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Dime Community Bancshares, Inc. Reports Second Quarter 2023 Results
Source: Nasdaq GlobeNewswire / 28 Jul 2023 05:55:01 America/New_York
Average Deposits Increased By Over $150 Million On A Linked Quarter Basis
Successfully Onboarded 7 Deposit Groups, Capitalizing on Moment-In-Time Opportunity to Enhance Deposit Franchise
Capital Ratios and Asset Quality Continue to Be Strong
Announces CEO Succession Plan; Stuart H. Lubow named Successor
HAUPPAUGE, N.Y., July 28, 2023 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “Bank”), today reported net income available to common stockholders of $25.7 million for the quarter ended June 30, 2023, or $0.66 per diluted common share, compared to net income available to common stockholders of $35.5 million for the quarter ended March 31, 2023 or $0.92 per diluted common share, and net income available to common stockholders of $36.7 million for the quarter ended June 30, 2022, or $0.94 per diluted common share.
Adjusted net income available to common stockholders (non-GAAP) totaled $26.6 million for the quarter ended June 30, 2023, or $0.68 per diluted share. Adjusted net income available to common stockholders for the quarter ended June 30, 2023 included $1.3 million of aggregate pre-tax adjustments related to loss on equity securities and severance expense (see “Non-GAAP Reconciliation” tables at the end of this news release).
Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “Despite the challenges posed by the interest rate environment and volatility stemming from bank failures in March, Dime has increased deposits, capital and on balance sheet liquidity versus year-end levels; our year-to-date return on assets was approximately 1%. I am extremely proud of our employees for their unwavering focus on our customers and enabling us to be the premier community-based business bank on Greater Long Island.”
Stuart H. Lubow, President and Chief Operating Officer of the Company, stated, “We successfully onboarded seven prolific deposit-focused Groups in the second quarter, comprising 21 individuals. Hiring these Groups was a validation of Dime’s customer-first mindset, high-touch and relationship-based model, flat organizational structure, best-in-class technology platform and solid financial prospects. Initial results for these Groups have been very positive, with over 600 new customers onboarded and over 1,000 accounts opened in a very short period of time. Building on our success, we continue to receive significant interest from additional Groups looking to join Dime. During the second quarter, we were also pleased to receive affirmations of our investment grade rating from KBRA and Moody’s.”
Highlights for the Second Quarter of 2023 Included:
- Average total deposits were $10.54 billion for the second quarter of 2023 compared to $10.38 billion for the first quarter of 2023;
- Non-insured deposits (excluding deposits with pass through insurance and collateralized deposits) represented only 28% of total deposits at the end of the second quarter;
- The ratio of average non-interest bearing deposits to average total deposits for the second quarter of 2023 was 29%;
- Total loans held for investment, net, increased by $147 million or 6% on an annualized basis versus the linked quarter;
- The pace of Net Interest Margin (“NIM”) compression slowed in the second quarter; on a linked quarter basis, the NIM declined by 24 basis points in the second quarter of 2023 compared to 41 basis points for the first quarter of 2023;
- Expenses remained well-controlled, with non-interest expense to average assets of 1.53% for the second quarter of 2023, compared to 1.71% for the year-ago quarter;
- Credit quality continues to be strong with non-performing assets and loans 90 days past due and accruing declining by 12% versus the linked quarter and representing only 0.20% of total assets as of June 30, 2023; and
- The Company’s Tier 1 Risk Based Capital Ratio of 10.50% was 11 basis points higher compared to the prior quarter.
Management’s Discussion of Quarterly Operating Results
Net Interest Income
Net interest income for the second quarter of 2023 was $80.2 million compared to $85.8 million for the first quarter of 2023 and $93.5 million for the second quarter of 2022.
The table below provides a reconciliation of the reported net interest margin (“NIM”) and adjusted NIM excluding the impact of purchase accounting accretion on the loan portfolio.
(Dollars in thousands) Q2 2023 Q1 2023 Q2 2022 Net interest income $ 80,219 $ 85,752 $ 93,512 Purchase accounting amortization (accretion) on loans ("PAA") 58 586 117 Adjusted net interest income excluding PAA on loans (non-GAAP) $ 80,277 $ 86,338 $ 93,629 Average interest-earning assets $ 12,888,522 $ 12,685,235 $ 11,412,350 NIM (1) 2.50 % 2.74 % 3.29 % Adjusted NIM excluding PAA on loans (non-GAAP) (2) 2.50 % 2.76 % 3.29 % (1) NIM represents net interest income divided by average interest-earning assets.
(2) Adjusted NIM excluding PAA on loans represents adjusted net interest income, which excludes net interest income on PAA loans divided by average interest-earning assets.Loan Portfolio
The ending weighted average rate (“WAR”)(1) on the total loan portfolio was 5.12% at June 30, 2023, a 16 basis point increase compared to the ending WAR on the total loan portfolio at March 31, 2023.
Outlined below are loan balances and WARs for the period ended as indicated.
June 30, 2023 March 31, 2023 June 30, 2022 (Dollars in thousands) Balance WAR Balance WAR Balance WAR Loans held for investment balances at period end: Business loans (2) $ 2,250,108 6.56 % $ 2,255,316 6.41 % $ 2,004,072 4.57 % One-to-four family residential, including condominium and cooperative apartment 855,980 4.17 799,321 4.06 691,586 3.60 Multifamily residential and residential mixed-use (3)(4) 4,132,358 4.38 4,118,439 4.23 3,654,164 3.62 Non-owner-occupied commercial real estate 3,406,232 5.04 3,330,582 4.85 3,048,188 3.89 Acquisition, development, and construction 225,580 8.99 221,015 8.62 252,108 5.41 Other loans 6,157 6.74 7,172 11.03 10,789 7.16 Loans held for investment $ 10,876,415 5.12 % $ 10,731,845 4.96 % $ 9,660,907 3.94 % (1) Weighted average rate is calculated by aggregating interest based on the current loan rate from each loan in the category, adjusted for non-accrual loans, divided by the total balance of loans in the category.
(2) Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and Small Business Administration Paycheck Protection Program (“PPP”) loans.
(3) Includes loans underlying multifamily cooperatives.
(4) While the loans within this category are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.Outlined below are the loan originations, for the quarter ended as indicated.
(Dollars in millions) Q2 2023 Q1 2023 Q2 2022 Loan originations $ 296.6 $ 351.9 $ 901.5 Deposits
Period end total deposits (excluding mortgage escrow deposits) at June 30, 2023 were $10.45 billion, compared to $10.46 billion at March 31, 2023 and $10.18 billion at December 31, 2022. Period end total mortgage escrow deposits at June 30, 2023 were $70.6 million, compared to $110.1 million at March 31, 2023 and $69.6 million at December 31, 2022, reflecting normal seasonal escrow payment activity.
Non-Interest Income
Non-interest income was $10.4 million during the second quarter of 2023, $9.0 million during the first quarter of 2023, and $12.1 million during the second quarter of 2022. Included in non-interest income was income related to mortality proceeds from a death claim of $645 thousand and $2.2 million for the second quarter of 2023 and 2022, respectively.
Non-Interest Expense
Total non-interest expense was $52.2 million during the second quarter of 2023, $47.5 million during the first quarter of 2023, and $51.8 million during the second quarter of 2022. Excluding the impact of severance expense, loss on extinguishment of debt, and amortization of other intangible assets, adjusted non-interest expense was $51.4 million during the second quarter of 2023, $47.1 million during the first quarter of 2023, and $48.5 million during the second quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release). The increase in adjusted non-interest expense on a linked quarter basis was primarily due to annual merit increases and expenses associated with hiring the previously mentioned seven deposit-focused Groups.
The ratio of non-interest expense to average assets was 1.53% during the second quarter of 2023, compared to 1.41% during the linked quarter and 1.71% for the second quarter of 2022. Excluding the impact of severance expense, loss on extinguishment of debt, and amortization of other intangible assets, the ratio of adjusted non-interest expense to average assets was 1.51% during the second quarter of 2023, compared to 1.40% during the linked quarter and 1.60% for the second quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release).
The efficiency ratio was 57.6% during the second quarter of 2023, compared to 50.1% during the linked quarter and 49.1% during the second quarter of 2022. Excluding the impact of loss on equity securities, net loss on sale of securities and other assets, severance expense, loss on extinguishment of debt and amortization of other intangible assets the adjusted efficiency ratio was 56.2% during the second quarter of 2023, compared to 48.9% during the linked quarter and 45.9% during the first quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release).
Income Tax Expense
The reported effective tax rate for both the second and first quarter of 2023 was 26.8%, compared to 28.4% for the second quarter of 2022.
Credit Quality
Non-performing loans at June 30, 2023 were $27.7 million, 12% lower than the prior quarter.
A credit loss provision of $0.9 million was recorded during the second quarter of 2023, compared to a credit loss recovery of $3.6 million during the first quarter of 2023, and a credit loss provision of $44 thousand during the second quarter of 2022. The credit loss provision in the second quarter of 2023 was associated with growth in the loan portfolio and deterioration in forecasted macroeconomic conditions offset by a reduction in the reserve on Purchased Credit Deteriorated ("PCD”) loans that were acquired as part of the Company’s merger of equals transaction in 2021. The credit loss recovery in the first quarter of 2023 was primarily associated with a reduction in reserves on the PCD loans.
Capital Management
The Company’s and the Bank’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements as of June 30, 2023. All of the Company’s and Bank’s risk-based regulatory capital ratios increased in the second quarter of 2023.
Dividends per common share were $0.25 during the second quarter of 2023 compared to $0.24 during the first quarter of 2023. The dividend increase reflected Dime’s strong financial position.
Book value per common share was $27.99 at June 30, 2023 compared to $27.70 at March 31, 2023.
Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by the number of shares outstanding) was $23.82 at June 30, 2023 compared to $23.52 at March 31, 2023. Excluding the impact of accumulated other comprehensive loss, the adjusted tangible common book value per share was $26.51 at June 30, 2023 compared to $26.06 at March 31, 2023 (see “Non-GAAP Reconciliation” tables at the end of this news release).
CEO Succession
The Company announced today that Kevin M. O’Connor will step down as CEO effective August 31, 2023 and that Stuart H. Lubow, the Company’s current President and Chief Operating Officer, will succeed Mr. O’Connor as CEO. Mr. O’Connor will continue to serve on the Board of Directors until December 31, 2023. Mr. Lubow will be added to the Board of Directors simultaneous with his appointment as CEO.
Mr. O’Connor has been CEO of the Company since Bridge Bancorp, Inc. (“Bridge”) and Dime Community Bancshares, Inc. (“Dime”) merged on February 1, 2021 (the “Merger”). Before the Merger, Mr. O’Connor was President and CEO of Bridge. He joined Bridge in October 2007 as President and Chief Executive Officer and director. Mr. Lubow has been President and Chief Operating Officer of the Company since the Merger. Before the Merger, Mr. Lubow served as President of Dime. Before joining Dime in 2017, Mr. Lubow was a founder, Chairman, President, and CEO of each of Community National Bank and Community State Bank. Mr. Lubow has prior community bank CEO experience of over 17 years.
"Under Kevin’s leadership, we successfully completed a transformational merger, creating the premier business bank on Greater Long Island, driving superior financial results for shareholders and providing tremendous support to our customers and communities," said Executive Chairman, Kenneth J. Mahon, on behalf of the Company's and Bank's Boards of Directors. "We are grateful for Kevin’s strong leadership and are very excited to promote Stu Lubow to CEO. The appointment of Stu as CEO has been under consideration since the beginning of the year and is the culmination of a thoughtful and well-planned succession process. Stu has a proven track record throughout his career of delivering value for customers and shareholders alike. Most recently, he was instrumental in the hiring and onboarding of seven deposit- focused Groups that are already contributing to significant customer growth. The Board of Directors is confident that he will provide a steady, uninterrupted mission and culture of service to our staff and customers. Having admirably weathered the challenges caused by the recent bank failures, evidenced by an increase in deposits on a year-to-date basis, we believe now is the ideal time to execute on the succession plan. We are very excited about our future under Stu’s leadership.”
“I applaud and congratulate the accomplishments of our entire team and am proud of what we have built together. Our focus on developing and strengthening relationships while supporting and serving our communities has served our constituents well, leading to our recognition as the preeminent community bank in our footprint,” said Kevin O’Connor. “I want to thank and commend all of my colleagues, past and present, and personally wish Stu and the entire Dime team well. I have full confidence that they will reach greater heights as they continue building on our past successes.”
“I am thankful for the opportunity the Board has granted me to lead Dime and would also like to express my gratitude to Kevin for his leadership and support over the years,” said Stuart H. Lubow. “Dime has a proud history of being rooted in the communities we serve, and I look forward to working with all of our dedicated employees to add value to our customers and our shareholders. I will draw upon my prior CEO experience to lead Dime into the next chapter of our growth as the preeminent community bank in our footprint.”
Earnings Call Information
The Company will conduct a conference call at 8:30 a.m. (ET) on Friday, July 28, 2023, during which CEO O’Connor will discuss the Company’s second quarter 2023 financial performance, with a question-and-answer session to follow.
The conference call will be simultaneously webcast (listen only) and archived for a period of one year at https://events.q4inc.com/attendee/893173701.
Conference Call Details:
Dial-in for Live Call:
United States: 1-833-470-1428 International +1-929-526-1599 Access code: 236348 Telephone Replay:
A recording will be available until Friday, August 11, 2023.
United States: 1-866-813-9403 International +44-204-525-0658 Access code: 786213 ABOUT DIME COMMUNITY BANCSHARES, INC.
Dime Community Bancshares, Inc. is the holding company for Dime Community Bank, a New York State-chartered trust company with over $13.8 billion in assets and the number one deposit market share among community banks on Greater Long Island(1).(1) Aggregate deposit market share for Kings, Queens, Nassau & Suffolk counties for community banks less than $20 billion in assets.
This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as “annualized," “anticipate," "believe," “continue,” "could," "estimate," "expect," "intend," “likely,” "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.
Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may affect demand for our products and reduce interest margins and the value of our investments; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company; changes in the quality and composition of the Company’s loan or investment portfolios or unanticipated or significant increases in loan losses may negatively affect the Company’s financial condition or results of operations; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general socio-economic conditions, including conditions caused by the COVID-19 pandemic and any other public health emergency, international conflict, inflation, and recessionary pressures, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates and may adversely affect our customers, our financial results and our operations; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; and litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections entitled “Forward-Looking Statements” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and updates set forth in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Contact: Avinash Reddy Senior Executive Vice President – Chief Financial Officer 718-782-6200 extension 5909 DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands) June 30, March 31, December 31, 2023 2023 2022 Assets: Cash and due from banks $ 452,504 $ 663,132 $ 169,297 Securities available-for-sale, at fair value 894,856 926,812 950,587 Securities held-to-maturity 603,960 605,642 585,798 Loans held for sale 371 2,171 — Loans held for investment, net: Business loans (1) 2,250,108 2,255,316 2,211,857 One-to-four family and cooperative/condominium apartment 855,980 799,321 773,321 Multifamily residential and residential mixed-use (2)(3) 4,132,358 4,118,439 4,026,826 Non-owner-occupied commercial real estate 3,406,232 3,330,582 3,317,485 Acquisition, development and construction 225,580 221,015 229,663 Other loans 6,157 7,172 7,679 Allowance for credit losses (75,646 ) (78,335 ) (83,507 ) Total loans held for investment, net 10,800,769 10,653,510 10,483,324 Premises and fixed assets, net 45,890 45,863 46,749 Restricted stock 104,724 105,258 88,745 Bank Owned Life Insurance ("BOLI") 337,083 335,455 333,292 Goodwill 155,797 155,797 155,797 Other intangible assets 5,758 6,107 6,484 Operating lease assets 54,931 57,204 57,857 Derivative assets 147,740 130,294 154,485 Accrued interest receivable 51,787 49,926 48,561 Other assets 146,692 104,553 108,945 Total assets $ 13,802,862 $ 13,841,724 $ 13,189,921 Liabilities: Non-interest-bearing checking (excluding mortgage escrow deposits) $ 2,884,184 $ 3,012,378 $ 3,449,763 Interest-bearing checking 960,465 908,988 827,454 Savings (excluding mortgage escrow deposits) 2,275,008 2,333,196 2,259,909 Money market 2,801,652 2,686,290 2,532,270 Certificates of deposit 1,530,749 1,519,267 1,115,364 Deposits (excluding mortgage escrow deposits) 10,452,058 10,460,119 10,184,760 Non-interest-bearing mortgage escrow deposits 70,431 109,867 69,455 Interest-bearing mortgage escrow deposits 203 249 192 Total mortgage escrow deposits 70,634 110,116 69,647 FHLBNY advances 1,448,000 1,498,000 1,131,000 Other short-term borrowings — 2,068 1,360 Subordinated debt, net 200,240 200,261 200,283 Derivative cash collateral 140,160 120,680 153,040 Operating lease liabilities 57,547 59,757 60,340 Derivative liabilities 131,130 115,568 137,335 Other liabilities 100,590 83,902 82,573 Total liabilities 12,600,359 12,650,471 12,020,338 Stockholders' equity: Preferred stock, Series A 116,569 116,569 116,569 Common stock 416 416 416 Additional paid-in capital 493,955 493,801 495,410 Retained earnings 804,532 789,010 762,762 Accumulated other comprehensive loss ("AOCI"), net of deferred taxes (104,385 ) (98,638 ) (94,379 ) Unearned equity awards (11,746 ) (13,468 ) (8,078 ) Treasury stock, at cost (96,838 ) (96,437 ) (103,117 ) Total stockholders' equity 1,202,503 1,191,253 1,169,583 Total liabilities and stockholders' equity $ 13,802,862 $ 13,841,724 $ 13,189,921 (1) Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and PPP loans.
(2) Includes loans underlying multifamily cooperatives.(3) While the loans within this category are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands except share and per share amounts) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Interest income: Loans $ 138,310 $ 128,439 $ 93,102 $ 266,749 $ 179,522 Securities 7,914 8,431 7,067 16,345 14,198 Other short-term investments 5,867 3,802 741 9,669 1,109 Total interest income 152,091 140,672 100,910 292,763 194,829 Interest expense: Deposits and escrow 52,616 37,272 3,731 89,888 6,262 Borrowed funds 17,759 16,171 3,573 33,930 5,851 Derivative cash collateral 1,497 1,477 94 2,974 95 Total interest expense 71,872 54,920 7,398 126,792 12,208 Net interest income 80,219 85,752 93,512 165,971 182,621 Provision (recovery) for credit losses 892 (3,648 ) 44 (2,756 ) (1,548 ) Net interest income after provision (recovery) 79,327 89,400 93,468 168,727 184,169 Non-interest income: Service charges and other fees 4,856 3,814 4,337 8,670 8,395 Title fees 246 292 683 538 1,104 Loan level derivative income 2,437 3,133 1,685 5,570 1,691 BOLI income 2,852 2,163 4,143 5,015 5,982 Gain on sale of SBA loans 210 516 723 726 965 Gain on sale of residential loans 34 48 191 82 339 Loss on equity securities (780 ) — — (780 ) — Net loss on sale of securities and other assets — (1,447 ) — (1,447 ) — Other 550 482 362 1,032 851 Total non-interest income 10,405 9,001 12,124 19,406 19,327 Non-interest expense: Salaries and employee benefits 29,900 26,634 28,454 56,534 59,288 Severance 481 25 2,193 506 2,193 Occupancy and equipment 7,144 7,373 7,396 14,517 14,980 Data processing costs 4,197 4,238 3,913 8,435 7,718 Marketing 1,488 1,449 1,515 2,937 2,810 Professional services 1,676 1,923 2,028 3,599 4,122 Federal deposit insurance premiums 1,874 1,873 1,150 3,747 2,300 Loss on extinguishment of debt — — 740 — 740 Amortization of other intangible assets 349 377 430 726 1,016 Other 5,077 3,583 4,019 8,660 6,559 Total non-interest expense 52,186 47,475 51,838 99,661 101,726 Income before taxes 37,546 50,926 53,754 88,472 101,770 Income tax expense 10,048 13,623 15,269 23,671 28,754 Net income 27,498 37,303 38,485 64,801 73,016 Preferred stock dividends 1,822 1,821 1,822 3,643 3,643 Net income available to common stockholders $ 25,676 $ 35,482 $ 36,663 $ 61,158 $ 69,373 Earnings per common share ("EPS"): Basic $ 0.66 $ 0.92 $ 0.94 $ 1.58 $ 1.76 Diluted $ 0.66 $ 0.92 $ 0.94 $ 1.58 $ 1.76 Average common shares outstanding for diluted EPS 38,175,993 38,151,465 38,631,683 38,164,359 38,939,753 DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SELECTED FINANCIAL HIGHLIGHTS (Dollars in thousands except per share amounts) At or For the Three Months Ended At or For the Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Per Share Data: Reported EPS (Diluted) $ 0.66 $ 0.92 $ 0.94 $ 1.58 $ 1.76 Cash dividends paid per common share 0.25 0.24 0.24 0.49 0.48 Book value per common share 27.99 27.70 26.41 27.99 26.41 Tangible common book value per share (1) 23.82 23.52 22.20 23.82 22.20 Tangible common book value per share excluding AOCI (1) 26.51 26.06 24.01 26.51 24.01 Common shares outstanding 38,803 38,804 38,769 38,803 38,769 Dividend payout ratio 37.88 % 26.09 % 25.53 % 31.01 % 27.27 % Performance Ratios (Based upon Reported Net Income): Return on average assets 0.81 % 1.11 % 1.27 % 0.96 % 1.20 % Return on average equity 9.03 12.50 13.44 10.75 12.47 Return on average tangible common equity (1) 11.04 15.62 17.08 13.30 15.73 Net interest margin 2.50 2.74 3.29 2.62 3.24 Non-interest expense to average assets 1.53 1.41 1.71 1.47 1.67 Efficiency ratio 57.6 50.1 49.1 53.8 50.4 Effective tax rate 26.76 26.75 28.41 26.76 28.25 Balance Sheet Data: Average assets $ 13,658,068 $ 13,449,746 $ 12,121,949 $ 13,554,483 $ 12,160,620 Average interest-earning assets 12,888,522 12,685,235 11,412,350 12,787,441 11,373,294 Average tangible common equity (1) 940,054 914,994 865,329 927,592 891,007 Loan-to-deposit ratio at end of period (2) 103.4 101.5 91.4 103.4 91.4 Capital Ratios and Reserves - Consolidated: (3) Tangible common equity to tangible assets (1) 6.78 % 6.67 % 7.07 % Tangible common equity excluding AOCI to tangible assets (1) 7.54 7.39 7.64 Tangible equity to tangible assets (1) 7.63 7.52 8.02 Tangible equity excluding AOCI to tangible assets (1) 8.40 8.25 8.60 Tier 1 common equity ratio 9.44 9.32 9.28 Tier 1 risk-based capital ratio 10.50 10.39 10.44 Total risk-based capital ratio 13.06 12.98 13.26 Tier 1 leverage ratio 8.42 8.43 8.71 Consolidated CRE concentration ratio (4) 555 554 534 Allowance for credit losses/ Total loans 0.70 0.73 0.82 Allowance for credit losses/ Non-performing loans 273.42 248.34 218.80 (1) See "Non-GAAP Reconciliation" tables for reconciliation of tangible equity, tangible common equity, and tangible assets.
(2) Total deposits include mortgage escrow deposits, which fluctuate seasonally.
(3) June 30, 2023 amounts are preliminary pending completion and filing of the Company’s regulatory reports.(4) The Consolidated CRE concentration ratio is calculated using the sum of commercial real estate, excluding owner-occupied commercial real estate, multifamily, and acquisition, development, and construction, divided by consolidated capital. June 30, 2023 amounts are preliminary pending completion and filing of the Company’s regulatory reports.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME (Dollars in thousands) Three Months Ended June 30, 2023 March 31, 2023 June 30, 2022 Average Average Average Average Yield/ Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost Balance Interest Cost Assets: Interest-earning assets: Business loans (1) $ 2,259,769 $ 35,558 6.31 % $ 2,200,543 $ 32,451 5.98 % $ 1,982,020 $ 21,787 4.41 % One-to-four family residential, including condo and coop 828,324 9,818 4.75 788,302 8,857 4.56 683,615 6,771 3.97 Multifamily residential and residential mixed-use 4,125,119 45,123 4.39 4,074,011 42,348 4.22 3,510,377 32,024 3.66 Non-owner-occupied commercial real estate 3,337,689 42,559 5.11 3,317,049 39,695 4.85 2,990,246 28,466 3.82 Acquisition, development, and construction 220,795 5,149 9.35 225,898 4,973 8.93 302,534 3,909 5.18 Other loans 6,536 103 6.32 7,550 115 6.18 11,571 145 5.03 Securities 1,642,057 7,914 1.93 1,699,846 8,431 2.01 1,695,702 7,067 1.67 Other short-term investments 468,233 5,867 5.03 372,036 3,802 4.14 236,285 741 1.26 Total interest-earning assets 12,888,522 152,091 4.73 % 12,685,235 140,672 4.50 % 11,412,350 100,910 3.55 % Non-interest-earning assets 769,546 764,511 709,599 Total assets $ 13,658,068 $ 13,449,746 $ 12,121,949 Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest-bearing checking (2) $ 952,424 $ 3,081 1.30 % $ 843,108 $ 1,523 0.73 % $ 858,402 $ 604 0.28 % Money market 2,713,816 18,284 2.70 2,699,640 13,849 2.08 3,148,472 1,240 0.16 Savings (2) 2,279,670 17,376 3.06 2,327,126 14,599 2.54 1,509,776 859 0.23 Certificates of deposit 1,546,257 13,875 3.60 1,167,736 7,301 2.54 827,286 1,028 0.50 Total interest-bearing deposits 7,492,167 52,616 2.82 7,037,610 37,272 2.15 6,343,936 3,731 0.24 FHLBNY advances 1,327,121 15,206 4.60 1,255,700 13,500 4.36 79,176 172 0.87 Subordinated debt, net 200,254 2,553 5.11 200,276 2,553 5.17 273,470 3,309 4.85 Other short-term borrowings 814 — — 11,827 118 4.05 54,229 92 0.68 Total borrowings 1,528,189 17,759 4.66 1,467,803 16,171 4.47 406,875 3,573 3.52 Derivative cash collateral 120,542 1,497 4.98 135,641 1,477 4.42 98,995 94 0.38 Total interest-bearing liabilities 9,140,898 71,872 3.15 % 8,641,054 54,920 2.58 % 6,849,806 7,398 0.43 % Non-interest-bearing checking (2) 3,043,899 3,341,707 3,935,765 Other non-interest-bearing liabilities 254,826 273,281 191,066 Total liabilities 12,439,623 12,256,042 10,976,637 Stockholders' equity 1,218,445 1,193,704 1,145,312 Total liabilities and stockholders' equity $ 13,658,068 $ 13,449,746 $ 12,121,949 Net interest income $ 80,219 $ 85,752 $ 93,512 Net interest rate spread 1.58 % 1.92 % 3.12 % Net interest margin 2.50 % 2.74 % 3.29 % Deposits (including non-interest-bearing checking accounts) (2) $ 10,536,066 $ 52,616 2.00 % $ 10,379,317 $ 37,272 1.46 % $ 10,279,701 $ 3,731 0.15 % (1) Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and PPP loans.
(2) Includes mortgage escrow deposits.DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS (Dollars in thousands) At or For the Three Months Ended June 30, March 31, June 30, Asset Quality Detail 2023 2023 2022 Non-performing loans ("NPLs") Business loans (1) $ 23,470 $ 25,512 $ 29,866 One-to-four family residential, including condominium and cooperative apartment 3,305 2,808 3,128 Multifamily residential and residential mixed-use — — — Non-owner-occupied commercial real estate 15 2,468 2,519 Acquisition, development, and construction 657 657 657 Other loans 220 99 131 Total Non-accrual loans $ 27,667 $ 31,544 $ 36,301 Total Non-performing assets ("NPAs") $ 27,667 $ 31,544 $ 36,301 Loans 90 days delinquent and accruing ("90+ Delinquent") Business loans $ — $ — $ 24 One-to-four family residential, including condominium and cooperative apartment — — 341 Multifamily residential and residential mixed-use — — — Non-owner-occupied commercial real estate — — — Acquisition, development, and construction — — — Other loans — — — 90+ Delinquent $ — $ — $ 365 NPAs and 90+ Delinquent $ 27,667 $ 31,544 $ 36,666 NPAs and 90+ Delinquent / Total assets 0.20 % 0.23 % 0.30 % Net charge-offs ("NCOs") $ 3,679 $ 1,541 $ 555 NCOs / Average loans (2) 0.14 % 0.06 % 0.02 % (1) Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and PPP loans.
(2) Calculated based on annualized NCOs to average loans, excluding loans held for sale.DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(Dollars in thousands except per share amounts)The following tables below provide a reconciliation of certain financial measures calculated under generally accepted accounting principles ("GAAP") (as reported) and non-GAAP measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. The Company’s management believes the presentation of non-GAAP financial measures provides investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.
The following non-GAAP financial measures exclude pre-tax income and expenses associated with loss on equity securities, net loss on sale of securities and other assets, severance and loss on extinguishment of debt:
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Reconciliation of Reported and Adjusted (non-GAAP) Net Income Available to Common Stockholders Reported net income available to common stockholders $ 25,676 $ 35,482 $ 36,663 $ 61,158 $ 69,373 Adjustments to net income (1): Loss on equity securities 780 — — 780 — Net loss on sale of securities and other assets — 1,447 — 1,447 — Severance 481 25 2,193 506 2,193 Loss on extinguishment of debt — — 740 — 740 Income tax effect of adjustments and other tax adjustments (373 ) (436 ) (295 ) (809 ) (295 ) Adjusted net income available to common stockholders (non-GAAP) $ 26,564 $ 36,518 $ 39,301 $ 63,082 $ 72,011 Adjusted Ratios (Based upon Adjusted (non-GAAP) Net Income as calculated above) Adjusted EPS (Diluted) $ 0.68 $ 0.95 $ 1.01 $ 1.63 $ 1.83 Adjusted return on average assets 0.83 % 1.14 % 1.36 % 0.98 % 1.24 % Adjusted return on average equity 9.32 12.85 14.36 11.06 12.92 Adjusted return on average tangible common equity 11.42 16.08 18.30 13.72 16.32 Adjusted non-interest expense to average assets 1.51 1.40 1.60 1.45 1.61 Adjusted efficiency ratio 56.2 48.9 45.9 52.5 48.4 (1) Adjustments to net income are taxed at the Company's statutory tax rate of approximately 30% unless otherwise noted.
The following table presents a reconciliation of operating expense as a percentage of average assets (as reported) and adjusted operating expense as a percentage of average assets (non-GAAP):
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Operating expense as a % of average assets - as reported 1.53 % 1.41 % 1.71 % 1.47 % 1.67 % Loss on extinguishment of debt — — (0.03 ) — (0.01 ) Severance (0.01 ) — (0.07 ) (0.01 ) (0.03 ) Amortization of other intangible assets (0.01 ) (0.01 ) (0.01 ) (0.01 ) (0.02 ) Adjusted operating expense as a % of average assets (non-GAAP) 1.51 % 1.40 % 1.60 % 1.45 % 1.61 % The following table presents a reconciliation of efficiency ratio (non-GAAP) and adjusted efficiency ratio (non-GAAP):
Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2023 2023 2022 2023 2022 Efficiency ratio - as reported (non-GAAP) (1) 57.6 % 50.1 % 49.1 % 53.8 % 50.4 % Non-interest expense - as reported $ 52,186 $ 47,475 $ 51,838 $ 99,661 $ 101,726 Severance (481 ) (25 ) (2,193 ) (506 ) (2,193 ) Loss on extinguishment of debt — — (740 ) — (740 ) Amortization of other intangible assets (349 ) (377 ) (430 ) (726 ) (1,016 ) Adjusted non-interest expense (non-GAAP) $ 51,356 $ 47,073 $ 48,475 $ 98,429 $ 97,777 Net interest income - as reported $ 80,219 $ 85,752 $ 93,512 $ 165,971 $ 182,621 Non-interest income - as reported $ 10,405 $ 9,001 $ 12,124 $ 19,406 $ 19,327 Loss on equity securities 780 — — 780 — Net loss on sale of securities and other assets — 1,447 — 1,447 — Adjusted non-interest income (non-GAAP) $ 11,185 $ 10,448 $ 12,124 $ 21,633 $ 19,327 Adjusted total revenues for adjusted efficiency ratio (non-GAAP) $ 91,404 $ 96,200 $ 105,636 $ 187,604 $ 201,948 Adjusted efficiency ratio (non-GAAP) (2) 56.2 % 48.9 % 45.9 % 52.5 % 48.4 %
(1) The reported efficiency ratio is a non-GAAP measure calculated by dividing GAAP non-interest expense by the sum of GAAP net interest income and GAAP non-interest income.
(2) The adjusted efficiency ratio is a non-GAAP measure calculated by dividing adjusted non-interest expense by the sum of GAAP net interest income and adjusted non-interest income.The following table presents the tangible common equity to tangible assets, tangible equity to tangible assets, and tangible common book value per share calculations (non-GAAP):
June 30, March 31, June 30, 2023 2023 2022 Reconciliation of Tangible Assets: Total assets $ 13,802,862 $ 13,841,724 $ 12,347,085 Goodwill (155,797 ) (155,797 ) (155,797 ) Other intangible assets (5,758 ) (6,107 ) (7,346 ) Tangible assets (non-GAAP) $ 13,641,307 $ 13,679,820 $ 12,183,942 Reconciliation of Tangible Common Equity - Consolidated: Total stockholders' equity $ 1,202,503 $ 1,191,253 $ 1,140,522 Goodwill (155,797 ) (155,797 ) (155,797 ) Other intangible assets (5,758 ) (6,107 ) (7,346 ) Tangible equity (non-GAAP) 1,040,948 1,029,349 977,379 Preferred stock, net (116,569 ) (116,569 ) (116,569 ) Tangible common equity (non-GAAP) $ 924,379 $ 912,780 $ 860,810 Tangible common equity (non-GAAP) $ 924,379 $ 912,780 $ 860,810 AOCI, net of deferred taxes 104,385 98,638 69,950 Tangible common equity excluding AOCI (non-GAAP) $ 1,028,764 $ 1,011,418 $ 930,760 Tangible equity (non-GAAP) $ 1,040,948 $ 1,029,349 $ 977,379 AOCI, net of deferred taxes 104,385 98,638 69,950 Tangible equity excluding AOCI (non-GAAP) $ 1,145,333 $ 1,127,987 $ 1,047,329 Common shares outstanding 38,803 38,804 38,769 Tangible common equity to tangible assets (non-GAAP) 6.78 % 6.67 % 7.07 % Tangible common equity excluding AOCI to tangible assets (non-GAAP) 7.54 7.39 7.64 Tangible equity to tangible assets (non-GAAP) 7.63 7.52 8.02 Tangible equity excluding AOCI to tangible assets (non-GAAP) 8.40 8.25 8.60 Book value per share $ 27.99 $ 27.70 $ 26.41 Tangible common book value per share (non-GAAP) 23.82 23.52 22.20 Tangible common book value per share excluding AOCI (non-GAAP) 26.51 26.06 24.01 
