Dime Community Bancshares in Hauppauge, New York, has added 15 banker teams in a little over a year. It may not be done hiring.
"We're still talking to folks," Stuart Lubow, the $13.5 billion-asset Dime's president and CEO, said last month on a conference call with analysts. "We're planting the seeds into next year. I do think there is some opportunity."
Rapid-fire hiring emerged as a recurrent industry theme last summer and into 2024, as a string of failures involving large, prominent institutions converted hundreds of bankers into free agents. Few banks, though, moved as quickly or decisively to exploit the opportunity as Dime. Since April 2023, the company's quarterly salary and benefits tab has risen more than 20%, reaching $32.2 million on June 30, 2024.
"We had an event not too long ago where we hosted our private and commercial bank," Lubow said in an interview. "There were 100 people in that room. More than half of them were not with us a year ago."
The new groups have had a measurable impact on deposits, which increased 5% to $11 billion in the first six months of 2024. At the same time, they've accelerated Dime's transformation into what Lubow described as "a vibrant state-of-the-art community commercial bank." Business loans, defined as commercial and industrial as well as owner-occupied commercial real estate, totaled $2.53 billion on June 30, about a quarter of the company's $10.7 billion loan portfolio. The proportion was 21% at year-end 2023.
Lubow, who also serves as CEO of Dime's bank subsidiary, Dime Community Bank, expects the business-loan expansion to continue as Dime's lenders, including a
Optimizing balance sheets
Dime, to be sure, was not the only institution that amped up hiring in the wake of the failures that claimed the $209 billion-asset Silicon Valley Bank, the $233 billion-asset First Republic Bank and the $110 billion-asset Signature Bank. The $3.6 billion-asset Five Star Bancorp in Rancho Cordova, California, for instance, relied on nearly two dozen new hires to spearhead a
Second quarter financial results at both companies followed comparable patterns. Five Star reported sizable increases in loans and deposits between June 30, 2024, and the same period in 2023. The $6.5 billion-asset Peapack-Gladstone reported an uptick in deposits, as well as a buildup of commercial-and-industrial loans in its pipeline.
At Dime, the influx of core deposits allowed it to reduce Federal Home Loan bank advances by nearly $700 million in the first half of 2024, contributing to a 20 basis-point expansion of its net interest margin, to 2.41%, during the three months ending June 30. Five Star and Peapack-Gladstone also reported sequential expansions of their respective net interest margins.
Reduced reliance on borrowed funds helped Dime "improve borrowing yields, net interest spread and net interest income," Jeremy LaKosh, a Eureka, Illinois-based investor wrote in a recent research note.
"A continuation of this trend will help the bank's earnings," LaKosh added.
Continuation is precisely what Dime is forecasting as the new hires augment their loan books and as the bank applies the next wave of fresh core deposits to scaling back brokered deposits, Chief Financial Officer Avinash Reddy said on the conference call.
In a recent report, Kroll Bond Rating Agency credited Dime with higher levels of core deposits, "which have grown steadily in recent quarters and should continue to expand."
These new core relationships — Lubow said Dime has opened between 3,000 and 4,000 business accounts over the past year — "are high-quality and maintain a higher-level of non-interest-bearing balances, which combined with de-leveraging efforts could result in a reduction of deposit costs moving forward," Kroll stated.
Like starting a new bank
Dime
"The bank did what it did well. It had a great credit history and was a well-run organization," Lubow said. Still, "the board realized it was time to make a change. … We've said all along that we want to diversify our balance sheet and moderate our CRE exposure, and we've been doing that."
Presently, Dime's loan portfolio is increasingly diversified, Lubow added. "We do run the gamut, but overall, our lending relationships are very granular and our average loan size across all portfolios is less than $1.5 million."
Dime has no plans to exit CRE lending, though. Lubow said it plans to "moderate" involvement in what he termed transactional business that isn't accompanied by deposits. "We're going to continue in the CRE business, and service and grow full service relationships," Lubow said.
Lubow, who founded and sold two Long Island-based commercial banks before joining Dime, said his work there has felt much like developing a bank from the ground up.
Though Dime was founded in 1864 and operates 65 branches, "it was really very similar to starting and building a new bank," Lubow said. Dime "had the basics. They had the branches. They had the systems in place, but the business was very different from what it needed to be. … That was relationship banking, building out a more diversified loan portfolio and commercial-bank-focused credit culture."
