Expect Dime Community Bancshares to resume its recruiting blitz next year.
Stuart Lubow, the Hauppauge, New York company's president and CEO, said Tuesday that disruption in Dime's markets "continue[s] to be at all-time highs," which has provided opportunities for Dime to add bankers.
"We are actively building our recruiting pipeline for 2025," Lubow said on a conference call with analysts, though he refrained from offering any specific predictions about the number of bankers the bank will hire. "Suffice to say we are spending a fair bit of time interviewing candidates that fit well with the Dime culture and business model."
Dime has been in an
"We're open to looking, but really we're focusing more on organic growth, particularly in terms of this year's success in terms of the teams we've brought on board," Lubow said.
New York's banking market continues to feel after-effects following the failures of two prominent banks, New York-based Signature and San Francisco-based First Republic, which had a big regional presence, as well as the
Continuing to hire more bankers would likely act as a tailwind next year, if the $13.7 billion-asset Dime's 2024 performance is any guide. Recruiting to date has focused on commercial banking and
Dime, which released its third-quarter financial results Tuesday, reported a 17% annual increase in commercial-and-industrial and owner-occupied commercial real estate loans, which totaled a combined $2.7 billion on Sept. 30. Similarly, deposits increased more than 8% year over year, totaling $11.42 billion at the end of the third quarter.
Even hard-to-come-by demand deposits increased, jumping 4.8% in the 12 months ending Sept. 30 to $3.2 billion. "Our [demand deposits] are back to almost 30% of total deposits, and we believe the value of this DDA base will shine through in the current rate environment," Lubow said.
Dime "showed really good growth around core deposits," Raymond James analyst Steve Moss said on the call.
Strong growth in deposits and business loans, which earn significantly higher yields than Dime's legacy multifamily loans, helped widen the net interest margin — calculated by dividing net interest income by average earning assets — by 16 basis points year over year. Chief Financial Officer Avi Reddy said that expansion should continue in the fourth quarter and into 2025.
"We see a pathway to a 3% NIM in 2025 and a NIM greater than 3.25% in 2026," Reddy said on the conference call. "The impact of this enhancement will no doubt increase our earnings power as time progresses."
Still, during the third quarter Dime reported net income totaling $11.2 million, down 13% from the same period in 2023, as elevated operating expenses and credit costs combined to restrain Dime's bottom-line results.
Not surprisingly, given its rapid-fire hiring, salary and benefits costs rose 18% year over year to $36.1 million for the three months ending Sept. 30.
The increase in the quarterly provision for credit losses was even more marked. Dime's provision totaled $11.6 million for the third quarter of 2024, compared with $1.8 million for the same three months last year.
Dime attributed the spike to an ongoing strategy aimed at pushing its overall allowance for credit losses to about 1% of total loans. The bank's $85.2 million allowance amounted to 0.78% of loans as of Sept. 30. Dime expects the allowance to climb to the 0.9%-1% range over the next nine to 12 months, according to Reddy.
Historically, Dime maintained a relatively low allowance for credit losses due to its high level of low-risk, rent-controlled multifamily CRE loans. While these loans have performed well historically, recent legislative changes, along with tougher market conditions generally, have made the sector tougher to navigate.
But the bank's loan mix is changing as Dime's focus shifts to commercial lending. Period-end CRE loans were down 4% from the third quarter of 2023 and totaled 487% of risked-based capital. CRE loans totaled 534% of risk-based capital at the end of the first quarter. Midway through 2016, the ratio was
"The CRE to risk-based capital ratio has come down nicely," Piper Sandler analyst Mark Fitzgibbon said on the conference call.
Dime would like to push that ratio into the "low 400s" by the end of 2025, Reddy said on the conference call. "It's just the natural evolution of the portfolio, especially as we put on more business loans."
