What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-07 compared with 2022-08-08 · 126 added, 127 removed, 415 unchanged (38% of the section changed)

17 unchanged sentences

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.

The Company’s ability to respond quickly to the SBA guidelines allowed the Company to be a source of funding for local businesses during the COVID-19 pandemic.

The Company’s SBA PPP loans generally have a two-year or five-year term and earn interest at 1%.

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 June 30, 2022, the Company had SBA PPP loans totaling $18.9 million, net of deferred fees.

As of September 30, 2022, the Company had SBA PPP loans totaling $11.4 million, net of deferred fees.

It is the Company’s expectation that loans funded through the PPP are fully guaranteed by the U.S.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Per Share Data:

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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.

Changes in estimates could result in a material change in the allowance through charges to earnings and 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.

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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 calculated expected cash flows.

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

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Repurchase agreements represent funds received from customers, generally on an overnight basis, which are collateralized by investment securities.

As of June 30, 2022 and December 31, 2021, the Bank’s repurchase agreements totaling $2.2 million and $1.9 million, respectively, were included in other short-term borrowings on the consolidated balance sheets.

As of September 30, 2022 and December 31, 2021, the Bank’s repurchase agreements totaling $2.1 million and $1.9 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.

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However, favorable performance of the equity or bond markets could adversely impact the Bank’s deposit flows.

Total deposits increased $107.0 million during the six months ended June 30, 2022 compared to an increase of $6.54 billion for the six months ended June 30, 2021.

Total deposits increased $29.7 million during the nine months ended September 30, 2022 compared to an increase of $6.15 billion for the nine months ended September 30, 2021.

The increase in total deposits during the 2021 period was primarily due to the acquisition of deposits in the Merger.

Within deposits, core deposits ( i.e., non-CDs) increased $957 thousand during the six months ended June 30, 2022 and increased $6.56 billion during the six months ended June 30, 2021.

CDs increased $106.1 million during the six months ended June 30, 2022 compared to a decrease of $21.7 million during the six months ended June 30, 2021.

The increase in CDs during the current period was primarily due an $87.7 million increase in brokered CDs.

Within deposits, core deposits ( i.e., non-CDs) decreased $47.8 million during the nine months ended September 30, 2022 and increased $6.46 billion during the nine months ended September 30, 2021.

CDs increased $77.5 million during the nine months ended September 30, 2022 compared to a decrease of $306.4 million during the nine months ended September 30, 2021.

The increase in CDs during the current period was primarily due to a $132.6 million increase in brokered CDs.

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 June 30, 2022, the Bank had an additional unused borrowing capacity of $2.76 billion through the FHLBNY, subject to customary minimum FHLBNY common stock ownership requirements ( i.e.

At September 30, 2022, the Bank had an additional unused borrowing capacity of $2.48 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 $75.0 million during the six months ended June 30, 2022, compared to a $1.18 billion decrease during the six months ended June 30, 2021.

The Bank increased its outstanding FHLBNY advances by $595.0 million during the nine months ended September 30, 2022, compared to a $1.18 billion decrease during the nine months ended September 30, 2021.

The decrease in borrowings during the 2021 period was primarily due to a reduction of borrowings assumed in the Merger.

“FHLBNY Advances” for further information.

During the six months ended June 30, 2022 and 2021, real estate loan originations totaled $1.34 billion and $762.0 million, respectively.

During the six months ended June 30, 2022 and 2021, C&I loan originations totaled $49.9 million and $641.1 million, respectively.

The decrease in C&I loan originations during the 2022 period was primarily due to PPP loan originations of $609.7 million during the six months ended June 30, 2021.

During the nine months ended September 30, 2022 and 2021, real estate loan originations totaled $2.13 billion and $1.24 billion, respectively.

During the nine months ended September 30, 2022 and 2021, C&I loan originations totaled $66.2 million and $631.3 million, respectively.

Included in the 2021 period was PPP loan originations of $579.9 million.

The PPP program ended on May 31, 2021.

The Bank did not have proceeds from sales of securities available-for-sale during the six months ended June 30, 2022.

Proceeds from sales of available-for-sale securities totaled $137.6 million during the six months ended June 30, 2021.

Purchases of available-for-sale securities totaled $6.2 million and $508.3 million during the six months ended June 30,

2022 and 2021, respectively.

Proceeds from pay downs and calls and maturities of available-for-sale securities were $112.2 million and $290.4 million for the six months ended June 30, 2022 and 2021, respectively.

The Bank did not have proceeds from sales of held-to-maturity securities during the six months ended June 30, 2022.

Purchases of held-to-maturity securities totaled $41.6 million during the six months ended June 30, 2022.

Proceeds from pay downs and calls and maturities of held-to-maturity securities were $14.1 million for the six months ended June 30, 2022.

The Bank did not have securities held-to-maturity during the six months ended June 30, 2021.

The Bank did not have proceeds from sales of securities available-for-sale during the nine months ended September 30, 2022.

Proceeds from sales of available-for-sale securities totaled $138.1 million during the nine months ended September 30, 2021.

Purchases of available-for-sale securities totaled $29.7 million and $1.03 billion during the nine months ended

September 30, 2022 and 2021, respectively.

Proceeds from pay downs and calls and maturities of available-for-sale securities were $140.0 million and $350.6 million for the nine months ended September 30, 2022 and 2021, respectively.

The Bank did not have proceeds from sales of held-to-maturity securities during the nine months ended September 30, 2022.

Purchases of held-to-maturity securities totaled $63.2 million during the nine months ended September 30, 2022.

Proceeds from pay downs and calls and maturities of held-to-maturity securities were $25.3 million for the nine months ended September 30, 2022.

The Bank did not have securities held-to-maturity during the nine months ended September 30, 2021.

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 June 30, 2022, each of the Company and the Bank were in compliance with all applicable regulatory capital requirements and the Bank was considered "well capitalized"

At September 30, 2022, 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 June 30, 2022

Actual Ratios at September 30, 2022

To Be Categorized as

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

During the six months ended June 30, 2022, the Holding Company repurchased 1,222,649 shares of its common stock at an aggregate cost of $40.3 million.

The Holding Company repurchased 424,121 shares of its common stock at an aggregate cost of $14.6 million during the six months ended June 30, 2021.

As of June 30, 2022, up to 1,812,352 shares remained available for purchase under the authorized share repurchase programs.

During the nine months ended September 30, 2022, the Holding Company repurchased 1,422,995 shares of its common stock at an aggregate cost of $46.5 million.

The Holding Company repurchased 904,160 shares of its common stock at an aggregate cost of $30.0 million during the nine months ended September 30, 2021.

As of September 30, 2022, 1,612,006 shares remained available for purchase under the authorized share repurchase programs.

See "Part II - Item 2.

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for additional information about repurchases of common stock.

The Holding Company paid $3.6 million in cash dividends on its preferred stock during both the six months ended June 30, 2022 and 2021, respectively.

The Holding Company paid $18.7 million and $15.1 million in cash dividends on its common stock during the six months ended June 30, 2022 and 2021, respectively.

The Holding Company paid $5.5 million in cash dividends on its preferred stock during both the nine months ended September 30, 2022 and 2021, respectively.

The Holding Company paid $27.7 million and $29.6 million in cash dividends on its common stock during the nine months ended September 30, 2022 and 2021, respectively.

Contractual Obligations

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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 June 30, 2022, the Bank had $382.0 million of firm loan commitments that were accepted by the borrowers.

As of September 30, 2022, the Bank had $286.8 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, 2022.

Additionally, in connection with the Loan Securitization, 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.

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.

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Non-accrual Loans

Within our held-for-investment loan portfolio, non-accrual loans totaled $36.3 million at June 30, 2022 and $40.3 million at December 31, 2021.

Within our held-for-investment loan portfolio, non-accrual loans totaled $41.1 million at September 30, 2022 and $40.3 million at December 31, 2021.

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

September 30,

(Dollars in thousands)

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In instances in which the interest rate has been reduced, management would not deem the modification a TDR in the event that the reduction in interest rate reflected either a general decline in market interest rates or an effort to maintain a relationship with a borrower who could readily obtain funds from other sources at the current market interest rate, and the terms of the restructured loan are comparable to the terms offered by the Bank to non-troubled debtors.

The Bank modified six loans and two loans in a manner that met the criteria for a TDR by granting payment deferrals to borrowers experiencing financial difficulties during the six months ended June 30, 2022 and 2021, respectively.

The Bank modified nine loans and three loans in a manner that met the criteria for a TDR during the nine months ended September 30, 2022 and 2021, respectively.

Accrual status for TDRs is determined separately for each TDR in accordance with our policies for determining accrual or non-accrual status.

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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 TDRs on accrual status and well as TDRs 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.

TDRs on non-accrual status excluding one-to-four family and consumer loans are individually evaluated to determine expected credit losses.

Within the allowance for credit losses, losses are estimated for TDRs on accrual status and well as TDRs 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.

TDRs on non-accrual status

excluding one-to-four family and consumer loans are individually evaluated to determine expected credit losses.

For collateral-dependent TDRs where we 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.

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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 June 30, 2022 or December 31, 2021.

We did not recognize any provisions for losses on OREO properties during the six months ended June 30, 2022 or 2021.

There was no carrying value of OREO properties on our consolidated balance sheets at September 30, 2022 or December 31, 2021.

We did not recognize any provisions for losses on OREO properties during the nine months ended September 30, 2022 or 2021.

Past Due Loans

Loans Delinquent 30 to 59 Days

At June 30, 2022, we had loans totaling $35.9 million that were past due between 30 and 59 days.

At September 30, 2022, we had loans totaling $19.5 million that were past due between 30 and 59 days.

At December 31, 2021, we had loans totaling $61.2 million that were past due between 30 and 59 days.

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Loans Delinquent 60 to 89 Days

At June 30, 2022, we had loans totaling $1.4 million that were past due between 60 and 89 days.

At September 30, 2022, we had loans totaling $9.6 million that were past due between 60 and 89 days.

At December 31, 2021, we had loans totaling $12.1 million that were past due between 60 and 89 days.

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Accruing Loans 90 Days or More Past Due

We continued accruing interest on three loans with an aggregate outstanding balance of $365 thousand at June 30, 2022, and nine loans with an aggregate outstanding balance of $3.0 million at December 31, 2021, all of which were 90 days or more past due.

We continued accruing interest on four loans with an aggregate outstanding balance of $2.8 million at September 30, 2022, and nine loans with an aggregate outstanding balance of $3.0 million at December 31, 2021, all of which were 90 days or more past due.

These loans were either well secured, awaiting a forbearance extension or formal payment deferral, or will likely be forgiven through the PPP or repurchased by the SBA, and, therefore, remained on accrual status and were deemed performing assets at the dates indicated above.

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We maintain an allowance, recorded in other liabilities, associated with unfunded loan commitments accepted by the borrower.

The amount of our allowance was $4.1 million at June 30, 2022 and $4.4 million at December 31, 2021.

allowance is determined based upon the outstanding volume of loan commitments at each period end.

The amount of our allowance was $4.3 million at September 30, 2022 and $4.4 million at December 31, 2021.

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.

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The after-tax cumulative-effect adjustment of $1.7 million was recorded as an increase to retained earnings as of January 1, 2021.

We recognized a credit loss recovery of $1.5 million during the six months ended June 30, 2022, compared to a provision of $11.5 million for the six months ended June 30, 2021.

The $1.5 million credit loss recovery for the six months ended June 30, 2022 was primarily due to releases of reserves on PCD loans.

The change in provision for the six months ended June 30, 2021 was primarily associated with the provision for credit losses recorded on acquired non-PCD loans which totaled $20.3 million for the Day 2 accounting of acquired loans from the Merger.

We recognized a credit loss recovery of $12.2 million on the remainder of the portfolio for the six months ended June 30, 2021, primarily as a result of improvement in forecasted macroeconomic conditions, as well as releases of reserves on PCD individually analyzed loans.

For a further discussion of the allowance for credit losses and related activity during the three and six months ended June 30, 2022 and 2021, please see Note 8 to the condensed consolidated financial statements.

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

June 30, 2022

We recognized a credit loss provision of $5.0 million during the nine months ended September 30, 2022, compared to a provision of $6.3 million for the nine months ended September 30, 2021.

The $5.0 million credit loss provision for the nine months ended September 30, 2022 was primarily due to changes to the forecasted macroeconomic conditions and loan growth, offset by releases of reserves on acquired PCD individually analyzed loans.

The change in provision for the nine months ended September 30, 2021 was primarily associated with the provision for credit losses recorded on acquired non-PCD loans which totaled $20.3 million for the Day 2 accounting of acquired loans from the Merger.

We recognized a credit loss recovery of $14.0 million on the remainder of the portfolio for the nine months ended September 30, 2021, primarily as a result of improvement in forecasted macroeconomic conditions, as well as releases of reserves on acquired PCD individually analyzed loans.

For a further discussion of the allowance for credit losses and related activity during the three and nine months ended September 30, 2022 and 2021, please see Note 8 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.

September 30, 2022

December 31, 2021

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

At or for the Six Months Ended June 30,

At or for the Nine Months Ended September 30,

(Dollars in thousands)

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(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 June 30, 2022 and December 31, 2021

Assets totaled $12.35 billion at June 30, 2022, $280.7 million above their level at December 31, 2021, primarily due to an increase of $420.7 million in our loan portfolio and an increase of $61.8 million in derivative assets, partially offset by a decrease of $155.3 million in securities and a decrease of $112.2 million in cash and due from banks.

Total loans increased $420.7 million during the six months ended June 30, 2022, to $9.58 billion at period end.

Comparison of Financial Condition at September 30, 2022 and December 31, 2021

Assets totaled $12.89 billion at September 30, 2022, $819.5 million above their level at December 31, 2021, primarily due to an increase of $874.2 million in our loan portfolio and an increase of $117.6 million in derivative assets, partially offset by a decrease of $188.7 million in securities and a decrease of $80.7 million in cash and due from banks.

Total loans increased $874.2 million during the nine months ended September 30, 2022, to $10.04 billion at period end.

During the period, we had loan originations of $2.19 billion.

Additionally, our allowance for credit losses decreased by $1.9 million.

Total securities decreased $155.3 million during the six months ended June 30, 2022, to $1.59 billion at period end, primarily due to proceeds from principal payments and calls of $126.4 million and an increase in unrealized losses of $75.5 million, offset in part by purchases of $47.8 million.

We transferred $372.2 million of securities available-to-sale to securities held-to-maturity during the six months ended June 30, 2022.

Total liabilities increased $332.8 million during the six months ended June 30, 2022, to $11.21 billion at period end, primarily due to an increase of $111.2 million in derivative cash collateral, an increase of $107.0 million in deposits, an increase of $75.0 million in FHLBNY advances, and an increase of $52.7 million in derivative liabilities.

Total securities decreased $188.7 million during the nine months ended September 30, 2022, to $1.55 billion at period end, primarily due to proceeds from principal payments and calls of $165.2 million and an increase in unrealized losses of $115.2 million, offset in part by purchases of $93.0 million.

We transferred $372.2 million of securities available-to-sale to securities held-to-maturity during the nine months ended September 30, 2022.

Total liabilities increased $871.4 million during the nine months ended September 30, 2022, to $11.75 billion at period end, primarily due to an increase of $595.0 million in FHLBNY advances, an increase of $153.7 million in derivative cash collateral, an increase of $103.6 million in derivative liabilities and an increase of $29.7 million in deposits.

Stockholders’ Equity.

Stockholders’ equity decreased $52.1 million during the six months ended June 30, 2022 to $1.14 billion at period end, primarily due to other comprehensive loss of $63.8 million, repurchases of shares of common stock of $40.3 million, common stock dividends of $18.4 million, and preferred stock dividends of $3.6 million, offset in part by net income for the period of $73.0 million.

Comparison of Operating Results for the Three Months Ended June 30, 2022 and 2021

Net income was $38.5 million during the three months ended June 30, 2022, lower than the net income of $51.3 million for the three months ended June 30, 2021.

During the three months ended June 30, 2022, net interest income increased by $258 thousand, non-interest income decreased by $17.4 million, non-interest expense decreased by $3.0 million, income tax expense decreased by $5.6 million, and the credit loss provision increased by $4.3 million, compared to the three months ended June 30, 2021.

Stockholders’ equity decreased $51.8 million during the nine months ended September 30, 2022 to $1.14 billion at period end, primarily due to other comprehensive loss of $86.9 million, repurchases of shares of common stock of $46.5 million, common stock dividends of $28.0 million, and preferred stock dividends of $5.5 million, offset in part by net income for the period of $112.5 million.

Comparison of Operating Results for the Three Months Ended September 30, 2022 and 2021

Net income was $39.5 million during the three months ended September 30, 2022, compared to net income of $38.4 million for the three months ended September 30, 2021.

During the three months ended September 30, 2022, net interest income increased by $5.6 million, non-interest income decreased by $366 thousand, non-interest expense decreased by $8.5 million, income tax expense increased by $865 thousand, and the credit loss provision increased by $11.8 million, compared to the three months ended September 30, 2021.

Please see "Provision for Credit Losses"

for a discussion of the credit loss provision for the three months ended June 30, 2021.

The discussion of net interest income for the three months ended June 30, 2022 and 2021 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.

for a discussion of the credit loss provision for the three months ended September 30, 2021.

The discussion of net interest income for the three months ended September 30, 2022 and 2021 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.

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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 $455 thousand and $3.8 million during the three months ended June 30, 2022 and 2021, respectively.

Loan fees included in interest income were $1.1 million and $3.5 million during the three months ended September 30, 2022 and 2021, respectively.

The decrease in loan fees was primarily due to a decrease in amortization of SBA PPP loan origination fees in 2022.

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Analysis of Net Interest Income

Three Months Ended June 30,

Three Months Ended September 30,

(Dollars in thousands)

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Rate/Volume Analysis

Three Months Ended June 30, 2022

Compared to Three Months Ended June 30, 2021

Three Months Ended September 30, 2022

Compared to Three Months Ended September 30, 2021

Increase / (Decrease) Due to:

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Net interest income.

Net interest income was $93.5 million during the three months ended June 30, 2022, an increase of $258 thousand from the three months ended June 30, 2021.

Average interest-earning assets were $11.41 billion for the three months ended June 30, 2022, a decrease of $577.8 million from $11.99 billion for the three months ended June 30, 2021.

Net interest margin (“NIM”) was 3.29% during the three months ended June 30, 2022, up from 3.12% during the three months ended June 30, 2021.

Net interest income was $100.4 million during the three months ended September 30, 2022, an increase of $5.6 million from the three months ended September 30, 2021.

Average interest-earning assets were $11.78 billion for the three months ended September 30, 2022, an increase of $17.1 million from $11.77 billion for the three months ended September 30, 2021.

Net interest margin (“NIM”) was 3.38% during the three months ended September 30, 2022, up from 3.20% during the three months ended September 30, 2021.

Interest Income.

Interest income was $100.9 million during the three months ended June 30, 2022, compared to $100.4 million during the three months ended June 30, 2021.

During the second quarter of 2022, interest income increased $509 thousand from the second quarter of 2021, primarily reflecting increases in interest income of $6.4 million on real estate loans and $1.9 million on securities, partially offset by decreases in interest income of $7.3 million on C&I loans, $255 thousand on other loans, and $245 thousand on other short-term investments.

Interest income was $114.5 million during the three months ended September 30, 2022, compared to $100.7 million during the three months ended September 30, 2021.

During the third quarter of 2022, interest income increased $13.9 million from the third quarter of 2021, primarily reflecting increases in interest income of $13.5 million on real estate loans, $1.3 million on securities and $264 thousand on other short-term investments, partially offset by decreases in interest income of $949 thousand on C&I loans and $279 thousand on other loans.

The increased interest income on real estate loans was related to an increase of $691.9 million in the average balance of such loans in the 2022 period, and a 31-basis point increase in the average yield.

The increased interest income on securities was due to an increase of $557.7 million in the average balance of such securities during the period, offset in part by a 14-basis point decrease in the average yield.

The decreased interest income on C&I loans was related to a decrease of $1.23 billion in the average balance of such loans in the period, offset in part by a 144-basis point increase in the average yield.

The increased interest income on securities was due to an increase of $228.1 million in the average balance of such securities during the period, and a 10-basis point increase in the average yield.

The decreased interest income on C&I loans was related to a decrease of $194.4 million in the average balance of such loans in the period, offset in part by a 67-basis point increase in the average yield.

The decreased average balance of C&I loans was related to lower SBA PPP balances in the 2022 period.

Interest Expense.

Interest expense was $7.4 million during the three months ended June 30, 2022, compared to $7.1 million during the three months ended June 30, 2021, primarily reflecting increases in interest expense of $1.1 million on subordinated debt and $647 thousand on savings accounts, offset in part by decreases in interest expense of $1.1 million on CDs and $701 thousand on money market accounts.

The increased interest expense on subordinated debt was primarily due to our issuance of subordinated debt during the second quarter of 2022.

The increased interest expense on savings accounts was related to a 16-basis point increase in the average cost and a $320.3 million increase in average balance of such deposits.

The decreases in interest expenses on CDs and money market accounts were primarily due to decreased rates offered on CDs and money market accounts and decreases of $594.2 million in the average balances of CDs and $563.9 million in the average balances of money market accounts.

Interest expense was $14.1 million during the three months ended September 30, 2022, compared to $5.8 million during the three months ended September 30, 2021, primarily reflecting increases in interest expense of $4.8 million on savings accounts and $647 thousand on CDs.

The increased interest expense on savings accounts was related to an 83-basis point increase in the average cost and a $908.6 million increase in average balance of such deposits.

The increases in interest expenses on CDs and money market accounts were primarily due to increased rates offered on CDs and money market accounts, partly offset by decreases of $1.05 billion in the average balances of money market accounts and $150.0 million in the average balances of CDs.

Provision for Credit Losses.

We recognized a credit loss provision of $44 thousand during the three months ended June 30, 2022, compared to a credit loss recovery of $4.2 million for the three months ended June 30, 2021.

The $44 thousand credit loss provision for the second quarter of 2022 was due to a $366 thousand credit loss provision on the loan portfolio primarily due to growth, partially offset by a $323 thousand credit loss recovery in reserves for unfunded loan commitments primarily due to lower balances.

The $4.2 million credit loss recovery for the second quarter of 2021 was primarily associated with the improvement in forecasted macroeconomic conditions , as well as releases of reserves on PCD individually analyzed loans.

We recognized a credit loss provision of $6.6 million during the three months ended September 30, 2022, compared to a credit loss recovery of $5.2 million for the three months ended September 30, 2021.

The $6.6 million credit loss provision for the third quarter of 2022 was primarily due to changes in forecasted macroeconomic conditions.

The $5.2 million credit loss recovery for the third quarter of 2021 was primarily associated with the improvement in forecasted macroeconomic conditions , as well as releases of reserves on acquired PCD individually analyzed loans.

Non-Interest Income.

Non-interest income was $12.1 million during the three months ended June 30, 2022, compared to $29.5 million during the three months ended June 30, 2021.

During the second quarter of 2022, non-interest income decreased $17.4 million from the second quarter of 2021, reflecting a decrease of $20.9 million in gain on sale of SBA loans and a decrease of $315 thousand in gain on sale of residential loans, partially offset by an increase of $2.6 million in BOLI income, an increase of $1.1 million in loan level derivative income, and an increase of $461 thousand in service charges and other fees during the 2022 period.

Included in BOLI income for the second quarter of 2022 was $2.2 million of income related to mortality proceeds from a death claim.

Included in gain on sale of SBA loans for the second quarter of 2021 was a $20.7 million gain on sale of PPP loans.

Non-interest income was $9.4 million during the three months ended September 30, 2022, compared to $9.7 million during the three months ended September 30, 2021.

During the third quarter of 2022, non-interest income decreased $366 thousand from the third quarter of 2021, reflecting a decrease of $715 thousand in service charges and other fees, a decrease of $685 thousand in other income, and a decrease of $250 thousand in gain on sale of residential loans, partially offset by a $1.4 million gain on the sale of a branch property during the 2022 period.

Non-Interest Expense.

Non-interest expense was $51.8 million during the three months ended June 30, 2022, compared $54.9 million during the three months ended June 30, 2021.

During the second quarter of 2022, non-interest expense decreased $3.0 million from the second quarter of 2021, reflecting merger expenses and transaction costs of $1.8 million during the 2021 period due to the Merger and branch restructuring costs of $1.7 million during the 2021 period, a decrease of $1.1 million in data processing costs and a decrease of $726 thousand in occupancy and equipment expense during the 2022 period, partially offset by an increase during the 2022 period of $856 thousand in salaries and employee benefits expenses, an increase in $727 thousand in marketing expense, and a loss on extinguishment of debt of $740 thousand during the 2022 period due to the write-off of subordinated debt issuance costs.

Non-interest expense was 1.71% and 1.72% of average assets during the three months ended June 30, 2022 and 2021, respectively.

Non-interest expense was $48.3 million during the three months ended September 30, 2022, compared $56.8 million during the three months ended September 30, 2021.

During the third quarter of 2022, non-interest expense decreased $8.5 million from the third quarter of 2021, reflecting merger expenses and transaction costs of $2.5 million during the 2021 period due to the Merger and branch restructuring costs of $4.5 million during the 2021 period.

Non-interest expense was 1.54% and 1.80% of average assets during the three months ended September 30, 2022 and 2021, respectively.

Income Tax Expense.

Income tax expense was $15.3 million during the three months ended June 30, 2022, compared to income tax expense of $20.9 million during the three months ended June 30, 2021.

The reported effective tax rate for the second quarter of 2022 was 28.4%, comparable to 28.9% for the second quarter of 2021.

Comparison of Operating Results for the Six Months Ended June 30, 2022 and 2021

The Company’s results of operations for the six months ended June 30, 2021 include income for the five months following the Merger and the results of Legacy Dime for the month ended January 31, 2021.

Income tax expense was $15.4 million during the three months ended September 30, 2022, compared to income tax expense of $14.6 million during the three months ended September 30, 2021.

The reported effective tax rate for the third quarter of 2022 was 28.1%, comparable to 27.5% for the third quarter of 2021.

Comparison of Operating Results for the Nine Months Ended September 30, 2022 and 2021

The Company’s results of operations for the nine months ended September 30, 2021 include income for the eight months following the Merger and the results of Legacy Dime for the month ended January 31, 2021.

While Bridge was the legal acquirer and surviving corporation following the Merger, Legacy Dime is considered the acquirer for accounting purposes.

Net income was $73.0 million during the six months ended June 30, 2022, higher than the net income of $30.2 million for the six months ended June 30, 2021.

During the six months ended June 30, 2022, net interest income increased by $11.5 million, non-interest income decreased by $2.8 million, non-interest expense decreased by $36.0 million, income tax expense increased by $15.0 million, and the credit loss provision decreased by $13.1 million, compared to the six months ended June 30, 2021.

Net income was $112.5 million during the nine months ended September 30, 2022, higher than the net income of $68.6 million for the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, net interest income increased by $17.1 million, non-interest income decreased by $3.2 million, non-interest expense decreased by $44.4 million, income tax expense increased by $15.8 million, and the credit loss provision decreased by $1.3 million, compared to the nine months ended September 30, 2021.

Please see "Provision for Credit Losses"

for a discussion of the credit loss provision for the six months ended June 30, 2021.

The discussion of net interest income for the six months ended June 30, 2022 and 2021 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.

for a discussion of the credit loss provision for the nine months ended September 30, 2021.

The discussion of net interest income for the nine months ended September 30, 2022 and 2021 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.

2 unchanged sentences

Loan fees included in interest income were $1.3 million and

$6.5 million during the six months ended June 30, 2022 and 2021, respectively.

Loan fees included in interest income were $2.4 million and $10.0 million during the nine months ended September 30, 2022 and 2021, respectively.

The decrease in loan fees was primarily due to a decrease in amortization of SBA PPP loan origination fees in 2022.

1 unchanged sentence

Analysis of Net Interest Income

Six Months Ended June 30,

Nine Months Ended September 30,

(Dollars in thousands)

32 unchanged sentences

Rate/Volume Analysis

Six Months Ended June 30, 2022

Compared to Six Months Ended June 30, 2021

Nine Months Ended September 30, 2022

Compared to Nine Months Ended September 30, 2021

Increase / (Decrease) Due to:

17 unchanged sentences

Net interest income.

Net interest income was $182.6 million during the six months ended June 30, 2022, an increase of $11.5 million from the six months ended June 30, 2021.

Average interest-earning assets were $11.37 billion for the six months ended June 30, 2022, an increase of $344.1 million from $11.03 billion for the six months ended June 30, 2021.

Net interest margin (“NIM”) was 3.24% during the six months ended June 30, 2022, up from 3.13% during the six months ended June 30, 2021.

Net interest income was $283.1 million during the nine months ended September 30, 2022, an increase of $17.1 million from the nine months ended September 30, 2021.

Average interest-earning assets were $11.51 billion for the nine months ended September 30, 2022, an increase of $233.9 million from $11.28 billion for the nine months ended September 30, 2021.

NIM was 3.29% during the nine months ended September 30, 2022, up from 3.15% during the nine months ended September 30, 2021.

Interest Income.

Interest income was $194.8 million during the six months ended June 30, 2022, compared to $187.2 million during the six months ended June 30, 2021.

During the six months ended June 30, 2022, interest income increased $7.7 million from the same period in 2021, reflecting increases in interest income of $16.4 million on real estate loans and $4.7 million on securities, partially offset by decreases in interest income of $12.1 million on C&I loans, $870 thousand on other short-term investments, and $412 thousand on other loans.

Interest income was $309.4 million during the nine months ended September 30, 2022, compared to $287.8 million during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, interest income increased $21.5 million from the same period in 2021, reflecting increases in interest income of $29.9 million on real estate loans and $6.0 million on securities, partially offset by decreases in interest income of $13.1 million on C&I loans, $691 thousand on other loans, and $606 thousand on other short-term investments.

The increased interest income on real estate loans was related to an increase of $762.6 million in the average balance of such loans in the 2022 period, and a 13-basis point increase in the average yield.

1 unchanged sentence

The increased average balances were related to increased balances from the Merger.

The decreased interest income on C&I loans was related to a decrease of $1.04 billion in the average balance of such loans in the period, offset in part by a 122-basis point increase in the average yield.

The decreased interest income on C&I loans was related to a decrease of $757.6 million in the average balance of such loans in the period, offset in part by a 122-basis point increase in the average yield.

The decreased average balance of C&I loans and the increase in the average yield of such loans were related to lower SBA PPP balances in the 2022 period.

Interest Expense.

Interest expense was $12.2 million during the six months ended June 30, 2022, compared to $16.1 million during the six months ended June 30, 2021, primarily reflecting decreases in interest expense of $2.9 million on CDs, $1.8 million on money market accounts, and $1.6 million on FHLBNY advances, offset in part by increases in interest expense of $1.4 million on subordinated debt and $647 thousand on savings accounts.

The decrease in interest expense was primarily due decreases of $645.4 million in the average balances of CDs and $440.6 million in the average balances of FHLBNY advances, and decreases in rates offered on CDs and money market accounts.

The increased interest expense on subordinated debt was primarily due to our issuance of subordinated debt during the second quarter of 2022.

Interest expense was $26.3 million during the nine months ended September 30, 2022, compared to $21.9 million during the nine months ended September 30, 2021, primarily reflecting increases in interest expense of $5.4 million on savings accounts, $1.7 million on subordinated debt, and $739 thousand on interest-bearing checking accounts, offset in part by decreases in interest expense of $2.2 million on CDs, $1.2 million on FHLBNY advances, and $1.2 million on money market accounts.

The increased interest expense on savings accounts was related to a 41-basis point increase in the average cost and a $542.6 million increase in average balance of such deposits.

The decreases in interest expense on CDs and FHLBNY advances were primarily due to decreases of $478.4 million in the average balances of CDs and a decrease of $244.4 million in the average balance of FHLBNY advances.

The decrease in interest expense on money market accounts was primarily due to decreased rates offered on money market accounts, and lower average balances on such accounts.

The increased interest expense on subordinated debt was primarily due to the issuance of subordinated debt during the second quarter of 2022.

Provision for Credit Losses.

We recognized a credit loss recovery of $1.5 million during the six months ended June 30, 2022, compared to a provision for credit losses of $11.5 million for the six months ended June 30, 2021.

The $1.5 million credit loss recovery for the six months ended June 30, 2022 was primarily due to releases of reserves on PCD loans.

change in provision for the six months ended June 30, 2021 was primarily associated with the provision for credit losses recorded on acquired non-PCD loans which totaled $20.3 million for the Day 2 accounting of acquired loans from the Merger.

We recognized a credit loss provision of $5.0 million during the nine months ended September 30, 2022, compared to a credit loss provision of $6.3 million for the nine months ended September 30, 2021.

The $5.0 million credit loss provision for the nine months ended September 30, 2022 was primarily due to changes in forecasted macroeconomic conditions and loan growth, offset by releases of reserves on acquired PCD individually analyzed loans.

We recognized a credit loss recovery of $19.5 million on the remainder of the portfolio for the nine months ended September 30, 2021, primarily as a result of improvement in forecasted macroeconomic conditions, as well as releases of reserves on acquired PCD individually analyzed loans.

Non-Interest Income.

Non-interest income was $19.3 million during the six months ended June 30, 2022, compared to $22.2 million during the six months ended June 30, 2021.

During the six months ended June 30, 2022, non-interest income decreased $2.8 million from the six months ended June 30, 2021, reflecting a decrease during the 2022 period of $20.9 million in gain on sale of SBA loans, a decrease of $890 thousand in gain on sale of residential loans, and a $730 thousand net gain on sale of securities and other assets during the 2021 period, partially offset by losses on loan swap terminations of $16.5 million during the 2021 period, an increase of $3.1 million in BOLI income, and an increase of $1.6 million in service charges and other fees during the 2022 period.

Non-interest income was $28.7 million during the nine months ended September 30, 2022, compared to $31.9 million during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, non-interest income decreased $3.2 million from the nine months ended September 30, 2021, reflecting a $20.7 million gain on sale of PPP loans included in gain on sale of SBA loans during the 2021 period, a decrease of $1.1 million in gain on sale of residential loans, and a decrease of $556 thousand on loan level derivative income, partially offset by losses on loan swap terminations of $16.5 million during the 2021 period, an increase of $3.0 million in BOLI income, and an increase of $884 thousand in service charges and other fees during the 2022 period.

Included in BOLI income for the 2022 period was $2.2 million of income related to mortality proceeds from a death claim.

Included in gain on sale of SBA loans for the 2021 period was a $20.7 million gain on sale of PPP loans.

During the six months ended June 30, 2021, the Company terminated 34 derivatives with notional values totaling $785.0 million, resulting in a termination value of $16.5 million which was recognized in loss on termination of derivatives in non-interest income.

During the nine months ended September 30, 2021, the Company terminated 34 derivatives with notional values totaling $785.0 million, resulting in a termination value of $16.5 million which was recognized in loss on termination of derivatives in non-interest income.

Non-Interest Expense.

Non-interest expense was $101.7 million during the six months ended June 30, 2022, compared to $137.7 million during the six months ended June 30, 2021.

During the six months ended June 30, 2022, non-interest expense decreased $36.0 million from the same period in 2021, reflecting merger expenses and transaction costs of $39.8 million, loss on extinguishment of debt of $1.8 million, and curtailment loss of $1.5 million during the 2021 period due to the Merger, and branch restructuring costs of $1.7 million during the 2021 period, partially offset by an increase during the 2022 period of $6.9 million in salaries and employee benefits expenses, an increase of $1.2 million in marketing expense, and a loss on extinguishment of debt of $740 thousand during the 2022 period due to the write-off of subordinated debt issuance costs.

Non-interest expense was 1.67% and 2.35% of average assets during the six months ended June 30, 2022 and 2021, respectively.

Non-interest expense was $150.0 million during the nine months ended September 30, 2022, compared to $194.5 million during the nine months ended September 30, 2021.

During the nine months ended September 30, 2022, non-interest expense decreased $44.4 million from the same period in 2021, reflecting merger expenses and transaction costs of $42.3 million, loss on extinguishment of debt of $1.8 million, and curtailment loss of $1.5 million during the 2021 period due to the Merger, and branch restructuring costs of $6.2 million during the 2021 period, partially offset by an increase during the 2022 period of $7.8 million in salaries and employee benefits expenses, an increase of $1.6 million in marketing expense, and a loss on extinguishment of debt of $740 thousand during the 2022 period due to the write-off of subordinated debt issuance costs.

Non-interest expense was 1.63% and 2.16% of average assets during the nine months ended September 30, 2022 and 2021, respectively.

Income Tax Expense.

Income tax expense was $28.8 million during the six months ended June 30, 2022, compared to income tax expense of $13.8 million during the six months ended June 30, 2021.

Income tax expense was $44.2 million during the nine months ended September 30, 2022, compared to income tax expense of $28.4 million during the nine months ended September 30, 2021.

Income tax expense increased in 2022 primarily due to higher income before income taxes in the 2022 period compared to the 2021 period.

The reported effective tax rate for the six months ended June 30, 2022 was 28.3%, and 31.3% for the six months ended June 30, 2021.

The decrease in the effective tax rate during the six months ended June 30, 2022 compared to a year ago was primarily the result of higher non-deductible expenses during the 2021 period.

The reported effective tax rate for the nine months ended September 30, 2022 was 28.2%, and 29.2% for the nine months ended September 30, 2021.

The decrease in the effective tax rate during the nine months ended September 30, 2022 compared to a year ago was primarily the result of higher non-deductible expenses during the 2021 period.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis