Quarterly Report (10-q)

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 March 31, 2019

☐ 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 0-27782

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)

Delaware		11-3297463
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

300 Cadman Plaza West, 8 ^th Floor, Brooklyn, NY		11201
( Address of principal executive offices)		(Zip Code)

(718) 782-6200

(Registrant's telephone number, including area code)

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.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common		DCOM		The NASDAQ Stock Market

Classes of Common Stock		Number of Shares Outstanding at May 10, 2019
$.01 Par Value		36,056,385

		Page
	PART I – FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements	4
	Consolidated Statements of Financial Condition at March 31, 2019 and December 31, 2018	4
	Consolidated Statements of Income for the Three-Month Periods Ended March 31, 2019 and 2018	5
	Consolidated Statements of Comprehensive Income for the Three-Month Periods Ended March 31, 2019 and 2018	6
	Consolidated Statements of Changes in Stockholders' Equity for the Three-Month Periods Ended March 31, 2019 and 2018	7
	Consolidated Statements of Cash Flows for the Three-month Periods Ended March 31, 2019 and 2018	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
	Signatures	45

Table of Contents

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:

●

there may be increases in competitive pressure among financial institutions or from non-financial institutions;

●

the net interest margin is subject to material short-term fluctuation based upon market rates;

●

changes in deposit flows, loan demand or real estate values may affect the business of Dime Community Bank (the “Bank”);

●

changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently;

●

changes in corporate and/or individual income tax laws may adversely affect the Company's business or financial condition or results of operations;

●

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, may different than the Company currently anticipates;

●

legislative, regulatory or policy changes may adversely affect the Company’s business or results of operations;

●

technological changes may be more difficult or expensive than the Company anticipates;

●

success or consummation of new business initiatives or the integration of any acquired entities may be more difficult or expensive than the Company anticipates;

●

litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; 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, 2018 as updated by our Quarterly Reports on Form 10-Q.

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

Table of Contents

Item 1.

Condensed Consolidated Financial Statements

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

(Dollars in thousands except share amounts)

	March 31, 2019			December 31, 2018
ASSETS:
Cash and due from banks	$	143,473		$	147,256
Total cash and cash equivalents		143,473			147,256
Securities available-for-sale, at fair value		511,623			502,885
Marketable equity securities, at fair value		5,912			5,667
Loans:
Real estate		5,238,882			5,163,122
Commercial and industrial ("C&I") loans		266,415			229,504
Other loans		1,139			1,192
Less allowance for loan losses		(21,941	)		(21,782	)
Total loans, net		5,484,495			5,372,036
Premises and fixed assets, net		23,708			24,713
Loans held for sale		682			1,097
Federal Home Loan Bank of New York ("FHLBNY") capital stock		55,840			57,551
Bank Owned Life Insurance ("BOLI")		112,121			111,427
Goodwill		55,638			55,638
Operating lease assets		40,401			—
Other assets		41,408			42,308
Total Assets	$	6,475,301		$	6,320,578

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Due to depositors:
Interest-bearing deposits	$	3,990,147		$	3,961,277
Non-interest-bearing deposits		417,475			395,477
Total deposits		4,407,622			4,356,754
Escrow and other deposits		137,116			85,234
FHLBNY advances		1,087,325			1,125,350
Subordinated debt, net		113,796			113,759
Other borrowings		45,000			—
Operating lease liabilities		46,868			—
Other liabilities		31,300			37,400
Total Liabilities		5,869,027			5,718,497

Stockholders' Equity:
Preferred stock ($0.01 par, 9,000,000 shares authorized, none issued or outstanding at March 31, 2019 and December 31, 2018)		—			—
Common stock ($0.01 par, 125,000,000 shares authorized, 53,690,825 shares and 53,690,825 shares issued at March 31, 2019 and December 31, 2018, respectively, and 36,020,112 shares and 36,081,455 shares outstanding at March 31, 2019 and December 31, 2018, respectively)		537			537
Additional paid-in capital		278,358			277,512
Retained earnings		572,175			565,713
Accumulated other comprehensive loss, net of deferred taxes		(5,232	)		(6,500	)
Unearned Restricted Stock Award common stock		(6,068	)		(3,623	)
Common stock held by Benefit Maintenance Plan ("BMP")		(1,509	)		(1,509	)
Treasury stock, at cost (17,670,713 shares and 17,609,370 shares at March 31, 2019 and December 31, 2018, respectively)		(231,987	)		(230,049	)
Total Stockholders' Equity		606,274			602,081
Total Liabilities and Stockholders' Equity	$	6,475,301		$	6,320,578

See notes to unaudited consolidated financial statements.

Table of Contents

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

	Three Months Ended March 31,
	2019		2018
Interest income:
Loans secured by real estate	$	49,177	$	49,575
C&I loans		3,436		1,656
Other loans		18		19
Mortgage-backed securities (“MBS”) and Agency Collaterized Mortgage Obligation (“CMO”) securities		3,197		2,257
Marketable equity and investment securities		420		15
Other short-term investments		1,447		1,511
Total interest income		57,695		55,033
Interest expense:
Deposits and escrow		15,017		10,751
Borrowed funds		7,354		6,267
Total interest expense		22,371		17,018
Net interest income		35,324		38,015
Provision for loan losses		321		193
Net interest income after provision for loan losses		35,003		37,822
Non-interest income:
Service charges and other fees		1,099		911
Mortgage banking income, net		68		111
Net gain on securities and other assets ⁽¹⁾		192		1,366
Gain on sale of loans		255		90
Income from BOLI		694		712
Other		52		54
Total non-interest income		2,360		3,244
Non-interest expense:
Salaries and employee benefits		11,884		11,177
Stock benefit plan compensation expense		284		388
Occupancy and equipment		3,869		3,872
Data processing costs		2,066		1,754
Marketing		466		1,047
Federal deposit insurance premiums		454		665
Other		3,029		2,831
Total non-interest expense		22,052		21,734
Income before income taxes		15,311		19,332
Income tax expense		3,810		4,587
Net income	$	11,501	$	14,745

Earnings per Share:
Basic	$	0.32	$	0.39
Diluted	$	0.32	$	0.39

(1)	Amount includes periodic valuation gains or losses on marketable equity securities.

See notes to unaudited financial statements.

Table of Contents

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)

	Three Months Ended March 31,
	2019			2018
Net Income	$	11,501		$	14,745
Other comprehensive income (loss):
Change in holding gain (loss) on securities available-for-sale		4,687			(2,558	)
Change in pension and other postretirement obligations		492			155
Change in gain (loss) on derivative assets		(3,284	)		2,016
Other comprehensive gain (loss) before income taxes		1,895			(387	)
Deferred tax expense (benefit)		627			(112	)
Other comprehensive income (loss), net of tax		1,268			(275	)
Total comprehensive income	$	12,769		$	14,470

See notes to unaudited condensed consolidated financial statements.

Table of Contents

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

(Dollars in thousands)

	Three Months Ended March 31, 2019
	Number of Shares			Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss, Net of Deferred Taxes			Unearned Stock Award Common Stock			Common Stock Held by BMP			Treasury Stock, at cost			Total Stockholders' Equity

Beginning balance as of January 1, 2019		36,081,455		$	537	$	277,512	$	565,713		$	(6,500	)	$	(3,623	)	$	(1,509	)	$	(230,049	)	$	602,081
Net Income		—			—		—		11,501			—			—			—			—			11,501
Other comprehensive income, net of tax		—			—		—		—			1,268			—			—			—			1,268
Release of shares, net of forfeitures		138,329			—		846		—			—			(2,729	)		—			1,883			—
Stock-based compensation		—			—		—		—			—			284			—			—			284
Payments related to tax withholding for stock-based compensation		(418	)		—		—		—			—			—			—			(7	)		(7	)
Cash dividends declared and paid		—			—		—		(5,039	)		—			—			—			—			(5,039	)
Repurchase of shares of Common Stock		(199,254	)		—		—		—			—			—			—			(3,814	)		(3,814	)
Ending balance as of March 31, 2019		36,020,112		$	537	$	278,358	$	572,175		$	(5,232	)	$	(6,068	)	$	(1,509	)	$	(231,987	)	$	606,274

	Three Months Ended March 31, 2018
	Number of Shares			Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss, Net of Deferred Taxes			Unearned Stock Award Common Stock			Common Stock Held by BMP			Treasury Stock, at cost			Total Stockholders' Equity

Beginning balance as of January 1, 2018		37,419,070		$	536	$	276,730		$	535,130		$	(3,641	)	$	(2,894	)	$	(2,736	)	$	(204,558	)	$	598,567
Reclassification of unrealized gains and losses on marketable equity securities		—			—		—			153			(153	)		—			—			—			—
A djusted beginning balance as of January 1, 2018		37,419,070			536		276,730			535,283			(3,794	)		(2,894	)		(2,736	)		(204,558	)		598,567
Net Income		—			—		—			14,745			—			—			—			—			14,745
Other comprehensive loss, net of tax		—			—		—			—			(275	)		—			—			—			(275	)
Exercise of stock options, net		19,726			1		454			—			—			—			—			(165	)		290
Release of shares, net of forfeitures		73,019			—		426			—			—			(1,349	)		—			923			—
Stock-based compensation		—			—		—			—			—			388			—			—			388
Shares received to satisfy distribution of retirement benefits		(27,545	)		—		(540	)		—			—			—			540			(524	)		(524	)
Reclassification of tax effects on other comprehensive income (loss)		—			—		—			(32	)		32			—			—			—			—
Cash dividends declared and paid		—			—		—			(5,234	)		—			—			—			—			(5,234	)
Ending balance as of March 31, 2018		37,484,270		$	537	$	277,070		$	544,762		$	(4,037	)	$	(3,855	)	$	(2,196	)	$	(204,324	)	$	607,957

See notes to unaudited condensed consolidated financial statements.

Table of Contents

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)

	Three Months Ended March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	11,501		$	14,745
Adjustments to reconcile net income to net cash provided by operating activities:
Net (gain) loss on sales of securities available-for-sale		76			(1,370	)
Net (gain) loss recognized on marketable equity securities		(268	)		4
Net gain on sale of loans held for sale		(255	)		(90	)
Net depreciation, amortization and accretion		2,875			2,184
Cash paid for amounts included in the measurement of lease liabilities		(1,712	)		—
Stock plan compensation		284			388
Provision for loan losses		321			193
Originations of loans held for sale		(569	)		—
Proceeds from sale of loans originated for sale		618			—
Increase in cash surrender value of BOLI		(694	)		(712	)
Deferred income tax provision		(807	)		(1,728	)
Changes in assets and liabilities:
Decrease (Increase) in other assets		(262	)		3,204
Decrease in other liabilities		(923	)		(4,072	)
Net cash provided by Operating activities		10,185			12,746
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales securities available-for-sale		15,499			158,484
Proceeds from sales of marketable equity securities		137			393
Purchases of securities available-for-sale		(38,319	)		(189,874	)
Acquisition of marketable equity securities		(114	)		(109	)
Proceeds from calls and principal repayments of securities available-for-sale		18,530			25,958
Proceeds from sale of portfolio loans held for sale		8,659			765
Net decrease (increase) in loans		(120,886	)		93,994
Purchases of fixed assets, net		(50	)		(1,879	)
Sale of FHLBNY capital stock, net		1,711			7,182
Net cash provided by (used in) Investing Activities		(114,833	)		94,914
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in due to depositors		50,868			26,994
Increase in escrow and other deposits		51,882			49,785
Repayments of FHLBNY advances		(1,030,150	)		(1,034,600	)
Proceeds from FHLBNY advances		992,125			875,000
Repayments of other borrowings		(571,000	)		—
Proceeds from other borrowings		616,000			—
Proceeds from exercise of stock options		—			290
Payments related to tax withholding for stock-based compensation		(7	)		—
BMP ESOP shares received to satisfy distribution of retirement benefits		—			(524	)
Treasury shares repurchased		(3,814	)		—
Cash dividends paid to stockholders, net		(5,039	)		(5,234	)
Net cash provided by (used in) Financing Activities		100,865			(88,289	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,783	)		19,371
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		147,256			169,455
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	143,473		$	188,826

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	4,406		$	2,928
Cash paid for interest		24,013			15,323
Loans transferred to held for sale		2,329			675
Operating lease assets in exchange for operating lease liabilities		41,641			—

See notes to unaudited condensed consolidated financial statements.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands Except Per Share Amounts)

1.	NATURE OF OPERATIONS

Dime Community Bancshares, Inc. (the "Holding Company" and together with its direct and indirect subsidiaries, the "Company") is a Delaware corporation organized by Dime Community Bank (the "Bank") for the purpose of acquiring all of the capital stock of the Bank issued in the Bank's conversion to stock ownership on June 26, 1996. On January 24, 2019, the Bank filed an application with the New York Department of Financial Services (“NYSDFS”) seeking approval to convert from a New York stock form savings bank to a New York commercial bank (the “Charter Conversion”). Simultaneous with the Charter Conversion application to NYSDFS, the Company filed an application with the Federal Reserve Bank of Philadelphia to delist as a savings and loan holding company and elect to become a bank holding company. Having received all applicable regulatory approvals, on April 25, 2019 the Bank completed the Charter Conversion, and began operating as a New York commercial bank. Simultaneously, the Company began operating as a bank holding company. At March 31, 2019 the significant assets of the Holding Company were the capital stock of the Bank and investments retained by the Holding Company. The liabilities of the Holding Company were comprised primarily of $113,796 subordinated notes due in 2027, which become callable commencing in 2022. The Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended.

The Bank was originally founded in 1864 as a New York State-chartered mutual savings bank, and operated as a New York State-chartered stock savings bank until April 2019. Effective August 1, 2016, the Bank changed its name from The Dime Savings Bank of Williamsburgh to Dime Community Bank. The new name more accurately reflected the Bank's evolving business model and emphasized its broader geographic and business reach while retaining the Bank's mission to be in and of the communities it served, including the virtual online community. The Bank's principal business is gathering deposits from customers within its market area and via the internet, and investing them primarily in multifamily residential, commercial real estate, mixed use, and, to an increasing extent, commercial and industrial (“C&I”) loans, and one-to-four family residential real estate loans, as well as mortgage-backed securities, obligations of the U.S. government and government- sponsored enterprises (“GSEs”), and corporate debt and equity securities.

The Holding Company neither owns nor leases any property, but instead uses the back office of the Bank, located in the Brooklyn Heights section of the borough of Brooklyn, New York. The Bank maintains its principal office in the Williamsburg section of the borough of Brooklyn, New York. As of March 31, 2019, the Bank had twenty-nine retail banking offices located throughout the boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County and Suffolk County, New York.

2.	SUMMARY OF 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 March 31, 2019 and December 31, 2018, the results of operations and statements of comprehensive income for the three-month periods ended March 31, 2019 and 2018, and the changes in stockholders' equity and cash flows for the three-month periods ended March 31, 2019 and 2018. The results of operations for the three-month period ended March 31, 2019 is not necessarily indicative of the results of operations for the remainder of the year ending December 31, 2019. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2018 and notes thereto contained in our Annual Report on Form 10-K.

Table of Contents

3.	RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updates ("ASU") 2016-02, Leases (Topic 842) . ASU 2016-02 requires companies that lease valuable assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases , and ASU 2018-11, Leases (Topic 842) : Targeted Improvements. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. An entity may adopt the new guidance by either restating prior periods and recording a cumulative effect adjustment at the beginning of the earliest comparative period presented (the modified retrospective transition approach) or by recording a cumulative adjustment at the beginning of the period of adoption (the additional transition method). The Company used the additional transition method approach. Topic 842 includes a number of optional practical expedients that entities may elect to apply. The practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company adopted these practical expedients: not reevaluating whether or not a contract contains a lease; retaining current lease classification; not reassessing initial direct costs for existing leases; and not reassessing existing land easements that were not previously accounted for as leases under current lease accounting rules. The Company did not utilize the practical expedient of hindsight in its lease assessments. An entity that elects to apply these practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The adoption of ASU 2016-02 resulted in increases of $41,641 to the Company's assets and liabilities.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) , which requires that the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current condition, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. This guidance also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For the Company, this guidance is effective for fiscal years and interim periods beginning after December 31, 2019. The Company has established a committee that has assessed system requirements, gathered data, and will evaluate the impact of ASU 2016-13 on its consolidated financial statements. The Company has engaged a third party software provider in order to evaluate the potential impact of ASU 2016-13, and is currently working through implementation of the software. The Company expects to recognize a one-time cumulative effect increase to the allowance for loan losses as of the beginning of the reporting period in which ASU 2016-13 takes effect, however, cannot yet determine the magnitude of the impact on the consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities . ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, however, early adoption is permitted. The adoption of ASU 2017-08 did not have a material impact on the Company’s consolidated financial statements.

Table of Contents

4.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in accumulated other comprehensive income (loss), net of tax, was as follows:

	Securities Available-for-Sale			Defined Benefit Plans			Derivative Asset			Total Accumulated Other Comprehensive Loss
Balance as of January 1, 2019	$	(1,957	)	$	(6,290	)	$	1,747		$	(6,500	)
Other comprehensive income (loss) before reclassifications		3,129			252			(2,007	)		1,374
Amounts reclassified from accumulated other comprehensive loss		51			82			(239	)		(106	)
Net other comprehensive income during the period		3,180			334			(2,246	)		1,268
Balance as of March 31, 2019	$	1,223		$	(5,956	)	$	(499	)	$	(5,232	)

Balance as of January 1, 2018	$	285		$	(6,633	)	$	2,707		$	(3,641	)
Reclassification for adoption of ASU 2016-01 ⁽¹⁾		(153	)		—			—			(153	)
Adjusted balance as of January 1, 2018		132			(6,633	)		2,707			(3,794	)
Other comprehensive income (loss) before reclassifications		(786	)		(88	)		1,373			499
Amounts reclassified from accumulated other comprehensive loss		(922	)		192			(44	)		(774	)
Net other comprehensive income during the period		(1,708	)		104			1,329			(275	)
Reclassification of tax effects on other comprehensive income ⁽²⁾		—			32			—			32
Balance as of March 31, 2018	$	(1,576	)	$	(6,497	)	$	4,036		$	(4,037	)

(1)	Represents the impact of adopting ASU 2016-01 allowing the reclassification of unrealized gains and losses on available-for-sale equity securities from accumulated other comprehensive income to retained earnings.

(2)

Represents the impact of adopting ASU 2018-02 allowing the reclassification of certain stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act") from accumulated other comprehensive income to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act (or portion thereof) is recorded. The amount of the reclassification is an adjustment for the difference between the historical corporate income tax rate (35%) and the newly enacted 21% corporate income tax rate.

Table of Contents

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 March 31,
	2019			2018
Change in holding gain (loss) on securities available-for-sale:
Change in net unrealized holding gain (loss) during the period	$	4,611		$	(1,188	)
Reclassification adjustment for net gains included in net gain on securities and other assets		76			(1,370	)
Net change		4,687			(2,558	)
Tax expense (benefit)		1,507			(850	)
Net change in holding gain (loss) on securities available-for-sale		3,180			(1,708	)
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense		122			286
Change in the net actuarial gain or loss		370			(131	)
Net change		492			155
Tax expense		158			51
Net change in pension and other postretirement obligations		334			104
Change in gain (loss) on derivative assets:
Change in net unrealized gain (loss) during the period		(2,928	)		2,081
Reclassification adjustment for expense included in interest expense		(356	)		(65	)
Net change		(3,284	)		2,016
Tax expense (benefit)		(1,038	)		687
Net change in unrealized loss on derivative asset or liability		(2,246	)		1,329
Other comprehensive income (loss)	$	1,268		$	(275	)

5.	EARNINGS PER SHARE ("EPS")

Basic EPS is computed by dividing net income 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 if all likely aggregate Long-term Incentive Plan ("LTIP") and Sales Incentive Plan ("SIP") share are 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 and SIP 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 March 31,
	2019			2018
Net income per the Consolidated Statements of Income	$	11,501		$	14,745
Less: Dividends paid and earnings allocated to participating securities		(37	)		(29	)
Income attributable to common stock	$	11,464		$	14,716
Weighted average common shares outstanding, including participating securities		36,000,140			37,495,317
Less: weighted average participating securities		(153,793	)		(145,725	)
Weighted average common shares outstanding		35,846,347			37,349,592
Basic EPS	$	0.32		$	0.39
Income attributable to common stock	$	11,464		$	14,716
Weighted average common shares outstanding		35,846,347			37,349,592
Weighted average common equivalent shares outstanding		130,568			115,133
Weighted average common and equivalent shares outstanding		35,976,915			37,464,725
Diluted EPS	$	0.32		$	0.39

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 no "out-of-the-money" stock options during the three-month periods ended March 31, 2019 or 2018.

Table of Contents

For information about the calculation of expected aggregate LTIP and SIP share payouts, see Note 14.

6.	REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , on January 1, 2018. Under ASC 2014-09, an entity is required to recognize revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires disclosure of sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, as well as qualitative and quantitative disclosure related to contracts with certain customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.

In accordance with ASU 2014-09, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. The Company applies the following five steps to properly recognize revenue:

Identify the contract with a customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to performance obligations in the contract

Recognize revenue when (or as) the Company satisfies a performance obligation

The Company's only in-scope revenue stream that is subject to the accounting standard is service fees on deposit accounts (including interchange fees), which is disclosed on the Consolidated Statements of Operations as "Service charges and other fees." For the three-month periods ended March 31, 2019 and 2018, service charges and other fees totaled $1,099 and $911, respectively.

Service Charges on Deposit Accounts . The Company earns fees from its deposits customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payments, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of the month, representing the period over which the Company satisfied the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.

Interchange Income . The Company earns interchange fees from debit cardholder transactions conducted through various payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provide to the cardholder.

7.	INVESTMENT AND MORTGAGE-BACKED SECURITIES

The Company adopted ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, on January 1, 2018. As a result of adoption all registered mutual funds were reclassified as marketable equity securities on the Consolidated Statement of Financial Condition and are recorded at fair value with changes in fair value recorded through the income statement. Additionally, $153 of unrealized gains, net of taxes, was reclassified from accumulated other comprehensive income to beginning retained earnings on January 1, 2018. Marketable equity securities are excluded from the tables below.

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

	At March 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale:
Agency Notes	$	25,124	$	52	$	3	$	25,173
Corporate Securities		29,131		166		64		29,233
Pass-through MBS issued by Government-sponsored Enterprises ("GSEs")		346,338		2,829		560		348,607
Agency CMOs		109,244		142		776		108,610
Total securities available-for-sale	$	509,837	$	3,189	$	1,403	$	511,623

Table of Contents

	At December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale:
Agency Notes	$	25,110	$	45	$	10	$	25,145
Corporate Securities		11,167		0		32		11,135
Pass-through MBS issued by GSEs		356,039		574		2,000		354,613
Agency CMOs		113,470		157		1,635		111,992
Total securities available-for-sale	$	505,786	$	776	$	3,677	$	502,885

The carrying amount of securities pledged as collateral for the Bank's first loss guarantee was $23,786 and $27,248 at March 31, 2019 and December 31, 2018, respectively.

At March 31, 2019, the available-for-sale agency notes possessed a weighted average contractual maturity of 3.9 years. At March 31, 2019, available-for-sale agency CMO and MBS securities possessed a weighted average contractual maturity of 12.9 years. At March 31, 2019, the corporate securities possessed had a weighted average contractual maturity of 5.9 years.

	For the Three Months Ended March 31,
	2019			2018
Pass through MBS issued by GSEs:
Proceeds	$	6,117		$	—
Gross gains		—			—
Tax expense on gain		—			—
Gross losses		174			—
Tax benefit on loss		(56	)		—
Agency CMOs:
Proceeds		9,382			158,484
Gross gains		98			1,370
Tax expense on gain		31			440
Gross losses		—			—
Tax benefit on loss		—			—

The Company holds marketable equity securities as the underlying mutual fund investments of the BMP, held in a rabbi trust. The Company may sell these securities on a periodic basis in order to pay retirement benefits to plan retirees. There are no gains or losses recognized from the sales of marketable equity securities. A summary of the sales of marketable equity securities is listed below for the periods indicated:

	For the Three Months Ended March 31,
	2019		2018
Proceeds:
Marketable equity securities	$	137	$	393

The remaining gain or loss on securities shown in the unaudited condensed consolidated statements of income was due to market valuation changes. Net gains (losses) of $268 and $(4) were recognized on marketable equity securities for the three-month period ended March 31, 2019 and March 31, 2018, respectively.

Table of Contents

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

	March 31, 2019
	Less than 12 Consecutive Months				12 Consecutive Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available-for-sale:
Agency Notes	$	5,121	$	3	$	—	$	—	$	5,121	$	3
Corporate Securities		10,104		64		—		—		10,104		64
Pass through MBS issued by GSEs		—		—		81,834		560		81,834		560
Agency CMOs		86,626		716		4,583		60		91,209		776

	December 31, 2018
	Less than 12 Consecutive Months				12 Consecutive Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available-for-sale:
Agency Notes	$	5,100	$	10	$	—	$	—	$	5,100	$	10
Corporate Securities		11,135		32		—		—		11,135		32
Pass through MBS issued by GSEs		216,451		1,049		45,489		951		261,940		2,000
Agency CMOs		52,605		439		39,833		1,196		92,438		1,635

The issuers of securities available-for-sale are 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. 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 March 31, 2019.

8.	LOANS RECEIVABLE AND CREDIT QUALITY

Loans are reported at the principal amount outstanding, net of unearned fees or costs. Interest income on loans is recorded using the level yield method. Under this method, discount accretion and premium amortization are included in interest income. Loan origination fees and certain direct loan origination costs are deferred and amortized as yield adjustments over the contractual loan terms.

Credit Quality Indicators:

On a quarterly basis, the Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them as to credit risk. This analysis includes all loans, such as multifamily residential, mixed-use residential ( i.e., loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the residential units), mixed-use commercial real estate ( i.e. , loans in which the aggregate rental income of the underlying collateral property is generated from both residential and commercial units, but the majority of such income is generated from the commercial units), commercial real estate loans, acquisition, development, and construction ("ADC") loans (which includes land loans), C&I loans, as well as one-to-four family residential and cooperative and condominium apartment loans.

The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of then existing facts, conditions, and values, highly questionable and improbable.

Table of Contents

The Bank had no loans classified as doubtful as of March 31, 2019 or December 31, 2018. All real estate and C&I loans not classified as Special Mention or Substandard were deemed pass loans at both March 31, 2019 and December 31, 2018.

The following is a summary of the credit risk profile of real estate and C&I loans (including deferred costs) by internally assigned grade as of the dates indicated:

	Balance at March 31, 2019
	Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
One-to-four family residential, including condominium and cooperative apartment	$	106,659	$	—	$	1,050	$	—	$	107,709
Multifamily residential and residential mixed-use		3,793,706		25,326		12,113		—		3,831,145
Commercial real estate and commercial mixed-use		1,230,111		6,110		9,585		—		1,245,806
ADC		54,222		—		—		—		54,222
Total real estate		5,184,698		31,436		22,748		—		5,238,882
C& I		265,521		49		845		—		266,415
Total Real Estate and C&I	$	5,450,219	$	31,485	$	23,593	$	—	$	5,505,297

	Balance at December 31, 2018
	Pass		Special Mention		Substandard		Doubtful		Total
Real Estate:
One-to-four family residential, including condominium and cooperative apartment	$	95,782	$	—	$	1,065	$	—	$	96,847
Multifamily residential and residential mixed-use		3,829,643		32,682		4,463		—		3,866,788
Commercial real estate and commercial mixed-use		1,162,429		1,209		6,447		—		1,170,085
ADC		29,402		—		—		—		29,402
Total real estate		5,117,256		33,891		11,975		—		5,163,122
C& I		228,924		—		580		—		229,504
Total Real Estate and C&I	$	5,346,180	$	33,891	$	12,555	$	—	$	5,392,626

The following is a summary of the credit risk profile of consumer loans by internally assigned grade:

	Balance at
Grade	March 31, 2019		December 31, 2018
Performing	$	1,133	$	1,189
Non-accrual		6		3
Total	$	1,139	$	1,192

Table of Contents

The following is a breakdown of the past due status of the Company's investment in loans (excluding accrued interest) as of the dates indicated:

	At March 31, 2019
	30 to 59 Days Past Due		60 to 89 Days Past Due		Loans 90 Days or More Past Due and Still Accruing Interest		Non- accrual ⁽¹⁾		Total Past Due		Current		Total Loans
Real Estate:
One-to-four family residential, including condominium and cooperative apartment	$	133	$	8	$	—	$	706	$	847	$	106,862	$	107,709
Multifamily residential and residential mixed-use		145		—		768		276		1,189		3,829,956		3,831,145
Commercial real estate and commercial mixed-use		—		—		5,622		4,205		9,827		1,235,979		1,245,806
ADC		—		—		—		—		—		54,222		54,222
Total real estate	$	278	$	8	$	6,390	$	5,187	$	11,863	$	5,227,019	$	5,238,882
C& I	$	49	$	—	$	565	$	232	$	846	$	265,569	$	266,415
Consumer	$	3	$	1	$	—	$	6	$	10	$	1,129	$	1,139

(1)	Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of March 31, 2019.

	At December 31, 2018
	30 to 59 Days Past Due		60 to 89 Days Past Due		Loans 90 Days or More Past Due and Still Accruing Interest		Non- accrual ⁽¹⁾		Total Past Due		Current		Total Loans
Real Estate:
One-to-four family residential, including condominium and cooperative apartment	$	312	$	—	$	—	$	712	$	1,024	$	95,823	$	96,847
Multifamily residential and residential mixed-use		—		—		100		280		380		3,866,408		3,866,788
Commercial real estate and commercial mixed-use		—		—		—		1,041		1,041		1,169,044		1,170,085
ADC		—		—		—		—		—		29,402		29,402
Total real estate	$	312	$	—	$	100	$	2,033	$	2,445	$	5,160,677	$	5,163,122
C&I	$	50	$	49	$	—	$	309	$	408	$	229,096	$	229,504
Consumer	$	12	$	1	$	—	$	3	$	16	$	1,176	$	1,192

(1)	Includes all loans on non-accrual status regardless of the number of days such loans were delinquent as of December 31, 2018.

Accruing Loans 90 Days or More Past Due

The Bank continued accruing interest on eleven loans with an aggregate outstanding balance of 6,955 at March 31, 2019, and one real estate loan with an aggregate outstanding balance of $100 at December 31, 2018, all of which were 90 days or more past due on their respective contractual maturity dates. These loans continued to make monthly payments consistent with their initial contractual amortization schedule exclusive of the balloon payments due at maturity. These loans were well secured and were expected to be refinanced, and therefore remained on accrual status and were deemed performing assets at the dates indicated above.

Table of Contents

Troubled Debt Restructurings ("TDRs")

A TDR has been created in the event that, for economic or legal reasons, any of the following concessions has been granted that would not have otherwise been considered to a debtor experiencing financial difficulties. The following criteria are considered concessions:

•

A reduction of interest rate has been made for the remaining term of the loan

•

The maturity date of the loan has been extended with a stated interest rate lower than the current market rate for new debt with similar risk

•

The outstanding principal amount and/or accrued interest have been reduced

I n instances in which the interest rate has been reduced, management would not deem the modification a TDR in the event that the reduction in interest rate reflected either a general decline in market interest rates or an effort to maintain a relationship with a borrower who could readily obtain funds from other sources at the current market interest rate, and the terms of the restructured loan are comparable to the terms offered by the Bank to non-troubled debtors. The following table summarizes outstanding TDRs by underlying collateral types as of the dates indicated:

	As of March 31, 2019				As of December 31, 2018
	No. of Loans		Balance		No. of Loans		Balance
One-to-four family residential, including condominium and cooperative apartment		1	$	12		1	$	14
Multifamily residential and residential mixed-use		2		261		2		271
Commercial real estate and commercial mixed-use		1		4,061		1		4,084
Total real estate		4	$	4,334		4	$	4,369

Accrual status for TDRs is determined separately for each TDR in accordance with the Bank's policies for determining accrual or non-accrual status. At the time an agreement is entered into between the Bank and the borrower that results in the Bank's determination that a TDR has been created, the loan can be on either accrual or non-accrual status. If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least six months. Conversely, if at the time of restructuring the loan is performing (and accruing), it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under the Bank's policy and agency regulations. There were no TDRs on non-accrual status at March 31, 2019 or at December 31, 2018.

The Company has not restructured any C&I or consumer loans, as these loan portfolios have not experienced any problem issues warranting restructuring. Therefore, all TDRs were collateralized by real estate at both March 31, 2019 and December 31, 2018.

There were no loans modified in a manner that met the criteria of a TDR during the three-month periods ended March 31, 2019 or 2018.

As of March 31, 2019 and December 31, 2018, the Bank had no loan commitments to borrowers with outstanding TDRs.

A TDR is considered to be in payment default once it is 90 days contractually past due under the modified terms. All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any.

There were no TDRs which defaulted within twelve months following the modification during the three-month periods ended March 31, 2019 or 2018 (thus no impact to the allowance for loan losses during those periods).

Impaired Loans

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 one-to-four family loans equal to or less than the FNMA conforming loan limits for high-cost areas, such as the Bank's primary lending area, ("FNMA Limits") and consumer loans, to be impaired. Non-accrual one-to-four family loans equal to or less than the FNMA Limits and all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment unless considered a TDR.

Table of Contents

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 some of the 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.

Please refer to Note 9 for tabular information related to impaired loans.

9.	ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses consists of specific and general components. At March 31, 2019, the Bank's periodic evaluation of its allowance for loan losses (specific or general) was comprised of two primary components: (1) impaired loans and (2) pass graded loans. Within these components, the Company has identified the following portfolio segments for purposes of assessing its allowance for loan losses: (1) real estate loans; (2) C&I loans; and (3) consumer loans. Within these segments, the Bank analyzes the allowance for loan losses based upon the underlying collateral type (classes). Smaller balance homogeneous real estate loans, such as condominium or cooperative apartment and one-to-four family residential real estate loans with balances equal to or less than the FNMA Limits, and consumer loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Impaired Loan Component

All loans that are deemed to meet the definition of impaired are individually evaluated for impairment. 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 in the case of certain performing TDRs). For impaired loans on non-accrual status, either of the initial two measurements is utilized.

All TDRs are considered impaired loans and are evaluated individually for measurable impairment, if any. If a TDR is substantially performing in accordance with its restructured terms, management will look to either the present value of the expected cash flows from the debt service or the potential net liquidation proceeds of the underlying collateral in measuring impairment (whichever is deemed most appropriate under the circumstances). If a TDR has re-defaulted, the likely realizable net proceeds from either a note sale or the liquidation of the collateral are generally considered when measuring impairment. While measured impairment is generally charged off immediately, impairment attributed to a reduction in the present value of expected cash flows of a performing TDR is generally reflected as an allocated reserve within the allowance for loan losses. At March 31, 2019 and December 31, 2018, there were no allocated reserves related to TDRs within the allowance for loan losses.

Non-Impaired Loan Component

The Bank initially looks to the underlying collateral type when determining the allowance for loan losses associated with non-impaired real estate loans. The following underlying collateral types are analyzed separately: 1) one-to-four family residential and condominium or cooperative apartment; 2) multifamily residential and residential mixed-use; 3) commercial mixed-use real estate, 4) commercial real estate; 5) ADC; and 6) C&I. Within the analysis of each underlying collateral type, the following elements are additionally considered and provided weighting in determining the allowance for loan losses for non-impaired real estate loans:

(i)

Charge-off experience (including peer charge-off experience)

(ii)

Economic conditions

(iii)

Underwriting standards or experience

(iv)

Loan concentrations

(v)

Regulatory climate

(vi)

Nature and volume of the portfolio

(vii)

Changes in the quality and scope of the loan review function

Table of Contents

The following is a brief synopsis of the manner in which each element is considered:

(i)

Charge-off experience – Loans within the non-impaired loan portfolio are segmented by significant common characteristics, against which historical loss rates are applied to reflect probable incurred loss percentages. The Bank also reviews and considers the charge-off experience of peer banks in its lending marketplace in order to determine whether probable incurred losses that could take a longer period to flow through its allowance for loan losses possibly exist.

(ii)

Economic conditions – The Bank assigned a loss allocation to its entire non-impaired real estate loan portfolio based, in part, upon a review of economic conditions affecting the local real estate market. Specifically, the Bank considered both the level of, and recent trends in: 1) the local and national unemployment rate, 2) residential and commercial vacancy rates, 3) real estate sales and pricing, and 4) delinquencies in the Bank's loan portfolio.

(iii)

Underwriting standards or experience – Underwriting standards are reviewed to ensure that changes in the Bank's lending policies and practices are adequately evaluated for risk and reflected in its analysis of potential credit losses. Loss expectations associated with changes in the Bank's lending policies and practices, if any, are then incorporated into the methodology.

(iv)

Loan concentrations – The Bank regularly reviews its loan concentrations (borrower, collateral type, location, etc.) in order to ensure that heightened risk has not evolved that has not been captured through other factors. The risk component of loan concentrations is regularly evaluated for reserve adequacy.

(v)

Regulatory climate – Consideration is given to public statements made by the banking regulatory agencies that have a potential impact on the Bank's loan portfolio and allowance for loan losses.

(vi)

Nature and volume of the portfolio – The Bank considers any significant changes in the overall nature and volume of its loan portfolio.

(vii)

Changes in the quality and scope of the loan review function – The Bank considers the potential impact upon its allowance for loan losses of any adverse change in the quality and scope of the loan review function.

Consumer Loans

Due to their small individual balances, the Bank does not evaluate individual consumer loans for impairment. Loss percentages are applied to aggregate consumer loans based upon both their delinquency status and loan type. These loss percentages are derived from a combination of the Company's historical loss experience and/or nationally published loss data on such loans. Consumer loans in excess of 120 days delinquent are typically fully charged off against the allowance for loan losses.

Reserve for Loan Commitments

At both March 31, 2019 and December 31, 2018, respectively, the Bank maintained a reserve of $0.03 million associated with unfunded loan commitments accepted by the borrower. This reserve is determined based upon the outstanding volume of loan commitments at each period end. Any increases or reductions in this reserve are recognized in periodic non-interest expense.

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

	At or for the Three Months Ended March 31, 2019
	Real Estate Loans
	One-to-Four Family Residential, Including Condominium and Cooperative Apartment			Multifamily Residential and Residential Mixed-Use			Commercial Real Estate and Commercial Mixed-Use			ADC		Total Real Estate				C&I		Consumer Loans
Beginning balance	$	198		$	13,446		$	3,777		$	397	$	17,818		$	3,946		$	18
Provision (credit) for loan losses		4			(453	)		250			246		47			273			1
Charge-offs		(1	)		(5	)		(5	)		—		(11	)		(150	)		(1	)
Recoveries		—			—			—			—		—			—			—
Ending balance	$	201		$	12,988		$	4,022		$	643	$	17,854		$	4,069		$	18

Table of Contents

	At or for the Three Months Ended March 31, 2018
	Real Estate Loans
	One- to Four Family Residential, Including Condominium and Cooperative Apartment			Multifamily Residential and Residential Mixed-Use			Commercial Real Estate and Commercial Mixed-Use			ADC		Total Real Estate				C&I	Consumer Loans
Beginning balance	$	116		$	15,219		$	3,535		$	123	$	18,993		$	2,021	$	19
Provision (credit) for loan losses		—			(223	)		(13	)		3		(233	)		424		2
Charge-offs		(15	)		—			(4	)		—		(19	)		—		(4	)
Recoveries		1			—			—			—		1			—		—
Ending balance	$	102		$	14,996		$	3,518		$	126	$	18,742		$	2,445	$	17

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment evaluation method as of the dates indicated:

	At March 31, 2019
	Real Estate Loans												Consumer Loans
	One-to-Four Family Residential, Including Condominium and Cooperative Apartment		Multifamily Residential and Residential Mixed-Use		Commercial Real Estate and Commercial Mixed-Use		ADC		Total Real Estate			C&I	Consumer Loans
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	116	$	—
Collectively evaluated for impairment		201		12,988		4,022		643		17,854		3,953		18
Total ending allowance balance	$	201	$	12,988	$	4,022	$	643	$	17,854	$	4,069	$	18

Loans:
Individually evaluated for impairment	$	12	$	537	$	8,266	$	—	$	8,815	$	232	$	—
Collectively evaluated for impairment		107,697		3,830,608		1,237,540		54,222		5,230,067		266,183		1,139
Total ending loans balance	$	107,709	$	3,831,145	$	1,245,806	$	54,222	$	5,238,882	$	266,415	$	1,139

	At December 31, 2018
	Real Estate Loans
	One-to-Four Family Residential, Including Condominium and Cooperative Apartment		Multifamily Residential and Residential Mixed-Use		Commercial Real Estate and Commercial Mixed-Use		ADC		Total Real Estate			C&I	Consumer Loans
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	230	$	—
Collectively evaluated for impairment		198		13,446		3,777		397		17,818		3,716		18
Total ending allowance balance	$	198	$	13,446	$	3,777	$	397	$	17,818	$	3,946	$	18

Loans:
Individually evaluated for impairment	$	14	$	551	$	5,125	$	—	$	5,690	$	309	$	—
Collectively evaluated for impairment		96,833		3,866,237		1,164,960		29,402		5,157,432		229,195		1,192
Total ending loans balance	$	96,847	$	3,866,788	$	1,170,085	$	29,402	$	5,163,122	$	229,504	$	1,192

Table of Contents

The following table summarizes impaired loans recorded as of the dates indicated (by collateral type within the real estate loan segment):

	At March 31, 2019						At December 31, 2018
	Unpaid Principal Balance		Recorded Investment ⁽¹⁾		Related Allowance		Unpaid Principal Balance		Recorded Investment ⁽¹⁾		Related Allowance

With no related allowance recorded:
One-to-four family residential, including condominium and cooperative apartment	$	12	$	12	$	—	$	14	$	14	$	—
Multifamily residential and residential mixed-use		537		537		—		551		551		—
Commercial real estate and commercial mixed-use		8,266		8,266		—		5,125		5,125		—
Total with no related allowance recorded		8,815		8,815		—		5,690		5,690		—
With an allowance recorded:
C&I		232		232		116		309		309		230
Total with an allowance recorded		232		232		116		309		309		230
Total	$	9,047	$	9,047	$	116	$	5,999	$	5,999	$	230

(1)	The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.

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

	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018
	Average Recorded Investment ⁽¹⁾		Interest Income Recognized		Average Recorded Investment ⁽¹⁾		Interest Income Recognized

With no related allowance recorded:
One-to-four family residential, including condominium and cooperative apartment	$	13	$	—	$	21	$	—
Multifamily residential and residential mixed-use		544		13		611		12
Commercial real estate and commercial mixed-use		6,695		99		7,542		76
Total with no related allowance recorded		7,252		112		8,174		88

With an allowance recorded:
C&I		271		6		589		—
Total	$	7,523	$	118	$	8,763	$	88

(1)	The recorded investment excludes accrued interest receivable and loan origination fees, net, due to immateriality.

10.

LEASES

The Company adopted ASU 2016-02 on January 1, 2019. As a result of adoption, the Company recognized operating lease assets and corresponding lease liabilities related to its office facilities and retail branches. The operating lease assets represent the Company’s right to use an underlying asset for the lease term, and the lease liability represents the Company’s obligation to make lease payments over the lease term.

The operating lease asset and lease liability are determined at the commencement date of the lease based on the present value of the lease payments. As most of our leases do not provide an implicit rate, the Company used its incremental borrowing rate, the rate of interest to borrow on a collateralized basis for a similar term, at the lease commencement date.

The Company made a policy election to exclude the recognition requirements of ASU 2016-02 to short-term leases, those leases with original terms of 12 months or less. Short-term lease payments are recognized in the income statement on a straight-line basis over the lease term. Certain leases may include one or more options to renew. The exercise of lease renewal options is typically at the Company’s discretion, and are included in the operating lease liability if it is reasonably certain that the renewal option will be exercised. Certain real estate leases may contain lease and non-lease components, such as common area maintenance charges, real estate taxes, and insurance, which are generally accounted for separately and are not included in the measurement of the lease liability since they are generally able to be segregated. The Company does not sublease any of its leased properties. The Company does not lease properties from any related parties.

Table of Contents

Maturities of the Company's operating lease liabilities at March 31, 2019 are as follows:

	Rent to be Capitalized
2019	$	5,184
2020		6,807
2021		6,664
2022		6,362
2023		5,395
Thereafter		23,573
Total undiscounted lease payments		53,985
Less amounts representing interest		7,117
Lease liability	$	46,868

Other information related to our operating leases was as follows:

	At March 31, 2019
Operating lease cost	$	1,620
Cash paid for amounts included in the measurement of operating lease liabilities		1,712
Weighted average remaining lease term	8.55 years
Weighted average discount rate		3.28	%

11.	DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's loan portfolio.

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company uses derivatives to hedge the variable cash flows associated with existing or forecasted issuances of short term borrowings debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income (Loss) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's debt. During the next twelve months, the Company estimates that an additional $907 will be reclassified as a reduction to interest expense.

Table of Contents

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition as of the periods indicated.

	At March 31, 2019									At December 31, 2018
	Count		Notional Amount		Fair Value Assets		Fair Value Liabilities			Count		Notional Amount		Fair Value Assets		Fair Value Liabilities
Included in other assets/(liabilities):
Interest rate swaps related to FHLBNY advances		17	$	295,000	$	3,258	$	(3,970	)		14	$	245,000	$	4,669	$	(2,097	)

The table below presents the effect of the cash flow hedge accounting on Accumulated Other Comprehensive Income Loss as of March 31, 2019 and 2018.

	Three Months Ended March 31,
	2019			2018
Interest rate products
Amount of gain (loss) recognized in other comprehensive income	$	(2,928	)	$	2,081
Amount of loss reclassified from other comprehensive income into interest expense		(356	)		(65	)

The table below presents a gross presentation, the effects of offsetting of derivative assets, and a net presentation of the Company's derivatives for the periods indicated. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value in Note 12 provides the location that derivative assets and liabilities are presented on the Balance Sheet.

	At March 31, 2019
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets Presented in the Statement of Financial Position			Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
									Financial Instruments		Cash Collateral Received
FHLB Advances	$	3,258	$	(3,970	)	$	(712	)	$	—	$	—	$	(712	)

	At December 31, 2018
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position			Net Amounts of Assets Presented in the Statement of Financial Position		Gross Amounts Not Offset in the Statement of Financial Position				Net Amount
								Financial Instruments		Cash Collateral Received
FHLB Advances	$	4,669	$	(2,097	)	$	2,572	$	—	$	—	$	2,572

The Company's agreements with each of its derivative counterparties state that if the Company defaults on any of its indebtedness, it could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty.

The Company's agreements with certain of its derivative counterparties state that if the Bank fails to maintain its status as a well-capitalized institution, the Bank could be required to terminate its derivative positions with the counterparty.

As of March 31, 2019, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $(597). If the Company had breached any of the above provisions at March 31, 2019, it could have been required to settle its obligations under the agreements at the termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparty. There were no provisions breached for the period ended March 31, 2019.

Table of Contents

12.	FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 Inputs – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Significant other observable inputs such as any of the following: (1) quoted prices for similar assets or liabilities in active markets, (2) quoted prices for identical or similar assets or liabilities in markets that are not active, (3) inputs other than quoted prices that are observable for the asset or liability ( e.g. , interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates), or (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 Inputs – Significant unobservable inputs for the asset or liability. Significant unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Significant unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Securities

The Company's marketable equity securities and available-for-sale securities are reported at fair value, which were determined utilizing prices obtained from independent parties. The valuations obtained are based upon market data, and often utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, pricing applications apply available information such as benchmarking and matrix pricing. The market inputs normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (obtained only from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Prioritization of inputs may vary on any given day based on market conditions.

All securities available-for-sale are guaranteed either implicitly or explicitly by GSEs as of March 31, 2019 and December 31, 2018. Obtaining market values as of March 31, 2019 and December 31, 2018 for these securities utilizing significant observable inputs was not difficult due to their considerable demand.

Derivatives

Derivatives represent interest rate swaps and estimated fair values are based on valuation models using observable market data as of the measurement date.

The following tables present financial assets liabilities measured at fair value on a recurring basis as of the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Table of Contents

	Total		Fair Value Measurements at March 31, 2019 Using
	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Financial Assets
Marketable equity securities (Registered Mutual Funds):
Domestic Equity Mutual Funds	$	1,611	$	1,611	$	—	$	—
International Equity Mutual Funds		416		416		—		—
Fixed Income Mutual Funds		3,885		3,885		—		—
Securities available-for-sale:
Agency Notes		25,173		—		25,173		—
Corporate Securities		29,233		—		29,233		—
Pass-through MBS issued by GSEs		348,607		—		348,607		—
Agency CMOs		108,610		—		108,610		—
Loans Held for Sale		682		—		682		—
Derivative – interest rate product		3,258		—		3,258		—
Financial Liabilities
Derivative – interest rate product		3,970		—		3,970		—

	Total		Fair Value Measurements at December 31, 2018 Using
	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Financial Assets
Marketable Equity Securities (Registered Mutual Funds)
Domestic Equity Mutual Funds	$	1,420	$	1,420	$	—	$	—
International Equity Mutual Funds		377		377		—		—
Fixed Income Mutual Funds		3,870		3,870		—		—
Securities available-for-sale:
Agency Notes		25,145		—		25,145		—
Corporate Securities		11,135		—		11,135		—
Pass-through MBS issued by GSEs		354,613		—		354,613		—
Agency CMOs		111,992		—		111,992		—
Loans Held for Sale		1,097		—		1,097		—
Derivative – interest rate product		4,669		—		4,669		—
Financial Liabilities
Derivative – interest rate product		2,097		—		2,097		—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis. That is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment), and are subject to fair value adjustments. Financial assets measured at fair value on a non-recurring basis include certain impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.

Financial Instruments Not Measured at Fair Value

The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 23 to the Company's Consolidated Financial Statements included in the Annual Report on Form 10-K. Other borrowings consists of overnight or short-term borrowings carried at amortized cost, equal to the amount payable on demand at the reporting date (deemed a Level 1 valuation).

The following tables present the carrying amounts and estimated fair values of financial instruments other than those measured at fair value on either a recurring or non-recurring is as follows for the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Table of Contents

	Carrying Amount		Fair Value Measurements at March 31, 2019 Using
	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total

Financial Assets
Cash and due from banks	$	143,473	$	143,473	$	—	$	—	$	143,473
Loans, net		5,484,495		—		—		5,410,989		5,410,989
Accrued interest receivable		18,868		27		1,664		17,177		18,868
Financial Liabilities
Savings, money market and checking accounts		2,826,844		2,826,844		—		—		2,826,844
Certificates of Deposits ("CDs")		1,580,778		—		1,577,338		—		1,577,338
Escrow and other deposits		137,116		137,116		—		—		137,116
FHLBNY Advances		1,087,325		—		1,085,118		—		1,085,118
Subordinated debt, net		113,796		—		112,089		—		112,089
Other borrowings		45,000		45,000		—		—		45,000
Accrued interest payable		4,352		10		4,342		—		4,352

	Carrying Amount		Fair Value Measurements at December 31, 2018 Using
	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Financial Assets
Cash and due from banks	$	147,256	$	147,256	$	—	$	—	$	147,256
Loans, net		5,372,036		—		—		5,301,281		5,301,281
Accrued interest receivable		17,875		—		1,296		16,579		17,875
Financial Liabilities		—		—		—		—		—
Savings, money market and checking accounts		2,946,717		2,946,717		—		—		2,946,717
CDs		1,410,037		—		1,407,747		—		1,407,747
Escrow and other deposits		85,234		85,234		—		—		85,234
FHLBNY Advances		1,125,350		—		1,119,548		—		1,119,548
Subordinated debt, net		113,759		—		110,346		—		110,346
Accrued interest payable		2,710		—		2,710		—		2,710

13.	RETIREMENT AND POSTRETIREMENT PLANS

The Holding Company or the Bank maintains the Retirement Plan of Dime Community Bank (the "Employee Retirement Plan"), the Retirement Plan for Board Members of Dime Community Bancshares, Inc. (the "Outside Director Retirement Plan"), the BMP, and the Postretirement Welfare Plan of Dime Community Bank (the "Postretirement Plan").

The Company adopted ASU 2017-07 , Compensation-Retirement Benefits (Topic 715), on January 1, 2018. The components of net periodic costs are included in other non-interest expense in the Consolidated Statements of Operations. Net expenses associated with these plans were comprised of the following components:

	Three Months Ended March 31,
	2019						2018
	BMP, Employee and Outside Director Retirement Plans			Postretirement Plan			BMP, Employee and Outside Director Retirement Plans			Postretirement Plan

Service cost	$	—		$	—		$	—		$	—
Interest cost		313			14			292			14
Expected return on assets		(382	)		—			(430	)		—
Unrecognized past service liability		—			(2	)		—			(2	)
Amortization of unrealized loss (gain)		243			(3	)		289			—
Net periodic cost	$	174		$	9		$	151		$	12

Table of Contents

The following table presents the Company's planned contributions to, or benefit payments on behalf of each benefit plan as disclosed in its consolidated financial statements for the year ended December 31, 2018, as well as the actual contributions to, or benefit payments on behalf of each benefit plan during the period indicated:

	Planned Contributions/Benefit Payments for the Year Ended December 31, 2019		Actual Contributions/Benefit Payments for the Three Months Ended March, 31, 2019

Employee Retirement Plans	$	1,492	$	—
Outside Director Retirement Plans		225		56
Post Retirement Plan		109		44
BMP		564		137

The Company expects to make the remainder of the contributions to, or benefit payments on behalf of, each benefit plan during 2019.

The BMP exists in order to compensate executive officers for any curtailments in benefits due to statutory limitations on qualifying benefit plans. In addition to benefit payments from the defined benefit component of the BMP discussed above, the following distributions were made to retired participants:

	For the Three Months Ended March 31,
	2019		2018

Cash	$	—	$	257
Market value of Common Stock from Employee Stock Ownership Plan of BMP (22,051 shares for March 31, 2018)		—		942
Gross lump-sum distribution	$	—	$	1,199
Non-cash tax benefit	$	—	$	285

14.	ACCOUNTING FOR STOCK BASED COMPENSATION

The Company maintains the Dime Community Bancshares, Inc. 2001 Stock Option Plan for Outside Directors, Officers and Employees, the 2004 Stock Incentive Plan and the 2013 Equity and Incentive Plan ("2013 Equity Plan") (collectively, the "Stock Plans"), which are discussed more fully in Note 21 to the Company's Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2018, and which are subject to the accounting requirements of ASC 505-50 and ASC 718.

Stock Option Awards

The following table presents a summary of activity related to stock options granted under the Stock Plans, and changes during the period then ended:

	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Years		Aggregate Intrinsic Value
Options outstanding at January 1, 2019		72,395	$	13.58
Options granted		—		—
Options expired		—		—
Options exercised		—		—
Options outstanding at March 31, 2019		72,395	$	13.58		1.7	$	373
Options vested and exercisable at March 31, 2019		72,395	$	13.58		1.7	$	373

Table of Contents

Information related to stock options during each period is as follows:

	For the Three Months Ended March 31,
	2019		2018
Cash received for option exercise cost	$	—	$	290
Income tax benefit recognized on stock option exercises		—		4
Intrinsic value of options exercised		—		97

Restricted Stock Awards

The Company has made restricted stock award grants to outside Directors and certain officers under the Stock Plans. Typically, awards to outside Directors fully vest on the first anniversary of the grant date, while awards to officers may vest in equal annual installments over a four-year period or at the end of the pre-determined requisite period. All awards were made at the fair value of Common Stock on the grant date. Compensation expense on all restricted stock awards are based upon the fair value of the shares on the respective dates of the grant.

The following table presents a summary of activity related to the RSAs granted, and changes during the period then ended:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Unvested allocated shares outstanding at January 1, 2019		148,235		$	19.48
Shares granted		11,584			17.24
Shares vested		(4,329	)		20.50
Shares forfeited		(3,743	)		19.45
Unvested allocated shares at March 31, 2019		151,747		$	19.28

Information related to restricted stock awards during each period is as follows:

	At or for the Three Months Ended March 31,
	2019			2018
Compensation expense recognized	$	289		$	304
Income tax benefit (expense) recognized on vesting of RSA		(3	)		(2	)
Weighted average remaining years for which compensation expense is to be recognized		2.4			2.7

Performance Based Equity Awards

The Company established the LTIP, a long term incentive award program for certain officers, which meets the criteria for equity-based accounting. For each award, threshold (50% of target), target (100% of target) and maximum (150% of target) opportunities are eligible to be earned over a three-year performance period based on the Company's relative performance on certain goals that were established at the onset of the performance period and cannot be altered subsequently. Shares of Common Stock are issued on the grant date and held as unvested stock awards until the end of the performance period. They are issued at the maximum opportunity in order to ensure that an adequate number of shares are allocated for shares expected to vest at the end of the performance period.

The following table presents a summary of activity related to performance based equity awards, and changes during the period then ended:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Maximum aggregate share payout at January 1, 2019		120,880		$	18.90
Shares granted		138,562			19.18
Shares vested		(2,276	)		17.35
Shares forfeited		(2,574	)		17.35
Maximum aggregate share payout at March 31, 2019		254,592		$	19.08
Minimum aggregate share payout		—			—
Expected aggregate share payout		112,388		$	19.28

Table of Contents

Compensation expense recorded for performance based equity awards was $(75) and $84 for the three-month periods ended March 31, 2019 and March 31, 2018, respectively.

Sales Incentive Awards

The Company established the SIP, a sales incentive award program for certain officers, which meets the criteria for equity-based accounting. For each quarter an individual can earn their shares based on their sales performance in that quarter. The shares then vest one year from the quarter in which they are earned. Shares of Common Stock are issued on the grant date and held as unvested stock awards until the end of the performance period. They are issued at the maximum opportunity in order to ensure that an adequate number of shares are allocated for shares expected to vest at the end of the performance period.

The following table presents a summary of activity related to performance based equity awards, and changes during the period then ended:

	Number of Shares			Weighted-Average Grant-Date Fair Value
Maximum aggregate share payout at January 1, 2019		8,151		$	18.40
Shares granted		—			—
Shares vested		—			—
Shares forfeited		(5,500	)		18.40
Maximum aggregate share payout at March 31, 2019		2,651		$	18.40
Minimum aggregate share payout		—			—
Expected aggregate share payout		2,651		$	18.40

Compensation expense recorded for sales incentive based equity awards was $70 for the three-month period ended March 31, 2019. No compensation expense was recognized for the three-month period ended March 31, 2018.

15.	OTHER BORROWINGS

Other borrowings consists of overnight or short-term borrowings with member commercial banks within a network of financial institutions. The availability of funds changes daily. As of March 31, 2019, the Bank had $45,000 of such borrowings outstanding. Interest expense for the three month period ended March 31, 2019 was $65. There was no activity during 2018.

16.	INCOME TAXES

During the three months ended March 31, 2019 and 2018, the Company's consolidated effective tax rates were 24.9% and 23.7%, respectively. There were no significant unusual income tax items during the three-month periods ended either March 31, 2019 or 2018.

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

General

Table of Contents

The Bank was originally founded in 1864 as a New York State-chartered mutual savings bank, and operate as a New York State-chartered stock savings bank until April 2019. Effective August 1, 2016, the Bank changed its name from The Dime Savings Bank of Williamsburgh to Dime Community Bank. The new name more accurately reflects the Bank's evolving business model and emphasizes its broader geographic and business reach while retaining the Bank's mission to be in and of the communities it serves, including the virtual online community. The Bank's principal business is gathering deposits from customers within its market area and via the internet, and investing them primarily in multifamily residential, commercial real estate, mixed use, and, to an increasing extent, commercial and industrial (“C&I”) loans, and one-to-four family residential real estate loans, as well as mortgage-backed securities, obligations of the U.S. government and government- sponsored enterprises (“GSEs”), and corporate debt and equity securities.

In addition to the Bank, the Holding Company's direct and indirect subsidiaries consist of seven corporations, which are wholly-owned by the Bank. The following table presents an overview of the Holding Company's indirect subsidiaries, other than the Bank, as of March 31, 2019:

Direct Subsidiaries of the Bank	Year/ State of Incorporation	Primary Business Activities
Boulevard Funding Corp.	1981 / New York	Management and ownership of real estate
Dime Insurance Agency Inc. ( f/k/a Havemeyer Investments, Inc.)	1997 / New York	Sale of non-FDIC insured investment products
DSBW Preferred Funding Corp.	1998 / Delaware	Real Estate Investment Trust investing in multifamily residential and commercial real estate loans
DSBW Residential Preferred Funding Corp.	1998 / Delaware	Real Estate Investment Trust investing in one-to-four family residential loans
Dime Reinvestment Corporation	2004 / Delaware	Community Development Entity. Currently inactive.
195 Havemeyer Corp.	2008 / New York	Management and ownership of real estate. Currently inactive.
DSB Holdings NY, LLC	2015 / New York	Management and ownership of real estate. Currently inactive.

Executive Summary

The Holding Company’s primary business is the ownership of the Bank. The Company’s consolidated results of operations are dependent primarily on net interest income, which is the difference between the interest income earned on interest-earning assets, such as loans and securities, and the interest expense paid on interest-bearing liabilities, such as deposits and borrowings. The Bank additionally generates non-interest income such as service charges and other fees, mortgage banking related income, and income associated with bank owned life insurance (“BOLI”). Non-interest expense primarily consists of employee compensation and benefits, federal deposit insurance premiums, data processing costs, occupancy and equipment, marketing and other operating expenses. The Company’s consolidated results of operations are also significantly affected by general economic and competitive conditions (particularly fluctuations in market interest rates), government policies, changes in accounting standards and actions of regulatory agencies.

The Bank’s primary deposit strategy is generally to increase its product and service utilization for each depositor, and to increase its household and deposit market shares in the communities that it serves. In recent years, particular emphasis has been placed upon growing individual and small business commercial checking account balances. The Bank also actively strives to obtain checking account balances affiliated with the operation of the collateral underlying its real estate and C&I loans, as well as personal deposit accounts from its borrowers. Historically, the Bank’s primary lending strategy included the origination of, and investment in, real estate loans secured by multifamily and mixed-use properties, and, to a lesser extent, real estate loans secured by commercial real estate properties, primarily located in the greater NYC metropolitan area. As part of its strategic plan for 2019, the Bank is investing in the development of its Business Banking division, by adding products and services to serve both the credit and business banking needs in its footprint.

The Business Banking division is focused on total relationship banking and will enable the Bank to diversify its loan portfolio into areas such as C&I loans, Small Business Administration (“SBA”) loans (a portion of which is guaranteed by the SBA), ADC loans, finance loans and leases, one-to-four family loans and consumer loans. These business lines are intended to supplement core deposit growth and provide greater funding diversity. In the first quarter of 2017, the Bank hired seasoned executives, and bolstered its lending and credit and administrative staff. In the third quarter of 2017, the Bank was approved by the SBA as a lender, and in December 2018 the Bank received “Preferred Lender” status from the SBA, thus better positioning the Business Banking division for future expansion.

Additionally, during the year ended December 31, 2018, the Bank resumed offering one-to-four family loan products.

The Bank also purchases securities primarily for liquidity purposes as defined by the Bank's investment policy. The Bank seeks to maintain the asset quality of its loans and other investments, and uses portfolio and asset/liability management techniques in an effort to manage the effects of interest rate volatility on its profitability and capital.

Table of Contents

Selected Financial Highlights and Other Data

(Dollars in Thousands Except Per Share Amounts)

	At or For the Three Months Ended March 31,
	2019			2018
Per Share Data:
EPS (Diluted)	$	0.32		$	0.39
Cash dividends paid per share		0.14			0.14
Book value per share		16.83			16.22
Dividend payout ratio		43.75	%		35.90	%
Performance and Other Selected Ratios:
Return on average assets		0.72	%		0.93	%
Return on average common equity		7.62			9.77
Net interest spread		2.02			2.28
Net interest margin		2.31			2.47
Average interest earning assets to average interest-bearing liabilities		118.14			115.84
Non-interest expense to average assets		1.39			1.36
Efficiency ratio		59.22			54.60
Loan-to-deposit ratio at end of period		124.93			124.31
Effective tax rate		24.88			23.73
Asset Quality Summary:
Non-performing loans	$	5,425		$	1,719
Non-performing assets		5,425			1,719
Net charge-offs		162			23
Non-performing loans/Total loans		0.10	%		0.03	%
Non-performing assets/Total assets		0.08			0.03
Allowance for loan loss/Total loans		0.40			0.39
Allowance for loan loss/Non-performing loans		404.44			1,233.51

Critical Accounting Policies

The Company's policies with respect to the methodologies it uses to determine the allowance for loan losses (including reserves for loan commitments), are its most critical accounting policies because they are important to the presentation of the Company's consolidated financial condition and results of operations, involve a significant degree of complexity and require management to make difficult and subjective judgments which often necessitate assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions or estimates could result in material variations in the Company's consolidated results of operations or financial condition.

Allowance for Loan Losses. The Bank's methods and assumptions utilized to periodically determine its allowance for loan losses are summarized in Note 9 to the Company's condensed consolidated financial statements.

Liquidity and Capital Resources

The Board of Directors of the Bank has approved a liquidity policy that it reviews and updates at least annually. Senior management is responsible for implementing the policy. The Bank's ALCO is responsible for general oversight and strategic implementation of the policy and management of the appropriate departments are designated responsibility for implementing any strategies established by ALCO. On a daily basis, appropriate senior management receives a current cash position report and one-week forecast to ensure that all short-term obligations are timely satisfied and that adequate liquidity exists to fund future activities. Reports detailing the Bank's liquidity reserves and forecasted cash flows are presented to appropriate senior management on a monthly basis, and the Board of Directors at each of its meetings. In addition on a monthly basis, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors on an annual basis.

The Bank's primary sources of funding for its lending and investment activities include deposits, loan and MBS payments, investment security principal and interest payments and advances from the FHLBNY. The Bank may also sell or securitize selected multifamily residential, mixed-use or one-to-four family residential real estate loans to private sector secondary market purchasers, and has in the past sold such loans to FNMA and FHLMC. The Company may additionally issue debt under appropriate circumstances. Although maturities and scheduled amortization of loans and investments are predictable sources of funds, deposit flows and prepayments on real estate loans and MBS are influenced by interest rates, economic conditions and competition.

Table of Contents

In December 2018, the Bank became a member of the American Financial Exchange ("AFX"), through which it may either borrow or lend funds on an overnight or short-term basis with other member institutions. The availability of funds changes daily. As of March 31, 2019, the Bank had $45.0 million of borrowings through AFX.

The Bank gathers deposits in direct competition with commercial banks, savings banks and brokerage firms, many among the largest in the nation. It must additionally compete for deposit monies against the stock and bond markets, especially during periods of strong performance in those arenas. The Bank's deposit flows are affected primarily by the pricing and marketing of its deposit products compared to its competitors, as well as the market performance of depositor investment alternatives such as the U.S. bond or equity markets. To the extent that the Bank is responsive to general market increases or declines in interest rates, its deposit flows should not be materially impacted. However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.

Total deposits increased $50.9 million during the three months ended March 31, 2019, compared to an increase of $27.0 million for the three months ended March 31, 2018. Within deposits, core deposits ( i.e., non-CDs) decreased $119.9 million during the three months ended March 31, 2019 and decreased $105.6 million during the three months ended March 31, 2018. CDs increased $170.7 million during the three months ended March 31, 2019 compared to an increase of $132.6 million during the three months ended March 31, 2018. The increase in deposits during the current period was primarily due to successful gathering efforts tied to CD products, offset by declines in money market deposits.

In the event that the Bank should require funds beyond its ability or desire to generate them internally, an additional source of funds is available through its borrowing line at the FHLBNY. At March 31, 2019, the Bank had an additional potential borrowing capacity of $988.4 million through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements ( i.e. , 4.5% of the Bank's outstanding FHLBNY borrowings).

The Bank reduced its outstanding FHLBNY advances by $38.0 million during the three months ended March 31, 2019, compared to a $159.6 million reduction during the three months ended March 31, 2018, reflecting deposit inflows.

During the three months ended March 31, 2019, principal repayments on real estate loans (including refinanced loans) tota led $150.5 million compared to $183.1 million during the three months ended March 31, 2018. The decrease resulted primarily from lower prepayment activity. During the three months ended March 31, 2019 and 2018, real estate loan originations totaled $233.9 million and $75.0 million, respectively.

Sales of mortgage-backed securities total ed $15.5 million and $158.5 mil lion during the three-month periods ended March 31, 2019 and 2018, respectively. Purchases of mortgage-backed securities totaled $20.3 million and $189.9 million during the three-month periods ended March 31, 2019 and 2018 respectively. Proceeds from pay downs were $18.5 million and $25.0 million for the three-month periods ended March 31, 2019 and 2018, respectively.

The Company and the Bank are subject to minimum regulatory capital requirements imposed by its primary federal regulator. As a general matter, these capital requirements are based on the amount and composition of an institution's assets. At March 31, 2019, each of the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered "well-capitalized" for all regulatory purposes.

The following table summarizes Company and Bank capital ratios calculated under the Basel III Capital Rules framework as of March 31, 2019:

	Actual Ratios at March 31, 2019						Basel III
	Bank			Consolidated Company			Minimum Requirement			Minimum Requirement Plus 2.5% Buffer ⁽¹⁾			Well Capitalized Requirement Under FDIC Prompt Corrective Action Framework ⁽²⁾
Tier 1 common equity ratio		12.39	%		11.04	%		4.50	%		7.0	%		6.5	%
Tier 1 risk-based based capital ratio		12.39			11.04			6.0			8.5			8.0
Total risk-based based capital ratio		12.84			13.77			8.0			10.5			10.0
Tier 1 leverage ratio		9.77			8.81			4.00			n/a			5.0

(1)	The 2.5% buffer percentage represents the fully phased-in requirement as of January 1, 2019.

(2)	Only the Bank is subject to these requirements.

Implementation of the Basel III Capital Rules on January 1, 2019 did not have a material impact upon the operations of the Bank or Holding Company.

Table of Contents

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%. A financial institution can elect to be subject to this new definition.

The Holding Company repurchased 199,254 shares of its common stock during the three months ended March 31, 2019. No shares were repurchased during the three months ended March 31, 2018. As of March 31, 2019, up to 1,267,886 shares remained available for purchase under authorized share purchase programs. See "Part II - Item 2. Other Information - Unregistered Sales of Equity Securities and Use of Proceeds" for additional information about repurchases of common stock.

The Holding Company paid $5.0 million and $5.2 million in cash dividends on common stock during the three months ended March 31, 2019 and 2018, respectively.

Contractual Obligations

The Bank is obligated to make rental payments under leases on certain of its branches and equipment. In addition, the Bank generally has outstanding at any time significant borrowings in the form of FHLBNY advances, as well as customer CDs with fixed contractual interest rates.

Off-Balance Sheet Arrangements

As part of its loan origination business, the Bank generally has outstanding commitments to extend credit to third parties, which are granted pursuant to its regular underwriting standards. Since these loan commitments may expire prior to funding, in whole or in part, the contract amounts are not estimates of future cash flows.

The following table presents off-balance sheet arrangements as of March 31, 2019:

	Less than One Year		One Year to Three Years		Over Three Years to Five Years		Over Five Years		Total
	(Dollars in thousands)
Credit Commitments:
Available lines of credit	$	212,650	$	—	$	—	$	—	$	212,650
Other loan commitments		120,515		—		—		—		120,515
Stand-by letters of credit		2,011		—		—		—		2,011
Total Off-Balance Sheet Arrangements	$	335,176	$	—	$	—	$	—	$	335,176

Asset Quality

General

The Bank does not originate or purchase loans, either whole loans or loans underlying mortgage-backed securities (“MBS”), which would have been considered subprime loans at origination, i.e ., real estate loans advanced to borrowers who did not qualify for market interest rates because of problems with their income or credit history. See Note 6 to the Company’s Consolidated Financial Statements for a discussion of evaluation for impaired investment securities and MBS.

Monitoring and Collection of Delinquent Loans

Management of the Bank reviews delinquent loans on a monthly basis and reports to its Board of Directors at each regularly scheduled Board meeting regarding the status of all non-performing and otherwise delinquent loans in the Bank's portfolio.

The Bank's loan servicing policies and procedures require that an automated late notice be sent to a delinquent borrower as soon as possible after a payment is ten days late in the case of multifamily residential, commercial real estate loans, and C&I loans, or fifteen days late in connection with one-to-four family or consumer loans. A second letter is sent to the borrower if payment has not been received within 30 days of the due date, or 32 days for one-to-four family loans serviced by the subservicer. Thereafter, periodic letters are mailed and phone calls placed to the borrower until payment is received. When contact is made with the borrower at any time prior to foreclosure, the Bank will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

Table of Contents

Accrual of interest is generally discontinued on a loan that meets any of the following three criteria: (i) full payment of principal or interest is not expected; (ii) principal or interest has been in default for a period of 90 days or more (unless the loan is both deemed to be well secured and in the process of collection); or (iii) an election has otherwise been made to maintain the loan on a cash basis due to deterioration in the financial condition of the borrower. Such non-accrual determination practices are applied consistently to all loans regardless of their internal classification or designation. Upon entering non-accrual status, the Bank reverses all outstanding accrued interest receivable.

The Bank generally initiates foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, and typically does not accept partial payments once foreclosure proceedings have commenced. At some point during foreclosure proceedings, the Bank procures current appraisal information in order to prepare an estimate of the fair value of the underlying collateral. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure action is completed, the property securing the loan is transferred to Other Real Estate Owned (“OREO”) status. The Bank generally attempts to utilize all available remedies, such as note sales in lieu of foreclosure, in an effort to resolve non-accrual loans and OREO properties as quickly and prudently as possible in consideration of market conditions, the physical condition of the property and any other mitigating circumstances. In the event that a non-accrual loan is subsequently brought current, it is returned to accrual status once the doubt concerning collectability has been removed and the borrower has demonstrated performance in accordance with the loan terms and conditions for a period of at least six months.

The C&I portfolio is actively managed by the Bank's lenders and underwriters. All credit facilities at a minimum require an annual review of the exposure and typically terms of the loan require annual and interim financial reporting and have financial covenants to indicate expected performance levels. Guarantors are also required to, at a minimum, annually update their financial reporting. All exposures are risk rated and those entering adverse ratings due to financial performance concerns of the borrower or material delinquency of any payments or financial reporting are subjected to added management scrutiny. Measures taken typically include amendments to the amount of the available credit facility, requirements for increased collateral, a request for a capital infusion, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are subject to quarterly updating to Credit Administration and executive management. When warranted, loans reaching a Substandard rating could be reassigned to Credit Administration for direct handling.

Non-accrual Loans

Within the Bank's held-for-investment loan portfolio (excluding consumer loans), eighteen non-accrual loans totaled $5.4 million at March 31, 2019, and sixteen non-accrual loans totaled $2.3 million at December 31, 2018. During the three months ended March 31, 2019, five loans totaling $3.4 million were placed on non-accrual status, two loans totaling $0.1 million were returned to accrual status, one loan totaling $0.2 million was fully charged off, and principal amortization of $0.04 million was recognized on eight non-accrual loans. There were no changes on the remaining five non-accrual loans during the three-month period ended March 31, 2019.

Impaired Loans

The recorded investment in loans deemed impaired (as defined in Note 9 to the condensed consolidated financial statements) totaled $9.0 million, consisting of fifteen loans, at March 31, 2019, compared to $6.0 million, consisting of thirteen loans, at December 31, 2018. During the three months ended March 31, 2019, five loans totaling $3.4 million were added to impaired status, two loans totaling $0.1 million were removed from impaired status, one loan totaling $0.02 million was fully charged off, and principal amortization totaling $0.07 million was recognized on eight impaired loans.

Table of Contents

The following is a reconciliation of non-accrual and impaired loans as of the dates indicated:

	March 31, 2019			December 31, 2018
	(Dollars in Thousands)
Non-accrual loans ⁽¹⁾ :
One-to-four family residential, including condominium and cooperative apartment	$	706		$	712
Multifamily residential and residential mixed-use real estate		276			280
Commercial real estate and commercial mixed-use		4,205			1,041
C& I		232			309
Consumer		6			3
Total non-accrual loans		5,425			2,345
Non-accrual one-to-four family residential and consumer loans deemed homogeneous loans		(712	)		(715	)
TDRs:
One-to-four family residential, including condominium and cooperative apartment		12			14
Multifamily residential and residential mixed-use real estate		261			271
Commercial real estate and commercial mixed-use		4,061			4,084
Total TDRs		4,334			4,369
Impaired loans	$	9,047		$	5,999

(1)	There were no non-accruing TDRs for the periods indicated.

Ratios:
Total non-accrual loans to total loans	0.10	%	0.04	%
Total non-performing assets to total assets	0.08		0.04

TDRs

Under ASC 310-40-15, the Bank is required to recognize loans for which certain modifications or concessions have been made as TDRs. A TDR has been created in the event that, for economic or legal reasons, any of the following concessions has been granted that would not have otherwise been considered to a debtor experiencing financial difficulties. The following criteria are considered concessions:

●

A reduction of interest rate has been made for the remaining term of the loan

●

The maturity date of the loan has been extended with a stated interest rate lower than the current market rate for new debt with similar risk

●

The outstanding principal amount and/or accrued interest have been reduced

In instances in which the interest rate has been reduced, management would not deem the modification a TDR in the event that the reduction in interest rate reflected either a general decline in market interest rates or an effort to maintain a relationship with a borrower who could readily obtain funds from other sources at the current market interest rate, and the terms of the restructured loan are comparable to the terms offered by the Bank to non-troubled debtors. The Bank did not modify any loans in a manner that met the criteria for a TDR during the three months ended March 31, 2019 or 2018.

Accrual status for TDRs is determined separately for each TDR in accordance with the Bank's policies for determining accrual or non-accrual status. At the time an agreement is entered into between the Bank and the borrower that results in the Bank's determination that a TDR has been created, the loan can be on either accrual or non-accrual status. If a loan is on non-accrual status at the time it is restructured, it continues to be classified as non-accrual until the borrower has demonstrated compliance with the modified loan terms for a period of at least three months. Conversely, if at the time of restructuring the loan is performing (and accruing) it will remain accruing throughout its restructured period, unless the loan subsequently meets any of the criteria for non-accrual status under the Bank's policy and agency regulations.

The Bank does not accept receivables or equity interests in satisfaction of TDRs.

Table of Contents

At March 31, 2019 and December 31, 2018, all TDRs but one were collateralized by real estate that generated rental income. For TDRs that demonstrated conditions sufficient to warrant accrual status, the present value of the expected net cash flows of the underlying property was utilized as the primary means of determining impairment. Any shortfall in the present value of the expected cash flows calculated at each measurement period (typically quarter-end) compared to the present value of the expected cash flows at the time of the original loan agreement was recognized as either an allocated reserve (in the event that it related to lower expected interest payments) or a charge-off (if related to lower expected principal payments). For TDRs on non-accrual status, an appraisal of the underlying real estate collateral is deemed the most appropriate measure to utilize when evaluating impairment and any shortfall in valuation from the recorded balance is accounted for through a charge-off. In the event that either an allocated reserve or a charge-off is recognized on TDRs, the periodic loan loss provision is impacted.

Please refer to Note 8 to the condensed consolidated financial statements for a further discussion of TDRs.

OREO

Property acquired by the Bank, or a subsidiary, as a result of foreclosure on a mortgage loan or a deed in lieu of foreclosure is classified as OREO. Upon entering OREO status, the Bank obtains a current appraisal on the property and reassesses the likely realizable value ( a/k/a fair value) of the property quarterly thereafter. OREO is carried at the lower of the fair value or book balance, with any write downs recognized through a provision recorded in non-interest expense. Only the appraised value, or either a contractual or formal marketed value that falls below the appraised value, is used when determining the likely realizable value of OREO at each reporting period. The Bank typically seeks to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.

The Bank had no OREO properties at March 31, 2019 or December 31, 2018. The Bank did not recognize any provisions for losses on OREO properties during the three months ended March 31, 2019 or 2018.

Boards:

Quotes:

Boards

News

Market Data

Markets

Discover

DCOM Dime Community Bancshares Inc

Latest DCOM Messages

Loading Messages....

Dime Community Bancshares Inc News

Loading Messages....

Your Recent History

	March 31, 2019		December 31, 2018		March 31, 2018
	(Dollars in Thousands)
Impaired loans	$	116	$	230	$	294
Non-impaired loans:
Real estate loans		17,854		17,818		18,742
C&I loans		3,953		3,716		2,151
Consumer loans		18		18		17
Total	$	21,941	$	21,782	$	21,204

	Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018 Increase/ (Decrease) Due to:
	Volume			Rate			Total
	(Dollars In thousands)
Interest-earning assets:
Real estate loans	$	(2,242	)	$	1,844		$	(398	)
C&I loans		1,377			403			1,780
Other loans		(2	)		1			(1	)
MBS and CMO securities		755			185			940
Investment securities		228			177			405
Other		(460	)		396			(64	)
Total	$	(344	)	$	3,006		$	2,662

Interest-bearing liabilities:
Interest-bearing checking accounts	$	(3	)	$	(29	)	$	(32	)
Money market accounts		(1,301	)		2,623			1,322
Savings accounts		(5	)		(9	)		(14	)
CDs		1,377			1,613			2,990
Borrowed funds		(55	)		1,142			1,087
Total	$	13		$	5,340		$	5,353
Net change in net interest income	$	(357	)	$	(2,334	)	$	(2,691	)

	At March 31, 2019							At December 31, 2018
	EVE		Dollar Change		Percentage Change			EVE		Dollar Change			Percentage Change
Rate Shock Scenario	(Dollars in Thousands)
+ 200 Basis Points	$	610,878	$	14,100		2.4	%	$	643,531	$	(27,967	)		(4.2	)%
Pre-Shock Scenario		596,777		—		—			671,498		—			—

Gradual Change in Interest rates of:	Percentage Change in Net Interest Income
+ 200 Basis Points		(2.5	)%
+ 100 Basis Points		(1.3	)%

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that May Yet be Purchased Under the Programs
January 2019		76,000		17.76		76,000		1,397,140
February 2019		53,254		20.24		53,254		1,321,140
March 2019		70,000		19.96		70,000		1,267,886

Exhibit Number

3.1	Amended and Restated Certificate of Incorporation of Dime Community Bancshares, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant's Transition Report on Form 10-K for the transition period ended December 31, 2002, filed with the SEC on March 28, 2003 (File No. 000-27782))
3.2	Amended and Restated Bylaws of Dime Community Bancshares, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K, filed with the SEC on September 28, 2018 (File No. 000-27782))
4.1	Draft Stock Certificate of Dime Community Bancshares, Inc. (incorporated by reference to Exhibit 4.3 to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, filed with the SEC on September 28, 1998 (File No. 000-27782))
4.2	Indenture, dated as of June 13, 2017, by and between Dime Community Bancshares, Inc. and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 13, 2017 (File No. 000-27782))
4.3	First Supplemental Indenture, dated as of June 13, 2017, by and between Dime Community Bancshares, Inc. and Wilmington Trust, National Association, as Trustee, including the form of 4.50% fixed-to-floating rate subordinated debentures due 2027 (incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 13, 2017 (File No. 000-27782))
4.4	Change in Control Employment Agreement between Dime Community Bancshares, Inc. and Conrad Gunther
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350
101	Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2019 is formatted in XBRL (Extensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Financial Condition (Unaudited), (ii) the Consolidated Statements of Income f(Unaudited), (iii) the Consolidated Statements of Comprehensive Income (Unaudited), (iv) the Consolidated Statements of Changes in Stockholders' Equity (Unaudited), (v) the Consolidated Statements of Cash Flows (Unaudited), and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements **

Dated: May 10, 2019	By:	/s/ KENNETH J. MAHON
		Kenneth J. Mahon
		President and Chief Executive Officer

Dated: May 10, 2019	By:	/s/ AVINASH REDDY
		Avinash Reddy
		Executive Vice President and Chief Financial Officer