between $2,500 and $3,250 per share. The Bank owned 60 shares at December 31, 2024 and 2023. The Bank did not record dividend income on the ACBB capital stock during the year ended December 31, 2024. The Bank recorded dividend income on the ACBB capital stock of $2 thousand during the year ended December 31, 2023, and $1 thousand during the year ended December 31, 2022.
10. DEPOSITS
Deposits are summarized as follows:
Year Ended December 31,
Weighted
Weighted
Average
Average
(Dollars in thousands)
Rate
Liability
Rate
Liability
Savings (1)
2.98
%
$
1,927,909
3.67
%
$
2,335,490
CDs
3.73
1,069,081
4.43
1,607,683
Money market
3.01
4,198,784
3.46
3,125,996
Interest-bearing checking
1.92
1,079,823
0.77
515,987
Non-interest-bearing checking (1)
-
3,410,544
-
2,945,499
Total
2.09
%
$
11,686,141
2.56
%
$
10,530,655
(1) Includes mortgage escrow deposits.
The following table presents a summary of scheduled maturities of CDs outstanding at December 31, 2024:
Maturing
Weighted Average
(Dollars in thousands)
Balance
Interest Rate
$
873,750
3.91
%
75,616
2.53
12,401
1.44
103,163
3.50
4,139
0.36
2030 and beyond
1.34
Total
$
1,069,081
3.73
%
CDs that met or exceeded the Federal Deposit Insurance Corporation (“FDIC”) insurance limit of $250 thousand were $93.3 million and $115.3 million at December 31, 2024 and 2023, respectively.
11. DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposure to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loan portfolio.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. The Company engages in fair value hedges, cash flow hedges and freestanding derivatives.
Effect of Derivatives on the Consolidated Statements of Financial Condition
The tables below present the notional amounts and the fair values of the Company’s derivative financial instruments as of December 31, 2024 and December 31, 2023.
December 31, 2024
December 31, 2023
Notional
Fair Value
Notional
Fair Value
(In thousands)
Amount
Assets
Amount
Assets
Derivatives designated as hedging instruments:
Cash flow hedges - interest rate products
$
150,000
$
8,318
$
150,000
$
12,492
Derivatives not designated as hedging instruments:
Interest rate products
1,665,949
108,178
1,682,961
114,671
December 31, 2024
December 31, 2023
Notional
Fair Value
Notional
Fair Value
(In thousands)
Amount
Liabilities
Amount
Liabilities
Derivatives designated as hedging instruments:
Fair value hedges - interest rate products
$
500,000
$
-
$
500,000
$
6,594
Cash flow hedges - interest rate products
350,000
200,000
5,031
Derivatives not designated as hedging instruments:
Interest rate products
1,665,949
108,178
1,682,961
114,671
Risk participations
141,080
93,891
Effect of Fair Value and Cash Flow Hedge Accounting on the Consolidated Statements of Operations
The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations as of December 31, 2024 and December 31, 2023.
Year Ended December 31,
Interest
Interest
Interest
Interest
(In thousands)
Income
Expense
Income
Expense
Effects of fair value or cash flow hedges are recorded
$
1,607
$
10,008
$
2,092
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships
Interest contracts:
Hedged items
(3,976)
-
6,591
-
Derivatives designated as hedging instruments
5,583
-
(6,030)
-
Gain or (loss) on cash flow hedging relationships
Interest contracts:
Loss reclassified from AOCI into income
-
10,008
-
2,092
Fair Value Hedges
The Company uses fair value hedges to protect against changes in fair value of certain interest rate sensitive assets. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.
For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.
As of December 31, 2024 and December 31, 2023, the Company posted $2.7 million and $6.5 million, respectively to the Chicago Mercantile Exchange ("CME") clearing house related to the fair value derivatives settled daily to market. The
Company pays an average fixed rate of 4.82% and receives a floating rate based on the US federal funds effective rate for the life of the agreement without an exchange of the underlying notional amount.
The amortized cost basis of the closed portfolio of the fixed rate mortgage loans on December 31, 2024 totaled $692.2 million. The amount identified as the last-of-layer in the open hedge relationship was $500.0 million, which is the amount of loans in the closed portfolio anticipated to be outstanding for the designated hedge period. The basis adjustment associated with the hedged item was a $2.6 million asset as of December 31, 2024, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedged relationship.
The amortized cost basis of the closed portfolio of the fixed rate mortgage loans on December 31, 2023 totaled $729.5 million. The amount identified as the last-of-layer in the open hedge relationship was $500.0 million, which is the amount of loans in the closed portfolio anticipated to be outstanding for the designated hedge period. The basis adjustment associated with the hedged item was a $6.6 million asset as of December 31, 2023, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedged relationship.
During the years ended December 31, 2024 and 2023, the Company recorded a $1.6 million and $561 thousand, respectively, credit from the swap transaction as a component of interest income in the consolidated statements of operations, respectively.
As of December 31, 2024 and 2023, the following amounts were recorded on the consolidated statements of financial condition related to cumulative basis adjustment for fair value hedges:
Year Ended December 31,
(In thousands)
Carrying Amount of the Hedged Assets
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Carrying Amount of the Hedged Assets
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
Fixed Rate Loans
$
694,774
$
2,615
$
736,098
$
6,591
Cash Flow Hedges
The Company uses cash flow hedges to protect against variability in cash flows associated with existing or forecasted issuances of short-term borrowing. Cash flow hedges on liabilities involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s debt. During the next twelve months, the Company estimates that an additional $6.1 million will be reclassified as a decrease to interest expense.
During the years ended December 31, 2024, 2023 and 2022, the Company did not terminate any derivatives.
The table below presents the effect of the cash flow hedge accounting on accumulated other comprehensive loss as of December 31, 2024, 2023 and 2022.
Year Ended December 31,
(In thousands)
(Loss) gain recognized in other comprehensive income (loss)
$
(8,453)
$
(11,782)
$
14,412
(Loss) gain reclassified from other comprehensive income into interest expense
(10,008)
(2,092)
1,621
All cash flow hedges are recorded gross on the Consolidated statement of financial condition.
Certain cash flow hedges involve derivative agreements with third-party counterparties that contain provisions requiring the Company to post cash collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of December 31, 2024 and 2023, the Company did not post collateral to the third-party counterparties. As of December 31, 2024 and 2023, the Company received $9.1 million and $13.5 million, respectively, in collateral from its third-party counterparties under the agreements in a net asset position. Additionally, the Bank entered certain cash flow hedges that are CME exchanged and settled daily to market. As of December 31, 2024, the Company posted $856 thousand to the CME clearing house that are accounted for as settlements of the derivative asset. As of December 31, 2023, the Company posted $4.9 million to the CME clearing house that are accounted for as settlements of the derivative liabilities.
Freestanding Derivatives
The Company maintains an interest-rate risk protection program for its loan portfolio in order to offer loan level derivatives with certain borrowers and to generate loan level derivative income. The Company enters into interest rate swap or interest rate floor agreements with borrowers. These interest rate derivatives are designed such that the borrower synthetically attains a fixed-rate loan, while the Company receives floating rate loan payments. The Company offsets the loan level interest rate swap exposure by entering into an offsetting interest rate swap or interest rate floor with an unaffiliated and reputable bank counterparty. These interest rate derivatives do not qualify as designated hedges, under ASC 815; therefore, each interest rate derivative is accounted for as a freestanding derivative. The notional amounts of the interest rate derivatives do not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate derivative agreements. The following tables reflect freestanding derivatives included in the consolidated statements of financial condition as of the dates indicated:
December 31, 2024
Notional
Fair Value
Fair Value
(Dollars in thousands)
Count
Amount
Assets
Liabilities
Included in derivative assets/liabilities:
Loan level interest rate swaps with borrower
$
321,745
$
3,704
$
-
Loan level interest rate swaps with borrower
1,344,204
-
104,474
Loan level interest rate swaps with third-party counterparties
321,745
-
3,704
Loan level interest rate swaps with third-party counterparties
1,344,204
104,474
-
December 31, 2023
Notional
Fair Value
Fair Value
(Dollars in thousands)
Count
Amount
Assets
Liabilities
Included in derivative assets/liabilities:
Loan level interest rate swaps with borrower
$
491,394
$
10,985
$
-
Loan level interest rate swaps with borrower
1,121,085
-
103,570
Loan level interest rate floors with borrower
29,721
-
-
Loan level interest rate floors with borrower
40,761
-
Loan level interest rate swaps with third-party counterparties
491,394
-
10,985
Loan level interest rate swaps with third-party counterparties
1,121,085
103,570
-
Loan level interest rate floors with third-party counterparties
29,721
-
-
Loan level interest rate floors with third-party counterparties
40,761
-
Loan level derivative income is recognized on the mark-to-market of the interest rate swap as a fair value adjustment at the time the transaction is closed. Total loan level derivative income is included in non-interest income as follows:
Year Ended December 31,
(In thousands)
Loan level derivative income
$
2,114
$
7,081
$
3,637
The interest rate swap product with the borrower is cross collateralized with the underlying loan and, therefore, there is no posted collateral. Certain interest rate swap agreements with third-party counterparties contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of December 31, 2024 and 2023, the Company did not post collateral to its third-party
counterparties. As of December 31, 2024 and 2023, the Company received $103.3 million and $94.7 million, respectively, in collateral from its third-party counterparties under the agreements in a net asset position.
Risk Participation Agreements
The Company enters into risk participation agreements to manage economic risks but does not designate the instruments in hedge relationships. As of December 31, 2024 and December 31, 2023, the notional amounts of risk participation agreements for derivative liabilities were $141.1 million and $93.9 million, respectively. The related fair values of the Company’s risk participation agreements as of December 31, 2024 and December 31, 2023 were $10 thousand and $24 thousand, respectively.
Credit Risk Related Contingent Features
The Company’s agreements with each of its derivative counterparties state that if the Company defaults on any of its indebtedness, it could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty.
The Company’s agreements with certain of its derivative counterparties state that if the Bank fails to maintain its status as a well-capitalized institution, the Bank could be required to terminate its derivative positions with the counterparty.
For derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, any breach of the above provisions by the Company may require settlement of its obligations under the agreements at the termination value with the respective counterparty. As of December 31, 2024, there were no derivatives in a net liability position, and therefore the termination value was zero. There were no provisions breached for the year ended December 31, 2024.
12. FHLBNY ADVANCES
The Bank had borrowings from the FHLBNY (“Advances”) totaling $608.0 million and $1.31 billion at December 31, 2024 and 2023, respectively, all of which were fixed rate. In accordance with its Advances, Collateral Pledge and Security Agreement with the FHLBNY, the Bank was eligible to borrow or secure municipal letters of credit up to $3.87 billion as of December 31, 2024 and $4.09 billion as of December 31, 2023, and maintained sufficient qualifying collateral, as defined by the FHLBNY. We pledge real estate loans including Residential, Multifamily and CRE. At December 31, 2024 there were no callable Advances and the Bank had $1.84 billion of remaining borrowing capacity through the FHLBNY.
During the year ended December 31, 2024, the Company had $454 thousand of prepayment penalty expense recognized as a loss on extinguishment of debt. During the years ended December 31, 2023 and 2022, the Company did not have any prepayment penalty expense recognized as a loss on extinguishment of debt.
The following table is a summary of FHLBNY extinguishments for the periods presented:
Year Ended December 31,
(Dollars in thousands)
FHLBNY advances extinguished
$
1,805,000
$
-
$
-
Weighted average rate
5.28
%
-
%
-
%
Loss on extinguishment of debt
$
$
-
$
-
The following table presents the contractual maturities of FHLBNY advances for each of the next five years.
(Dollars in thousands)
December 31, 2024
December 31, 2023
2024, fixed rate at rates from 4.85% to 5.67%
-
1,265,000
Overnight, fixed rate at 4.67%
100,000
-
2025, fixed rate at rates from 4.54% to 4.84%
400,000
-
2027, fixed rate at 4.25%
36,000
36,000
2028, fixed rate at 4.04%
12,000
12,000
2029, fixed rate at rates from 3.98% to 4.03%
60,000
-
Total FHLBNY advances
$
608,000
$
1,313,000
Total FHLBNY advances had a weighted average interest rate of 4.58% and 5.23% at December 31, 2024 and December 31, 2023, respectively.
13. SUBORDINATED DEBENTURES
On June 28, 2024, the Company issued $65.0 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2034 (“the 2024 Notes”). The 2024 Notes are callable at par after five years, have a stated maturity of July 15, 2034, and bear interest at a fixed annual rate of 9.00% per year, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing on October 15, 2024. The last interest payment for the fixed rate period will be July 15, 2029. From and including July 15, 2029, to, but excluding the stated maturity date or any earlier redemption date, the interest rate will reset quarterly to an annual interest rate equal to the benchmark rate (which is expected to be Three-Month Term SOFR) plus 495.1 basis points, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, commencing on October 15, 2029.
Subsequently, on July 9, 2024, the Company issued and sold an additional $9.8 million of the 2024 Notes, pursuant to an overallotment option granted to the underwriters of the offering. Including the overallotment option, the total gross proceeds from the offering were $74.8 million, before discounts and offering expenses.
On May 6, 2022, the Company issued $160.0 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2032 (“the Notes”). The Notes are callable at par after five years, have a stated maturity of May 15, 2032 and bear interest at a fixed annual rate of 5.00% per year, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2022. The last interest payment for the fixed rate period will be May 15, 2027. From and including May 15, 2027 to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the benchmark rate (which is expected to be Three-Month Term SOFR) plus 218 basis points, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2027. The Company used the net proceeds of the offering for the repayment of $115.0 million of the Company’s 4.50% fixed-to-floating rate subordinated notes due 2027 on June 15, 2022, and $40.0 million of the Company’s 5.25% fixed-to-floating rate subordinated debentures due 2025 on June 30, 2022. The repayment of the subordinated notes due 2027 resulted in a pre-tax write-off of debt issuance costs of $740 thousand, which was recognized in loss on extinguishment of debt in non-interest expense.
The remaining $40.0 million of fixed-to-floating rate subordinated debentures were issued by the Company in September 2015, are callable at par after ten years, have a stated maturity of September 30, 2030, and bear interest at a fixed annual rate of 5.75% per year, for the first five years. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month CME Term SOFR plus 372 basis points.
The subordinated debentures totaled $272.3 million at December 31, 2024 and $200.2 million at December 31, 2023. Interest expense related to the subordinated debt was $13.8 million, $10.2 million and $10.6 million during the years ended December 31, 2024, 2023 and 2022, respectively. The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.
14. OTHER SHORT-TERM BORROWINGS
Repurchase Agreements
The Bank utilizes securities sold under agreements to repurchase (“repurchase agreements”) as part of its borrowing policy to add liquidity. Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities, of which 100% were pass-through MBS issued by GSEs. There were no repurchase agreements at December 31, 2024 and December 31, 2023.
Repurchase agreements are financing arrangements that at maturity, the securities underlying the agreements are returned to the Bank. The primary risk associated with these secured borrowings is the requirement to pledge a market value-based balance of collateral in excess of the borrowed amount. The excess collateral pledged represents an unsecured exposure to the lending counterparty. As the market value of the collateral changes, both through changes in discount rates and spreads as well as related cash flows, additional collateral may need to be pledged. In accordance with the Bank’s policies, eligible counterparties are defined and monitored to minimize exposure.
There was no interest expense on repurchase agreements for the years ended December 31, 2024 and December 31, 2023. Interest expense on repurchase agreements for the year ended December 31, 2022 was $1 thousand.
AFX
The Bank is a member of AFX, through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. As of December 31, 2024 and December 31, 2023, the Bank had $50.0 million and zero, respectively, of such borrowings outstanding. Interest expense on AFX borrowings for the years ended December 31, 2024, 2023 and 2022 was $3 thousand, $101 thousand, and $1.4 million, respectively.
15. INCOME TAXES
The Company’s consolidated Federal, State and City income tax provisions were comprised of the following:
Year Ended December 31,
(In thousands)
Current expense
Federal
$
20,170
$
24,469
$
39,492
State and city
8,479
15,681
17,205
Total current expense
28,649
40,150
56,697
Deferred expense
Federal
(5,179)
1,393
State and city
(1,115)
(758)
1,822
Total deferred expense
(6,294)
2,662
Total
$
22,355
$
40,785
$
59,359
The preceding table excludes tax effects recorded directly to stockholders’ equity in connection with unrealized gains and losses on securities available-for-sale (including losses on such securities upon their transfer to held-to-maturity), interest rate derivatives, and adjustments to other comprehensive income relating to the minimum pension liability, unrecognized gains of pension and other postretirement obligations and changes in the non-credit component of OTTI. These tax effects are disclosed as part of the presentation of the consolidated statements of changes in stockholders’ equity and comprehensive income.
The provision for income taxes differed from that computed at the Federal statutory rate as follows:
Year Ended December 31,
(Dollars in thousands)
Tax at federal statutory rate
$
10,802
$
28,745
$
44,502
State and local taxes, net of federal income tax benefit
5,583
12,237
13,699
Benefit plan differences
(131)
(127)
(127)
Investment in BOLI
(2,179)
(2,047)
(2,173)
Surrender of BOLI
7,415
-
-
Equity based compensation
(141)
Salaries deduction limitation
2,381
2,054
Other, net
(483)
1,545
Total
$
22,355
$
40,785
$
59,359
Effective tax rate
43.46
%
29.80
%
28.01
%
The increase in effective tax rate in 2024 was primarily the result of $9.1 million of income expense related to the taxable gain and Modified Endowment Contract Tax on the surrender of legacy BOLI assets. Deferred tax assets and liabilities are recorded for temporary differences between the book and tax bases of assets and liabilities. The components of Federal, State and City deferred income tax assets and liabilities were as follows:
December 31,
(In thousands)
Deferred tax assets:
Allowance for credit losses and other contingent liabilities
$
29,013
$
26,926
Tax effect of other components of income on securities available-for-sale
14,251
34,745
Tax effect of other components of income on securities held-to-maturity
6,048
7,216
Operating lease liability
15,034
19,229
Other
3,546
2,603
Total deferred tax assets
67,892
90,719
Deferred tax liabilities:
Tax effect of other components of income on derivatives
3,261
2,368
Employee benefit plans
3,259
1,707
Tax effect of purchase accounting fair value adjustments
(201)
1,329
Difference in book and tax carrying value of fixed assets
2,230
Difference in book and tax basis of unearned loan fees
2,531
3,239
Operating lease asset
14,179
18,266
States taxes
-
2,166
Other
Total deferred tax liabilities
24,650
31,546
Net deferred tax asset (recorded in other assets)
$
43,242
$
59,173
The Company and its subsidiary are subject to U.S. federal income tax as well as income tax of the State of New York, City of New York and the State of New Jersey.
Under generally accepted accounting principles, the Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled.
No valuation allowances were recognized on deferred tax assets during the years ended December 31, 2024 or 2023, since, at each period end, it was deemed more likely than not that the deferred tax assets would be fully realized.
In connection with the Merger, the Company acquired a federal net operating loss (“NOL”) carryforward subject to Internal Revenue Code Section 382. The Company recorded a deferred tax asset that it expects to realize within the carryforward period. At December 31, 2024, the remaining federal NOL carryforward was $2.0 million. At December 31, 2024, the Company had a New York State and New York City NOL carryforward balance of zero.
At December 31, 2024 and 2023, the Bank had accumulated bad debt reserves totaling $15.1 million for which no provision for income tax was required to be recorded. These bad debt reserves could be subject to recapture into taxable income
under certain circumstances, including a distribution of the bad debt benefits to the Holding Company or the failure of the Bank to qualify as a bank for federal income tax purposes. Should the reserves as of December 31, 2024 be fully recaptured, the Bank would recognize $4.8 million in additional income tax expense. The Company expects to take no action in the foreseeable future that would require the establishment of a tax liability associated with these bad debt reserves.
The Company is subject to regular examination by various tax authorities in jurisdictions in which it conducts significant business operations. The Company regularly assesses the likelihood of additional examinations in each of the tax jurisdictions resulting from ongoing assessments.
Under current accounting rules, all tax positions adopted are subjected to two levels of evaluation. Initially, a determination is made, based on the technical merits of the position, as to whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. In conducting this evaluation, management is required to presume that the position will be examined by the appropriate taxing authority possessing full knowledge of all relevant information. The second level of evaluation is the measurement of a tax position that satisfies the more-likely-than-not recognition threshold. This measurement is performed in order to determine the amount of benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. The Company had no unrecognized tax benefits as of December 31, 2024 or 2023. The Company does not anticipate any material change to unrecognized tax benefits during the year ended December 31, 2025.
As of December 31, 2024, the tax years ended December 31, 2024, 2023, 2022, and 2021, remained subject to examination by all of the Company's relevant tax jurisdictions. The Company is currently not under audit in any taxing jurisdictions.
16. RETIREMENT AND POSTRETIREMENT PLANS
The Bank maintains two noncontributory pension plans: (i) the Retirement Plan of Dime Community Bank (“Employee Retirement Plan”) and (ii) the BNB Bank Pension Plan, covering all eligible employees. Bank of America, N.A. (“BANA”) was the Trustee for the Employee Retirement Plan and BNB Bank Pension Plan assets as of December 31, 2024 and 2023. The assets of both plans are overseen by the Retirement Committee (“Committee”), comprised of management, who meet quarterly and set investment policy guidelines. Merrill Lynch, Pierce, Fenner & Smith, Inc. (“MLPF&S”) and Blackrock are the investment managers of the assets of both plans. The Committee meets with representatives of MLPF&S and reviews the performance of the plan assets. Pension plan assets include cash and cash equivalents, equities and fixed income securities.
Employee Retirement Plan
The Bank sponsors the Employee Retirement Plan, a tax-qualified, noncontributory, defined-benefit retirement plan. Prior to April 1, 2000, substantially all full-time employees of at least 21 years of age were eligible for participation after one year of service. Effective April 1, 2000, the Bank froze all participant benefits under the Employee Retirement Plan. On December 21, 2023, the Company’s Board of Directors adopted a resolution to terminate the Employee Retirement Plan effective December 31, 2023. Retirement benefits of the plan were vested as they were earned. For the years ended December 31, 2024 and 2023, the Bank used December 31st as its measurement date for the Employee Retirement Plan.
The funded status of the Employee Retirement Plan was as follows:
Year Ended December 31,
(In thousands)
Reconciliation of projected benefit obligation:
Projected benefit obligation at beginning of year
$
18,721
$
19,021
Interest cost
Actuarial (gain) loss
(1,101)
Benefit payments
(1,649)
(1,584)
Projected benefit obligation at end of year
16,818
18,721
Plan assets at fair value (investments in trust funds managed by trustee)
Balance at beginning of year
21,303
22,593
Return on plan assets
(448)
Benefit payments
(1,649)
(1,584)
Balance at end of year
19,206
21,303
Funded status at end of year
$
2,388
$
2,582
The net periodic cost for the Employee Retirement Plan included the following components:
Year Ended December 31,
(In thousands)
Interest cost
$
$
$
Expected return on plan assets
(1,429)
(1,521)
(1,949)
Amortization of unrealized loss
Net periodic benefit (credit) cost
$
$
(49)
$
(1,066)
The change in accumulated other comprehensive loss that resulted from the Employee Retirement Plan is summarized as follows:
Year Ended December 31,
(In thousands)
Balance at beginning of period
$
(6,363)
$
(5,323)
Amortization of unrealized loss
Loss recognized during the year
(776)
(1,612)
Balance at the end of the period
$
(6,285)
$
(6,363)
Period end component of accumulated other comprehensive loss, net of tax
$
4,356
$
4,343
Major assumptions utilized to determine the net periodic cost of the Employee Retirement Plan benefit obligations were as follows:
At or for the Year Ended December 31,
Discount rate used for net periodic benefit cost
4.70
%
4.90
%
2.55
%
Discount rate used to determine benefit obligation at period end
5.40
4.70
4.90
Expected long-term return on plan assets used for net periodic benefit cost
7.00
7.00
7.00
Expected long-term return on plan assets used to determine benefit obligation at period end
7.00
7.00
7.00
Plan Assets
At December 31, 2024, the Employee Retirement Plan’s assets included debt securities. Debt securities include corporate bonds, government issues, mortgage-backed securities, and high yield securities.
The weighted average expected long-term rate of return is estimated based on current trends in Employee Retirement Plan assets, as well as projected future rates of return on those assets and reasonable actuarial assumptions based on the guidance provided by Actuarial Standard of Practice No. 27 for the real and nominal rate of investment return for a specific mix of asset classes. The long-term rate of return considers historical returns for the S&P 500 index and corporate bonds
representing cumulative returns of approximately 9.0% and 5.0%, respectively. These returns were considered along with the target allocations of asset categories. When these overall return expectations were applied to the Employee Retirement Plan’s target allocation, the expected annual rate of return was determined to be 7.00% at both December 31, 2024 and 2023.
The Bank did not make any contributions to the Employee Retirement Plan during the year ended December 31, 2024. The Bank does not expect to make contributions to the Employee Retirement Plan during the year ending December 31, 2025.
The weighted-average allocation by asset category of the assets of the Employee Retirement Plan was summarized as follows:
December 31,
Asset category:
Debt securities
%
%
Cash equivalents
-
Total
%
%
The allocation percentages in the above table were consistent with future planned allocation percentages as of December 31, 2024 and 2023, respectively.
The following tables present a summary of the Employee Retirement Plan’s investments measured at fair value on a recurring basis by level within the fair value hierarchy, as of the dates indicated. (See Note 21 for a discussion of the fair value hierarchy).
December 31, 2024
Fair Value Measurements Using:
Quoted
Prices in
Significant
Active Markets for
Other
Significant
Identical
Observable
Unobservable
(In thousands)
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
Total
Description:
Cash and cash equivalents
$
-
$
$
-
$
Fixed income securities:
Government
19,070
-
-
19,070
Total Plan Assets
$
19,070
$
$
-
$
19,206
December 31, 2023
Fair Value Measurements Using:
Quoted
Prices in
Significant
Active Markets for
Other
Significant
Identical
Observable
Unobservable
(In thousands)
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
Total
Description:
Cash and cash equivalents
$
-
$
$
-
$
Fixed income securities:
Government
21,245
-
-
21,245
Total Plan Assets
$
21,245
$
$
-
$
21,303
Benefit payments for the fiscal year ending December 31st are anticipated to be made as follows:
(In thousands)
$
1,502
1,462
1,431
1,393
1,353
2030 to 2034
6,514
BNB Bank Pension Plan
During 2012, Bridge amended the BNB Bank Pension Plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered Bridge employees. Additionally, new Bridge employees hired on or after October 1, 2012 were not eligible for the BNB Bank Pension Plan. Effective December 31, 2023, the Bank froze all participant benefits under the BNB Pension Plan, the impact of which is reflected in the recorded curtailment as of December 31, 2023. On December 21, 2023, the Company’s Board of Directors adopted a resolution to terminate the BNB Bank Pension Plan effective December 31, 2023. Retirement benefits of the plan were vested as they were earned. For the years ended December 31, 2024 and 2023, the Bank used December 31st as its measurement date for the BNB Pension Plan.
The funded status of the BNB Bank Pension Plan was as follows:
Year Ended December 31,
(In thousands)
Reconciliation of projected benefit obligation:
Projected benefit obligation at beginning of year
$
27,282
$
27,920
Service cost
-
Interest cost
1,265
1,263
Actuarial gain
(1,575)
(883)
Curtailment
-
(446)
Impact of settlement
(5,481)
-
Benefit payments
(1,040)
(1,136)
Projected benefit obligation at end of year
20,451
27,282
Plan assets at fair value (investments in trust funds managed by trustee)
Balance at beginning of year
38,170
38,572
Return on plan assets
(1,542)
Impact of settlement
(5,481)
-
Benefit payments
(1,040)
(1,136)
Balance at end of year
30,107
38,170
Funded status at end of year
$
9,656
$
10,888
The net periodic cost for the BNB Bank Pension Plan included the following components:
Year Ended December 31,
(In thousands)
Service cost
$
-
$
Interest cost
1,265
1,263
Expected return on plan assets
(2,726)
(2,760)
Net periodic benefit credit
$
(1,461)
$
(933)
Settlement loss recognized
1,215
-
Total benefit cost
$
(246)
$
(933)
The change in accumulated other comprehensive income that resulted from the BNB Bank Pension Plan is summarized as follows:
Year Ended December 31,
(In thousands)
Balance at beginning of period
$
(3,056)
$
(2,358)
Recognition of gain as a result of settlement
1,215
-
Loss recognized during the year
(2,693)
(698)
Balance at the end of the period
$
(4,534)
$
(3,056)
Period end component of accumulated other comprehensive income, net of tax
$
3,143
$
2,087
Major assumptions utilized to determine the net periodic cost of the BNB Bank Pension Plan benefit obligations were as follows:
At or for the Year Ended December 31,
Discount rate used for net periodic benefit cost
4.79
%
4.98
%
Discount rate used to determine benefit obligation at period end
5.47
4.79
Expected long-term return on plan assets used for net periodic benefit cost
7.25
7.25
Expected long-term return on plan assets used to determine benefit obligation at period end
7.25
7.25
Plan Assets
At December 31, 2024, the BNB Bank Pension Plan’s assets included cash equivalents and debt securities.
The weighted average expected long-term rate of return is estimated based on current trends in BNB Bank Pension Plan assets, as well as projected future rates of return on those assets and reasonable actuarial assumptions based on the guidance provided by Actuarial Standard of Practice No. 27 for the real and nominal rate of investment return for a specific mix of asset classes. The long-term rate of return considers historical returns for the S&P 500 index and corporate bonds representing cumulative returns of approximately 9.0% and 5.0%, respectively. These returns were considered along with the target allocations of asset categories. When these overall return expectations were applied to the BNB Bank Pension Plan’s target allocation, the expected annual rate of return was determined to be 7.25% at December 31, 2024 and 2023.
The Bank did not make any contributions to the BNB Bank Pension Plan during the year ended December 31, 2024. The Bank does not expect to make contributions to the BNB Bank Pension Plan during the year ending December 31, 2025.
The weighted-average allocation by asset category of the assets of the BNB Bank Pension Plan was summarized as follows:
December 31,
Asset category:
Debt securities
%
%
Cash equivalents
Total
%
%
The following tables present a summary of the BNB Bank Pension Plan’s investments measured at fair value on a recurring basis by level within the fair value hierarchy, as of the dates indicated. (See Note 21 for a discussion of the fair value hierarchy).
Fair Value Measurements
at December 31, 2024
Quoted
Prices in
Significant
Active Markets for
Other
Significant
Identical
Observable
Unobservable
(In thousands)
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
Total
Description:
Cash and cash equivalents
$
-
$
1,062
$
-
$
1,062
Fixed income securities:
Government
29,045
-
-
29,045
Total Plan Assets
$
29,045
$
1,062
$
-
$
30,107
Fair Value Measurements
at December 31, 2023
Quoted
Prices in
Significant
Active Markets for
Other
Significant
Identical
Observable
Unobservable
(In thousands)
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
Total
Description:
Cash and cash equivalents
$
-
$
$
-
$
Fixed income securities:
Government
37,853
-
-
37,853
Total Plan Assets
$
37,853
$
$
-
$
38,170
Benefit payments for the fiscal year ending December 31st are anticipated to be made as follows:
(In thousands)
$
1,128
1,302
1,207
1,294
1,300
2030 to 2034
7,689
401(k) Plan
The Company maintains a 401(k) Plan (the “401(k) Plan”) that existed before the Merger. The 401(k) Plan covers substantially all current employees. Newly hired employees are automatically enrolled in the plan on the first day of the month following the 60th day of employment, unless they elect not to participate. Participants may contribute a portion of their pre-tax base salary, generally not to exceed $23,000 for the calendar year ended December 31, 2024. Under the provisions of the 401(k) plan, employee contributions are partially matched by the Bank as follows: 100% of each employee’s contributions up to 1% of each employee’s compensation plus 50% of each employee’s contributions over 1% but not in excess of 6% of each employee’s compensation for a maximum contribution of 3.5% of a participating employee’s compensation. Participants can invest their account balances into several investment alternatives. The 401(k) plan does not allow for investment in the Company’s common stock. Legacy Dime employees were allowed to rollover Company common stock shares in-kind held in the former Dime Community Bank KSOP Plan (“Dime KSOP Plan”) and hold in the 401(k) Plan. The 401(k) held Company common stock within the accounts of participants totaling $6.6 million and $6.3 million at December 31, 2024 and 2023, respectively. Total expense recognized as a component of salaries and employee benefits expense for the 401(k) Plan was $3.0 million during the year ended December 31, 2024 and $2.5 million during the year December 31, 2023, and $2.3 million during the year ended December 31, 2022.
17. STOCK-BASED COMPENSATION
In May 2021, the Company’s stockholders approved the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) to provide the Company with sufficient equity compensation to meet the objectives of appropriately incentivizing its officers, other employees, and directors to execute our strategic plan to build shareholder value, while providing appropriate shareholder protections. The Company no longer makes grants under the Legacy Stock Plans. Awards outstanding under the Legacy Stock Plans will continue to remain outstanding and subject to the terms and conditions of the Legacy Stock Plans. An additional 1,185,000 shares of common stock were reserved to be issued under the 2021 Equity Incentive Plan following stockholder approval at the Annual Meeting of Shareholders on May 23, 2024. At December 31, 2024, there were 1,493,586 shares reserved for issuance under the 2021 Equity Incentive Plan.
Stock Option Activity
The following table presents a summary of activity related to stock options granted under the Legacy Stock Plans, and changes during the period then ended:
Weighted-
Average
Weighted-
Remaining
Aggregate
Number of
Average Exercise
Contractual
Intrinsic
(Dollars in thousands except share and per share amounts)
Options
Price
Years
Value
Options outstanding at January 1, 2024
26,995
$
35.39
5.2
-
Options exercised
-
-
Options forfeited
-
-
Options outstanding at December 31, 2024
26,995
$
35.39
4.2
$
-
Options vested and exercisable at December 31, 2024
26,995
$
35.39
4.2
$
-
Information related to stock options during each period is as follows:
Year Ended December 31,
(In thousands)
Cash received for option exercise cost
$
-
$
-
$
-
Income tax (expense) benefit recognized on stock option exercises
-
-
-
Intrinsic value of options exercised
-
-
-
The range of exercise prices and weighted-average remaining contractual lives of both outstanding and vested options (by option exercise cost) as of December 31, 2024 were as follows:
Outstanding Options
Vested Options
Weighted
Weighted
Average
Average
Number
Contractual
Number
Contractual
of
Years
of
Years
Options
Remaining
Options
Remaining
Exercise Prices:
$34.87
10,061
5.1
10,061
5.1
$35.35
9,802
4.1
9,802
4.1
$36.19
7,132
3.1
7,132
3.1
Total
26,995
4.2
26,995
4.2
Restricted Stock Awards
The Company has made RSA grants to outside Directors and certain officers under the Legacy Stock Plans and the 2021 Equity Incentive Plan. Typically, awards to outside Directors fully vest on the first anniversary of the grant date, while awards to officers vest over a pre-determined requisite period. All awards were made at the fair value of the Company’s common stock on the grant date. Compensation expense on all RSAs is based upon the fair value of the shares on the respective dates of the grant.
The following table presents a summary of activity related to the RSAs granted, and changes during the period then ended:
Weighted-
Average
Number of
Grant-Date
Shares
Fair Value
Unvested allocated shares outstanding at January 1, 2024
356,795
$
26.88
Shares granted
319,924
20.62
Shares vested
(170,540)
26.98
Shares forfeited
(35,943)
24.15
Unvested allocated shares outstanding at December 31, 2024
470,236
$
22.79
Information related to RSAs during each period is as follows:
Year Ended December 31,
(In thousands)
Compensation expense recognized
$
5,780
$
4,003
$
3,516
Income tax expense recognized on vesting of RSAs
(317)
(188)
(10)
As of December 31, 2024, there was $5.6 million of total unrecognized compensation cost related to unvested RSAs to be recognized over a weighted-average period of 1.7 years.
Performance-Based Share Awards
The Company maintains a Long Term Incentive Plan (“LTIP”) for certain officers, which meets the criteria for equity-based accounting. For each award, threshold (50% of target), target (100% of target) and stretch (150% of target) opportunities are eligible to be earned over a three-year performance period based on the Company’s relative performance on certain goals that were established at the onset of the performance period and cannot be altered subsequently. Shares of common stock are issued on the grant date and held as unvested stock awards until the end of the performance period. Shares are issued at the stretch opportunity in order to ensure that an adequate number of shares are allocated for shares expected to vest at the end of the performance period. Compensation expense on PSAs is based upon the fair value of the shares on the date of the grant for the expected aggregate share payout as of the period end.
During the year ended December 31, 2024 and 2023, 96,049 shares and 195,066 shares have been granted, respectively.
The following table presents a summary of activity related to the PSAs granted, and changes during the period then ended:
Weighted-
Average
Number of
Grant-Date
Shares
Fair Value
Maximum aggregate share payout at January 1, 2024
222,240
$
20.64
Shares granted
96,049
18.61
Shares forfeited
(47,054)
24.75
Shares vested
(12,371)
29.97
Maximum aggregate share payout at December 31, 2024
258,864
$
18.69
Minimum aggregate share payout
-
-
Expected aggregate share payout
248,381
$
18.35
Information related to PSAs during each period is as follows:
Year Ended December 31,
(In thousands)
Compensation expense recognized
$
$
$
Income tax (expense) benefit recognized on vesting of PSAs
(52)
-
As of December 31, 2024, there was $2.5 million of total unrecognized compensation cost related to unvested PSAs based on the expected aggregate share payout to be recognized over a weighted-average period of 1.8 years.
18. EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the reporting period. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution that would occur if "in the money" stock options were exercised and converted into common stock, and prior to 2021, if all likely aggregate PSAs were issued. In determining the weighted average shares outstanding for basic and diluted EPS, treasury shares are excluded. Vested restricted stock award (“RSA”) shares are included in the calculation of the weighted average shares outstanding for basic and diluted EPS. Unvested RSA and performance-based share awards (“PSA”) shares not yet awarded are recognized as a special class of participating
securities under ASC 260, and are included in the calculation of the weighted average shares outstanding for basic and diluted EPS.
The following is a reconciliation of the numerators and denominators of basic and diluted EPS for the periods presented:
Year Ended December 31,
(In thousands except share and per share amounts)
Net income available to common stockholders
$
21,798
$
88,808
$
145,270
Less: Dividends paid and earnings allocated to participating securities
(377)
(1,240)
(1,688)
Income attributable to common stock
$
21,421
$
87,568
$
143,582
Weighted-average common shares outstanding, including participating securities
39,657,985
38,754,346
38,985,314
Less: weighted-average participating securities
(724,931)
(566,869)
(446,480)
Weighted-average common shares outstanding
38,933,054
38,187,477
38,538,834
Basic EPS
$
0.55
$
2.29
$
3.73
Income attributable to common stock
$
21,421
$
87,568
$
143,582
Weighted-average common shares outstanding
38,933,054
38,187,477
38,538,834
Weighted-average common equivalent shares outstanding
-
-
-
Weighted-average common and equivalent shares outstanding
38,933,054
38,187,477
38,538,834
Diluted EPS
$
0.55
$
2.29
$
3.73
Common and equivalent shares resulting from the dilutive effect of "in-the-money" outstanding stock options are calculated based upon the excess of the average market value of the common stock over the exercise price of outstanding in-the-money stock options during the period.
There were 26,995, 69,479 and 134,447 weighted-average stock options outstanding for the years ended December 31, 2024, 2023 and 2022, respectively, which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.
19. PREFERRED STOCK
Dime Community Bancshares, Inc. has 5,299,200 shares currently outstanding, or $132.5 million in aggregate liquidation preference, of its 5.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $25.00 per share (the “Preferred Stock”).
The Company expects to pay dividends when, as, and if declared by its board of directors, at a fixed rate of 5.50% per annum, payable quarterly, in arrears, on February 15, May 15, August 15 and November 15 of each year. The Preferred Stock is perpetual and has no stated maturity. The Company may redeem the Preferred Stock at its option at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), subject to regulatory approval, on or after June 15, 2025 or within 90 days following a regulatory capital treatment event, as described in the prospectus supplement and accompanying prospectus relating to the offering.
20. COMMITMENTS AND CONTINGENCIES
Loan Commitments and Lines of Credit
The contractual amounts of financial instruments with off-balance sheet risk were as follows:
Year Ended December 31,
(In thousands)
Fixed Rate
Variable Rate
Fixed Rate
Variable Rate
Available lines of credit
$
195,714
$
993,637
$
114,880
$
1,072,471
Other loan commitments
33,858
43,975
7,190
89,855
Stand-by letters of credit
31,374
-
38,095
-
At December 31, 2024 and 2023, the Bank had outstanding firm loan commitments that were accepted by borrowers that aggregated to $77.8 million and $97.0 million, respectively. Substantially all of the Bank’s commitments expire within
three months of their acceptance by the prospective borrowers. The credit risk associated with these commitments is based on the loan type which is comprised of multifamily residential, residential mixed-use, business, non-owner-occupied, commercial mixed-use, and one-to-four family residential loans.
At December 31, 2024, the Bank had an available line of credit with the FHLBNY equal to its excess borrowing capacity. At December 31, 2024, this amount approximated $1.84 billion.
During the year ended December 31, 2017, the Bank completed a securitization of $280.2 million of its multifamily loans through a FHLMC sponsored “Q-deal” securitization. With respect to the securitization transaction, the Company also has continuing involvement through a reimbursement agreement executed with Freddie Mac. To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to reimburse FHLMC for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date.
Litigation
The Company is subject to certain pending and threatened legal actions which arise out of the normal course of business. Litigation is inherently unpredictable, particularly in proceedings where claimants seek substantial or indeterminate damages, or which are in their early stages. The Company cannot predict with certainty the actual loss or range of loss related to such legal proceedings, the manner in which they will be resolved, the timing of final resolution or the ultimate settlement. Consequently, the Company cannot estimate losses or ranges of losses related to such legal matters, even in instances where it is reasonably possible that a loss will be incurred. In the opinion of management, after consultation with counsel, the resolution of all ongoing legal proceedings will not have a material adverse effect on the consolidated financial condition or results of operations of the Company. The Company accounts for potential losses related to litigation in accordance with GAAP.
21. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1 Inputs - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Significant other observable inputs such as any of the following: (1) quoted prices for similar assets or liabilities in active markets, (2) quoted prices for identical or similar assets or liabilities in markets that are not active, (3) inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates), or (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).
Level 3 Inputs - Significant unobservable inputs for the asset or liability. Significant unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Significant unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Securities
The Company’s available-for-sale securities are reported at fair value, which were determined utilizing prices obtained from independent parties. The valuations obtained are based upon market data, and often utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, pricing applications apply available information such as benchmarking and matrix pricing. The market inputs
normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (obtained only from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Prioritization of inputs may vary on any given day based on market conditions.
All MBS, CMOs, treasury securities, and agency notes are guaranteed either implicitly or explicitly by GSEs as of December 31, 2024 and December 31, 2023. In accordance with the Company’s investment policy, corporate securities are rated "investment grade" at the time of purchase and the financials of the issuers are reviewed quarterly. Obtaining market values as of December 31, 2024 and December 31, 2023 for these securities utilizing significant observable inputs was not difficult due to their liquid nature.
Derivatives
Derivatives represent interest rate swaps and estimated fair values are based on valuation models using observable market data as of the measurement date.
The following tables present financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value Measurements
at December 31, 2024 Using
Level 1
Level 2
Level 3
(In thousands)
Total
Inputs
Inputs
Inputs
Financial Assets:
Securities available-for-sale:
Agency notes
$
9,607
$
-
$
9,607
$
-
Treasury securities
-
-
-
-
Corporate securities
163,949
-
163,949
-
Pass-through MBS issued by GSEs
300,221
-
300,221
-
Agency CMOs
191,888
-
191,888
-
State and municipal obligations
25,028
-
25,028
-
Derivative - cash flow hedges
8,318
-
8,318
-
Derivative - freestanding derivatives, net
108,178
-
108,178
-
Financial Liabilities:
Derivative - fair value hedges
-
-
-
-
Derivative - cash flow hedges
-
-
Derivative - freestanding derivatives, net
108,178
108,178
Derivative - risk participations
-
-
Fair Value Measurements
at December 31, 2023 Using
Level 1
Level 2
Level 3
(In thousands)
Total
Inputs
Inputs
Inputs
Financial Assets:
Securities available-for-sale:
Agency Notes
$
9,371
$
-
$
9,371
$
-
Treasury securities
234,190
-
234,190
-
Corporate securities
151,170
-
151,170
-
Pass-through MBS issued by GSEs
205,285
-
205,285
-
Agency CMOs
259,415
-
259,415
-
State and municipal obligations
26,809
-
26,809
-
Derivative - cash flow hedges
7,461
-
7,461
-
Derivative - freestanding derivatives, net
114,671
-
114,671
-
Financial Liabilities:
Derivative - fair value hedge
6,594
-
6,594
-
Derivative - cash flow hedges
5,031
-
5,031
-
Derivative - freestanding derivatives, net
114,671
-
114,671
-
Assets Measured at Fair Value on a Non-recurring Basis
Certain financial assets are measured at fair value on a nonrecurring basis. That is, they are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis include certain individually evaluated loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.
December 31, 2024
Fair Value Measurements Using:
Quoted Prices
In Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Carrying
Assets
Inputs
Inputs
(In thousands)
Value
(Level 1)
(Level 2)
(Level 3)
Individually evaluated loans
$
7,584
$
-
$
-
$
7,584
December 31, 2023
Fair Value Measurements Using:
Quoted Prices
In Active
Significant
Markets for
Other
Significant
Identical
Observable
Unobservable
Carrying
Assets
Inputs
Inputs
(In thousands)
Value
(Level 1)
(Level 2)
(Level 3)
Individually evaluated loans
$
6,336
$
-
$
-
$
6,336
Individually evaluated loans with an allowance for credit losses at December 31, 2024 had a carrying amount of $7.6 million, which is made up of the outstanding balance of $9.7 million, net of a valuation allowance of $2.1 million. Collateral dependent individually analyzed loans as of December 31, 2024 resulted in a credit loss recovery of $194 thousand, which is included in the amounts reported in the consolidated statements of operations for the year ended December 31, 2024.
Individually evaluated loans with an allowance for credit losses at December 31, 2023 had a carrying amount of $6.3 million, which is made up of the outstanding balance of $7.3 million, net of a valuation allowance of $1.0 million. Collateral dependent individually analyzed loans as of December 31, 2023 resulted in a credit loss recovery of $371 thousand, which is included in the amounts reported in the consolidated statements of operations for the year ended December 31, 2023.
Financial Instruments Not Measured at Fair Value
The following tables present the carrying amounts and estimated fair values of financial instruments other than those measured at fair value on either a recurring or nonrecurring basis for the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Fair Value Measurements
at December 31, 2024 Using
Carrying
Level 1
Level 2
Level 3
(In thousands)
Amount
Inputs
Inputs
Inputs
Total
Financial Assets:
Cash and due from banks
$
1,283,571
$
1,283,571
$
-
$
-
$
1,283,571
Securities held-to-maturity
637,339
-
552,277
-
552,277
Loans held for sale
22,625
-
-
22,625
22,625
Loans held for investment, net
10,775,608
-
-
10,354,366
10,354,366
Accrued interest receivable
55,970
-
6,676
49,294
55,970
Financial Liabilities:
Savings, money market and checking accounts (1)
10,617,060
10,617,060
-
-
10,617,060
CDs
1,069,081
-
1,066,630
-
1,066,630
FHLBNY advances
608,000
-
608,908
-
608,908
Subordinated debt, net
272,325
-
257,464
-
257,464
Other short-term borrowings
50,000
50,000
-
-
50,000
Accrued interest payable
8,586
-
8,586
-
8,586
(1) Includes mortgage escrow deposits.
Fair Value Measurements
at December 31, 2023 Using
Carrying
Level 1
Level 2
Level 3
(In thousands)
Amount
Inputs
Inputs
Inputs
Total
Financial Assets:
Cash and due from banks
$
457,547
$
457,547
$
-
$
-
$
457,547
Securities held-to-maturity
594,639
-
516,930
-
516,930
Loans held for sale
10,159
-
-
10,159
10,159
Loans held for investment, net
10,695,349
-
-
10,305,026
10,305,026
Accrued interest receivable
55,666
-
6,593
49,073
55,666
Financial Liabilities:
Savings, money market and checking accounts (1)
8,922,972
8,922,972
-
-
8,922,972
CDs
1,607,683
-
1,602,087
-
1,602,087
FHLBNY advances
1,313,000
-
1,312,940
-
1,312,940
Subordinated debt, net
200,196
-
160,696
-
160,696
Accrued interest payable
17,298
-
17,298
-
17,298
(1) Includes mortgage escrow deposits.
22. REGULATORY CAPITAL MATTERS
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital requirements that involve quantitative measures of the Company’s and Bank’s assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications also are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, tier 1, and common equity tier 1 capital to risk-weighted assets and of tier 1 capital to average assets. Tier 1 capital, risk-weighted assets and average assets are as defined by regulation. The required
minimums for the Company and Bank are set forth in the tables that follow. The Company and the Bank met all capital adequacy requirements at December 31, 2024 and 2023.
Under the Basel III Capital Rules the Company and the Bank are subject to the following minimum capital to risk-weighted assets ratios: a) 4.5% based on common equity tier 1 capital ("CET1"); b) 6.0% based on tier 1 capital; and c) 8.0% based on total regulatory capital. A minimum leverage ratio (tier 1 capital as a percentage of total average assets) of 4.0% is also required under the Basel III Capital Rules. The Basel III Capital Rules additionally require institutions to retain a capital conservation buffer, composed of CET1, of 2.5% above these required minimum capital ratio levels. Including the capital conservation buffer, the Company and the Bank effectively have the following minimum capital to risk-weighted assets ratios: a) 7.0% based on CET1; b) 8.5% based on tier 1 capital; and c) 10.5% based on total regulatory capital.
The Company and the Bank made the one-time, permanent election to continue to exclude the effects of accumulated other comprehensive income or loss items included in stockholders’ equity for the purposes of determining the regulatory capital ratios.
As of December 31, 2024, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, tier 1 risk-based, common equity tier 1 risk-based, and tier 1 leverage ratios as set forth in the tables below. Since that notification, there are no conditions or events that management believes have changed the institution’s category.
The following tables present actual capital levels and minimum required levels for the Company and the Bank under Basel III rules at December 31, 2024 and 2023:
At December 31, 2024
For Capital
To Be Categorized
Actual
Adequacy Purposes(1)
as “Well Capitalized”(1)
Minimum
Minimum
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Tier 1 capital / % of average total assets
Bank
$
1,469,047
10.7
%
$
546,759
4.0
%
$
683,449
5.0
%
Consolidated Company
1,283,038
9.4
547,024
4.0
N/A
N/A
Common equity Tier 1 capital / % of risk-weighted assets
Bank
1,469,047
13.9
474,269
4.5
685,055
6.5
Consolidated Company
1,166,469
11.1
474,521
4.5
N/A
N/A
Tier 1 capital / % of risk-weighted assets
Bank
1,469,047
13.9
632,358
6.0
843,144
8.0
Consolidated Company
1,283,038
12.2
632,694
6.0
N/A
N/A
Total capital / % of risk-weighted assets
Bank
1,560,876
14.8
843,144
8.0
1,053,931
10.0
Consolidated Company
1,649,617
15.6
843,592
8.0
N/A
N/A
(1) In accordance with the Basel III rules.
At December 31, 2023
For Capital
To Be Categorized
Actual
Adequacy Purposes(1)
as “Well Capitalized”(1)
Minimum
Minimum
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Tier 1 capital / % of average total assets
Bank
$
1,331,676
9.8
%
$
544,254
4.0
%
$
680,318
5.0
%
Consolidated Company
1,158,455
8.5
544,529
4.0
N/A
N/A
Common equity Tier 1 capital / % of risk-weighted assets
Bank
1,331,676
12.6
476,168
4.5
687,798
6.5
Consolidated Company
1,041,886
9.8
476,341
4.5
N/A
N/A
Tier 1 capital / % of risk-weighted assets
Bank
1,331,676
12.6
634,890
6.0
846,520
8.0
Consolidated Company
1,158,455
10.9
635,122
6.0
N/A
N/A
Total capital / % of risk-weighted assets
Bank
1,406,581
13.3
846,520
8.0
1,058,151
10.0
Consolidated Company
1,433,361
13.5
846,829
8.0
N/A
N/A
(1) In accordance with the Basel III rules.
23. CONDENSED HOLDING COMPANY ONLY FINANCIAL STATEMENTS
The following statements of financial condition as of December 31, 2024 and 2023, and the related statements of operations and cash flows for the years ended December 31, 2024, 2023 and 2022, reflect the Holding Company’s investment in its wholly-owned subsidiary, the Bank, using, as deemed appropriate, the equity method of accounting:
DIME COMMUNITY BANCSHARES, INC.
CONDENSED STATEMENTS OF FINANCIAL CONDITION
December 31,
(In thousands)
ASSETS:
Cash and due from banks
$
95,528
$
35,114
Securities available-for-sale, at fair value
2,850
2,693
Investment in subsidiaries
1,578,643
1,395,526
Other assets
6,180
4,401
Total assets
$
1,683,201
$
1,437,734
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Subordinated debt, net
$
272,325
$
200,196
Other liabilities
14,359
11,313
Stockholders’ equity
1,396,517
1,226,225
Total liabilities and stockholders’ equity
$
1,683,201
$
1,437,734
DIME COMMUNITY BANCSHARES, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (1)
Year Ended December 31,
(In thousands)
Net interest loss
$
(13,501)
$
(9,942)
$
(10,394)
Dividends received from Bank
50,000
60,000
95,000
Non-interest expense
(1,115)
(1,066)
(1,720)
Income before income taxes and equity in undistributed earnings of direct subsidiaries
35,384
48,992
82,886
Income tax credit
5,308
7,822
4,001
Income before equity in undistributed earnings of direct subsidiaries
40,692
56,814
86,887
Equity in undistributed earnings of subsidiaries
(11,608)
39,280
65,669
Net income
$
29,084
$
96,094
$
152,556
(1) Comprehensive income for the Holding Company approximated comprehensive income for the consolidated Company during the years ended December 31, 2024, 2023 and 2022.
DIME COMMUNITY BANCSHARES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(In thousands)
Cash flows from operating activities:
Net income
$
29,084
$
96,094
$
152,556
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of direct subsidiaries
11,608
(39,280)
(65,669)
Net amortization (accretion)
(87)
(111)
Loss on extinguishment of debt
-
-
Increase in other assets
(1,863)
(62)
(104)
Increase (decrease) in other liabilities
(931)
(1,096)
Net cash provided by operating activities
39,677
55,734
86,316
Cash flows from investing activities:
Net cash provided by investing activities
-
-
-
Cash flows from financing activities:
Proceeds from subordinated debentures issuance, net
72,084
-
157,559
Redemption of subordinated debentures
-
-
(155,000)
Proceeds from common stock issuance, net
135,764
-
-
Release of stock for benefit plan awards
1,105
1,164
1,167
Payments related to tax withholding for equity awards
(1,347)
(1,258)
(1,558)
Treasury shares repurchased
-
(947)
(46,762)
Cash dividends paid to preferred stockholders
(7,286)
(7,286)
(7,286)
Cash dividends paid to common stockholders
(38,036)
(37,302)
(36,791)
Other, net
(141,547)
-
-
Net cash provided by (used in) financing activities
20,737
(45,629)
(88,671)
Net increase (decrease) in cash and due from banks
60,414
10,105
(2,355)
Cash and due from banks, beginning of period
35,114
25,009
27,364
Cash and due from banks, end of period
$
95,528
$
35,114
$
25,009
424. SEGMENT INFORMATION
The Chief Executive Officer, who is designated as the chief operating decision maker (“CODM”), determines the Company’s reportable segment. The Chief Executive Officer along with others in the Company’s executive management evaluates performance and allocates resources based upon analysis of the Company as one operating segment or unit. The activities of the Company comprise one reportable segment, "Community Banking." All of the Company’s activities are interrelated, and each activity is dependent and assessed based on the manner in which it supports the other activities of the Company. All the consolidated assets are attributable to the Community Banking segment. The accounting policies of the Community Banking segment are the same as those described in the Note 1 “Summary of Significant Accounting Policies.”
The Company provides a range of community banking services, including commercial and consumer lending, personal and business banking, treasury management and merchant services, and other financial services primarily to individuals, businesses, and municipalities in the Greater Long Island area.
The CODM is provided with the Company’s consolidated statements of financial condition and operations and evaluates the Company’s operating results based on consolidated net interest income, non-interest income, non-interest expense, and net income, which can be seen on the consolidated statement of operations. These results are used to benchmark the Company against its competitors. Other significant non-cash items assessed by the CODM are depreciation, amortization and provision for credit losses consistent with the reporting on the consolidated statements of cash flows. Expenditures for long-lived assets are also evaluated and are consistent with the reporting on the consolidated statements of cash flows. Strategic plans and budget to actual monitoring are evaluated as one reportable segment. The actual results are used in assessing performance of the segment and in establishing management’s compensation. All revenues are derived from
banking operations within the United States, and for the years ended December 31, 2024, 2023 and 2022, there was no customer that accounted for more than 10% of the Company's consolidated revenue.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of December 31, 2024. Based on that evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by the annual report.
Report by Management on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining an effective system of internal control over financial reporting. The Company’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the Company’s internal control over financial reporting as of December 31, 2024. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2024, the Company maintained effective internal control over financial reporting based on those criteria.
The Company’s independent registered public accounting firm that audited the financial statements that are included in this annual report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting. The attestation report of Crowe LLP appears on page 103.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
During the year ended December 31, 2024, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding Directors, Executive Officers and Corporate Governance will be set forth in the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 22, 2025 and is incorporated herein by reference thereto.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The information regarding Executive Compensation will be set forth in the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 22, 2025 and is incorporated herein by reference thereto.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information regarding Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters will be set forth in the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 22, 2025 and is incorporated herein by reference thereto.
Set forth below is certain information as of December 31, 2024, regarding the Company’s equity compensation plans that have been approved by stockholders. The Company does not have any equity compensation plans that have not been approved by stockholders.
Number of securities to
Weighted average
Equity compensation
be issued upon exercise
exercise price with
Number of securities
plan approved by
of outstanding options
respect to outstanding
remaining available for
stockholders
and awards
stock options
issuance under the plan
2012 Equity Incentive Plan
16,934
$ 35.70
-
2019 Equity Incentive Plan
10,061
34.87
-
2021 Equity Incentive Plan
-
-
1,493,586
Employee Stock Purchase Plan
-
-
929,751
Total
26,995
$ 35.39
2,423,337

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information regarding Certain Relationships and Related Transactions and Director Independence will be set forth in the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 22, 2025 and is incorporated herein by reference thereto.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services
The information regarding the Company’s independent registered public accounting firm’s fees and services will be set forth in the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on May 22, 2025 and is incorporated herein by reference thereto.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(a) The following consolidated financial statements, including notes thereto, and financial schedules of the Company, required in response to this item are included in Part II, Item 8, “Financial Statements and Supplementary Data.”
Page No.
1.
Financial Statements
Consolidated Statements of Financial Condition
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 173)
2.
Financial Statement Schedules
Financial Statement Schedules have been omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto in Part II, Item 8, “Financial Statements and Supplementary Data.”
3.
Exhibits
See Exhibit Index on page 105
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and the Board of Directors
of Dime Community Bancshares, Inc. and Subsidiaries
Hauppauge, New York
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial condition of Dime Community Bancshares, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework: (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report by Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses for Loans - Qualitative Factors
As described in Notes 1 and 4 to the financial statements, the Company estimates expected credit losses for its financial assets carried at amortized cost utilizing the current expected credit loss (“CECL”) methodology. In determining the allowance for credit losses (“ACL”) related to loans that are collectively evaluated, expected credit losses are determined by calculating a loss percentage by loan segment, or pool. Management estimates the allowance for credit losses on each loan pool using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historically observed credit loss experience of peer banks within the Company’s geography, adjusted for prepayment and curtailment assumptions as well as reasonable and supportable forecasts, provide the basis for the estimation of quantitatively modeled expected credit losses on similar loan pools.
The quantitative results of the modeling are then adjusted using qualitative factors. These factors include: (1) lending policies and procedures and the experience, ability, and depth of the lending management and other relevant staff; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the volume and severity of past due loans; (5) the quality of the loan review system; (6) the value of underlying collateral for collateralized loans; (7) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (8) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio. A significant amount of management judgment is required to assess the reasonableness of the qualitative factors.
The qualitative factors contribute to the determination of the ACL related to loans that share similar risk characteristics. We identified the assessment of qualitative factors as a critical audit matter because auditing management’s estimate required especially subjective auditor judgment.
The primary procedures we performed to address this critical audit matter were comprised of testing management’s process and controls related to the determination of qualitative factor adjustments, which included (i) testing the design and operating effectiveness of controls over the review and approval of qualitative factors, including significant assumptions and judgments made in those determinations, (ii) testing the relevance and reliability of data used as the basis for qualitative factors, and (iii) evaluating the reasonableness of management’s judgments and significant assumptions used in the assessment of qualitative factors, including determining that they are calculated to conform with management’s policies.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Crowe LLP
We have served as the Company’s auditor since 2009.
Livingston, New Jersey
February 20, 2025
Exhibit Number
Description of Exhibit
Exhibit Number
Description of Exhibit
3.1
Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed February 2, 2021 (SEC File No. 001-34096))
3.2
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, filed October 24, 2024 (SEC File No. 001-34096))
4.1
Description of the Registrant’s Securities
4.2
Indenture, dated as of September 21, 2015, by and between the Registrant, as Issuer, and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K, filed on September 21, 2015 (SEC File No. 001-34096))
4.3
First Supplemental Indenture, dated as of September 21, 2015, by and between the Registrant and Wilmington Trust, National Association, as Trustee, including the form of the 5.25% fixed-to-floating rate subordinated debentures due 2025 attached as Exhibit A thereto (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K, filed September 21, 2015 (SEC File No. 001-34096))
4.4
Second Supplemental Indenture, dated as of September 21, 2015, by and between the Registrant and Wilmington Trust, National Association, as Trustee, including the form of the 5.75% fixed-to-floating rate subordinated debentures due 2030 attached as Exhibit A thereto (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K, filed September 21, 2015 (SEC File No. 001-34096))
4.5
Indenture, dated as of June 13, 2017, by and between Dime Community Bancshares, Inc., as Issuer, and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Dime Community Bancshares, Inc.’s Form 8-K, filed on June 13, 2017 (SEC File No. 000-27782))
4.6
First Supplemental Indenture, dated as of June 13, 2017, by and between Dime Community Bancshares, Inc., as Issuer, and Wilmington Trust, National Association, as Trustee, including the form of the 4.50% fixed-to-floating rate subordinated debentures due 2027 attached as Exhibit A thereto (incorporated by reference to Exhibit 4.2 to Dime Community Bancshares, Inc.’s Form 8-K, filed on June 13, 2017 (SEC File No. 000-27782))
4.7
Second Supplemental Indenture, dated as of February 1, 2021, by and between the Registrant and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K, filed February 1, 2021 (SEC File No. 000-27782))
4.8
Indenture, dated May 6, 2022, between the Registrant and Wilmington Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K, filed May 6, 2022 (SEC File No. 001-34096))
4.9
First Supplemental Indenture, May 6, 2022, between the Registrant and Wilmington Trust National Association, as Trustee, including the form of 5.000% Fixed-to-Floating Rate Subordinated Notes due 2032 (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K, filed May 6, 2022 (SEC File No. 001-34096))
4.10
Second Supplemental Indenture, June 28, 2024, between Dime Community Bancshares, Inc. and Wilmington Trust National Association, as trustee, including the form of 9.000% Fixed-to-Floating Rate Subordinated Notes due 2034 (incorporated by reference to Exhibit 4.2 and 4.3, respectively, to the Registrant’s Form 8-K, filed June 28, 2024 (SEC File No. 001-34096))
10.1
Form of Employment Agreement entered into with Stuart H. Lubow, Avinash Reddy and Conrad J. Gunther (incorporated by reference to Exhibit 10.4 to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No. 333-248787))
10.2
Form of Amendment to Employment Agreement entered into with Stuart H. Lubow, Avinash Reddy and Conrad J. Gunther (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 28, 2021 (File No. 001-34096))
10.3
Second Amendment to Employment Agreement entered into with Stuart H. Lubow (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed December 23, 2021 (File No. 001-34096))
10.4
Amended and Restated Change in Control Employment Agreement between Dime Community Bancshares, Inc. and Michael Fegan
10.5
Amended and Restated Change in Control Employment Agreement between Dime Community Bancshares, Inc. and Christopher J. Porzelt
10.6
Form of Retention and Award Agreement entered into with Stuart H. Lubow, Avinash Reddy and Conrad J. Gunther (incorporated by reference to Exhibit 10.5 to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No. 333-248787))
10.7
Form of Defense of Tax Position Agreement entered into with Kenneth J. Mahon, Stuart H. Lubow, Avinash Reddy and Conrad J. Gunther (incorporated by reference to Exhibit 10.6 to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No. 333-248787))
10.8
Executive Chairman and Separation Agreement entered into with Kenneth J. Mahon (incorporated by reference to Exhibit 10.7 to Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No. 333-248787))
10.9
Dime Community Bank Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed November 2, 2021 (File No. 001-34096))
10.10
Amendment One to the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (incorporated by reference to Exhibit 10.10 to Registrant’s Annual Report on Form 10-K, filed February 28, 2023 (File No. 001-34096))
10.11
Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (incorporated by reference to the Registrant’s Definitive Proxy Statement, File No. 001-34096, filed April 16, 2021)
10.12
Dime Community Bancshares, Inc. 2019 Equity Incentive Plan (incorporated by reference to the Registrant’s Definitive Proxy Statement, File No. 001-34096, filed April 1, 2019)
10.13
Employee Stock Purchase Plan (incorporated by reference to the Registrant’s Definitive Proxy Statement, filed April 2, 2018 (SEC File No. 001-34096))
10.14
Employment Agreement by and between Dime Community Bancshares, Inc., Dime Community Bank and Thomas X. Geisel, dated February 20, 2025
Dime Community Bancshares, Inc. Insider Trading Policy
21.1
Subsidiaries of Registrant
23.1
Consent of Independent Registered Public Accounting Firm
31.1
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)
31.2
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
32.1
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
Dime Community Bancshares, Inc. Clawback Policy
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document
Cover page to this Annual Report on Form 10-K, formatted in Inline XBRL