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DCOM Dime Community Bancshares

Filed: 9 Nov 21, 2:51pm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34096

DIME COMMUNITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

N/A

(Former name or former address, if changed since last report)

New York

    

11-2934195

(State or other jurisdiction of incorporation or organization)

(I.R.S. employer identification number)

898 Veterans Memorial Highway, Suite 560, Hauppauge, NY

11788

 (Address of principal executive offices)

(Zip Code)

(631) 537-1000

(Registrant’s telephone number, including area code)

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value

DCOM

The NASDAQ Stock Market

Preferred Stock, Series A, $0.01 Par Value

DCOMP

The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer" "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ☐

Accelerated Filer  ☒

Non-Accelerated Filer  ☐

Smaller Reporting Company 

Emerging Growth Company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES   NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Classes of Common Stock

Number of shares outstanding at October 31, 2021

$0.01 Par Value

40,454,438

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q 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,” “seek,” “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 Dime Community Bancshares, Inc. (together with its direct and indirect subsidiaries, 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 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 conditions or results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. These factors include, without limitation, the following:

increases in competitive pressure among financial institutions or from non-financial institutions;
fluctuation in market interest rates;
changes in deposit flows, loan demand or real estate values;
changes in the quality and composition of our loan or investment portfolios;
changes in accounting principles, policies or guidelines;
changes in corporate and/or individual income tax laws or policies;
general economic conditions, 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;
legislative, regulatory or policy changes;
the success or consummation of new business initiatives or the integration of any acquired entities may be more difficult or expensive than the Company anticipates; and
the risks referred to in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2020 as updated by our Quarterly Reports on Form 10-Q.

Further, the COVID-19 pandemic has caused local and national economic disruption and has had an impact on the Company’s operations and financial results. Given its ongoing and dynamic nature, it is difficult to predict what further effects the pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, result in a decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch closures, work stoppages and unavailability of personnel; and increased cybersecurity risks, as employees continue to increasingly work remotely.

The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.

3

Item 1.   Condensed Consolidated Financial Statements

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

(Dollars in thousands except share amounts)

September 30, 

December 31, 

    

2021

    

2020

Assets

 

 

  

Cash and due from banks

$

629,011

$

243,603

Mortgage-backed securities available-for-sale, at fair value

1,212,383

426,979

Investment securities available-for-sale, at fair value

 

496,680

 

111,882

Investment securities held-to-maturity

40,303

Marketable equity securities, at fair value

5,970

Loans held for sale

 

14,720

 

5,903

Loans held for investment, net:

 

 

  

Real estate

 

8,251,743

 

4,978,195

Commercial and industrial ("C&I") loans

 

1,012,415

 

641,533

Other loans

20,713

2,316

Allowance for credit losses

 

(81,255)

 

(41,461)

Total loans held for investment, net

 

9,203,616

 

5,580,583

Premises and fixed assets, net

 

49,615

 

19,053

Premises held for sale

2,799

Restricted stock

 

37,719

 

60,707

Bank Owned Life Insurance ("BOLI")

 

293,898

 

156,096

Goodwill

 

155,339

 

55,638

Other intangible assets

9,077

Operating lease assets

 

56,836

 

33,898

Derivative assets

41,700

18,932

Accrued interest receivable

43,284

34,815

Other assets

 

77,401

 

27,551

Total assets

$

12,364,381

$

6,781,610

Liabilities

 

  

 

  

Interest-bearing deposits

$

6,852,205

$

3,744,371

Non-interest-bearing deposits

 

3,821,832

 

780,751

Total deposits

 

10,674,037

 

4,525,122

Federal Home Loan Bank of New York ("FHLBNY") advances

 

25,000

 

1,204,010

Other short-term borrowings

 

2,629

 

120,000

Subordinated debt, net

 

197,142

 

114,052

Operating lease liabilities

 

62,870

 

39,874

Derivative liabilities

38,889

37,374

Other liabilities

 

162,697

 

40,082

Total liabilities

 

11,163,264

 

6,080,514

 

  

 

  

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 September 30, 2021 and December 31, 2020)

 

116,569

 

116,569

Common stock ($0.01 par 80,000,000 shares authorized, 41,599,973 shares and 34,813,302 shares issued at September 30, 2021 and December 31, 2020, respectively, and 40,714,828 shares and 21,232,984 shares outstanding at September 30, 2021 and December 31, 2020, respectively)

 

416

 

348

Additional paid-in capital

 

493,775

 

278,295

Retained earnings

 

630,744

 

600,641

Accumulated other comprehensive loss, net of deferred taxes

 

(1,042)

 

(5,924)

Unearned equity awards

 

(9,417)

 

Common stock held by the Benefit Maintenance Plan ("BMP")

 

 

(1,496)

Treasury stock, at cost (885,145 shares and 13,580,318 shares at September 30, 2021 and December 31, 2020, respectively)

 

(29,928)

 

(287,337)

Total stockholders' equity

 

1,201,117

 

701,096

Total liabilities and stockholders' equity

$

12,364,381

$

6,781,610

See notes to unaudited condensed consolidated financial statements.

4

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

2021

    

2020

Interest income:

 

  

 

  

  

 

  

Loans

$

94,045

$

53,245

$

269,715

$

161,564

Securities

6,030

3,422

15,536

 

10,794

Other short-term investments

 

583

 

729

 

2,563

 

2,577

Total interest income

 

100,658

 

57,396

 

287,814

 

174,935

Interest expense:

 

  

 

  

 

  

 

  

Deposits and escrow

 

3,565

 

6,672

 

13,666

 

28,298

Borrowed funds

 

2,265

 

5,780

 

8,225

 

17,613

Total interest expense

 

5,830

 

12,452

 

21,891

 

45,911

Net interest income

 

94,828

 

44,944

 

265,923

 

129,024

(Credit) provision for credit losses

 

(5,187)

 

5,931

 

6,344

 

20,003

Net interest income after (credit) provision for credit losses

 

100,015

 

39,013

 

259,579

 

109,021

Non-interest income:

 

  

 

  

 

  

 

  

Service charges and other fees

 

4,581

 

1,632

 

11,377

 

3,918

Title fees

482

1,603

Loan level derivative income

 

445

 

1,544

 

2,796

 

5,201

BOLI income

 

2,249

 

1,033

 

5,181

 

3,831

Gain on sale of SBA loans

348

808

22,182

972

Gain on sale of residential loans

 

304

 

617

 

1,533

 

974

Net gain on equity securities

175

131

139

Net gain on sale of securities and other assets

 

 

215

 

730

 

3,357

Loss on termination of derivatives

(16,505)

Other

 

1,319

 

125

 

2,861

 

379

Total non-interest income

 

9,728

 

6,149

 

31,889

 

18,771

Non-interest expense:

 

  

 

  

 

  

 

  

Salaries and employee benefits

 

28,276

 

14,316

 

80,693

 

45,030

Severance

1,875

4,000

Occupancy and equipment

 

7,814

 

4,046

 

22,913

 

12,061

Data processing costs

 

3,573

 

2,146

 

12,132

 

6,177

Marketing

 

1,054

 

345

 

2,702

 

1,140

Professional services

2,751

935

7,154

2,713

Federal deposit insurance premiums

 

1,173

 

761

 

3,046

 

1,767

Loss from extinguishment of debt

 

 

 

1,751

 

Curtailment loss

1,543

Merger expenses and transaction costs

2,472

769

42,250

2,427

Branch restructuring costs

4,518

6,177

Amortization of other intangible assets

715

1,907

Other

 

4,437

 

1,535

 

10,327

 

4,924

Total non-interest expense

 

56,783

 

24,853

 

194,470

 

80,239

Income before income taxes

 

52,960

 

20,309

 

96,998

 

47,553

Income tax expense

 

14,565

 

4,441

 

28,359

 

10,327

Net income

38,395

15,868

68,639

37,226

Preferred stock dividends

1,822

1,822

5,465

2,962

Net income available to common stockholders

$

36,573

$

14,046

$

63,174

$

34,264

Earnings per common share:

 

  

 

  

 

  

 

  

Basic

$

0.89

$

0.66

$

1.62

$

1.57

Diluted

$

0.89

$

0.65

$

1.62

$

1.56

See notes to unaudited condensed consolidated financial statements.

5

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

2021

    

2020

Net income

$

38,395

$

15,868

$

68,639

$

37,226

Other comprehensive income (loss):

 

  

 

  

 

  

 

  

Change in unrealized holding gain or loss on securities available-for-sale:

Change in net unrealized gain or loss during the period

 

(8,654)

 

1,716

 

(15,222)

 

15,769

Reclassification adjustment for net gains included in net gain on securities and other assets

(215)

(1,207)

(3,357)

Change in pension and other postretirement obligations:

Reclassification adjustment for expense included in other expense

 

(735)

 

4

 

(1,595)

 

194

Reclassification adjustment for curtailment loss

1,543

Change in the net actuarial gain or loss

941

267

2,470

619

Change in unrealized gain or loss on derivatives:

Change in net unrealized gain or loss during the period

 

225

 

100

 

3,767

 

(25,098)

Reclassification adjustment for loss included in loss on termination of derivatives

16,505

Reclassification adjustment for expense included in interest expense

38

2,319

902

3,679

Other comprehensive (loss) income before income taxes

 

(8,185)

 

4,191

 

7,163

 

(8,194)

Deferred tax (benefit) expense

 

(2,567)

 

1,327

 

2,281

 

(2,595)

Total other comprehensive (loss) income, net of tax

 

(5,618)

 

2,864

 

4,882

 

(5,599)

Total comprehensive income

$

32,777

$

18,732

$

73,521

$

31,627

See notes to unaudited condensed consolidated financial statements.

6

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands)

Nine Month Period Ended September 30, 2021

Accumulated

Other

Comprehensive

Common

Number of

Additional

Loss,

Unearned

Stock

Treasury

Total

Shares of

Preferred

Common

Paid-in

Retained

Net of Deferred

Equity

Held by

Stock,

Stockholders’

    

Common Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Taxes

    

Awards

    

BMP

    

at cost

    

Equity

Beginning balance as of January 1, 2021

 

21,232,984

$

116,569

$

348

$

278,295

$

600,641

$

(5,924)

$

$

(1,496)

$

(287,337)

$

701,096

Cumulative change in accounting principle (Note 3)

1,686

1,686

Adjusted beginning balance on January 1, 2021

21,232,984

116,569

348

278,295

602,327

(5,924)

(1,496)

(287,337)

702,782

Net loss

(21,034)

(21,034)

Other comprehensive income, net of tax

6,455

6,455

Reverse merger with Bridge Bancorp Inc.

19,992,284

65

206,641

(2,603)

287,107

491,210

Exercise of stock options

15,928

292

80

372

Release of shares, net of forfeitures

335,959

3

8,562

(8,340)

(33)

192

Stock-based compensation

836

836

Shares received to satisfy distribution of retirement benefits

(41,101)

(1,359)

1,496

(1,130)

(993)

Cash dividends declared to preferred stockholders

(1,821)

(1,821)

Cash dividends declared to common stockholders

(5,175)

(5,175)

Ending balance as of March 31, 2021

41,536,054

116,569

416

492,431

574,297

531

(10,107)

(1,313)

1,172,824

Net income

51,278

51,278

Other comprehensive income, net of tax

4,045

4,045

Exercise of stock options

1,174

(7)

31

24

Release of shares, net of forfeitures

3,098

424

64

(141)

347

Stock-based compensation

1,514

1,514

Shares received related to tax withholding

(3,342)

(147)

(147)

Cash dividends declared to preferred stockholders

(1,822)

(1,822)

Cash dividends declared to common stockholders

(9,962)

(9,962)

Repurchase of shares of common stock

(424,121)

(13,825)

(13,825)

Ending balance as of June 30, 2021

41,112,863

$

116,569

$

416

$

492,848

$

613,791

$

4,576

$

(8,529)

$

$

(15,395)

$

1,204,276

Net income

38,395

38,395

Other comprehensive loss, net of tax

(5,618)

(5,618)

Release of shares, net of forfeitures

82,004

1,048

(2,423)

1,615

240

Stock-based compensation

1,535

1,535

Cash dividends declared to preferred stockholders

(1,822)

(1,822)

Cash dividends declared to common stockholders

(19,620)

(19,620)

Redemption of real estate investment trust ("REIT") preferred stock

(121)

(121)

Repurchase of shares of common stock

(480,039)

(16,148)

(16,148)

Ending balance as of September 30, 2021

40,714,828

$

116,569

$

416

$

493,775

$

630,744

$

(1,042)

$

(9,417)

$

$

(29,928)

$

1,201,117

7

Nine Month Period Ended September 30, 2020

Accumulated

Other

Comprehensive

Common

Number of

Additional

Loss,

Unearned

Stock

Treasury

Total

Shares of

Preferred

Common

Paid-in

Retained

Net of Deferred

Equity

Held by

Stock,

Stockholders’

    

Common Stock

    

Stock

    

Stock

    

Capital

    

Earnings

    

Taxes

    

Awards

    

BMP

    

at cost

    

Equity

Beginning balance as of January 1, 2020

 

22,780,208

$

$

348

$

279,511

$

581,817

$

(5,940)

$

(6,731)

$

(1,496)

$

(250,751)

$

596,758

Net income

8,392

8,392

Other comprehensive loss, net of tax

(6,692)

(6,692)

Release of shares, net of forfeitures

59

5

(7)

2

Stock-based compensation

671

671

Proceeds from Preferred Stock issuance, net

72,224

72,224

Shares received related to tax withholding

(3,025)

(79)

(79)

Cash dividends declared to common stockholders, net

(4,915)

(4,915)

Repurchase of shares of common stock

(825,992)

(20,711)

(20,711)

Ending balance as of March 31, 2020

21,951,250

72,224

348

279,516

585,294

(12,632)

(6,067)

(1,496)

(271,539)

645,648

Net income

12,966

12,966

Other comprehensive loss, net of tax

(1,771)

(1,771)

Exercise of stock options, net

1,973

38

38

Release of shares, net of forfeitures

127,582

(784)

(1,960)

2,772

28

Stock-based compensation

478

478

Proceeds from Preferred Stock issuance, net

44,345

44,345

Shares received related to tax withholding

(6,912)

(169)

(169)

Cash dividends declared to preferred stockholders

(1,140)

(1,140)

Cash dividends declared to common stockholders

(4,623)

(4,623)

Repurchase of shares of common stock

(631,842)

(14,257)

(14,257)

Ending balance as of June 30, 2020

21,442,051

$

116,569

$

348

$

278,770

$

592,497

$

(14,403)

$

(7,549)

$

(1,496)

$

(283,193)

$

681,543

Net income

15,868

15,868

Other comprehensive income, net of tax

2,864

2,864

Release of shares, net of forfeitures

(2,368)

(1)

50

(49)

Stock-based compensation

804

804

Shares received related to tax withholding

(4,203)

(81)

(81)

Cash dividends declared to preferred stockholders

(1,822)

(1,822)

Cash dividends declared to common stockholders

(4,630)

(4,630)

Repurchase of shares of common stock

(19,196)

(388)

(388)

Ending balance as of September 30, 2020

21,416,284

$

116,569

$

348

$

278,769

$

601,913

$

(11,539)

$

(6,695)

$

(1,496)

$

(283,711)

$

694,158

See notes to unaudited condensed consolidated financial statements.

8

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

Nine Months Ended September 30, 

    

2021

    

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

  

  

Net income

$

68,639

$

37,226

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Net gain on sales of securities available-for-sale and other assets

 

(730)

 

(3,357)

Net gain on equity securities

 

(131)

 

(139)

Net gain on sale of loans held for sale

 

(23,715)

 

(1,946)

Loss on termination of derivatives

16,505

Net depreciation, amortization and accretion

 

4,907

 

3,786

Amortization of other intangible assets

1,907

Stock-based compensation

 

3,885

 

1,953

Provision for credit losses

 

6,344

 

20,003

Originations of loans held for sale

 

(38,709)

 

(26,007)

Proceeds from sale of loans originated for sale

 

57,558

 

38,789

Increase in cash surrender value of BOLI

 

(4,831)

 

(2,697)

Gain from death benefits from BOLI

(350)

(1,134)

Deferred income tax benefit

 

(12,704)

 

(6,841)

Decrease (increase) in other assets

 

126,377

 

(17,810)

(Decrease) increase in other liabilities

 

(45,669)

 

6,148

Net cash provided by operating activities

 

159,283

 

47,974

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Proceeds from sales of securities available-for-sale

 

138,077

 

68,784

Proceeds from sales of marketable equity securities

 

6,101

 

410

Purchases of securities available-for-sale

 

(1,025,697)

 

(149,353)

Purchases of securities held-to-maturity

(40,303)

 

Acquisition of marketable equity securities

 

0

 

(136)

Proceeds from calls and principal repayments of securities available-for-sale

 

350,598

 

121,169

Purchase of BOLI

 

(40,000)

 

(40,000)

Proceeds received from cash surrender value of BOLI

1,464

3,020

Loans purchased

 

(9,855)

 

(18,892)

Proceeds from the sale of portfolio loans transferred to held for sale

 

681,956

 

35,025

Net decrease (increase) in loans

 

244,995

 

(266,490)

Purchases of fixed assets, net

 

(781)

 

(1,442)

Redemptions (purchases) of restricted stock, net

 

46,350

 

(1,286)

Net cash received in business combination

715,988

0

Net cash provided by (used in) investing activities

 

1,068,893

 

(249,191)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Increase in deposits

 

733,744

 

133,042

Repayments of FHLBNY advances, long-term

 

(190,150)

 

(188,800)

Repayments of FHLBNY advances, short-term, net

 

(2,663,865)

 

Proceeds from FHLBNY advances, short-term

1,435,000

127,500

Proceeds from FHLBNY advances, long-term

25,000

97,450

Repayments of other short-term borrowings, net

 

(117,371)

 

(40,000)

Proceeds from preferred stock issuance, net

0

116,569

Proceeds from exercise of stock options

 

396

 

38

Release of stock for benefit plan awards

 

779

 

28

Payments related to tax withholding for equity awards

 

(147)

 

(329)

BMP ESOP shares received to satisfy distribution of retirement benefits

 

(993)

 

Treasury shares repurchased

 

(29,973)

 

(35,356)

Redemption of REIT preferred stock

 

(121)

 

Cash dividends paid to preferred stockholders

(5,465)

(2,962)

Cash dividends paid to common stockholders

 

(29,602)

 

(14,168)

Net cash (used in) provided by financing activities

 

(842,768)

 

193,012

Increase (decrease) in cash and cash equivalents

 

385,408

 

(8,205)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

243,603

 

155,488

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

629,011

$

147,283

 

  

 

  

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

  

 

  

Cash paid for income taxes

$

17,930

$

13,755

Cash paid for interest

 

21,995

 

46,972

Loans transferred to held for sale

 

685,747

 

47,938

Loans transferred to held for investment

 

10,000

 

Premises held for investment transferred to held for sale

2,799

Premises held for sale transferred to premises and fixed assets, net

0

(514)

Operating lease assets in exchange for operating lease liabilities

4,048

1,524

Cumulative change due to CECL adoption

 

1,686

 

Net non-cash liabilities assumed in Merger (See Note 2)

324,479

 

See notes to unaudited condensed consolidated financial statements.

9

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.BASIS OF PRESENTATION

On February 1, 2021, Dime Community Bancshares, Inc., a Delaware corporation (“Legacy Dime”) merged with and into Bridge Bancorp, Inc., a New York corporation (“Bridge”) (the “Merger”), with Bridge as the surviving corporation under the name “Dime Community Bancshares, Inc.” (the “Holding Company”). At the effective time of the Merger (the “Effective Time”), each outstanding share of Legacy Dime common stock, par value $0.01 per share, was converted into the right to receive 0.6480 shares of the Holding Company’s common stock, par value $0.01 per share.

At the Effective Time, each outstanding share of Legacy Dime’s Series A preferred stock, par value $0.01 (the “Dime Preferred Stock”), was converted into the right to receive one share of a newly created series of the Holding Company’s preferred stock having the same powers, preferences and rights as the Dime Preferred Stock.

Immediately following the Merger, Dime Community Bank, a New York-chartered commercial bank and a wholly-owned subsidiary of Legacy Dime, merged with and into BNB Bank, a New York-chartered trust company and a wholly-owned subsidiary of Bridge, with BNB Bank as the surviving bank, under the name “Dime Community Bank” (the “Bank”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q 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.”

The Merger was accounted for as a reverse merger using the acquisition method of accounting, which means that for accounting and financial reporting purposes, Legacy Dime was deemed to have acquired Bridge in the Merger, even though Bridge was the legal acquirer. Accordingly, Legacy Dime’s historical financial statements are the historical financial statements of the combined company for all periods before February 1, 2021 (the “Merger Date”).

The Company’s results of operations for 2021 include the results of operations of Bridge on and after the Merger Date. Results for periods before the Merger Date reflect only those of Legacy Dime and do not include the results of operations of Bridge. The number of shares issued and outstanding, earnings per share, additional paid-in capital, dividends paid and all references to share quantities of the Company have been retrospectively adjusted to reflect the equivalent number of shares issued to holders of Legacy Dime common stock in the Merger. The assets and liabilities of Bridge as of the Merger Date have been recorded at their estimated fair value and added to those of Legacy Dime. See Note 2. Merger for further information.

As of September 30, 2021, we operated 65 branch locations throughout Long Island and the New York City boroughs of Brooklyn, Queens, Manhattan, and the Bronx.  

The Company is a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank, which was known as BNB Bank prior to the Merger. 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 Bridge Abstract LLC (“Bridge Abstract”), a wholly-owned subsidiary of the Bank, which is a broker of title insurance services. In connection with the Merger, on February 1, 2021, the Holding Company acquired Dime Community Bank and its wholly-owned subsidiaries. In September 2021, the Company dissolved 2 REITs, DSBW Preferred Funding Corporation and DSBW Residential Preferred Funding Corporation, which were wholly-owned subsidiaries of the Bank. The preferred shares issued by the REITs were redeemed in connection with the dissolutions.  

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods

10

presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). 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. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Legacy Dime’s Annual Report on Form 10-K for the year ended December 31, 2019, which remain significantly unchanged and have been followed similarly as in prior periods except for the allowance for credit losses policy, resulting from the adoption of Accounting Standard Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326)” and certain policies added as a result of the Merger.

Risks and Uncertainties

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which has spread to most countries, including the United States. The pandemic has adversely affected economic activity globally, nationally and locally.

In March 2020, the United States declared a National Public Health Emergency in response to the COVID-19 pandemic. In an effort to mitigate the spread of COVID-19, local state governments, including New York (in which the Bank has retail banking offices), have taken preventative or protective actions such as travel restrictions, advising or requiring individuals to limit or forego their time outside of their homes, and other forced closures for certain types of non-essential businesses. The impact of these actions is expected to continue to have an adverse impact on the economies and financial markets in the United States.

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law at the end of March 2020. The CARES Act is intended to provide relief and lessen a severe economic downturn. The stimulus package includes direct financial aid to American families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and healthcare providers.

In December 2020, the 2021 Consolidated Appropriations Act was signed into law to provide additional relief.  

It is possible that there will be continued material, adverse impacts to significant estimates, asset valuations, and business operations, including intangible assets, investments, loans, deferred tax assets, and derivative counter party risk.

2.MERGER

As described in Note 1. Basis of Presentation, on February 1, 2021, we completed our Merger with Legacy Dime.

Pursuant to the merger agreement, Legacy Dime merged with and into Bridge with Bridge as the surviving corporation under the name “Dime Community Bancshares, Inc.” At the effective time of the Merger, each outstanding share of Legacy Dime common stock, par value $0.01 per share, was converted into 0.6480 shares of the Company’s common stock, par value $0.01 per share.

At the Effective Time, each outstanding share of Legacy Dime’s Series A preferred stock, par value $0.01 was converted into 1 share of a newly created series of the Company’s preferred stock having the same powers, preferences and rights as the Dime Preferred Stock.

11

In connection with the Merger, the Company assumed $115.0 million in aggregate principal amount of the 4.50% Fixed-to-Floating Rate Subordinated Debentures due 2027 of Legacy Dime.

The Merger constituted a business combination and was accounted for as a reverse merger using the acquisition method of accounting. As a result, Legacy Dime was the accounting acquirer and Bridge was the legal acquirer and the accounting acquiree. Accordingly, the historical financial statements of Legacy Dime became the historical financial statements of the combined company. In addition, the assets and liabilities of Bridge have been recorded at their estimated fair values and added to those of Legacy Dime as of the Merger Date. The determination of fair value required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are subjective and subject to change.

The Company issued 21.2 million shares of its common stock to Legacy Dime stockholders in connection with the Merger, which represented 51.5% of the voting interests in the Company upon completion of the Merger. In accordance with FASB ASC 805-40-30-2, the purchase price in a reverse acquisition is determined based on the number of equity interests the legal acquiree would have had to issue to give the owners of the legal acquirer the same percentage equity interest in the combined entity that results from the reverse acquisition.

The table below summarizes the ownership of the combined company following the Merger, for each shareholder group, as well as the market capitalization of the combined company using shares of Bridge and Legacy Dime common stock outstanding at January 31, 2021 and Bridge’s closing price on January 31, 2021.

Dime Community Bancshares, Inc. Ownership and Market Value

Number of

Market Value at

Bridge

Percentage

$24.43 Bridge

(Dollars and shares in thousands)

Outstanding Shares

Ownership

Share Price

Bridge shareholders

 

19,993

 

48.5%

 

$

488,420

Legacy Dime shareholders

21,233

51.5%

518,720

Total

41,226

100.0%

$

1,007,140

The table below summarizes the hypothetical number of shares as of January 31, 2021 that Legacy Dime would have to issue to give Bridge owners the same percentage ownership in the combined company.

Hypothetical Legacy Dime Ownership

Number of

Legacy Dime

Percentage

(Shares in thousands)

Outstanding Shares

Ownership

Bridge shareholders

 

30,853

 

48.5%

Legacy Dime shareholders

32,767

51.5%

Total

63,620

100.0%

The purchase price is calculated based on the number of hypothetical shares of Legacy Dime common stock issued to Bridge shareholders multiplied by the share price as demonstrated in the table below.

(Dollars and shares in thousands)

Number of hypothetical Legacy Dime shares issued to Bridge shareholders

30,853

Legacy Dime market price per share as of February 1, 2021

$

15.90

Purchase price determination of hypothetical Legacy Dime shares issued to Bridge shareholders

$

490,560

Value of Bridge stock options hypothetically converted to options to acquire shares of Legacy Dime common stock

643

Cash in lieu of fractional shares

7

Purchase price consideration

$

491,210

12

The following table provides the purchase price allocation as of the Merger Date and the Bridge assets acquired and liabilities assumed at their estimated fair value as of the Merger Date as recorded by Dime Community Bancshares. We recorded the estimate of fair value based on initial valuations available at the Merger Date and these estimates are considered preliminary and subject to adjustment for up to one year after the Merger Date. While we believe that the information available on the Merger Date provided a reasonable basis for estimating fair value, we are currently within the measurement period and our estimates of fair value are provisional. During the third quarter of 2021, no material fair value adjustments to acquired assets and assumed liabilities were identified. We expect that we may obtain additional information and evidence during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date we are able to determine that we have obtained all necessary information about the facts and circumstances that existed as of Merger Date. We expect to finalize all valuations and record final adjustments during the fourth quarter of 2021. Subsequent adjustments to fair value, if necessary, will be reflected in our future filings.

(In thousands)

Purchase price consideration

$

491,210

Fair value of assets acquired:

Cash and due from banks

715,988

Securities available-for-sale

651,997

Loans held for sale

10,000

Loans held for investment

4,531,640

Premises and fixed assets

37,881

Restricted stock

23,362

BOLI

94,085

Other intangible assets

10,984

Operating lease assets

45,603

Other assets

117,474

Total assets acquired

6,239,014

Fair value of liabilities assumed:

Deposits

5,405,575

Other short-term borrowings

216,298

Subordinated debt

83,200

Operating lease liabilities

45,285

Other liabilities

97,147

Total liabilities assumed

5,847,505

Fair value of net identifiable assets

391,509

Goodwill resulting from Merger

$

99,701

As a result of the Merger, we recorded $99.7 million of goodwill. The goodwill recorded is not deductible for income tax purposes.

13

As described in detail in Note 3. Summary of Accounting Policies, the Company is required to record purchased financial assets with credit deterioration (PCD assets), defined as a more-than-insignificant deterioration in credit quality since origination or issuance, at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no credit loss expense affecting net income on acquisition of PCD assets.  Changes in estimates of expected losses after acquisition are recognized as credit loss expense (or reversal of credit loss expense) in subsequent periods as they arise. Any non-credit discount or premium resulting from acquiring a pool of purchased financial assets with credit deterioration shall be allocated to each individual asset.  At the acquisition date, the initial allowance for credit losses determined on a collective basis shall be allocated to individual assets to appropriately allocate any non-credit discount or premium.  The non-credit discount or premium, after the adjustment for the allowance for credit losses, shall be accreted to interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date. Information regarding loans acquired at the Merger Date are as follows:

(In thousands)

PCD loans:

 

  

Unpaid principal balance

$

295,306

Non-credit discount at acquisition

 

(9,050)

Unpaid principal balance, net

 

286,256

Allowance for credit losses at acquisition

(52,284)

Fair value at acquisition

233,972

Non-PCD loans:

 

  

Unpaid principal balance

 

4,289,236

Premium at acquisition

 

8,432

Fair value at acquisition

 

4,297,668

 

Total fair value at acquisition

$

4,531,640

Supplemental disclosures of cash flow information related to investing and financing activities regarding the Merger are as follows for the nine months ended September 30, 2021:

(In thousands)

Business combination:

 

  

Fair value of tangible assets acquired

$

6,228,030

Goodwill, core deposit intangible and other intangible assets acquired

 

110,685

Liabilities assumed

 

5,847,505

Purchase price consideration

491,210

Other intangible assets consisted of core deposit intangibles and a non-compete agreement with estimated fair values at the Merger Date of $10.2 million and $780 thousand, respectively. Core deposit intangibles are being amortized over a life of 10 years on an accelerated basis. The non-compete agreement is being amortized over a life of 13 months.

14

Pro Forma Combined Results of Operations

The following pro forma financial information presents the consolidated results of operations of Legacy Dime and Bridge as if the Merger occurred as of January 1, 2020 with pro forma adjustments. The pro forma adjustments give effect to any change in interest income due to the accretion of discounts (premiums) associated with the fair value adjustments of acquired loans, any change in interest expense due to estimated premium amortization/discount accretion associated with the fair value adjustments to acquired time deposits and other debt, and the amortization of the core deposit intangible that would have resulted had the deposits been acquired as of January 1, 2020. Merger related expenses incurred by the Company during the three and nine months ended September 30, 2021 are not reflected in the pro forma amounts. The pro forma information does not necessarily reflect the results of operations that would have occurred had Legacy Dime merged with Bridge at the beginning of 2020.  

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(Dollars in thousands except per share amounts)

    

2021

    

2020

2021

    

2020

Net interest income

 

$

93,316

 

$

86,818

$

274,499

 

$

252,455

Non-interest income

9,728

12,939

33,240

33,030

Net income

39,978

29,971

92,782

72,015

Net income available to common shareholders

37,700

27,791

86,390

68,169

Earnings per share:

Basic

0.93

0.68

2.11

1.66

Diluted

0.93

0.68

2.11

1.66

3.SUMMARY OF ACCOUNTING POLICIES

Summary of Significant Accounting Policies

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company’s financial condition as of September 30, 2021 and December 31, 2020, the results of operations and statements of comprehensive income for the three and nine months ended September 30, 2021 and 2020, the changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, and cash flows for the nine months ended September 30, 2021 and 2020.

Please see "Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" for a discussion of areas in the accompanying unaudited condensed consolidated financial statements utilizing significant estimates.

Recent Accounting Pronouncements

Allowance for Credit Losses – The Company adopted ASU No. 2016-13 on January 1, 2021 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.  ASU 2016-13 was effective for the Company as of January 1, 2020. Under Section 4014 of the CARES Act, financial institutions required to adopt ASU 2016-13 as of January 1, 2020 were provided an option to delay the adoption of the Current Expected Credit Loss (“CECL” or the “CECL Standard”) framework. The Company elected to defer adoption of the CECL Standard until January 1, 2021. The CECL Standard requires that the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current conditions, and reasonable and supportable forecasts. This standard requires financial institutions and other organizations to use forward-looking information to better inform their credit loss estimates. Results for reporting periods beginning after January 1, 2021 are presented under the CECL Standard while prior period amounts will continue to be reported in accordance with previously applicable GAAP.

15

The adoption of the CECL Standard resulted in an initial decrease of $3.9 million to the allowance for credit losses and an increase of $1.4 million to the reserve for unfunded commitments in other liabilities. The after-tax cumulative-effect adjustment of $1.7 million was recorded in retained earnings as of January 1, 2021. There were no held-to-maturity securities as of January 1, 2021 and, therefore, no impact from the adoption of the CECL Standard.

The allowance for credit losses is a valuation allowance that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loan losses are charged against the allowance when management believes it has confirmed the loan balance is uncollectible. Subsequent recoveries, if any, are credited to the allowance.

The CECL Standard requires that debt securities held-to-maturity be accounted for under the current expected credit losses model, including historical loss experience and impact of current conditions and reasonable and supportable forecasts, with an associated allowance for credit losses. In addition, while credit losses on debt securities available-for-sale should be measured in accordance with the other-than-temporary impairment (“OTTI”) framework under current GAAP, the amendments in the CECL Standard require that these credit losses be presented as an allowance for credit losses.  For AFS debt securities, a decline in fair value due to credit loss results in recording an allowance for credit losses to the extent the fair value is less than the amortized cost basis.

Management estimates the allowance for credit losses for the Company’s loan portfolio required 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. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or terms as well as changes in environmental conditions, such as changes in unemployment rates, gross domestic product, and real estate pricing. Management evaluates the adequacy of the allowance on a quarterly basis.

Accrued interest receivable is excluded from the estimate of credit losses.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

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 Small Business Administration ("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.

16

Commercial real estate and commercial mixed-use loans - Loans in this classification consist of commercial real estate, both owner-occupied and non-owner occupied, and may have a residential aspect of less than 50% of the property’s rental income. The Bank’s underwriting standards for 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. Included in commercial real estate 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 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 more vulnerable to weak economic conditions, 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 commercial real estate prices.

Commercial, Industrial and Agricultural Loans - Loans in this classification 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 (excludes SBA Paycheck Protection Program (“PPP”) loans from allowance for credit losses as these loans carry a 100% guarantee from the SBA). 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.

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 and housing prices.

As allowed by ASC 326, the Entity elected to maintain pools of loans accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings (“TDRs”) as of the date of adoption.

TDRs – A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.  The allowance for credit losses on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate is used to discount the expected cash flows, not the rate specified within the restructuring.

Loans that do not share risk characteristics are evaluated on an individual basis based on various factors. Loans evaluated individually are not included in the collective 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.

Individually Evaluated Loans with an ACL and Other Real Estate Owned: For collateral-dependent loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loan to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral, less the estimated costs to sell, and the amortized cost basis of the loan as of the measurement date.  The fair value of real estate collateral is

17

determined based on recent appraised values. The fair value of other real estate owned is also determined based on recent appraised values less the estimated cost to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to location, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. All appraisals undergo a second review process to ensure that the methodology employed and the values derived are reasonable. The fair value of non-real estate collateral, which includes inventory, may be determined based on an appraisal, net book value per the borrower’s financial statements, aging reports, or by reference to  market activity, 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. For non-collateral-dependent loans, ACL is measured based on the difference between the present value of expected cash flows and the amortized cost basis of the loan as of the measurement date.

Appraisals for collateral-dependent loans 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. Once received, the Appraisal and Credit Departments review the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Management also considers the appraisal values for commercial properties associated with current loan origination activity. Collectively, this information is reviewed to help assess current trends in commercial property values. For each collateral dependent loan, management considers information that relates to the type of property to determine if such properties may have appreciated or depreciated in value since the date of the most recent appraisal. Adjustments to fair value are made only when the analysis indicates a probable decline in collateral values. Adjustments made in the appraisal process are not deemed material to the overall consolidated financial statements given the level of collateral dependent loans measured at fair value on a non-recurring basis.

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.

Loans acquired in a business combination – The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, on January 1, 2021 which now requires the Company to record purchased financial assets with credit deterioration (PCD assets), defined as a more-than-insignificant deterioration in credit quality since origination or issuance, at the purchase price plus the allowance for credit losses expected at the time of acquisition. Under this method, there is no credit loss expense affecting net income on acquisition of PCD assets.  Changes in estimates of expected losses after acquisition are recognized as credit loss expense (or reversal of credit loss expense) in subsequent periods as they arise. Any non-credit discount or premium resulting from acquiring a pool of purchased financial assets with credit deterioration shall be allocated to each individual asset.  At the acquisition date, the initial allowance for credit losses determined on a collective basis shall be allocated to individual assets to appropriately allocate any non-credit discount or premium.  The non-credit discount or premium, after the adjustment for the allowance for credit losses, shall be accreted to interest income using the interest method based on the effective interest rate determined after the adjustment for credit losses at the adoption date.

A purchased financial asset that does not qualify as a PCD asset is accounted for similar to an originated financial asset.  Generally, this means that an entity recognizes the allowance for credit losses for non-PCD assets through net income at the time of acquisition.  In addition, both the credit discount and non-credit discount or premium resulting from acquiring a pool of purchased financial assets that do not qualify as PCD assets shall be allocated to each individual asset.  This combined discount or premium shall be accreted to interest income using the effective yield method.

For further discussion of our loan accounting and acquisitions, see Note 2 – Merger and Note 8 – Loans.

18

Held-to-maturity debt securities and the allowance for credit losses

To the extent that debt securities in the held-to-maturity portfolio share common risk characteristics, estimated expected credit losses are calculated in a manner like that used for loans held for investment.  That is, for pools of such debt securities with common risk characteristics, 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 lives of the securities.

Expected credit loss on each debt security in the held-to-maturity portfolio that do not share common risk characteristics with any of the pools of debt securities 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 (“GSEs”), 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, the Company did not record an allowance for expected credit losses on its securities issued by GSEs at September 30, 2021.

Accrued interest receivable is excluded from the estimate of credit losses.

Available-for-sale debt securities and the allowance for credit losses

For available-for-sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, management evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes in the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to 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 other comprehensive income (“OCI”).

Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense.  Losses are charged against the allowance when management believes the collectability of an available-for-sale security is confirmed or when the criteria regarding intent or requirement to sell is met.

Accrued interest receivable is excluded from the estimate of credit losses.  

19

4.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

    

Income (Loss)

Balance as of January 1, 2021

$

12,694

$

(6,086)

$

(12,532)

$

(5,924)

Other comprehensive (loss) income before reclassifications

 

(10,378)

 

2,706

 

13,850

 

6,178

Amounts reclassified from accumulated other comprehensive loss

 

(826)

 

(1,082)

 

612

 

(1,296)

Net other comprehensive (loss) income during the period

 

(11,204)

 

1,624

 

14,462

 

4,882

Balance as of September 30, 2021

$

1,490

$

(4,462)

$

1,930

$

(1,042)

Balance as of January 1, 2020

$

4,621

$

(6,024)

$

(4,537)

$

(5,940)

Other comprehensive income (loss) before reclassifications

 

10,783

 

423

 

(17,150)

 

(5,944)

Amounts reclassified from accumulated other comprehensive loss

 

(2,302)

 

133

 

2,514

 

345

Net other comprehensive income (loss) during the period

 

8,481

 

556

 

(14,636)

 

(5,599)

Balance as of September 30, 2020

$

13,102

$

(5,468)

$

(19,173)

$

(11,539)

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.

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(In thousands)

    

2021

    

2020

2021

    

2020

Change in unrealized holding gain or loss on securities available-for-sale:

 

  

 

  

 

  

 

  

Change in net unrealized gain or loss during the period

$

(8,654)

$

1,716

$

(15,222)

$

15,769

Reclassification adjustment for net gains included in net gain on securities and other assets

 

 

(215)

 

(1,207)

 

(3,357)

Net change

 

(8,654)

 

1,501

 

(16,429)

 

12,412

Tax (benefit) expense

 

(2,714)

 

475

 

(5,226)

 

3,931

Net change in unrealized holding gain or loss on securities available-for-sale, net of reclassification adjustments and tax

 

(5,940)

 

1,026

 

(11,203)

 

8,481

Change in pension and other postretirement obligations:

 

  

 

  

 

  

 

  

Reclassification adjustment for expense included in other expense

 

(735)

 

4

 

(1,595)

 

194

Reclassification adjustment for curtailment loss

1,543

Change in the net actuarial gain or loss

 

941

 

267

 

2,470

 

619

Net change

 

206

271

 

2,418

 

813

Tax expense

 

65

 

86

 

795

 

257

Net change in pension and other postretirement obligations

 

141

 

185

 

1,623

 

556

Change in unrealized gain or loss on derivatives:

 

  

 

  

 

  

 

  

Change in net unrealized gain or loss during the period

 

225

 

100

 

3,767

 

(25,098)

Reclassification adjustment for loss included in loss on termination of derivatives

16,505

Reclassification adjustment for expense included in interest expense

 

38

 

2,319

 

902

 

3,679

Net change

 

263

 

2,419

 

21,174

 

(21,419)

Tax expense (benefit)

 

82

 

766

 

6,712

 

(6,783)

Net change in unrealized gain or loss on derivatives, net of reclassification adjustments and tax

 

181

 

1,653

 

14,462

 

(14,636)

Other comprehensive (loss) income, net of tax

$

(5,618)

$

2,864

$

4,882

$

(5,599)

5.EARNINGS PER COMMON SHARE ("EPS")

Basic 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 performance-based share awards ("PSA”) 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

20

and 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:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(In thousands except share and per share amounts)

    

2021

    

2020

    

2021

    

2020

 

  

 

  

  

 

  

Net income available to common stockholders

$

36,573

$

14,046

$

63,174

$

34,264

Less: Dividends paid and earnings allocated to participating securities

 

(437)

 

(83)

 

(811)

 

(195)

Income attributable to common stock

$

36,136

$

13,963

$

62,363

$

34,069

Weighted average common shares outstanding, including participating securities

 

40,915,012

 

21,378,332

 

38,979,259

 

21,848,184

Less: weighted average participating securities

 

(489,274)

 

(187,781)

 

(405,102)

 

(191,438)

Weighted average common shares outstanding

 

40,425,738

 

21,190,551

 

38,574,157

 

21,656,746

Basic EPS

$

0.89

$

0.66

$

1.62

$

1.57

 

  

 

  

 

  

 

  

Income attributable to common stock

$

36,136

$

13,963

$

62,363

$

34,069

Weighted average common shares outstanding

 

40,425,738

 

21,190,551

 

38,574,157

 

21,656,746

Weighted average common equivalent shares outstanding

 

423

 

133,636

 

700

 

134,334

Weighted average common and equivalent shares outstanding

 

40,426,161

 

21,324,187

 

38,574,857

 

21,791,080

Diluted EPS

$

0.89

$

0.65

$

1.62

$

1.56

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 174,584 and 177,953 weighted-average stock options outstanding for the three and nine-month periods ended September 30, 2021, respectively, which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period. There were 0 "out-of-the-money" stock options during the three-month or the nine-month period ended September 30, 2020.

6.PREFERRED STOCK

On February 5, 2020, Legacy Dime completed an underwritten public offering of 2,999,200 shares, or $75.0 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 “Legacy Dime Preferred Stock”). The net proceeds received from the issuance of preferred stock at the time of closing were $72.2 million. On June 10, 2020, Legacy Dime completed an underwritten public offering, a reopening of the February 5, 2020 original issuance, of 2,300,000 shares, or $57.5 million in aggregate liquidation preference, of the Legacy Dime Preferred Stock. The net proceeds received from the issuance of preferred stock at the time of closing were $44.3 million.

At the Effective Time of the Merger, each outstanding share of the Legacy Dime Preferred Stock was converted into the right to receive one share of a newly created series of the Company’s preferred stock having the same powers, preferences and rights as the Legacy Dime 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.

21

7.INVESTMENT AND MORTGAGE-BACKED SECURITIES

The following tables summarize the major categories of securities owned by the Company as of the dates indicated:

September 30, 2021

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

(In thousands)

    

Cost

    

Gains

    

Losses

    

Value

Securities available-for-sale:

 

  

 

  

 

  

 

  

Agency notes

$

82,475

$

$

(1,457)

$

81,018

Treasury securities

248,173

5

(482)

247,696

Corporate securities

 

122,476

 

4,758

 

(401)

 

126,833

Pass-through MBS issued by GSEs

 

622,225

 

6,005

 

(6,273)

 

621,957

Agency Collateralized Mortgage Obligations ("CMOs")

 

590,385

 

5,159

 

(5,118)

 

590,426

State and municipal obligations

41,158

153

(178)

41,133

Total securities available-for-sale

$

1,706,892

$

16,080

$

(13,909)

$

1,709,063

September 30, 2021

Gross

Gross

Amortized

Unrecognized

Unrecognized

Fair

(In thousands)

    

Cost

    

Gains

    

Losses

    

Value

Securities held-to-maturity:

 

  

 

  

 

  

 

  

Pass-through MBS issued by GSEs

$

25,325

$

$

$

25,325

Agency Collateralized Mortgage Obligations ("CMOs")

 

14,978

 

 

 

14,978

Total securities held-to-maturity

$

40,303

$

$

$

40,303

December 31, 2020

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

(In thousands)

    

Cost

    

Gains

    

Losses

    

Value

Securities available-for-sale:

 

  

 

  

 

  

 

  

Agency notes

$

47,500

$

12

$

(91)

$

47,421

Corporate securities

 

62,021

 

2,440

 

 

64,461

Pass-through MBS issued by GSEs

 

135,842

 

7,672

 

(31)

 

143,483

Agency CMOs

 

274,898

 

8,674

 

(76)

 

283,496

Total securities available-for-sale

$

520,261

$

18,798

$

(198)

$

538,861

As a result of the Merger, the Company acquired $652.0 million of securities available-for-sale on the Merger Date.

As of December 31, 2020, there were 0 securities held-to-maturity.

The carrying amount of securities pledged as collateral was $684.0 million and $99.4 million at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, there were 0 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 amortized cost and fair value of debt securities are shown 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.  

22

 

September 30, 2021

Amortized

Fair

(In thousands)

Cost

Value

Available-for-sale

Within one year

$

1,346

$

1,351

One to five years

270,069

269,665

Five to ten years

209,938

212,881

Beyond ten years

12,929

12,783

Pass-through MBS issued by GSEs and agency CMO

1,212,610

1,212,383

Total

$

1,706,892

$

1,709,063

Held-to-maturity

Pass-through MBS issued by GSEs and agency CMO

$

40,303

$

40,303

Total

$

40,303

$

40,303

The following table presents the information related to sales of securities available-for-sale as of the periods indicated:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(In thousands)

    

2021

    

2020

2021

    

2020

Agency Notes:

Proceeds

$

$

$

$

273

Gross gains

Tax expense on gain

Gross losses

Tax benefit on loss

Corporate Securities:

Proceeds

50,273

25,403

Gross gains

729

1,344

Tax expense on gain

232

423

Gross losses

41

Tax benefit on loss

13

Pass through MBS issued by GSEs:

 

 

  

  

 

  

Proceeds

5,987

26,823

39,182

Gross gains

 

 

215

 

187

 

2,005

Tax expense on gain

 

 

67

 

59

 

630

Gross losses

 

 

 

35

 

Tax benefit on loss

 

 

 

11

 

Agency CMOs:

 

  

 

 

  

 

  

Proceeds

 

 

 

41,324

 

4,199

Gross gains

 

 

 

268

 

8

Tax expense on gain

 

 

 

85

 

3

Gross losses

44

Tax benefit on loss

14

State and municipal obligations:

 

  

 

  

 

  

 

  

Proceeds

 

 

 

19,657

 

Gross gains

 

 

 

143

 

Tax expense on gain

 

 

 

45

 

Gross losses

Tax benefit on loss

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

(In thousands)

    

2021

    

2020

2021

    

2020

Proceeds:

 

  

 

  

  

 

  

Marketable equity securities

$

$

137

$

$

410

23

There were 0 gains on marketable equity securities for the three months ended September 30, 2021. Net gain of $175 thousand was recognized on marketable equity securities for the three months ended September 30, 2020. Net gains of $131 thousand and $139 thousand were recognized on marketable equity securities for the nine months ended September 30, 2021 and 2020, respectively. Marketable equity securities were fully liquidated in connection with the termination of the BMP.

There were 0 sales of securities held-to-maturity during the three months ended September 30, 2021 and 2020.  There were 0 sales of securities held-to-maturity during the nine months ended September 30, 2021 and 2020.

There were 0 transfers to or from securities held-to-maturity during the three months ended September 30, 2021 and 2020.  There were 0 transfers to or from securities held-to-maturity during the nine months ended September 30, 2021 and 2020.

The following table summarizes the gross unrealized losses and fair value of investment and mortgage-backed securities aggregated by investment category and the length of time the securities were in a continuous unrealized loss position as of the dates indicated:

September 30, 2021

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

$

81,018

$

1,457

$

0

$

0

$

81,018

$

1,457

Treasury securities

231,984

482

0

0

231,984

482

Corporate securities

17,863

401

0

0

17,863

401

Pass-through MBS issued by GSEs

446,864

6,273

0

0

446,864

6,273

Agency CMOs

347,726

5,118

0

0

347,726

5,118

State and municipal obligations

 

16,412

 

178

 

0

 

0

 

16,412

 

178

December 31, 2020

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

$

22,409

$

91

$

0

$

0

$

22,409

$

91

Pass-through MBS issued by GSEs

 

5,007

 

31

 

0

 

0

 

5,007

 

31

Agency CMOs

 

6,563

 

30

 

4,954

 

46

 

11,517

 

76

The issuers of securities available-for-sale are primarily U.S. government-sponsored entities or agencies. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. In accordance with the Company’s investment policy, corporate notes are rated "investment grade" at the time of purchase and the financials of the issuers are reviewed quarterly. It is likely that the Company will not be required to sell the securities before their anticipated recovery, and as such, the Company does not consider these securities to be other-than-temporarily-impaired at September 30, 2021.

24

8.LOANS HELD FOR INVESTMENT, NET

The following table presents the loan categories for the period ended as indicated:

(In thousands)

    

September 30, 2021

    

December 31, 2020

One-to-four family residential and cooperative/condominium apartment

$

683,665

$

184,989

Multifamily residential and residential mixed-use

 

3,468,262

 

2,758,743

Commercial real estate ("CRE")

 

3,814,437

 

1,878,167

Acquisition, development, and construction ("ADC")

 

285,379

 

156,296

Total real estate loans

 

8,251,743

 

4,978,195

Commercial and industrial ("C&I")

 

1,012,415

 

641,533

Other loans

 

20,713

 

2,316

Total

 

9,284,871

 

5,622,044

Allowance for credit losses

 

(81,255)

 

(41,461)

Loans held for investment, net

$

9,203,616

$

5,580,583

As a result of the Merger, the Company recorded $4.53 billion of loans held for investment on the Merger Date.

As of September 30, 2021, included in C&I loans was $134.1 million of SBA PPP loans. There was $313.4 million of SBA PPP loans at December 31, 2020.  These loans carry a 100% guarantee from the SBA and have 0 allowance for credit losses allocated to them based on the nature of the guarantee. In June 2021, the Company sold $596.2 million of SBA PPP loans and recorded a gain of $20.7 million in Gain on sale of SBA loans in the consolidated statements of income.

The following tables present data regarding the allowance for credit losses activity for the periods indicated:

At or for the Three Months Ended September 30, 2021

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

    

Apartment

    

Mixed-Use

    

CRE

    

ADC

    

Estate

    

C&I

    

Loans

 

Total

Allowance for credit losses:

Beginning balance

$

5,522

$

10,285

$

41,201

$

5,158

$

62,166

$

30,095

$

499

    

$

92,760

Provision (credit) for credit losses

 

583

(1,998)

(8,649)

(139)

 

(10,203)

 

1,943

946

 

(7,314)

Charge-offs

 

(1)

 

(58)

 

(2,952)

 

 

(3,011)

 

(497)

 

(768)

 

(4,276)

Recoveries

78

3

81

4

85

Ending balance

$

6,104

$

8,307

$

29,603

$

5,019

$

49,033

$

31,545

$

677

$

81,255

At or for the Three Months Ended September 30, 2020

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

    

Apartment

    

Mixed-Use

    

CRE

    

ADC

    

Estate

    

C&I

    

Loans

 

Total

Allowance for credit losses:

Beginning balance

$

671

$

16,666

$

9,859

$

1,777

$

28,973

$

13,502

$

17

    

$

42,492

Provision (credit) for credit losses

 

134

 

3,468

 

2,162

 

274

 

6,038

 

(107)

 

 

5,931

Charge-offs

 

(6)

 

(13)

 

0

 

0

 

(19)

 

0

 

(1)

 

(20)

Recoveries

 

0

 

89

 

0

 

0

 

89

 

0

 

0

 

89

Ending balance

$

799

$

20,210

$

12,021

$

2,051

$

35,081

$

13,395

$

16

$

48,492

25

At or for the Nine Months Ended September 30, 2021

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

    

Apartment

    

Mixed-Use

    

CRE

    

ADC

    

Estate

    

C&I

    

Loans

 

Total

Allowance for credit losses:

    

Beginning balance, prior to the adoption of CECL

$

644

$

17,016

$

9,059

$

1,993

$

28,712

$

12,737

$

12

    

$

41,461

Impact of adopting CECL

1,048

(8,254)

4,849

381

(1,976)

(1,935)

(8)

(3,919)

Adjusted beginning balance as of January 1, 2021

1,692

8,762

13,908

2,374

26,736

10,802

4

37,542

PCD Day 1

2,220

3,292

23,124

117

28,753

23,374

157

52,284

Provision (credit) for credit losses

 

2,212

 

(3,361)

 

(4,068)

 

2,528

 

(2,689)

 

2,215

 

1,286

 

812

Charge-offs

 

(20)

 

(467)

 

(3,365)

 

 

(3,852)

 

(4,959)

 

(773)

 

(9,584)

Recoveries

81

4

85

113

3

201

Ending balance

$

6,104

$

8,307

$

29,603

$

5,019

$

49,033

$

31,545

$

677

$

81,255

At or for the Nine Months Ended September 30, 2020

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

Apartment

    

Mixed-Use

    

CRE

    

ADC

    

Estate

    

C&I

    

Loans

 

Total

Allowance for credit losses:

Beginning balance

$

269

$

10,142

$

3,900

$

1,244

$

15,555

$

12,870

$

16

    

$

28,441

Provision for credit losses

 

540

 

10,010

 

8,127

 

807

 

19,484

 

518

 

1

 

20,003

Charge-offs

 

(10)

 

(45)

 

(6)

 

 

(61)

 

 

(1)

 

(62)

Recoveries

 

 

103

 

 

 

103

 

7

 

 

110

Ending balance

$

799

$

20,210

$

12,021

$

2,051

$

35,081

$

13,395

$

16

$

48,492

The following table presents the amortized cost basis of loans on non-accrual status as of the period indicated:

September 30, 2021

Non-accrual with

Non-accrual with

(In thousands)

    

No Allowance

    

Allowance

 

Reserve

One-to-four family residential and cooperative/condominium apartment

$

-

$

4,938

$

781

Multifamily residential and residential mixed-use

859

-

-

CRE

 

1,240

 

2,882

812

C&I

-

23,727

11,191

Other

-

374

371

Total

$

2,099

$

31,921

$

13,155

The Company did not recognize interest income on non-accrual loans during the three and nine-months ended September 30, 2021.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method, prior to the adoption of ASC 326, as of the dates indicated:

26

December 31, 2020

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

    

Apartment

    

Mixed-Use

    

CRE

    

ADC

    

Estate

    

C&I

    

Loans

    

Total

Allowance for loan losses:

Individually evaluated for impairment

$

$

$

$

$

$

6,474

$

 

$

6,474

Collectively evaluated for impairment

 

644

 

17,016

 

9,059

 

1,993

 

28,712

 

6,263

 

12

 

34,987

Total ending allowance balance

$

644

$

17,016

$

9,059

$

1,993

$

28,712

$

12,737

$

12

 

$

41,461

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Loans:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Individually evaluated for impairment

$

$

1,863

$

2,704

$

$

4,567

$

12,502

$

 

$

17,069

Collectively evaluated for impairment

 

184,989

 

2,756,880

 

1,875,463

 

156,296

 

4,973,628

 

629,031

 

2,316

 

5,604,975

Total ending loans balance

$

184,989

$

2,758,743

$

1,878,167

$

156,296

$

4,978,195

$

641,533

$

2,316

 

$

5,622,044

Impaired Loans (prior to the adoption of ASC 326)

A loan is considered impaired when, based on then current information and events, it is probable that all contractual amounts due will not be collected in accordance with the terms of the loan. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays or shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Bank considers TDRs and all non-accrual loans, except non-accrual one-to-four family loans in less than the Federal National Mortgage Association (“FNMA”) Limits, to be impaired. Non-accrual one-to-four family loans equal to or less than the FNMA Limits, as well as all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment unless considered a TDR.

Impairment is typically measured using the difference between the outstanding loan principal balance and either: 1) the likely realizable value of a note sale; 2) the fair value of the underlying collateral, net of likely disposal costs, if repayment is expected to come from liquidation of the collateral; or 3) the present value of estimated future cash flows (using the loan’s pre-modification rate for certain performing TDRs). If a TDR is substantially performing in accordance with its restructured terms, management will look to either the potential net liquidation proceeds of the underlying collateral or the present value of the expected cash flows from the debt service in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, generally the likely realizable net proceeds from either a note sale or the liquidation of the collateral is considered when measuring impairment. Measured impairment is either charged off immediately or, in limited instances, recognized as an allocated reserve within the allowance for loan losses.

27

The following tables summarize impaired loans with no related allowance recorded and with related allowance recorded as of the periods indicated (by collateral type within the real estate loan segment):

December 31, 2020

Unpaid

Principal

Recorded

Related

(In thousands)

    

Balance

    

Investment(1)

    

Allowance

With no related allowance recorded:

  

  

  

Multifamily residential and residential mixed-use

$

1,863

$

1,863

$

0

CRE

 

2,704

 

2,704

 

0

Total with no related allowance recorded

 

4,567

 

4,567

 

0

With an allowance recorded:

 

  

 

  

 

  

C&I

 

12,502

 

12,502

 

6,474

Total with an allowance recorded

 

12,502

 

12,502

 

6,474

Total

$

17,069

$

17,069

$

6,474

(1)The recorded investment excludes net deferred costs due to immateriality.

The following table presents information for impaired loans for the periods indicated:

Three Months Ended

Nine Months Ended

September 30, 2020

September 30, 2020

Average

Interest

Average

Interest

Recorded

Income

Recorded

Income

    

Investment(1)

    

Recognized(2)

Investment(1)

    

Recognized(2)

With no related allowance recorded:

  

  

  

  

One-to-four family residential, including condominium and cooperative apartment

$

$

$

10

$

4

Multifamily residential and residential mixed-use

 

1,295

 

 

416

 

7

Commercial real estate and commercial mixed-use

 

1,525

 

 

2,688

 

54

Total with no related allowance recorded

 

2,820

 

 

3,114

 

65

 

  

 

  

 

  

 

  

With an allowance recorded:

 

  

 

  

 

  

 

  

C&I

 

10,232

 

 

7,500

 

153

Total

$

13,052

$

$

10,614

$

218

(1)The recorded investment excludes net deferred costs due to immateriality.
(2)Cash basis interest and interest income recognized on accrual basis approximate each other.

28

The following tables summarize the past due status of the Company’s investment in loans as of the dates indicated:

September 30, 2021

Loans 90

Days or

30 to 59

60 to 89

More Past Due

Days

Days

and Still

Total

Total

(In thousands)

    

Past Due

    

Past Due

    

Accruing Interest

    

Non-accrual

    

Past Due

    

Current

    

Loans

Real estate:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

One-to-four family residential, including condominium and cooperative apartment

$

3,135

$

1,245

$

5,021

$

4,938

$

14,339

$

669,326

$

683,665

Multifamily residential and residential mixed-use

 

10,251

 

2,738

 

 

859

 

13,848

 

3,454,414

 

3,468,262

CRE

 

8,360

 

1,069

 

1,004

 

4,122

 

14,555

 

3,799,882

 

3,814,437

ADC

 

17,700

 

0

 

0

 

0

 

17,700

 

267,679

 

285,379

Total real estate

 

39,446

 

5,052

 

6,025

 

9,919

 

60,442

 

8,191,301

 

8,251,743

C&I

 

10,962

 

2,455

 

257

 

23,727

 

37,401

 

975,014

 

1,012,415

Other

730

2

0

374

1,106

19,607

20,713

Total

$

51,138

$

7,509

$

6,282

$

34,020

$

98,949

$

9,185,922

$

9,284,871

December 31, 2020

Loans 90

Days or

30 to 59

60 to 89

More Past Due

<