Release Date: January 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dime Community Bancshares Inc (DCOM, Financial) successfully raised approximately $1.8 billion in core deposits, with 40% being non-interest bearing.
- The company achieved substantial year-over-year growth in core deposits, ending the year with a loan-to-deposit ratio of less than 95%.
- Dime Community Bancshares Inc (DCOM) reported a significant expansion in net interest margin, increasing by 29 basis points in the fourth quarter.
- The company received its second consecutive outstanding CRA rating, achieving perfect scores on all three components of the CRA test.
- Dime Community Bancshares Inc (DCOM) raised approximately $136 million from an oversubscribed common equity offering, enhancing its capital ratios.
Negative Points
- The company experienced higher than expected payoffs and refinances in its business loan portfolio, impacting loan growth.
- Dime Community Bancshares Inc (DCOM) anticipates a $4.5 million pre-tax termination expense related to a legacy pension plan in the first quarter of 2025.
- The company faces challenges in maintaining its CRE concentration, aiming to reduce it to the low 400s.
- Dime Community Bancshares Inc (DCOM) reported a $13.7 million loan loss provision in the fourth quarter, reflecting increased allowance for loan losses.
- The company expects low single-digit loan growth in 2025, with growth more weighted towards the back half of the year.
Q & A Highlights
Q: Can you confirm the guidance for non-interest income for 2025?
A: Yes, the guidance for non-interest income is $40 million to $42 million for 2025. This increase is primarily due to the BOLI restructuring, which will add approximately $5 million to $5.5 million in income.
Q: What is the expected loan growth for 2025, and what factors are influencing this?
A: We expect low single-digit loan growth in 2025. This is due to higher levels of payoffs and refinances, particularly in the CRE and multifamily sectors, which offset new business-related loans.
Q: Are there any plans for acquisitions given your outstanding CRA rating?
A: We are open to strategic opportunities that enhance franchise value, particularly within the Tri-state area. However, we are also focused on significant organic growth with new teams and capital to support this.
Q: Can you provide details on the $1.9 billion of fixed-rate loans maturing in the second half of 2025 and 2026?
A: Approximately $600 million will mature in the second half of 2025 at a rate of 4.25%, with the remaining $1.3 billion maturing in 2026 at a rate of 3.85%.
Q: How are you managing deposit costs in light of recent Federal Reserve rate cuts?
A: We have been able to reduce deposit costs effectively, with new deposits coming in at a blended rate of 2% to 2.5%. Our overall cost of deposits is currently in the 2% to 2.5% range.
Q: What is the outlook for charge-offs and credit quality in 2025?
A: We expect charge-offs to be in the range of 20 to 30 basis points, consistent with a commercial bank's typical range. We are not seeing any concerning trends in credit quality at this time.
Q: How do you see the non-bank sector impacting the CRE market?
A: Non-bank entities are becoming more active in financing CRE and multifamily opportunities. However, we expect banks to re-enter the CRE market as they adjust their CRE ratios.
Q: What are your expectations for deposit growth and composition in 2025?
A: We anticipate solid deposit growth, with a focus on maintaining and potentially increasing our DDA percentage, which is currently at 30%. We expect business deposits to continue growing, supported by new account openings and pipelines.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
