Quarterly Report (10-q)

Three Months Ended

March 31,

(In thousands)

Loan level derivative income

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Table of Contents

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, 2023

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

For the transition period from to

Commission file number 001-34096

DIME COMMUNITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

N/A

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


New York		11-2934195
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

898 Veterans Memorial Highway, Suite 560, Hauppauge, NY		11788
(Address of principal executive offices)		(Zip Code)

(631) 537-1000

(Registrant’s telephone number, including area code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	DCOM	The NASDAQ Stock Market
Preferred Stock, Series A, $0.01 Par Value	DCOMP	The NASDAQ Stock Market

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

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

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


Large Accelerated Filer ☒	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller Reporting Company ☐
	Emerging Growth Company ☐

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

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

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


Classes of Common Stock		Number of shares outstanding at April 30, 2023
$0.01 Par Value		38,809,466

Table of Contents


PART I – FINANCIAL INFORMATION		Page
Item 1.	Unaudited Condensed Consolidated Financial Statements
	Consolidated Statements of Financial Condition at March 31, 2023 and December 31, 2022	4
	Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	5
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022	6
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	7
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	51

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
	Signatures	55

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:

●

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

●

inflation and fluctuation in market interest rates, which may affect demand for our products, interest margins and the fair value of financial instruments;

●

changes in deposit flows, loan demand or real estate values;

●

changes in the quality and composition of our loan or investment portfolios or unanticipated or significant increases in loan losses;

●

changes in accounting principles, policies or guidelines;

●

changes in corporate and/or individual income tax laws or policies;

●

general socio-economic conditions, including conditions caused by COVID-19 pandemic, other public health emergencies, international conflict, inflation and recessionary pressures, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry;

●

legislative, regulatory or policy changes;

●

technological changes;

●

breaches or failures of the Company’s information technology security systems;

●

difficulties or unanticipated expenses incurred in the consummation of new business initiatives or the integration of any acquired entities;

●

litigation or matters before regulatory agencies; 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, 2022, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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,		December 31,
	2023		2022
Assets:
Cash and due from banks	$	663,132	$	169,297
Securities available-for-sale, at fair value		926,812		950,587
Securities held-to-maturity		605,642		585,798
Loans held for sale		2,171		—
Loans held for investment, net of fees and costs		10,731,845		10,566,831
Allowance for credit losses		(78,335)		(83,507)
Total loans held for investment, net		10,653,510		10,483,324
Premises and fixed assets, net		45,863		46,749
Restricted stock		105,258		88,745
Bank Owned Life Insurance ("BOLI")		335,455		333,292
Goodwill		155,797		155,797
Other intangible assets		6,107		6,484
Operating lease assets		57,204		57,857
Derivative assets		130,294		154,485
Accrued interest receivable		49,926		48,561
Other assets		104,553		108,945
Total assets	$	13,841,724	$	13,189,921

Liabilities:
Interest-bearing deposits	$	7,447,990	$	6,735,189
Non-interest-bearing deposits		3,122,245		3,519,218
Total deposits		10,570,235		10,254,407
Federal Home Loan Bank of New York ("FHLBNY") advances		1,498,000		1,131,000
Other short-term borrowings		2,068		1,360
Subordinated debt, net		200,261		200,283
Derivative cash collateral		120,680		153,040
Operating lease liabilities		59,757		60,340
Derivative liabilities		115,568		137,335
Other liabilities		83,902		82,573
Total liabilities		12,650,471		12,020,338

Commitments and contingencies		—		—

Stockholders' equity:
Preferred stock, Series A ($0.01 par, $25.00 liquidation value, 10,000,000 shares authorized and 5,299,200 shares issued and outstanding at March 31, 2023 and December 31, 2022)		116,569		116,569
Common stock ($0.01 par, 80,000,000 shares authorized, 41,621,772 shares issued at March 31, 2023 and December 31, 2022, and 38,804,361 shares and 38,573,000 shares outstanding at March 31, 2023 and December 31, 2022, respectively)		416		416
Additional paid-in capital		493,801		495,410
Retained earnings		789,010		762,762
Accumulated other comprehensive loss, net of deferred taxes		(98,638)		(94,379)
Unearned equity awards		(13,468)		(8,078)
Treasury stock, at cost (2,817,411 shares and 3,048,772 shares at March 31, 2023 and December 31, 2022, respectively)		(96,437)		(103,117)
Total stockholders' equity		1,191,253		1,169,583
Total liabilities and stockholders' equity	$	13,841,724	$	13,189,921

See notes to unaudited condensed 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,
	2023		2022
Interest income:
Loans	$	128,439	$	86,420
Securities		8,431		7,131
Other short-term investments		3,802		368
Total interest income		140,672		93,919
Interest expense:
Deposits and escrow		37,272		2,531
Borrowed funds		16,171		2,278
Derivative cash collateral		1,477		1
Total interest expense		54,920		4,810
Net interest income		85,752		89,109
Recovery for credit losses		(3,648)		(1,592)
Net interest income after recovery for credit losses		89,400		90,701

Non-interest income:
Service charges and other fees		3,814		4,058
Title fees		292		421
Loan level derivative income		3,133		6
BOLI income		2,163		1,839
Gain on sale of Small Business Administration ("SBA") loans		516		242
Gain on sale of residential loans		48		148
Net loss on sale of securities and other assets		(1,447)		—
Other		482		489
Total non-interest income		9,001		7,203
Non-interest expense:
Salaries and employee benefits		26,634		30,834
Occupancy and equipment		7,373		7,584
Data processing costs		4,238		3,805
Marketing		1,449		1,295
Professional services		1,923		2,094
Federal deposit insurance premiums		1,873		1,150
Amortization of other intangible assets		377		586
Other		3,608		2,540
Total non-interest expense		47,475		49,888
Income before income taxes		50,926		48,016
Income tax expense		13,623		13,485
Net income		37,303		34,531
Preferred stock dividends		1,821		1,821
Net income available to common stockholders	$	35,482	$	32,710
Earnings per common share:
Basic	$	0.92	$	0.82
Diluted	$	0.92	$	0.82

See notes to unaudited condensed consolidated financial statements.

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DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands except per share amounts)


	Three Months Ended
	March 31,
	2023		2022
Net income	$	37,303	$	34,531
Other comprehensive income (loss):
Change in unrealized gain (loss) on securities:
Change in net unrealized loss during the period		(2,302)		(70,131)
Reclassification adjustment for net losses included in net loss on sale of securities and other assets		1,447		—
Accretion of net unrealized loss on securities transferred to held-to-maturity		757		170
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense		(370)		(934)
Change in the net actuarial gain		221		997
Change in unrealized gain (loss) on derivatives:
Change in net unrealized (loss) gain during the period		(2,111)		6,852
Reclassification adjustment for expense included in interest expense		(313)		31
Other comprehensive loss before income taxes		(2,671)		(63,015)
Deferred tax expense (benefit)		1,588		(19,816)
Total other comprehensive loss, net of tax		(4,259)		(43,199)
Total comprehensive income (loss)	$	33,044	$	(8,668)

See notes to unaudited condensed consolidated financial statements.

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DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

(Dollars in thousands)

Three Months Ended March 31, 2023

Accumulated

Other

Comprehensive

Number of

Additional

Loss,

Unearned

Treasury

Total

Shares of

Preferred

Common

Paid-in

Retained

Net of Deferred

Equity

Stock,

Stockholders’

Common Stock

Stock

Capital

Earnings

Taxes

Awards

at cost

Equity

Beginning balance as of January 1, 2023

38,573,000

116,569

416

495,410

762,762

(94,379)

(8,078)

(103,117)

1,169,583

Net income

—

37,303

—

37,303

Other comprehensive loss, net of tax

—

(4,259)

—

(4,259)

Release of shares, net of forfeitures

293,106

—

(1,608)

—

(6,692)

8,507

207

Stock-based compensation

—

1,302

—

1,302

Shares received related to tax withholding

(36,932)

—

(1)

—

(1,112)

(1,113)

Cash dividends declared to preferred stockholders

—

(1,821)

—

(1,821)

Cash dividends declared to common stockholders

—

(9,234)

—

(9,234)

Purchase of treasury stock

(24,813)

—

(715)

Ending balance as of March 31, 2023

38,804,361

116,569

416

493,801

789,010

(98,638)

(13,468)

(96,437)

1,191,253


	Three Months Ended March 31, 2022
										Accumulated
										Other
										Comprehensive
	Number of					Additional				(Loss) Income,		Unearned		Treasury		Total
	Shares of	Preferred		Common		Paid-in		Retained		Net of Deferred		Equity		Stock,		Stockholders’
	Common Stock	Stock		Stock		Capital		Earnings		Taxes		Awards		at cost		Equity
Beginning balance as of January 1, 2022	39,877,833	$	116,569	$	416	$	494,125	$	654,726	$	(6,181)	$	(7,842)	$	(59,193)	$	1,192,620
Net income	—		—		—		—		34,531		—		—		—		34,531
Other comprehensive income, net of tax	—		—		—		—		—		(43,199)		—		—		(43,199)
Release of shares, net of forfeitures	127,812		—		—		844		(146)		—		(3,939)		3,284		43
Stock-based compensation	—		—		—		—		—		—		1,219		—		1,219
Shares received related to tax withholding	(40,731)		—		—		—		—		—		—		(1,414)		(1,414)
Cash dividends declared to preferred stockholders	—		—		—		—		(1,821)		—		—		—		(1,821)
Cash dividends declared to common stockholders	—		—		—		—		(9,300)		—		—		—		(9,300)
Purchase of treasury stock	(505,005)		—		—		—		—		—		—		(17,392)		(17,392)
Ending balance as of March 31, 2022	39,459,909		116,569		416		494,969		677,990		(49,380)		(10,562)		(74,715)		1,155,287

See notes to unaudited condensed consolidated financial statements.

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DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollars in thousands)


	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	37,303	$	34,531
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss on sales of securities available-for-sale and other assets		1,447		—
Net gain on sale of loans held for sale		(564)		(390)
Net depreciation, amortization and accretion		1,602		2,768
Amortization of other intangible assets		377		586
Stock-based compensation		1,302		1,219
Recovery for credit losses		(3,648)		(1,592)
Originations of loans held for sale		(2,220)		(6,179)
Proceeds from sale of loans originated for sale		8,940		9,158
Increase in cash surrender value of BOLI		(2,163)		(1,839)
Decrease in other assets		2,837		8,967
(Decrease) increase in other liabilities		(31,796)		32,394
Net cash provided by operating activities		13,417		79,623
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of securities available-for-sale		77,804		—
Purchases of securities available-for-sale		(78,157)		(3,000)
Purchases of securities held-to-maturity		(23,739)		(31,944)
Proceeds from calls and principal repayments of securities available-for-sale		21,000		49,853
Proceeds from calls and principal repayments of securities held-to-maturity		4,714		2,733
Proceeds from the sale of portfolio loans transferred to held for sale		—		1,069
Net increase in loans		(175,002)		(23,179)
Purchases of fixed assets, net		(787)		(1,842)
Purchases of restricted stock, net		(16,513)		(1,166)
Net cash used in investing activities		(190,680)		(7,476)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits		315,884		(28,872)
Proceeds from FHLBNY advances, short-term, net		205,000		25,000
Proceeds from FHLBNY advances, long-term		162,000		—
Proceeds of other short-term borrowings, net		708		991
Release of stock for benefit plan awards		207		43
Payments related to tax withholding for equity awards		(1,113)		(1,414)
Purchase of treasury stock		(715)		(17,392)
Cash dividends paid to preferred stockholders		(1,821)		(1,821)
Cash dividends paid to common stockholders		(9,052)		(9,410)
Net cash provided by (used in) financing activities		671,098		(32,875)
Increase in cash and cash equivalents		493,835		39,272
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		169,297		393,722
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	663,132	$	432,994

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	1,970	$	1,601
Cash paid for interest		47,401		4,933
Securities available-for-sale transferred to held-to-maturity		—		175,260
Loans transferred to held for sale		8,232		15,172
Operating lease assets in exchange for operating lease liabilities		2,173		1,002

See notes to unaudited condensed consolidated financial statements.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.BASIS OF PRESENTATION

Dime Community Bancshares, Inc. (the “ Holding Company”) is engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank (“the Bank”). The Bank was established in 1910 and is headquartered in Hauppauge, New York. The Holding Company was incorporated under the laws of the State of New York in 1988 to serve as the holding company for the Bank. The Holding Company functions primarily as the holder of all of the Bank’s common stock. Our bank operations include Dime Community Inc., a real estate investment trust subsidiary which was formerly known as Bridgehampton Community, Inc., as an operating subsidiary. Our bank operations also include Dime Abstract LLC (“Dime Abstract”), a wholly-owned subsidiary of the Bank, which is a broker of title insurance services. In September 2021, the Company dissolved two REITs, DSBW Preferred Funding Corporation and DSBW Residential Preferred Funding Corporation, which were wholly-owned subsidiaries of the Bank, and the preferred shares outstanding were redeemed by their shareholders. As of March 31, 2023, we operated 59 branch locations throughout Long Island and the New York City boroughs of Brooklyn, Queens, Manhattan, and the Bronx.

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which remain significantly unchanged and have been followed similarly as in prior periods.

Risks and Uncertainties

The COVID-19 pandemic caused significant economic dislocation in the United States. Certain industries were particularly hard-hit, including the travel and hospitality industry, the restaurant industry and the retail industry. Additionally, the spread of COVID-19 temporarily caused us to modify our business practices, including placing restrictions on employee travel and implementing remote work practices. As a result of the COVID-19 pandemic or any other public health emergency, and related governmental responses to any outbreak, we may be subject to the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, or results of operations: demand for our products and services may decline; if consumer and business activities are restricted, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could increase loan losses; our allowance for credit losses may have to be increased if borrowers experience financial difficulties; a material decrease in net income or a net loss over several quarters could affect our ability to pay cash dividends; cyber security risks may be increased as the result of an increase in the number of

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employees working remotely; critical services provided by third-party vendors may become unavailable; and the Company may experience unanticipated unavailability or loss of key employees, harming our ability to execute our business strategy.

2.SUMMARY OF ACCOUNTING POLICIES

Summary of Significant Accounting Policies

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the Company’s financial condition as of March 31, 2023 and December 31, 2022, the results of operations and statements of comprehensive income for the three months ended March 31, 2023 and 2022, the changes in stockholders’ equity for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022.

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.

Adoption of Recent Accounting Standards

ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging-Portfolio Layer Method

On March 28, 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022-01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period, permitted. For entities who have already adopted ASU 2017-12, immediate adoption is allowed. The Company adopted this ASU on January 1, 2023, on a prospective basis; therefore, there was no impact to the consolidated financial statements.

ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

ASU 2022-02 eliminates troubled debt restructuring (“TDR”) recognition and measurement guidance and, instead, requires that an entity evaluate whether the modification represents a new loan or a continuation of an existing loan. ASU 2022-02 enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. For entities that have adopted the amendments of ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. This ASU is effective for the Company on January 1, 2023. The Company adopted ASU 2022-02 on its effective date using the modified retrospective method. The adoption of ASU 2022-02 did not have a material impact on the Company's consolidated financial statements.

Standards That Have Not Yet Been Adopted

ASU 2020-04, Reference Rate Reform (Topic 848)

ASU 2020-04 provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. Once optional expedients are elected, the amendments in this ASU

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must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic within the Codification. We are evaluating the impact of ASU 2020-04 and expect the LIBOR transition will not have a material effect on the Company's consolidated financial statements.

ASU 2021-01, Reference Rate Reform (Topic 848): Scope

ASU 2021-01 clarifies that all derivative instruments affected by changes to the interest rates used for discounting, margining, or contract price alignment due to reference rate reform are in the scope of ASC 848. Entities may apply certain optional expedients in ASC 848 to derivative instruments that do not reference LIBOR or another rate expected to be discontinued as a result of reference rate reform if there is a change to the interest rate used for discounting, margining or contract price alignment. ASU 2021-01 is effective upon issuance and generally can be applied through December 31, 2022. The adoption of ASU 2021-01 is not expected to have a material effect on the Company's consolidated financial statements.

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3.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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


							Total
							Accumulated
			Defined				Other
			Benefit				Comprehensive
(In thousands)	Securities		Plans		Derivatives		Income (Loss)
Balance as of January 1, 2023	$	(100,870)	$	(5,266)	$	11,757	$	(94,379)
Other comprehensive (loss) income before reclassifications		(4,313)		155		(1,172)		(5,330)
Amounts reclassified from accumulated other comprehensive loss		1,551		(260)		(220)		1,071
Net other comprehensive (loss) income during the period		(2,762)		(105)		(1,392)		(4,259)
Balance as of March 31, 2023	$	(103,632)	$	(5,371)	$	10,365	$	(98,638)

Balance as of January 1, 2022	$	(7,864)	$	(1,306)	$	2,989	$	(6,181)
Other comprehensive (loss) income before reclassifications		(48,075)		683		4,697		(42,695)
Amounts reclassified from accumulated other comprehensive loss		116		(641)		21		(504)
Net other comprehensive (loss) income during the period		(47,959)		42		4,718		(43,199)
Balance as of March 31, 2022	$	(55,823)	$	(1,264)	$	7,707	$	(49,380)

The before and after tax amounts allocated to each component of other comprehensive (loss) income are presented in the table below for the periods indicated.


	Three Months Ended
	March 31,
(In thousands)	2023		2022
Change in unrealized gain (loss) on securities:
Change in net unrealized loss during the period	$	(2,302)	$	(70,131)
Reclassification adjustment for net losses included in net loss on sale of securities and other assets		1,447		—
Accretion of net unrealized loss on securities transferred to held-to-maturity		757		170
Net change		(98)		(69,961)
Tax benefit (expense)		2,664		(22,002)
Net change in unrealized loss on securities, net of reclassification adjustments and tax		(2,762)		(47,959)
Change in pension and other postretirement obligations:
Reclassification adjustment for expense included in other expense		(370)		(934)
Change in the net actuarial gain		221		997
Net change		(149)		63
Tax (expense) benefit		(44)		21
Net change in pension and other postretirement obligations		(105)		42
Change in unrealized gain (loss) on derivatives:
Change in net unrealized (loss) gain during the period		(2,111)		6,852
Reclassification adjustment for expense included in interest expense		(313)		31
Net change		(2,424)		6,883
Tax (expense) benefit		(1,032)		2,165
Net change in unrealized (loss) gain on derivatives, net of reclassification adjustments and tax		(1,392)		4,718
Other comprehensive loss, net of tax	$	(4,259)	$	(43,199)

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4.EARNINGS PER COMMON SHARE

Basic earnings per share (“EPS”) is computed by dividing net income available to common stockholders by the weighted-average common shares outstanding during the reporting period. Diluted EPS is computed using the same method as basic EPS, but reflects the potential dilution that would occur if "in the money" stock options were exercised and converted into common stock. 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 performance-based share awards (“PSA”) shares not yet awarded are recognized as a special class of participating securities under ASC 260, and are included in the calculation of the weighted-average shares outstanding for basic and diluted EPS.

The following is a reconciliation of the numerators and denominators of basic and diluted EPS for the periods presented:


	Three Months Ended
	March 31,
(In thousands except share and per share amounts)	2023		2022

Net income available to common stockholders	$	35,482	$	32,710
Less: Dividends paid and earnings allocated to participating securities		(389)		(374)
Income attributable to common stock	$	35,093	$	32,336
Weighted-average common shares outstanding, including participating securities		38,568,640		39,680,652
Less: weighted-average participating securities		(417,175)		(429,404)
Weighted-average common shares outstanding		38,151,465		39,251,248
Basic EPS	$	0.92	$	0.82

Income attributable to common stock	$	35,093	$	32,336
Weighted-average common shares outstanding		38,151,465		39,251,248
Weighted-average common equivalent shares outstanding		—		—
Weighted-average common and equivalent shares outstanding		38,151,465		39,251,248
Diluted EPS	$	0.92	$	0.82

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 92,137 and 121,253 weighted-average stock options outstanding for the three months ended March 31, 2023 and 2022 which were not considered in the calculation of diluted EPS since their exercise prices exceeded the average market price during the period.

5.PREFERRED STOCK

On February 5, 2020, Legacy Dime completed an underwritten public offering of 2,999,200 shares, or $75.0 million in aggregate liquidation preference, of its 5.50% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $25.00 per share (the “Legacy Dime Preferred Stock”). The net proceeds received from the issuance of preferred stock at the time of closing were $72.2 million. On June 10, 2020, Legacy Dime completed an underwritten public offering, a reopening of its February 5, 2020 original issuance, of 2,300,000 shares, or $57.5 million in aggregate liquidation preference, of the Legacy Dime Preferred Stock. The net proceeds received from the issuance of preferred stock at the time of closing were $44.3 million.

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

The Company expects to pay dividends when, as, and if declared by its board of directors, at a fixed rate of 5.50% per annum, payable quarterly, in arrears, on February 15, May 15, August 15 and November 15 of each year. The Preferred

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Stock is perpetual and has no stated maturity. The Company may redeem the Preferred Stock at its option at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends (without regard to any undeclared dividends), subject to regulatory approval, on or after June 15, 2025 or within 90 days following a regulatory capital treatment event, as described in the prospectus supplement and accompanying prospectus relating to the offering.

6.SECURITIES

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

March 31, 2023

Gross

Amortized

Unrealized

Fair

(In thousands)

Cost

Gains

Losses

Value

Securities available-for-sale:

Agency notes

10,000

—

(709)

9,291

Treasury securities

246,646

—

(16,215)

230,431

Corporate securities

172,626

—

(28,744)

143,882

Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")

263,194

—

(28,120)

235,074

Agency collateralized mortgage obligations ("CMOs")

324,394

(46,002)

278,394

State and municipal obligations

32,078

—

(2,338)

29,740

Total securities available-for-sale

1,048,938

(122,128)

926,812

March 31, 2023

Gross

Amortized

Unrecognized

Fair

(In thousands)

Cost

Gains

Losses

Value

Securities held-to-maturity:

Agency notes

89,258

—

(11,619)

77,639

Corporate securities

9,000

—

(2,063)

6,937

Pass-through MBS issued by GSEs

290,698

123

(37,137)

253,684

Agency CMOs

216,686

(22,390)

194,312

Total securities held-to-maturity

605,642

139

(73,209)

532,572


	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities available-for-sale:
Treasury securities	$	246,899	$	—	$	(19,643)	$	227,256
Corporate securities		183,791		57		(17,075)		166,773
Pass-through mortgage-backed securities ("MBS") issued by government sponsored entities ("GSEs")		272,774		—		(31,534)		241,240
Agency collateralized mortgage obligations ("CMOs")		331,394		2		(50,057)		281,339
State and municipal obligations		37,000		—		(3,021)		33,979
Total securities available-for-sale	$	1,071,858	$	59	$	(121,330)	$	950,587

	December 31, 2022
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
(In thousands)	Cost		Gains		Losses		Value
Securities held-to-maturity:
Agency notes	$	89,157	$	—	$	(14,095)	$	75,062
Corporate securities		9,000		—		(553)		8,447
Pass-through MBS issued by GSEs		278,281		—		(40,960)		237,321
Agency CMOs		209,360		—		(24,431)		184,929
Total securities held-to-maturity	$	585,798	$	—	$	(80,039)	$	505,759

There were no transfers to or from securities held-to-maturity during the three months ended March 31, 2023. The Company transfeed securities with a book value of $182.1 million from available-for-sale to held-to-maturity during the three months ended March 31, 2022.

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The carrying amount of securities pledged at March 31, 2023 and December 31, 2022 was $667.9 million and $631.4 million, respectively.

At March 31, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders' equity.

The amortized cost and fair value of securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	March 31, 2023
	Amortized		Fair
(In thousands)	Cost		Value
Available-for-sale
Within one year	$	11,050	$	10,679
One to five years		269,229		251,440
Five to ten years		175,926		146,950
Beyond ten years		5,145		4,275
Pass-through MBS issued by GSEs and agency CMO		587,588		513,468
Total	$	1,048,938	$	926,812

Held-to-maturity
Within one year	$	—	$	—
One to five years		10,000		9,407
Five to ten years		88,258		75,169
Beyond ten years		—		—
Pass-through MBS issued by GSEs and agency CMO		507,384		447,996
Total	$	605,642	$	532,572

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


	Three Months Ended
	March 31,
(In thousands)	2023		2022
Securities available-for-sale
Proceeds	$	77,804	$	—
Gross gains		130		—
Tax expense on gains		39		—
Gross losses		1,577		—
Tax benefit on losses		467		—

There were no sales of securities held-to-maturity during the three months ended March 31, 2023 and 2022.

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The following table summarizes the gross unrealized losses and fair value of securities available-for-sale 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, 2023

Less than 12

12 Consecutive

Consecutive Months

Months or Longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(In thousands)

Value

Losses

Value

Losses

Value

Losses

Securities available-for-sale:

Agency notes

—

9,291

709

9,291

709

Treasury securities

—

230,431

16,215

230,431

16,215

Corporate securities

81,866

13,507

62,016

15,237

143,882

28,744

Pass-through MBS issued by GSEs

27,912

867

207,162

27,253

235,074

28,120

Agency CMOs

3,778

269,614

45,970

273,392

46,002

State and municipal obligations

2,021

27,719

2,309

29,740

2,338


	December 31, 2022
	Less than 12				12 Consecutive
	Consecutive Months				Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
Securities available-for-sale:
Treasury securities	$	—	$	—	$	227,256	$	19,643	$	227,256	$	19,643
Corporate securities		110,707		8,494		50,116		8,581		160,823		17,075
Pass-through MBS issued by GSEs		50,813		2,010		190,427		29,524		241,240		31,534
Agency CMOs		55,924		3,454		220,413		46,603		276,337		50,057
State and municipal obligations		10,848		174		22,681		2,847		33,529		3,021

As of March 31, 2023, none of the Company’s available-for-sale debt securities were in an unrealized loss position due to credit and therefore no allowance for credit losses on available-for-sale debt securities was required. Additionally, given the high-quality composition of the Company’s held-to-maturity portfolio, the Company did not record an allowance for credit losses on the held-to-maturity portfolio. With respect to certain classes of debt securities, primarily U.S. Treasuries and securities issued by Government Sponsored Entities, the Company considers the history of credit losses, current conditions and reasonable and supportable forecasts, which may indicate that the expectation that nonpayment of the amortized cost basis is or continues to be zero, even if the U.S. government were to technically default. Accrued interest receivable on securities totaling $4.7 million and $5.4 million at March 31, 2023 and December 31, 2022, respectively, was included in other assets in the consolidated balance sheet and excluded from the amortized cost and estimated fair value totals in the table above.

Management evaluates available-for-sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At March 31, 2023, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. The following major security types held by the Company are all issued by U.S. government entities and agencies and therefore either explicitly or implicitly guaranteed by the U.S. government: Agency Notes, Treasury Securities, Pass-through MBS issued by GSEs, Agency Collateralized Mortgage Obligations. Substantially all of the corporate bonds within the portfolio have maintained an investment grade rating by either Kroll, Egan-Jones, Fitch, Moody’s or Standard and Poor’s. None of the unrealized losses are related to credit losses. Substantially all of the state and municipal obligations within the portfolio have all maintained an investment grade rating by either Moody’s or Standard and Poor’s. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated

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recovery. The issuers continue to make timely principal and interest payments on the debt. The fair value is expected to recover as the securities approach maturity.

7.LOANS HELD FOR INVESTMENT, NET

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


(In thousands)	March 31, 2023		December 31, 2022
One-to-four family residential and cooperative/condominium apartment	$	799,321	$	773,321
Multifamily residential and residential mixed-use		4,118,439		4,026,826
Commercial real estate ("CRE")		4,510,968		4,457,630
Acquisition, development, and construction		221,015		229,663
Total real estate loans		9,649,743		9,487,440
Commercial and industrial ("C&I")		1,074,930		1,071,712
Other loans		7,172		7,679
Total		10,731,845		10,566,831
Allowance for credit losses		(78,335)		(83,507)
Loans held for investment, net	$	10,653,510	$	10,483,324

Included in C&I loans were Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans totaling $2.1 million and $5.8 million at March 31, 2023 and December 31, 2022, respectively. SBA PPP loans carry a 100% guarantee from the SBA.

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

At or for the Three Months Ended March 31, 2023

Real Estate Loans

One-to-Four

Family

Multifamily

Residential and

Residential

Cooperative/

and

Condominium

Residential

Total Real

Other

(In thousands)

Apartment

Mixed-Use

CRE

ADC

Estate

C&I

Loans

Total

Allowance for credit losses:

Beginning balance

5,969

8,360

27,329

1,723

43,381

39,853

273

83,507

Provision (recovery) for credit losses

(747)

(2,851)

792

(2,763)

(834)

(34)

(3,631)

Charge-offs

—

(2,029)

(1)

(2,030)

Recoveries

—

487

489

Ending balance

6,012

7,613

24,478

2,515

40,618

37,477

240

78,335


	At or for the Three Months Ended March 31, 2022
	Real Estate Loans
	One-to-Four
	Family		Multifamily
	Residential and		Residential
	Cooperative/		and
	Condominium		Residential						Total Real				Other
(In thousands)	Apartment		Mixed-Use		CRE		ADC		Estate		C&I		Loans		Total
Allowance for credit losses:
Beginning balance	$	5,932	$	7,816	$	29,166	$	4,857	$	47,771	$	35,331	$	751	$	83,853
(Recovery) provision for credit losses		(1,404)		(757)		(521)		(99)		(2,781)		1,516		(389)		(1,654)
Charge-offs		—		—		—		—		—		(2,635)		(3)		(2,638)
Recoveries		—		2		—		—		2		51		1		54
Ending balance	$	4,528	$	7,061	$	28,645	$	4,758	$	44,992	$	34,263	$	360	$	79,615

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The following tables present the amortized cost basis of loans on non-accrual status as of the periods indicated:


		March 31, 2023
		Non-accrual with		Non-accrual with
(In thousands)		No Allowance	Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	-	$	2,808	$	138
CRE		4,659		3,409		1,010
Acquisition, development, and construction		-		657		305
C&I		978		18,934		18,169
Other		-		99		99
Total	$	5,637	$	25,907	$	19,721


		December 31, 2022
		Non-accrual with		Non-accrual with
(In thousands)		No Allowance	Allowance			Reserve
One-to-four family residential and cooperative/condominium apartment	$	-	$	3,203	$	181
CRE		4,915		3,417		1,424
Acquisition, development, and construction		657		-		-
C&I		503		21,443		20,685
Other		-		99		99
Total	$	6,075	$	28,162	$	22,389

The Company did not recognize interest income on non-accrual loans held for investment during the three months ended March 31, 2023 and 2022.

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

March 31, 2023

Loans 90

Days or

Total

30 to 59

60 to 89

More Past Due

Past Due

Days

and Still

and

Total

(In thousands)

Past Due

Accruing Interest

Non-accrual

Current

Loans

Real estate:

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

6,617

419

—

2,808

9,844

789,477

799,321

Multifamily residential and residential mixed-use

3,841

—

3,841

4,114,598

4,118,439

CRE

4,603

716

—

8,068

13,387

4,497,581

4,510,968

Acquisition, development, and construction

—

657

220,358

221,015

Total real estate

15,061

1,135

—

11,533

27,729

9,622,014

9,649,743

C&I

3,403

233

—

19,912

23,548

1,051,382

1,074,930

Other

229

—

331

6,841

7,172

Total

18,693

1,371

—

31,544

51,608

10,680,237

10,731,845

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	December 31, 2022
					Loans 90
					Days or				Total
	30 to 59		60 to 89		More Past Due				Past Due
	Days		Days		and Still				and				Total
(In thousands)	Past Due		Past Due		Accruing Interest		Non-accrual		Non-accrual		Current		Loans
Real estate:
One-to-four family residential, including condominium and cooperative apartment	$	686	$	—	$	—	$	3,203	$	3,889	$	769,432	$	773,321
Multifamily residential and residential mixed-use		4,817		—		—		—		4,817		4,022,009		4,026,826
CRE		14,189		—		—		8,332		22,521		4,435,109		4,457,630
Acquisition, development, and construction		—		—		—		657		657		229,006		229,663
Total real estate		19,692		—		—		12,192		31,884		9,455,556		9,487,440
C&I		3,561		741		—		21,946		26,248		1,045,464		1,071,712
Other		264		1		—		99		364		7,315		7,679
Total	$	23,517	$	742	$	—	$	34,237	$	58,496	$	10,508,335	$	10,566,831

Accruing Loans 90 Days or More Past Due:

The Company did not have accruing loans 90 days or more past due as of March 31, 2023 or December 31, 2022.

Collateral Dependent Loans:

The Company had collateral dependent loans which were individually evaluated to determine expected credit losses as of the dates indicated:


	March 31, 2023				December 31, 2022
	Real Estate		Associated Allowance		Real Estate		Associated Allowance
(In thousands)	Collateral Dependent		for Credit Losses		Collateral Dependent		for Credit Losses
CRE	$	7,112	$	860	$	7,391	$	1,297
Acquisition, development, and construction		657		305		657		-
C&I		945		-		949		-
Total	$	8,714	$	1,165	$	8,997	$	1,297

Loan Restructurings

The Company adopted ASU No. 2022-02 on January 1, 2023, which eliminates the recognition and measurement of a TDR. Due to the removal of the TDR designation, the Company applies the loan refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include conditions where there is principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, and/or a combinations of these modifications. The disclosures related to loan restructuring are only for modifications that directly affect cash flows.

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The following table shows the amortized cost basis as of March 31, 2023 of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan category and type of concession granted):


	March 31, 2023

			Term Extension				% of Total Class
	Significant		and Significant				of Financing
(Dollars in thousands)	Payment Delay		Payment Delay		Total		Receivable
Real estate:
One-to-four family residential, including condominium and cooperative apartment	$	2,850	$	—	$	2,850	0.4	%
Multifamily residential and residential mixed-use		—		—		—	0.0
CRE		—		—		—	0.0
Acquisition, development, and construction		—		—		—	0.0
C&I		—		475		475	0.0
Other loans		—		—		—	0.0
Total	$	2,850	$	475	$	3,325	0.0	%

During the three months ended March 31, 2023, there was one one-to-four family residential modification which resulted in a significant payment delay. Twelve months of principal payments were deferred until maturity. Also during the three months ended March 31, 2023 there was one C&I loan modification which resulted in a term extension and a significant payment delay. The term was extended for 6 months and payments were reduced from the original contractual payment amount during the extension period.

The Bank monitors the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table describes the performance of loans that have been modified during the quarter ended March 31, 2023.

March 31, 2023

30-59 Days

60-89 Days

90+ Days

(Dollars in thousands)

Current

Past Due

Total

Real estate:

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

2,850

—

2,850

Multifamily residential and residential mixed-use

—

CRE

—

Acquisition, development, and construction

—

C&I

475

—

475

Other loans

—

Total

3,325

—

3,325

As of March 31, 2023, the Bank had no commitments to lend any additional funds on restructured loans. In addition, the Bank had no loans that defaulted during the quarter and were modified in the 12 months before default to borrowers experiencing financial difficulty.

Prior to our adoption of ASU 2022-02, as of December 31, 2022, the Company had TDRs totaling $22.1 million. The Company has allocated $9.1 million of allowance for those loans at December 31, 2022, with no commitments to lend additional amounts.

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The following table presents the loans by category modified as TDRs that occurred during the year ended December 31, 2022.



	Modifications During the Year Ended December 31, 2022
			Pre-		Post-
			Modification		Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
One-to-four family residential and cooperative/condominium apartment	2	$	762	$	762
CRE	1		991		991
Acquisition, development, and construction	1		13,500		13,500
C&I	7		21,934		21,938
Other	1		276		276
Total	12	$	37,463	$	37,467

Credit Quality Indicators

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 structure, loan documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying them based on credit risk. 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.

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The following is a summary of the credit risk profile of loans by internally assigned grade as of the periods indicated, the years represent the year of origination for non-revolving loans:


	March 31, 2023
(In thousands)	2023		2022		2021		2020		2019		2018 and Prior		Revolving		Revolving-Term		Total
One-to-four family residential, and condominium/cooperative apartment:
Pass	$	43,242	$	223,185	$	105,682	$	71,817	$	64,559	$	223,911	$	36,080	$	14,027	$	782,503
Special mention		—		—		—		—		—		765		159		1,140		2,064
Substandard		—		—		947		1,021		1,226		10,612		—		949		14,754
Doubtful		—		—		—		—		—		—		—		—		—
Total one-to-four family residential, and condominium/cooperative apartment		43,242		223,185		106,629		72,838		65,785		235,288		36,239		16,116		799,321
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

Multifamily residential and residential mixed-use:
Pass		137,533		1,378,920		596,720		295,172		396,885		1,182,588		11,981		4,364		4,004,163
Special mention		—		—		4,269		18,190		14,149		19,272		—		—		55,880
Substandard		—		—		—		10,766		—		47,630		—		—		58,396
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		137,533		1,378,920		600,989		324,128		411,034		1,249,490		11,981		4,364		4,118,439
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

CRE:
Pass		168,749		1,015,122		848,614		684,193		496,165		1,136,286		29,949		23,247		4,402,325
Special mention		—		2,812		—		47,905		4,630		27,888		—		—		83,235
Substandard		—		—		151		4,536		7,496		13,225		—		—		25,408
Doubtful		—		—		—		—		—		—		—		—		—
Total CRE		168,749		1,017,934		848,765		736,634		508,291		1,177,399		29,949		23,247		4,510,968
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

Acquisition, development, and construction:
Pass		—		42,427		136,430		7,647		15,744		609		17,233		268		220,358
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		657		—		—		—		—		—		657
Doubtful		—		—		—		—		—		—		—		—		—
Total acquisition, development, and construction:		—		42,427		137,087		7,647		15,744		609		17,233		268		221,015
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

C&I:
Pass		20,080		178,348		34,507		36,036		32,375		50,334		618,596		18,915		989,191
Special mention		—		3,432		624		1,467		1,371		2,031		15,142		6,286		30,353
Substandard		98		5,454		1,133		4,858		2,718		10,536		12,382		9,066		46,245
Doubtful		—		—		—		—		8,332		809		—		—		9,141
Total C&I		20,178		187,234		36,264		42,361		44,796		63,710		646,120		34,267		1,074,930
YTD Gross Charge-Offs		—		—		—		38		—		1,991		—		—		2,029

Total:
Pass		369,604		2,838,002		1,721,953		1,094,865		1,005,728		2,593,728		713,839		60,821		10,398,540
Special mention		—		6,244		4,893		67,562		20,150		49,956		15,301		7,426		171,532
Substandard		98		5,454		2,888		21,181		11,440		82,003		12,382		10,015		145,460
Doubtful		—		—		—		—		8,332		809		—		—		9,141
Total Loans	$	369,702	$	2,849,700	$	1,729,734	$	1,183,608	$	1,045,650	$	2,726,496	$	741,522	$	78,262	$	10,724,673
YTD Gross Charge-Offs		—		—		—		38		—		1,991		—		—		2,029

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	December 31, 2022
(In thousands)	2022		2021		2020		2019		2018		2017 and Prior		Revolving		Revolving-Term		Total
One-to-four family residential, and condominium/cooperative apartment:
Pass	$	225,031	$	108,185	$	72,732	$	65,515	$	66,038	$	164,338	$	41,172	$	12,563	$	755,574
Special mention		—		—		—		—		735		1,175		579		726		3,215
Substandard		—		—		1,026		1,227		407		10,779		—		1,093		14,532
Doubtful		—		—		—		—		—		—		—		—		—
Total one-to-four family residential, and condominium/cooperative apartment		225,031		108,185		73,758		66,742		67,180		176,292		41,751		14,382		773,321
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

Multifamily residential and residential mixed-use:
Pass		1,386,549		582,393		316,424		395,933		127,074		1,107,281		12,584		—		3,928,238
Special mention		—		—		—		11,183		—		14,168		—		—		25,351
Substandard		—		—		12,294		7,001		20,311		33,631		—		—		73,237
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily residential and residential mixed-use		1,386,549		582,393		328,718		414,117		147,385		1,155,080		12,584		—		4,026,826
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

CRE:
Pass		1,021,622		854,240		753,552		510,332		308,265		868,099		34,362		24,767		4,375,239
Special mention		2,864		—		19,655		4,653		14,372		15,478		—		—		57,022
Substandard		—		151		4,550		7,947		1,131		11,590		—		—		25,369
Doubtful		—		—		—		—		—		—		—		—		—
Total CRE		1,024,486		854,391		777,757		522,932		323,768		895,167		34,362		24,767		4,457,630
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

Acquisition, development, and construction:
Pass		36,877		152,543		11,242		15,943		—		2,087		10,033		281		229,006
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		657		—		—		—		—		—		—		657
Doubtful		—		—		—		—		—		—		—		—		—
Total acquisition, development, and construction:		36,877		153,200		11,242		15,943		—		2,087		10,033		281		229,663
YTD Gross Charge-Offs		—		—		—		—		—		—		—		—		—

C&I:
Pass		175,347		36,511		42,103		37,030		20,628		33,343		628,560		22,239		995,761
Special mention		3,770		—		894		1,529		1,521		843		9,062		478		18,097
Substandard		5,242		1,244		5,364		2,968		970		10,232		11,290		9,412		46,722
Doubtful		—		—		—		8,332		752		2,048		—		—		11,132
Total C&I		184,359		37,755		48,361		49,859		23,871		46,466		648,912		32,129		1,071,712
YTD Gross Charge-Offs		—		477		4,720		2,088		—		2,414		1,460		242		11,401

Total:
Pass		2,845,426		1,733,872		1,196,053		1,024,753		522,005		2,175,148		726,711		59,850		10,283,818
Special mention		6,634		—		20,549		17,365		16,628		31,664		9,641		1,204		103,685
Substandard		5,242		2,052		23,234		19,143		22,819		66,232		11,290		10,505		160,517
Doubtful		—		—		—		8,332		752		2,048		—		—		11,132
Total Loans	$	2,857,302	$	1,735,924	$	1,239,836	$	1,069,593	$	562,204	$	2,275,092	$	747,642	$	71,559	$	10,559,152
YTD Gross Charge-Offs		—		477		4,720		2,088		—		2,414		1,460		242		11,401

For other loans, the Company evaluates credit quality based on payment activity. Other loans that are 90 days or more past due are placed on non-accrual status, while all remaining other loans are classified and evaluated as performing. The following is a summary of the credit risk profile of other loans by internally assigned grade:


(In thousands)	March 31, 2023		December 31, 2022
Performing	$	7,073	$	7,580
Non-accrual		99		99
Total	$	7,172	$	7,679

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8.LEASES

Maturities of the Company’s operating lease liabilities at March 31, 2023 are as follows:


	Rent to be
(In thousands)	Capitalized
2023	$	9,122
2024		12,115
2025		11,912
2026		11,225
2027		9,240
Thereafter		9,991
Total undiscounted lease payments		63,605
Less amounts representing interest		(3,848)
Operating lease liabilities	$	59,757

Other information related to the Company’s operating leases was as follows:


	Three Months Ended
	March 31,
(In thousands)	2023		2022
Operating lease cost	$	3,141	$	3,262
Cash paid for amounts included in the measurement of operating lease liabilities		3,071		2,924


	March 31,		December 31,
	2023		2022
Weighted average remaining lease term	5.7	years	5.9	years
Weighted average discount rate	2.12	%	2.03	%

9.DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to certain risks 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. The Company engages in both cash flow hedges and freestanding derivatives.

Cash Flow Hedges

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 these types of derivatives to hedge the variable cash flows associated with existing or forecasted issuances of short-term borrowings.

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 periods during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive

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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 $6.1 million will be reclassified as a decrease to interest expense.

During the three months ended March 31, 2023, the Company did not terminate any derivatives. During the three months ended March 31, 2022, the Company did not terminate any derivatives.

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 dates indicated.

March 31, 2023

December 31, 2022

Notional

Fair Value

Notional

Fair Value

(Dollars in thousands)

Count

Amount

Assets

Liabilities

Count

Amount

Assets

Liabilities

Included in derivative assets/(liabilities):

Interest rate swaps related to FHLBNY advances

150,000

14,726

—

150,000

17,150

—

The table below presents the effect of the cash flow hedge accounting on accumulated other comprehensive income (loss) for the periods indicated:


	Three Months Ended
	March 31,
(In thousands)	2023		2022
(Loss) gain recognized in other comprehensive income (loss)	$	(2,111)	$	6,852
Gain (loss) recognized on termination of derivatives		—		—
Gain (loss) reclassified from other comprehensive income into interest expense		313		(31)

All cash flow hedges are recorded gross on the balance sheet.

The cash flow hedges involve derivative agreements with third-party counterparties that contain provisions requiring the Company to post cash collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of March 31, 2023 and December 31, 2022, the Company did not post collateral to the third-party counterparties. As of March 31, 2023, the Company received $16.0 million in collateral from its third-party counterparties under the agreements in a net asset position. As of December 31, 2022, the Company received $17.8 million in collateral from its third-party counterparties.

Freestanding Derivatives

The Company maintains an interest-rate risk protection program for its loan portfolio in order to offer loan level derivatives with certain borrowers and to generate loan level derivative income. The Company enters into interest rate swap or interest rate floor agreements with borrowers. These interest rate derivatives are designed such that the borrower synthetically attains a fixed-rate loan, while the Company receives floating rate loan payments. The Company offsets the loan level interest rate swap exposure by entering into an offsetting interest rate swap or interest rate floor with an unaffiliated and reputable bank counterparty. These interest rate derivatives do not qualify as designated hedges, under ASU 815; therefore, each interest rate derivative is accounted for as a freestanding derivative. The notional amounts of the interest rate derivatives do not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the

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notional amount and the other terms of the individual interest rate derivative agreements. The following tables reflect freestanding derivatives included in the consolidated statements of financial condition as of the dates indicated:


	March 31, 2023
		Notional		Fair Value		Fair Value
(In thousands)	Count	Amount		Assets		Liabilities
Included in derivative assets/(liabilities):
Loan level interest rate swaps with borrower	14	$	256,325	$	10,049	$	—
Loan level interest rate swaps with borrower	181		1,161,586		—		99,582
Loan level interest rate floors with borrower	39		294,537		—		5,937
Loan level interest rate swaps with third-party counterparties	14		256,325		—		10,049
Loan level interest rate swaps with third-party counterparties	181		1,161,586		99,582		—
Loan level interest rate floors with third-party counterparties	39		294,537		5,937		—


	December 31, 2022
		Notional		Fair Value		Fair Value
(In thousands)	Count	Amount		Assets		Liabilities
Included in derivative assets/(liabilities):
Loan level interest rate swaps with borrower	3	$	53,311	$	1,524	$	—
Loan level interest rate swaps with borrower	185		1,214,736		—		126,751
Loan level interest rate floors with borrower	40		326,309		—		9,060
Loan level interest rate swaps with third-party counterparties	3		53,311		—		1,524
Loan level interest rate swaps with third-party counterparties	185		1,214,736		126,751		—
Loan level interest rate floors with third-party counterparties	40		326,309		9,060		—

Loan level derivative income is recognized on the mark-to-market of the interest rate swap as a fair value adjustment at the time the transaction is closed. Total loan level derivative income is included in non-interest income as follows:

The interest rate swap product with the borrower is cross collateralized with the underlying loan and, therefore, there is no posted collateral. Certain interest rate swap agreements with third-party counterparties contain provisions that require the Company to post collateral if the derivative exposure exceeds a threshold amount and receive collateral for agreements in a net asset position. As of March 31, 2023 and December 31, 2022, the Company did not post collateral to its third-party counterparties. As of March 31, 2023, the Company received $104.7 million in collateral from its third-party counterparties under the agreements in a net asset position. As of December 31, 2022, the Company received $135.3 million in collateral from its third-party counterparties under the agreements in a net asset position.

Risk Participation Agreements

The Company enters into risk participation agreements to manage economic risks but does not designate the instruments in hedge relationships. As of March 31, 2023 and December 31, 2022, the notional amounts of risk participation agreements for derivative liabilities were $94.3 million and $71.1 million, respectively. The related fair values of the Company’s risk participation agreements were immaterial as of March 31, 2023 and December 31, 2022.

Credit Risk Related Contingent Features

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.

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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.

For derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, any breach of the above provisions by the Company may require settlement of its obligations under the agreements at the termination value with the respective counterparty. As of March 31, 2023, there were no derivatives in a net liability position, and therefore the termination value was zero. There were no provisions breached for the three months ended March 31, 2023.

10.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 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 MBS, CMOs, treasury securities, and agency notes are guaranteed either implicitly or explicitly by GSEs as of March 31, 2023 and December 31, 2022. In accordance with the Company’s investment policy, corporate securities are rated "investment grade" at the time of purchase and the financials of the issuers are reviewed quarterly. Obtaining market values as of March 31, 2023 and December 31, 2022 for these securities utilizing significant observable inputs was not difficult due to their liquid nature.

Derivatives

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

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The following tables present financial assets and 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.

Fair Value Measurements

at March 31, 2023 Using

Level 1

Level 2

Level 3

(In thousands)

Total

Inputs

Financial Assets:

Securities available-for-sale:

Agency notes

9,291

—

9,291

—

Treasury securities

230,431

—

230,431

—

Corporate securities

143,882

—

143,882

—

Pass-through MBS issued by GSEs

235,074

—

235,074

—

Agency CMOs

278,394

—

278,394

—

State and municipal obligations

29,740

—

29,740

—

Derivative – cash flow hedges

14,726

—

14,726

—

Derivative – freestanding derivatives, net

115,568

—

115,568

—

Financial Liabilities:

Derivative – freestanding derivatives, net

115,568

—

115,568

—


			Fair Value Measurements
			at December 31, 2022 Using
			Level 1		Level 2		Level 3
(In thousands)	Total		Inputs		Inputs		Inputs
Financial Assets:
Securities available-for-sale:
Treasury securities	$	227,256	$	—	$	227,256	$	—
Corporate securities		166,773		—		166,773		—
Pass-through MBS issued by GSEs		241,240		—		241,240		—
Agency CMOs		281,339		—		281,339		—
State and municipal obligations		33,979		—		33,979		—
Derivative – cash flow hedges		17,150		—		17,150		—
Derivative – freestanding derivatives, net		137,335		—		137,335		—
Financial Liabilities:
Derivative – freestanding derivatives, net		137,335		—		137,335		—

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. That is, they are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis include certain individually evaluated loans (or impaired loans prior to the adoption of ASC 326) reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.

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	March 31, 2023
				Fair Value Measurements Using:
			Quoted Prices
			In Active			Significant
			Markets for			Other	Significant
			Identical			Observable	Unobservable
	Carrying		Assets			Inputs	Inputs
(In thousands)	Value		(Level 1)			(Level 2)	(Level 3)
Individually evaluated loans	$	1,945	$	—	$	—	$	1,945


	December 31, 2022
				Fair Value Measurements Using:
				Quoted Prices
				In Active		Significant
				Markets for		Other	Significant
				Identical		Observable	Unobservable
	Carrying			Assets		Inputs	Inputs
(In thousands)	Value			(Level 1)		(Level 2)	(Level 3)
Individually evaluated loans	$	1,179	$	—	$	—	$	1,179

Individually evaluated loans with an allowance for credit losses at March 31, 2023 had a carrying amount of $1.9 million, which is made up of the outstanding balance of $3.1 million, net of a valuation allowance of $1.2 million. Collateral dependent individually analyzed loans as of March 31, 2023 resulted in a credit loss recovery of $132 thousand, which is included in the amounts reported in the consolidated statements of income for the three months ended March 31, 2023.

Individually evaluated loans with an allowance for credit losses at December 31, 2022 had a carrying amount of $1.2 million, which is made up of the outstanding balance of $2.5 million, net of a valuation allowance of $1.3 million.

Financial Instruments Not Measured at Fair Value

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 nonrecurring basis 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.

Fair Value Measurements

at March 31, 2023 Using

Carrying

Level 1

Level 2

Level 3

(In thousands)

Amount

Inputs

Total

Financial Assets:

Cash and due from banks

663,132

—

663,132

Securities held-to-maturity

605,642

—

532,572

—

532,572

Loans held for investment, net

10,651,565

—

10,123,743

Accrued interest receivable

49,926

—

5,505

44,421

49,926

Financial Liabilities:

Savings, money market and checking accounts

9,050,968

—

9,050,968

Certificates of Deposits ("CDs")

1,519,267

—

1,503,948

—

1,503,948

FHLBNY advances

1,498,000

—

1,502,366

—

1,502,366

Subordinated debt, net

200,261

—

164,461

—

164,461

Other short-term borrowings

2,068

—

2,068

Accrued interest payable

12,842

—

12,842

—

12,842

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			Fair Value Measurements
			at December 31, 2022 Using
	Carrying		Level 1		Level 2		Level 3
(In thousands)	Amount		Inputs		Inputs		Inputs		Total
Financial Assets:
Cash and due from banks	$	169,297	$	169,297	$	—	$	—	$	169,297
Securities held-to-maturity		585,798		—		505,759		—		505,759
Loans held for investment, net		10,482,145		—		—		10,005,121		10,005,121
Accrued interest receivable		48,561		—		6,105		42,456		48,561
Financial Liabilities:
Savings, money market and checking accounts		9,139,043		9,139,043		—		—		9,139,043
CDs		1,115,364		—		1,096,808		—		1,096,808
FHLBNY advances		1,131,000		—		1,131,217		—		1,131,217
Subordinated debt, net		200,283		—		180,583		—		180,583
Other short-term borrowings		1,360		1,360		—		—		1,360
Accrued interest payable		5,323		—		5,323		—		5,323

11.OTHER INTANGIBLE ASSETS

The following table presents the carrying amount and accumulated amortization of intangible assets that are amortizable.


	March 31, 2023						December 31, 2022
		Core Deposit		Non-compete				Core Deposit		Non-compete
(In thousands)		Intangibles		Agreement		Total		Intangibles		Agreement		Total
Gross carrying value	$	10,204	$	780	$	10,984	$	10,204	$	780	$	10,984
Accumulated amortization		(4,097)		(780)		(4,877)		(3,720)		(780)		(4,500)
Net carrying amount	$	6,107	$	-	$	6,107	$	6,484	$	-	$	6,484

Amortization expense recognized on intangible assets was $377 thousand and $586 thousand for the three months ended March 31, 2023 and 2022, respectively.

Estimated amortization expense for the remainder of 2023 through 2027 and thereafter is as follows:


(In thousands)		Total
2023		1,048
2024		1,163
2025		958
2026		795
2027		664
Thereafter		1,479
Total	$	6,107

12.FHLBNY ADVANCES

The Bank had borrowings from the FHLBNY (“Advances”) totaling $1.50 billion and $1.13 billion at March 31, 2023 and December 31, 2022, respectively, all of which were fixed rate. The average interest rate on outstanding FHLBNY Advances was 5.04% and 4.55% at March 31, 2023 and December 31, 2022, respectively. In accordance with its Advances, Collateral Pledge and Security Agreement with the FHLBNY, the Bank was eligible to borrow up to $4.45 billion as of March 31, 2023 and $4.13 billion as of December 31, 2022, and maintained sufficient qualifying collateral, as defined by the FHLBNY. At March 31, 2023 there were no callable Advances.

The Company did not have extinguishment of debt during the three months ended March 31, 2023 or 2022.

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The following tables present the contractual maturities and weighted average interest rates of FHLBNY advances for each of the next five years. There were no FHLBNY advances with an overnight contractual maturity at March 31, 2023 or December 31, 2022. As of March 31, 2023 there were $800.0 million of FHLBNY advances with contractual maturities during 2023 and $698.0 million of FHLBNY advances with contractual maturities after 2023. As of December 31, 2022, there were $1.10 billion of FHLBNY advances with contractual maturities during 2023 and $36.0 million of FHLBNY advances with contractual maturities after 2022:


	March 31, 2023
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		Average Rate
2023, fixed rate at rates from 4.82% to 5.31%	$	800,000	5.13
2024, fixed rate at rates from 4.85% to 5.16%		650,000	5.00
2027, fixed rate at 4.25%		36,000	4.25
2028, fixed rate at 4.04%		12,000	4.04
Total FHLBNY advances	$	1,498,000	5.04	%


	December 31, 2022
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		Average Rate
2023, fixed rate at rates from 3.85% to 4.75%	$	1,095,000	4.56	%
2027, fixed rate at 4.25%		36,000	4.25
Total FHLBNY advances	$	1,131,000	4.55	%

13.SUBORDINATED DEBENTURES

On May 6, 2022, the Company issued $160.0 million aggregate principal amount of fixed-to-floating rate subordinated notes due 2032 (“the Notes”). The Notes are callable at par after five years, have a stated maturity of May 15, 2032 and bear interest at a fixed annual rate of 5.00% per year, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2022. The last interest payment for the fixed rate period will be May 15, 2027. From and including May 15, 2027 to, but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the benchmark rate (which is expected to be Three-Month Term SOFR) plus 218 basis points, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2027.

The Company used the net proceeds of the offering for the repayment of $115.0 million of the Company’s 4.50% fixed-to-floating rate subordinated notes due 2027 on June 15, 2022, and $40.0 million of the Company’s 5.25% fixed-to-floating rate subordinated debentures due 2025 on June 30, 2022. The repayment of the subordinated notes due 2027 resulted in a pre-tax write-off of debt issuance costs of $740 thousand, which was recognized in loss on extinguishment of debt in non-interest expense.

The subordinated debentures totaled $200.3 million at March 31, 2023 and $200.3 million at December 31, 2022. Interest expense related to the subordinated debentures was $2.6 million and $2.2 million during the three months ended March 31, 2023 and 2022, respectively. The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

14.RETIREMENT AND POSTRETIREMENT PLANS

The Bank maintains two noncontributory pension plans that existed before the Merger: (i) the Retirement Plan of Dime Community Bank (“Employee Retirement Plan”) and (ii) the BNB Bank Pension Plan, covering all eligible employees.

Employee Retirement Plan

The Bank sponsors the Employee Retirement Plan, a tax-qualified, noncontributory, defined-benefit retirement plan. Prior to April 1, 2000, substantially all full-time employees of at least 21 years of age were eligible for participation after one year of service. Effective April 1, 2000, the Bank froze all participant benefits under the Employee Retirement Plan.

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BNB Bank Pension Plan

During 2012, Bridge amended the BNB Bank Pension Plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered Bridge employees. Additionally, new Bridge employees hired on or after October 1, 2012 were not eligible for the BNB Bank Pension Plan.

The following table represents the components of net periodic benefit (credit) cost included in other non-interest expense, except for service cost which is reported in salaries and employee benefits expense, in the consolidated statements of income. Net expenses associated with these plans were comprised of the following components:


	Three Months Ended March 31,
	2023				2022

	BNB Bank		Employee		BNB Bank		Employee
(In thousands)	Pension Plan		Retirement Plan		Pension Plan		Retirement Plan
Service cost	$	175	$	—	$	268	$	—
Interest cost		330		223		195		155
Expected return on assets		(687)		(383)		(858)		(490)
Amortization of unrealized loss		—		148		—		62
Net periodic credit	$	(182)	$	(12)	$	(395)	$	(273)

There were no contributions to the BNB Bank Pension Plan or the Employee Retirement Plan for the three months ended March 31, 2023.

401(k) Plan

The Company maintains a 401(k) Plan (the “401(k) Plan”) that existed before the Merger. The 401(k) Plan covers substantially all current employees. Newly hired employees are automatically enrolled in the plan on the first day of the month following the 60^th day of employment, unless they elect not to participate. Participants may contribute a portion of their pre-tax base salary, generally not to exceed $20,500 for the calendar year ended December 31, 2023. Under the provisions of the 401(k) Plan, employee contributions are partially matched by the Bank as follows: 100% of each employee’s contributions up to 1% of each employee’s compensation plus 50% of each employee’s contributions over 1% but not in excess of 6% of each employee’s compensation for a maximum contribution of 3.5% of a participating employee’s compensation. Participants can invest their account balances into several investment alternatives. The 401(k) Plan does not allow for investment in the Company’s common stock. The 401(k) Plan held Company common stock within the accounts of participants totaling $5.6 million at March 31, 2023. During the three months ended March 31, 2023 and 2022, total expense recognized as a component of salaries and employee benefits expense for the 401(k) Plan was $936 thousand and $800 thousand, respectively.

15.STOCK-BASED COMPENSATION

In May 2021, the Company’s shareholders approved the Dime Community Bancshares, Inc. 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) to provide the Company with sufficient equity compensation to meet the objectives of appropriately incentivizing its officers, other employees, and directors to execute our strategic plan to build shareholder value, while providing appropriate shareholder protections. The Company no longer makes grants under the Legacy Stock Plans. Awards outstanding under the Legacy Stock Plans will continue to remain outstanding and subject to the terms and conditions of the Legacy Stock Plans. At March 31, 2023, there were 673,756 shares reserved for issuance under the 2021 Equity Incentive Plan.

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Stock Option Awards

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


				Weighted-
				Average	Aggregate
		Weighted-		Remaining	Intrinsic
	Number of	Average Exercise		Contractual	Value
	Options	Price		Years	(In thousands)
Options outstanding at January 1, 2023	92,137	$	35.39	6.2		—
Options exercised	—		—
Options forfeited	—		—
Options outstanding at March 31, 2023	92,137	$	35.39	6.0	$	—
Options vested and exercisable at March 31, 2023	92,137	$	35.39	6.0	$	—

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


	Three Months Ended
	March 31,
(In thousands)	2023		2022
Cash received for option exercise cost	$	—	$	—
Income tax (expense) benefit recognized on stock option exercises		—		—
Intrinsic value of options exercised		—		—

The range of exercise prices and weighted-average remaining contractual lives of both outstanding and vested options (by option exercise cost) as of March 31, 2023 were as follows:


	Outstanding Options		Vested Options
		Weighted		Weighted
		Average		Average
		Contractual		Contractual
		Years		Years
	Amount	Remaining	Amount	Remaining
Exercise Prices:
$34.87	35,671	6.9	35,671	6.9
$35.35	32,079	5.9	32,079	5.9
$36.19	24,387	4.9	24,387	4.9
Total	92,137	6.0	92,137	6.0

Restricted Stock Awards

The Company has made RSA grants to outside Directors and certain officers under the Legacy Stock Plans and the 2021 Equity Incentive Plan. Typically, awards to outside Directors fully vest on the first anniversary of the grant date, while awards to officers vest over a pre-determined requisite period. All awards were made at the fair value of the Company’s common stock on the grant date. Compensation expense on all RSAs is based upon the fair value of the shares on the respective dates of the grant.

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


		Weighted-
		Average
	Number of	Grant-Date
	Shares	Fair Value
Unvested allocated shares outstanding at January 1, 2023	350,758	$	28.63
Shares granted	195,437		26.40
Shares vested	(92,897)		27.46
Shares forfeited	(1,284)		27.29
Unvested allocated shares outstanding at March 31, 2023	452,014	$	27.91

Information related to RSAs during each period is as follows:


	Three Months Ended
	March 31,
(Dollars in thousands)	2023		2022
Compensation expense recognized	$	1,058	$	1,024
Income tax (expense) benefit recognized on vesting of RSAs		(13)		329

As of March 31, 2023, there was $10.2 million of total unrecognized compensation cost related to unvested RSAs to be recognized over a weighted-average period of 2.2 years.

Performance-Based Share Awards

The Company maintains a long-term incentive award program (“LTIP”) for certain officers, which meets the criteria for equity-based accounting. For each award, threshold (50% of target), target (100% of target) and stretch (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. Shares are issued at the stretch 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. Compensation expense on PSAs is based upon the fair value of the shares on the date of the grant for the expected aggregate share payout as of the period end.

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


		Weighted-
		Average
	Number of	Grant-Date
	Shares	Fair Value
Maximum aggregate share payout at January 1, 2023	95,831	$	30.35
Shares granted	92,187		16.97
Maximum aggregate share payout at March 31, 2023	188,018	$	23.79
Minimum aggregate share payout	—		—
Expected aggregate share payout	157,468	$	22.58

Information related to PSAs during each period is as follows:


	Three Months Ended
	March 31,
(In thousands)	2023		2022
Compensation expense recognized	$	245	$	195
Income tax expense recognized on vesting of PSAs		(15)		—

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As of March 31, 2023, there was $2.4 million of total unrecognized compensation cost related to unvested PSAs based on the expected aggregate share payout to be recognized over a weighted-average period of 2.2 years.

16.INCOME TAXES

During the three months ended March 31, 2023 and 2022, the Company’s consolidated effective tax rates were 26.8% and 28.1%, respectively. There were no significant unusual income tax items during the three months ended March 31, 2022.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Dime Community Bancshares, Inc., a New York corporation, is a bank holding company formed in 1988. On a parent-only basis, the Holding Company has minimal operations, other than as owner of Dime Community Bank. The Holding Company is dependent on dividends from its wholly-owned subsidiary, Dime Community Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit and loan accounts, merchant credit and debit card processing programs, loan swap fees, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.

COVID-19 Pandemic Response

Following the March 2020 passage of the Paycheck Protection Program (“PPP”), administered by the SBA, the Company participated in assisting its customers with applications for resources through the program. Since the inception of the program, the consolidated PPP originations for the Company through December 31, 2021, including originations by both Legacy Dime and Bridge, exceeded $1.90 billion. Following the completion of the PPP, the Company sold its 2021 PPP loan originations in order to re-deploy funds into ongoing loan portfolio growth. The Company believes that the remainder of its SBA PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program. As of March 31, 2023, the Company had SBA PPP loans totaling $2.1 million, net of deferred fees. It is the Company’s expectation that loans funded through the PPP are fully guaranteed by the U.S. government.

We continue to monitor unfunded commitments, including commercial and home equity lines of credit, for evidence of increased credit exposure as borrowers utilize these lines for liquidity purposes.

It is possible that there will be continued material, adverse impacts to significant estimates, asset valuations, and business operations, including intangible assets, investments, loans, deferred tax assets, and derivative counter party risk, changes in consumer behavior, and supply chain interruptions as a result of the COVID-19 pandemic. Future government actions in response to the COVID-19 pandemic, including vaccination mandates, may also affect our workforce, human capital resources, and infrastructure.

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Selected Financial Highlights and Other Data

(Dollars in Thousands Except Per Share Amounts)


	At or For the
	Three Months Ended
	March 31,
	2023			2022
Per Share Data:
Reported EPS (Diluted)	$	0.92		$	0.82
Cash dividends paid per common share		0.24			0.24
Book value per common share		27.70			26.32
Dividend payout ratio		26.09	%		29.27	%
Performance and Other Selected Ratios:
Return on average assets		1.11	%		1.13	%
Return on average equity		12.50			11.53
Net interest spread		1.92			3.07
Net interest margin		2.74			3.19
Average interest-earning assets to average interest-bearing liabilities		146.80			165.88
Non-interest expense to average assets		1.41			1.64
Efficiency ratio		50.1			51.8
Loan-to-deposit ratio at end of period		101.5			88.7
Effective tax rate		26.75			28.08
Asset Quality Summary:
Non-performing loans ⁽¹⁾	$	31,544		$	35,962
Non-performing assets		31,544			35,962
Net charge-offs		1,541			2,584
Non-performing assets/Total assets		0.23	%		0.30	%
Non-performing loans/Total loans		0.29			0.39
Allowance for credit losses/Total loans		0.73			0.86
Allowance for credit losses/Non-performing loans		248.34			221.39

(1)	Non-performing loans are defined as all loans on non-accrual status.

Critical Accounting Estimates

Note 1. Summary of Significant Accounting Policies, to the Company’s Audited Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2022 contains a summary of significant accounting policies. These accounting policies may require various levels of subjectivity, estimates or judgment by management. Policies with respect to the methodologies it uses to determine the allowance for credit losses on loans held for investment and fair value of loans acquired in a business combinations are critical accounting policies because they are important to the presentation of the Company’s consolidated financial condition and results of operations. These critical accounting estimates 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.

Management has reviewed the following critical accounting estimates and related disclosures with its Audit Committee.

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Allowance for Credit Losses on Loans Held for Investment

Methods and Assumptions Underlying the Estimate

On January 1, 2021, we adopted the Current Expected Credit Losses (“CECL”) Standard, which requires that loans held for investment be accounted for under the current expected credit losses model. The allowance for credit losses is established and maintained through a provision for credit losses based on expected losses inherent in our loan portfolio. Management evaluates the adequacy of the allowance on a quarterly basis, and additions to the allowance are charged to expense and realized losses, net of recoveries, are charged against the allowance.

Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. In determining the allowance for credit losses for loans that share similar risk characteristics, the Company utilizes a model which compares the amortized cost basis of the loan to the net present value of expected cash flows to be collected. Expected credit losses are determined by aggregating the individual cash flows and calculating a loss percentage by loan segment, or pool, for loans that share similar risk characteristics. For a loan that does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods. Management assesses the sensitivity of key assumptions at least annually by stressing the assumptions to understand the impact on the model.

Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of a peer group of banks that operate in and around Dime’s footprint. These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables. Adjustments to the quantitative results are made using qualitative factors. These factors include: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio, including the condition of various markets; (3) the nature and volume of the loan portfolio; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due loans; (6) the quality of our loan review system; (7) the value of underlying collateral for collateralized loans; (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and (9) the effect of external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the existing portfolio.

The Company evaluates loans that do not share risk characteristics on an individual basis based on various factors. Factors that may be considered are borrower delinquency trends and non-accrual status, probability of foreclosure or note sale, changes in the borrower’s circumstances or cash collections, borrower’s industry, or other facts and circumstances of the loan or collateral. The expected credit loss is measured based on net realizable value, that is, the difference between the discounted value of the expected future cash flows, based on the original effective interest rate, and the amortized cost basis of the loan. For collateral dependent loans, expected credit loss is measured as the difference between the amortized cost basis of the loan and the fair value of the collateral, less estimated costs to sell.

Uncertainties Regarding the Estimate

Estimating the timing and amounts of future losses is subject to significant management judgment as these projected cash flows rely upon the estimates discussed above and factors that are reflective of current or future expected conditions. These estimates depend on the duration of current overall economic conditions, industry, borrower, or portfolio specific conditions. Volatility in certain credit metrics and differences between expected and actual outcomes are to be expected.

Customers may not repay their loans according to the original terms, and the collateral securing the payment of those loans may be insufficient to pay any remaining loan balance. Bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or loan charge-offs.

Impact on Financial Condition and Results of Operations

If our assumptions prove to be incorrect, the allowance for credit losses may not be sufficient to cover expected losses in the loan portfolio, resulting in additions to the allowance. Future additions or reductions to the allowance may be necessary

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based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance through charges to earnings would materially decrease our net income.

We may experience significant credit losses if borrowers experience financial difficulties, which could have a material adverse effect on our operating results.

In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for credit losses. Such agencies may require the Bank to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.

Fair value of loans acquired in a business combination

Methods and Assumptions Underlying the Estimate

On February 1, 2021, the Company completed a merger of equals business combination accounted for as a reverse merger using the acquisition method of accounting. As a part of accounting for the Merger, fair value estimates were calculated with a combination of assumptions by management and by using a third party. The fair value often involved third-party estimates utilizing input assumptions by management which may be complex or uncertain. The fair value of acquired loans was based on a discounted cash flow methodology that considers factors such as type of loan and related collateral, and requires management’s judgment on estimates about discount rates, expected future cash flows, market conditions and other future events.

For purchased financial loans with credit deterioration (“PCD”), an estimate of expected credit losses was made for loans with similar risk characteristics and was added to the purchase price to establish the initial amortized cost basis of the PCD loans. Any difference between the unpaid principal balance and the amortized cost basis is considered to relate to non-credit factors and resulted in a discount or premium. Discounts and premiums are recognized through interest income on a level-yield method over the life of the loans. For acquired loans not deemed PCD at acquisition, the differences between the initial fair value and the unpaid principal balance are recognized as interest income on a level-yield basis over the lives of the related loans.

Uncertainties Regarding the Estimate

Management relied on economic forecasts, internal valuations, or other relevant factors which were available at the time of the Merger in the determination of the assumptions used to calculate the fair value of the acquired loans. Discount rates, expected future cash flows, market conditions and other future events are subjective and may differ from estimates.

Impact on Financial Condition and Results of Operations

The estimate of fair values on acquired loans contributed to the recorded goodwill from the Merger. In future income statement periods, interest income on loans will include the amortization and accretion of any premiums and discounts resulting from the fair value of acquired loans. Additionally, the provision for credit losses on acquired individually analyzed PCD loans may be impacted due to changes in the assumptions used to calculate expected cash flows.

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 Asset Liability Committee (“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 are presented to appropriate senior management on a monthly basis, and the Board of Directors at each of its meetings. In addition, a twelve-month liquidity forecast is presented to ALCO in order to assess potential future liquidity concerns. A

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forecast of cash flow data for the upcoming 12 months is presented to the Board of Directors on an annual basis. Given recent banking industry events, management is also monitoring the level of uninsured deposits on a daily basis.

Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise. 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 or equity 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.

The Bank is a member of 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.

The Bank utilizes repurchase agreements as part of its borrowing policy to add liquidity. Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities. As of March 31, 2023 and December 31, 2022, the Bank’s repurchase agreements totaling $2.1 million and $1.4 million, respectively, were included in other short-term borrowings on the consolidated balance sheets.

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 $315.8 million during the three months ended March 31, 2023 compared to a decrease of $28.9 million for the three months ended March 31, 2022. Within deposits, core deposits (i.e., non-CDs) decreased $88.1 million during the three months ended March 31, 2023 and increased $42.6 million during the three months ended March 31, 2022. CDs increased $403.9 million during the three months ended March 31, 2023 compared to a decrease of $71.5 million during the three months ended March 31, 2022. The decrease in core deposits and increase in CDs was due to customer migration to higher-rate CDs as a result of the increasing interest rate environment. 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 or borrowing capacity through AFX and lines of credit with unaffiliated correspondent banks. At March 31, 2023, the Bank had an additional unused borrowing capacity of $1.53 billion 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 increased its outstanding FHLBNY advances by $367.0 million during the three months ended March 31, 2023, compared to a $25.0 million increase during the three months ended March 31, 2022. See Note 12. “FHLBNY Advances” for further information.

Subordinated debentures totaled $200.3 million at March 31, 2023 and $197.1 million at March 31, 2022. See Note 13. “Subordinated Debentures” to our consolidated financial statements for further information.

During the three months ended March 31, 2023 and 2022, real estate loan originations totaled $346.7 million and $454.3 million, respectively. During the three months ended March 31, 2023 and 2022, C&I loan originations totaled $5.2 million and $26.1 million, respectively.

Sale of securities available-for-sale totaled $79.3 million during the three months ended March 31, 2023. The Bank did not have any sale of securities available-for-sale during the three months ended March 31, 2022. Purchases of available-

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for-sale securities totaled $78.2 million and $3.0 million during the three months ended March 31, 2023 and 2022, respectively. Proceeds from pay downs and calls and maturities of available-for-sale securities were $16.2 million and $49.9 million for the three months ended March 31, 2023 and 2022, respectively.

The Bank did not have proceeds from sales of held-to-maturity securities during the three months ended March 31, 2023 or 2022, respectively. Purchases of held-to-maturity securities totaled $23.7 million and $31.9 million during the three months ended March 31, 2023 and 2022, respectively. Proceeds from pay downs and calls and maturities of held-to-maturity securities were $4.7 million and $2.7 million for the three months ended March 31, 2023 and 2022, 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, 2023, 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 the period indicated:


	Actual Ratios at March 31, 2023
							Basel III
				Consolidated			Minimum			To Be Categorized as
	Bank			Company			Requirement			“Well Capitalized” ⁽¹⁾
Tier 1 common equity ratio		12.1	%		9.3	%		4.5	%	6.5	%
Tier 1 risk-based capital ratio		12.1			10.4			6.0		8.0
Total risk-based capital ratio		12.9			13.0			8.0		10.0
Tier 1 leverage ratio		9.8			8.4			4.0		5.0

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

During the three months ended March 31, 2023, the Holding Company repurchased 24,813 shares of its common stock at an aggregate cost of $715 thousand. The Holding Company repurchased 505,005 shares of its common stock at an aggregate cost of $17.4 million during the three months ended March 31, 2022. As of March 31, 2023, 1,578,947 shares remained available for purchase under the authorized share repurchase 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 $1.8 million in cash dividends on its preferred stock during the three months ended March 31, 2023 and 2022, respectively.

The Holding Company paid $9.2 million and $9.4 million in cash dividends on its common stock during the three months ended March 31, 2023 and 2022, respectively.

Contractual Obligations

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

Off-Balance Sheet Arrangements

As part of its loan origination business, the Bank generally has outstanding commitments to extend credit to borrowers, which are originated pursuant to its regular underwriting standards. Available lines of credit may not be drawn on or may expire prior to funding, in whole or in part, and amounts are not estimates of future cash flows. As of March 31, 2023, the

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Bank had $105.3 million of firm loan commitments that were accepted by the borrowers. All of these commitments are expected to close during the remainder of the year ended December 31, 2023.

Additionally, in connection with a loan securitization completed in December 2017, the Bank executed a reimbursement agreement with FHLMC that obligates the Company to reimburse FHLMC for any contractual principal and interest payments on defaulted loans, not to exceed 10% of the original principal amount of the loans comprising the aggregate balance of the loan pool at securitization. The maximum exposure under this reimbursement obligation is $28.0 million. The Bank has pledged $28.0 million of available-for-sale pass-through MBS issued by GSEs as collateral.

Asset Quality

General

We do 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 our unaudited condensed consolidated financial statements for a discussion of evaluation for impaired securities.

Monitoring and Collection of Delinquent Loans

Our management reviews delinquent loans on a monthly basis and reports to our Board of Directors at each regularly scheduled Board meeting regarding the status of all non-performing and otherwise delinquent loans in our loan portfolio.

Our 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. 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, we will attempt to obtain the full payment due or negotiate a repayment schedule with the borrower to avoid foreclosure.

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, we reverse all outstanding accrued interest receivable.

We generally initiate foreclosure proceedings on real estate loans when a loan enters non-accrual status based upon non-payment, unless the borrower is paying in accordance with an agreed upon modified payment agreement. We obtain an updated appraisal upon the commencement of legal action to calculate a potential collateral shortfall and to reserve appropriately for the potential loss. 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. We generally attempt 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. We have not initiated any expected or imminent foreclosure proceedings that are likely to have a material adverse impact on our consolidated financial statements. 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 generally at least six months.

The C&I portfolio is actively managed by our lenders and underwriters. Most credit facilities typically require an annual review of the exposure and borrowers are required to submit annual financial reporting and loans are structured with financial covenants to indicate expected performance levels. Smaller C&I loans are monitored based on performance and the ability to draw against a credit line is curtailed if there are any indications of credit deterioration. Guarantors are also

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required to 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, additional guarantor support or a material enhancement to the frequency and quality of financial reporting. Loans determined to reach adverse risk rating standards are monitored closely by Credit Administration to identify any potential credit losses. When warranted, loans reaching a Substandard rating could be reassigned to the Workout Group for direct handling.

Non-accrual Loans

Within our held-for-investment loan portfolio, non-accrual loans totaled $31.5 million at March 31, 2023 and $34.2 million at December 31, 2022.

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


	March 31,			December 31,			March 31,
	2023			2022			2022

	(Dollars in thousands)
Non-accrual loans:
One-to-four family residential, including condominium and cooperative apartment	$	2,808		$	3,203		$	5,241
Multifamily residential and residential mixed-use real estate		—			—			—
CRE		8,068			8,332			4,972
Acquisition, development, and construction		657			657			665
C&I		19,912			21,946			25,000
Other		99			99			84
Total non-accrual loans	$	31,544		$	34,237		$	35,962
Ratios:
Total non-accrual loans to total loans		0.29	%		0.32	%		0.39	%
Total non-performing assets to total assets		0.23			0.26			0.30

Troubled Debt Restructuring Disclosures Prior to Our Adoption of ASU No. 2022-02

Prior to our adoption of ASU No. 2022-02, we accounted for a Troubled Debt Restructuring (“TDRs”) as a loan that we, for economic or legal reasons related to a borrower’s financial difficulties, granted a concession to the borrower that we would not otherwise grant. Those concessions included a reduction of interest rate for the remaining term of the loan, the maturity date of the loan was extended with a stated interest rate lower than the current market rate for new debt with similar risk, and the outstanding principal amount and/or accrued interest have been reduced. In instances in which the interest rate had 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.

On January 1, 2023, we adopted ASU 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023. The accrual status of each restructured loan is determined separately in accordance with our policies for determining accrual or non-accrual status. At the time the modification agreement is entered into between the Bank and the borrower 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 our policy and agency regulations.

Within the allowance for credit losses, losses are estimated for restructured loan on accrual status and well as restructured loans on non-accrual status that are one-to-four family loans or consumer loans, on a pooled basis with loans that share similar risk characteristics. Restructured loans on non-accrual status excluding one-to-four family and consumer loans are individually evaluated to determine expected credit losses. For restructured loans that are collateral-dependent where we

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have determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and we expect repayment of the loan to be provided substantially through the operation or sale of the collateral, the allowance for credit losses (“ACL”) is measured based on the difference between the fair value of collateral, less the estimated costs to sell, and the amortized cost basis of the loan as of the measurement date. For non-collateral-dependent loans, the ACL is measured based on the difference between the present value of expected cash flows and the amortized cost basis of the loan as of the measurement date.

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, we obtain a current appraisal on the property and reassess 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. We typically seek to dispose of OREO properties in a timely manner. As a result, OREO properties have generally not warranted subsequent independent appraisals.

There was no carrying value of OREO properties on our consolidated balance sheets at March 31, 2023 or December 31, 2022. We did not recognize any provisions for losses on OREO properties during the three months ended March 31, 2023 or 2022.

Past Due Loans

Loans Delinquent 30 to 59 Days

At March 31, 2023, we had loans totaling $18.7 million that were past due between 30 and 59 days. At December 31, 2022, we had loans totaling $23.5 million that were past due between 30 and 59 days. The 30 to 59-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Loans Delinquent 60 to 89 Days

At March 31, 2023, we had loans totaling $1.4 million that were past due between 60 and 89 days. At December 31, 2022, we had loans totaling $0.7 million that were past due between 60 and 89 days. The 60 to 89-day delinquency levels fluctuate monthly, and are generally considered a less accurate indicator of near-term credit quality trends than non-accrual loans.

Accruing Loans 90 Days or More Past Due

There were no accruing loans 90 days or more past due at March 31, 2023 or at December 31, 2022.

Allowance for Off-Balance Sheet Exposures

We maintain an allowance, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower. The amount of our allowance was $2.8 million at March 31, 2023 and at December 31, 2022, respectively. This allowance is determined based upon the outstanding volume of loan commitments at each period end. Any increases or reductions in this allowance are recognized in provision for credit losses.

Allowance for Credit Losses

We recognized a credit loss recovery of $3.6 million during the three months ended March 31, 2023, compared to a credit loss recovery of $1.6 million for the three months ended March 31, 2022. The $3.6 million credit loss recovery for the three months ended March 31, 2023 was primarily associated with a reduction in reserves on pooled Purchased Credit

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Deteriorated ("PCD”) loans that were acquired as part of the Company’s 2021 merger of equals transaction. The $1.6 million credit loss recovery for the first quarter of 2022 was primarily associated with the improvement in forecasted macroeconomic conditions, as well as a reduction in reserves for individually evaluated loans.

For a further discussion of the allowance for credit losses and related activity during the three months ended March 31, 2023 and 2022, please see Note 7 to the condensed consolidated financial statements.

The following table presents our allowance for credit losses allocated by loan type and the percent of loans in each category to total loans as of the dates indicated.


	March 31, 2023				December 31, 2022
			Percent				Percent
			of Loans				of Loans
			in Each				in Each
			Category				Category
	Allocated		to Total		Allocated		to Total
	Amount		Loans		Amount		Loans

(Dollars in thousands)
One-to-four family residential and cooperative/condominium apartment	$	6,012	7.45	%	$	5,969	7.32	%
Multifamily residential and residential mixed-use		7,613	38.38			8,360	38.11
CRE		24,478	42.02			27,329	42.19
Acquisition, development, and construction		2,515	2.06			1,723	2.17
C&I		37,477	10.02			39,853	10.14
Other loans		240	0.07			273	0.07
Total	$	78,335	100.00	%	$	83,507	100.00	%

The following table sets forth information about our allowance for credit losses at or for the dates indicated:


	At or for the Three Months Ended March 31,
	2023			2022

	(Dollars in thousands)
Total loans outstanding at end of period ⁽¹⁾	$	10,731,845		$	9,249,849
Average total loans outstanding during the period⁽²⁾		10,613,353			9,228,480
Allowance for credit losses balance at end of period		78,335			79,615
Allowance for credit losses to total loans at end of period		0.73	%		0.86	%
Non-performing loans to total loans at end of period		0.29			0.39
Allowance for credit losses to total non-performing loans at end of period		248.34			221.39

Ratio of net charge-offs to average loans outstanding during the period:
One-to-four family residential and cooperative/condominium apartment		—	%		—	%
Multifamily residential and residential mixed-use		—			—
CRE		—			—
Acquisition, development, and construction		—			—
C&I		0.59			1.13
Other loans		(0.05)			0.04
Total		0.06			0.11

(1)	Total loans represent gross loans (excluding loans held for sale), inclusive of deferred fees/costs and premiums/discounts.

(2)	Total average loans represent gross loans (including loans held for sale), inclusive of deferred loan fees/costs and premiums/discounts.

Comparison of Financial Condition at March 31, 2023 and December 31, 2022

Assets. Assets totaled $13.84 billion at March 31, 2023, $651.8 million above their level at December 31, 2022, primarily due to increases of $493.8 million in cash and due from banks, $170.2 million in our loan portfolio and $16.5 million in restricted stock, partially offset by a decrease of $24.2 million in derivative assets and a decrease of $3.9 million in total investment securities.

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Total loans increased $170.2 million during the three months ended March 31, 2023, to $10.65 billion at period end. During the period, we had loan originations of $351.9 million.

Total securities decreased $3.9 million during the three months ended March 31, 2023, to $1.53 billion at period end, primarily due to proceeds from principal payments, calls, maturities, and sales of $105.0 million, offset in part by purchases of $101.9 million. There were no transfers to or from securities held-to-maturity during the three months ended March 31, 2023.

Liabilities. Total liabilities increased $630.1 million during the three months ended March 31, 2023, to $12.65 billion at period end, primarily due to an increase of $367.0 million in FHLBNY advances and an increase of $315.8 million in deposits, partially offset by a decrease of $32.4 million in derivative cash collateral and a decrease of $21.8 million in derivative liabilities.

Stockholders’ Equity. Stockholders’ equity increased $21.7 million during the three months ended March 31, 2023 to $1.19 billion at period end, primarily due to net income for the period of $37.3 million, partially offset by common stock dividends of $9.2 million, other comprehensive loss of $4.3 million, preferred stock dividends of $1.8 million and repurchases of shares of common stock of $715 thousand.

Comparison of Operating Results for the Three Months Ended March 31, 2023 and 2022

General. Net income was $37.3 million during the three months ended March 31, 2023, compared to net income of $34.5 million for the three months ended March 31, 2022. During the three months ended March 31, 2023, non-interest expense decreased by $2.4 million, the credit loss provision decreased by $2.1 million, non-interest income increased by $1.8 million, net interest income decreased by $3.3 million, and income tax expense increased by $138 thousand, compared to the three months ended March 31, 2022.

The discussion of net interest income for the three months ended March 31, 2023 and 2022 should be read in conjunction with the following tables, which set forth certain information related to the consolidated statements of income for those periods, and which also present the average yield on assets and average cost of liabilities for the periods indicated. The average yields and costs were derived by dividing income or expense by the average balance of their related assets or liabilities during the periods represented. Average balances were derived from average daily balances. No tax-equivalent adjustments have been made for interest income exempt from Federal, state, and local taxation. The yields include loan fees consisting of amortization of loan origination and commitment fees and certain direct and indirect origination costs, prepayment fees, and late charges that are considered adjustments to yields. Loan fees included in interest income were $292 thousand and $834 thousand during the three months ended March 31, 2023 and 2022, respectively. The decrease in loan fees was primarily due to a decline in loan prepayment fees in 2023. There are no out-of-period adjustments included in the rate/volume analysis in the following table.

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Analysis of Net Interest Income


	Three Months Ended March 31,
	2023							2022
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost

Assets:	(Dollars in thousands)
Interest-earning assets:
Real estate loans ⁽¹⁾	$	9,560,755	$	109,589		4.65	%	$	8,296,732	$	76,437		3.74	%
Commercial and industrial loans ⁽¹⁾		1,045,048		18,735		7.27			916,090		9,786		4.33
Other loans ⁽¹⁾		7,550		115		6.18			15,658		197		5.10
Securities		1,699,846		8,431		2.01			1,726,189		7,131		1.68
Other short-term investments		372,036		3,802		4.14			379,136		368		0.39
Total interest-earning assets		12,685,235		140,672		4.50	%		11,333,805		93,919		3.36	%
Non-interest earning assets		764,511							865,916
Total assets	$	13,449,746						$	12,199,721

Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking	$	843,108	$	1,523		0.73	%	$	870,889	$	367		0.17	%
Money market		2,699,640		13,849		2.08			3,632,438		973		0.11
Savings		2,327,126		14,599		2.54			1,256,701		207		0.07
Certificates of deposit		1,167,736		7,301		2.54			824,883		984		0.48
Total interest-bearing deposits		7,037,610		37,272		2.15			6,584,911		2,531		0.16
FHLBNY advances		1,255,700		13,500		4.36			33,889		77		0.92
Subordinated debt, net		200,276		2,553		5.17			197,080		2,201		4.53
Other short-term borrowings		11,827		118		4.05			2,459		—		—
Total borrowings		1,467,803		16,171		4.47			233,428		2,278		3.96
Derivative cash collateral		135,641		1,477		4.42			14,335		1		—
Total interest-bearing liabilities		8,641,054		54,920		2.58	%		6,832,674		4,810		0.29	%
Non-interest-bearing checking		3,341,707							3,979,741
Other non-interest-bearing liabilities		273,281							189,843
Total liabilities		12,256,042							11,002,258
Stockholders' equity		1,193,704							1,197,463
Total liabilities and stockholders' equity	$	13,449,746						$	12,199,721
Net interest income			$	85,752						$	89,109
Net interest spread ⁽²⁾						1.92	%						3.07	%
Net interest-earning assets	$	4,044,181						$	4,501,131
Net interest margin ⁽³⁾						2.74	%						3.19	%
Ratio of interest-earning assets to interest-bearing liabilities						146.80	%						165.88	%
Deposits (including non-interest-bearing checking accounts)	$	10,379,317	$	37,272		1.46	%	$	10,564,652	$	2,531		0.10	%

(1) Amounts are net of deferred origination costs/ (fees) and allowance for credit losses, and include loans held for sale.

(2) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average-interest earning assets.

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Rate/Volume Analysis


	Three Months Ended March 31, 2023
	Compared to Three Months Ended March 31, 2022
	Increase / (Decrease) Due to:
	Volume		Rate		Total

	(Dollars in thousands)
Interest-earning assets:
Real estate loans ⁽¹⁾	$	13,096	$	20,056	$	33,152
Commercial and industrial ⁽¹⁾		1,843		7,106		8,949
Other loans ⁽¹⁾		(114)		32		(82)
Securities		(107)		1,407		1,300
Other short-term investments		(40)		3,474		3,434
Total interest-earning assets	$	14,678	$	32,075	$	46,753
Interest-bearing liabilities:
Interest-bearing checking	$	(30)	$	1,186	$	1,156
Money market		(2,511)		15,387		12,876
Savings		3,462		10,930		14,392
Certificates of deposit		1,267		5,050		6,317
FHLBNY advances		7,954		5,469		13,423
Subordinated debt, net		39		313		352
Other short-term borrowings		47		71		118
Derivative cash collateral		660		816		1,476
Total interest-bearing liabilities	$	10,888	$	39,222	$	50,110
Net change in net interest income	$	3,790	$	(7,147)	$	(3,357)

(1) Amounts are net of deferred origination costs/ (fees) and allowance for credit losses, and include loans held for sale.

Net interest income. Net interest income was $85.8 million during the three months ended March 31, 2023, a decrease of $3.3 million from the three months ended March 31, 2022. Average interest-earning assets were $12.69 billion for the three months ended March 31, 2023, an increase of $1.36 billion from $11.33 billion for the three months ended March 31, 2022. Net interest margin (“NIM”) was 2.74% during the three months ended March 31, 2023, down from 3.19% during the three months ended March 31, 2022.

Interest Income. Interest income was $140.7 million during the three months ended March 31, 2023, compared to $93.9 million during the three months ended March 31, 2022. During the first quarter of 2023, interest income increased $46.8 million from the first quarter of 2022, primarily reflecting increases in interest income of $33.1 million on real estate loans, $8.9 million on C&I loans, $3.4 million on other short-term investments and $1.3 million on securities, partially offset by decrease in interest income of $82 thousand on other loans.

The increased interest income on real estate loans was related to an increase of a 91-basis point increase in the average yield and an increase of $1.26 billion in the average balance of such loans in the 2023 period. The increased interest income on C&I loans was related to a 294-basis point increase in the average yield and an increase of $129.0 million in the average balance of such loans in the period. The increased interest income on short-term investments was due to an increase of a 375-basis point increase in the average yield offset by a $7.1 million decrease in the average balance of such short-term investments during the period. The increased interest income on securities was due to an increase of a 33-basis point increase in the average yield offset by a $26.3 million decrease in the average balance of such securities during the period. The decreased interest income on other loans was due to a 108-basis point increase in the average yield offset by a $8.1 million decrease in the average balance of other loans during the period.

Interest Expense. Interest expense was $54.9 million during the three months ended March 31, 2023, compared to $4.8 million during the three months ended March 31, 2022, primarily reflecting increases in interest expense of $34.7 million on deposits, $13.9 million on total borrowings and $1.5 million on derivative cash collateral. The increased interest expense

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on deposits primarily reflects a 247-basis point increase in rates paid on savings accounts and an increase of $1.07 billion in average balance of such deposits, a 197 basis-point increase in rates paid on money market accounts offset by $932.8 million in average balances of such deposits and a 206 basis-point increase in rates paid on CDs and an increase of $342.9 million in average balance of such deposits. The increases in interest expenses on money market accounts, saving accounts and CDs were primarily due to intense price competition among banks and other financial institutions. The increased interest expense on total borrowings primarily reflects a $1.22 billion increase in the average balance of FHLBNY advances and a 344-basis point increase in rates paid on such advances.

Provision for Credit Losses. We recognized a credit loss recovery of $3.6 million during the three months ended March 31, 2023, compared to a credit loss recovery of $1.6 million for the three months ended March 31, 2022. The $3.6 million credit loss recovery for the first quarter of 2023 was primarily associated with a reduction in reserves on pooled Purchased Credit Deteriorated (“PCD”) loans that were acquired as part of the Company’s 2021 merger of equals transaction. The $1.6 million credit loss recovery for the first quarter of 2022 was primarily associated with an improvement in forecasted macroeconomic conditions, as well as a reduction in reserves for individually evaluated loans.

Non-Interest Income. Non-interest income was $9.0 million during the three months ended March 31, 2023, compared to $7.2 million during the three months ended March 31, 2022. During the first quarter of 2023, non-interest income increased $1.8 million from the first quarter of 2022, reflecting an increase of $3.1 million in loan level derivative income, an increase of $324 thousand in BOLI income and a $274 thousand increase in gain on sale of SBA, partially offset by a $1.4 million loss on sale of securities and a $244 thousand decrease on service charges and other fees during the 2023 period.

Non-Interest Expense. Non-interest expense was $47.5 million during the three months ended March 31, 2023, compared to $49.9 million during the three months ended March 31, 2022. During the first quarter of 2023, non-interest expense decreased $2.4 million from the first quarter of 2022, primarily due to a $4.2 million decrease in salaries and employee benefits, offset by increases of $723 thousand in federal deposit insurance premiums, $433 thousand in data processing costs and $631 thousand in all other non-interest expenses. The increase in federal deposit insurance premiums relates to an increase in deposit insurance rates due to a special assessment by the FDIC.

Non-interest expense was 1.41% and 1.64% of average assets during the three months ended March 31, 2023 and 2022, respectively.

Income Tax Expense. Income tax expense was $13.6 million during the three months ended March 31, 2023, compared to income tax expense of $13.5 million during the three months ended March 31, 2022. The reported effective tax rate for the first quarter ending March 31, 2023 was 26.8%, and 28.1% for the first quarter ending March 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk were presented at December 31, 2022 in Item 7A of the Holding Company’s Annual Report on Form 10-K, filed with the SEC on February 28, 2023. The following is an update of the discussion provided therein.

General. The Company’s largest component of market risk remains interest rate risk. The Company is not subject to foreign currency exchange or commodity price risk. During the three months ended March 31, 2023, we conducted zero transactions involving derivative instruments requiring bifurcation in order to hedge interest rate or market risk.

Interest Rate Risk Exposure Analysis

Economic Value of Equity (“EVE”) Analysis. In accordance with agency regulatory guidelines, the Company simulates the impact of interest rate volatility upon EVE using several interest rate scenarios. EVE is the difference between the present value of the expected future cash flows of the Company’s assets and liabilities and the value of any off-balance sheet items, such as derivatives, if applicable.

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Traditionally, the fair value of fixed-rate instruments fluctuates inversely with changes in interest rates. Increases in interest rates thus result in decreases in the fair value of interest-earning assets, which could adversely affect the Company’s consolidated results of operations in the event they were to be sold, or, in the case of interest-earning assets classified as available-for-sale, reduce the Company’s consolidated stockholders’ equity, if retained. The changes in the value of assets and liabilities due to fluctuations in interest rates measure the interest rate sensitivity of those assets and liabilities.

In order to measure the Company’s sensitivity to changes in interest rates, EVE is calculated under market interest rates prevailing at a given quarter-end (“Pre-Shock Scenario”), and under various other interest rate scenarios (“Rate Shock Scenarios”) representing immediate, permanent, parallel shifts in the term structure of interest rates from the actual term structure observed in the Pre-Shock Scenario. An increase in the EVE is considered favorable, while a decline is considered unfavorable. The changes in EVE between the Pre-Shock Scenario and various Rate Shock Scenarios due to fluctuations in interest rates reflect the interest rate sensitivity of the Company’s assets, liabilities, and off-balance sheet items that are included in the EVE. Management reports the EVE results to the Board of Directors on a quarterly basis. The report compares the Company’s estimated Pre-Shock Scenario EVE to the estimated EVE calculated under the various Rate Shock Scenarios.

The Company’s valuation model makes various estimates regarding cash flows from principal repayments on loans and deposit decay rates at each level of interest rate change. The Company’s estimates for loan repayment levels are influenced by the recent history of prepayment activity in its loan portfolio, as well as the interest rate composition of the existing portfolio, especially in relation to the existing interest rate environment. In addition, the Company considers the amount of fee protection inherent in the loan portfolio when estimating future repayment cash flows. Regarding deposit decay rates, the Company tracks and analyzes the decay rate of its deposits over time, with the assistance of a reputable third-party, and over various interest rate scenarios. Such results are utilized in determining estimates of deposit decay rates in the valuation model. The Company also generates a series of spot discount rates that are integral to the valuation of the projected monthly cash flows of its assets and liabilities. The valuation model employs discount rates that it considers representative of prevailing market rates of interest with appropriate adjustments it believes are suited to the heterogeneous characteristics of the Company’s various asset and liability portfolios. No matter the care and precision with which the estimates are derived, actual cash flows could differ significantly from the Company’s estimates resulting in significantly different EVE calculations.

The analysis that follows presents, as of March 31, 2023 and December 31, 2022, the estimated EVE at both the Pre-Shock Scenario and the -100 Basis Point, +100 Basis Point Rate and +200 Basis Point Rate Shock Scenarios.

March 31, 2023

December 31, 2022

Dollar

Percentage

Dollar

Percentage

(Dollars in thousands)

EVE

Change

EVE

Change

Rate Shock Scenarios

+ 200 Basis Points

1,661,278

118,558

7.7%

1,717,562

78,373

4.8%

+ 100 Basis Points

1,621,565

78,845

5.1%

1,703,131

63,942

3.9%

Pre-Shock Scenario

1,542,720

—

1,639,189

—

- 100 Basis Points

1,449,208

(93,512)

(6.1)%

1,515,010

(124,179)

(7.6)%

The Company’s Pre-Shock Scenario EVE decreased from $1.64 billion at December 31, 2022 to $1.54 billion at March 31, 2023. In the first quarter of 2023, a shift in the deposit mix, coupled with an increase in the cost of the Bank’s interest bearing non-maturity deposits, led to a decline in the Bank’s EVE at March 31, 2023 relative to year-end. However, despite the quarter-over-quarter changes in the EVE valuation, the Bank continued to maintain a low-cost funding base relative to peers in the metro New York area.

The Company’s EVE in the +100 Basis Point Rate and +200 Basis Point Rate Shock Scenarios decreased from $1.70 billion and $1.72 billion, respectively, at December 31, 2022, to $1.62 billion and $1.66 billion, respectively, at March 31, 2023. In the -100 Basis Point Rate Shock Scenario the Company’s EVE decreased from $1.52 billion at December 31, 2022, to $1.45 billion at March 31, 2023.

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Income Simulation Analysis. As of the end of each quarterly period, the Company also monitors the impact of interest rate changes through a net interest income simulation model. This model estimates the impact of interest rate changes on the Company’s net interest income over forward-looking periods typically not exceeding 36 months (a considerably shorter period than measured through the EVE analysis). Management reports the net interest income simulation results to the Company’s Board of Directors on a quarterly basis. The following table discloses the estimated changes to the Company’s net interest income in various time periods assuming gradual changes in interest rates over a 12-month period beginning March 31, 2023, for the given rate scenarios:


	Percentage Change in Net Interest Income
Gradual Change in Interest rates of:	Year-One	Year-Two
+ 200 Basis Points	0.6%	1.5%
+ 100 Basis Points	0.2%	0.6%
- 100 Basis Points	(0.4)%	(1.6)%

Management also examines the potential impact to net interest income by simulating the impact of instantaneous changes to interest rates. The following table discloses the estimated changes to the Company’s net interest income in various time periods associated with the given interest rate shock scenarios.


	Percentage Change in Net Interest Income
Instantaneous Rate Shock Scenarios	Year-One	Year-Two
+ 200 Basis Points	3.2%	3.9%
+ 100 Basis Points	1.6%	1.9%
- 100 Basis Points	(2.2)%	(3.2)%

iIte

Item 4.Controls and Procedures

Management of the Company, with the participation of its Principal Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness, as of March 31, 2023, of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2023 in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, such controls.

PART II – OTHER INFORMATION

Item 1.Legal Proceedings

In the ordinary course of business, the Company is routinely named as a defendant in or party to various pending or threatened legal actions or proceedings. Certain of these matters may seek substantial monetary damages. In the opinion of management, the Company was not involved in any actions or proceedings that were likely to have a material adverse impact on its financial condition and results of operations as of March 31, 2023.

Item 1A.Risk Factors

For information regarding the Company’s risk factors, see Part 1, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2022, as filed with the Securities and Exchange Commission. The following risk factors represent a material update and addition to those disclosed in the Annual Report on Form 10-K for

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the fiscal year ended December 31, 2022. The risk factors set forth below also identify important factors that could cause our actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of us.

The Company’s business and stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions. If the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on the Company’s financial condition and results of operations.

On March 8, 2023, Silvergate Capital Corporation, La Jolla, California, the holding company for Silvergate Bank, announced its decision to voluntarily liquidate the Bank and wind down operations. On March 10, 2023, Silicon Valley Bank, Santa Clara, California, and on May 1, 2023, First Republic Bank, San Francisco, California, were closed by the California Department of Financial Protection and Innovation. On March 12, 2023, Signature Bank, New York, New York, was closed by the New York State Department of Financial Services. These banks also had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in regional depository institutions.

As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations. While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including previously uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional banks and the banking system more broadly.

These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of deposit portfolios, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. If the Company is unable to adequately manage liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on its financial condition and results of operations.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a)	Not applicable.

(b)	Not applicable.

(c)


	Total			Total Number of	Maximum Number
	Number	Average		Shares Purchased	of Shares that May
	of Shares	Price Paid		as Part of Publicly	Yet be Purchased
Period	Purchased	Per Share		Announced Programs	Under the Programs ⁽¹⁾
January 2023	9,200	$	30.50	9,200	1,594,560
February 2023	8,818		30.67	8,818	1,585,742
March 2023	6,795		26.01	6,795	1,578,947

(1)

In May 2022, we announced the adoption of a new stock repurchase program of up to 1,948,314 shares, upon the completion of our existing authorized stock repurchase program. The stock repurchase program may be suspended, terminated, or modified at any time for any reason, and has no termination date. As of March 31, 2023, there were 1,578,947 shares remaining to be purchased in the program.

Item 3.Defaults Upon Senior Securities

None.

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Item 4.Mine Safety Disclosures

Not Applicable.

Item 5.Other Information

None.

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Item 6.Exhibits


3.1		Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed February 2, 2021 (File No. 001-34096))
3.2		Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed February 1, 2021 (File No. 001-34096))
4.1		Indenture, dated May 6, 2022, 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 May 6, 2022 (File No. 001-34096))
4.2		First Supplemental Indenture, May 6, 2022, between Dime Community Bancshares, Inc. and Wilmington Trust National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed May 6, 2022 (File No. 001-34096))
4.3		Form of 5.000% Fixed-to-Floating Rate Subordinated Notes due 2032 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed May 6, 2022 (File No. 001-34096))
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a)
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a)
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
101		The following financial statements from Dime Community Bancshares, Inc.'s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2023, filed on May 5, 2023, formatted in XBRL: (i) Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022, (ii) Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022, (iii) Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and 2022, (iv) Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022, and (vi) the Condensed Notes to Consolidated Financial Statements.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definitions Linkbase Document
104		Cover page to this Quarterly Report on Form 10-Q, formatted in Inline XBRL

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dime Community Bancshares, Inc.


Dated: May 5, 2023	By:	/s/ KEVIN M. O’CONNOR
		Kevin M. O’Connor
		Chief Executive Officer


Dated: May 5, 2023	By:	/s/ AVINASH REDDY
		Avinash Reddy
		Senior Executive Vice President and Chief Financial Officer