Hello and welcome to the Dime Community Bancshares, Inc. Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note today's event is being recorded. I would now like to turn the conference over to your host today, Ken Mahon. Mr. Mahon, please go ahead.

Thank you, operator, and thank you, everyone, for joining us this morning. On the call with me today are our President, Stu Lubow; Chief Financial Officer, Avi Reddy; and our Chief Accounting Officer, Leslie Veluswamy. We posted a record earnings quarter in September with core EPS of $0.44, which included a $5.9 million addition to the general allowance for loan losses, which we determine to be appropriate level for our portfolio in the current environment. This record EPS was aided by three components: net interest margin expansion, year-over-year fee income growth, and excellent expense control. By now we're well into our build-out of the commercial bank model and this year especially, we can see it bearing fruit. The positive impact of that transformation has taken hold. And we're reaping the benefits of scaling the commercial loan portfolio, which enables us to generate significant positive operating leverage, excuse me. Our Principal and Interest loan deferrals were down to approximately $272 million at September 30 and represents 4.9% of total loans. We're not surprised by the meaningful downward movement in deferrals and we believe that compares favorably to other multifamily bank portfolios concentrated in New York. Bear repeating that for the six years between 2007 and 2013, which were the years covering the financial crisis, Dime's cumulative net charge-offs were only 130 basis points, with starting loan balances of about $4 billion. This was approximately five times lower than the overall bank index for charge-offs. Given the low LTV nature of our multi portfolio, which was on average 52% at September 30, the multi-generational nature of the ownership of the multifamily borrower base, as well as our capital strength and our earnings prospects, I'm confident that the outcome will be a soft landing once again. Multifamily borrowers understand the value inherent in…

Thank you, Ken, and good morning, everybody. Included in this quarter’s reported results was $0.8 million of merger-related expenses and $0.2 million of securities gains. Excluding these non-core items, core EPS was $0.44. As Ken mentioned, this is a record for Dime as a public company, and we're proud of achieving such a result in the middle of the pandemic. We continue to build our results with a $5.9 million loan loss provision this quarter. Excluding PPP loans our reserve to loans at September 30 would have been 92 basis points. We ended the third quarter with an adjusted tangible equity ratio excluding the impact of PPP loans from the numerator of 10.22%. We strongly believe that our capital levels and loan loss reserve position is sufficient to withstand any disruption caused by the pandemic. Excluding the merger-related expenses and securities gains, core pre-tax pre provision earnings for the third quarter of 2020 was $26.8 million, representing 9.5% linked quarter growth and 46.3% year-over-year growth. Core PPNR to average assets for the third quarter was approximately 1.65%. Importantly, we generated significant positive operating leverage this quarter with revenue growth far outpacing non-interest expense growth. The core NIM which excludes the impact of $0.5 million of prepayment fees increased by 13 basis points on a linked quarter basis to 2.88%. Driving a structurally higher NIM has been one of the key tenets of our business model transformation and we're again pleased with this quarter's results. The increase in core NIM was driven by a 28 basis point linked quarter decline in our cost of deposits. The period end weighted average rate on our loan portfolio excluding PPP loans remains steady on a linked quarter basis at 3.94%. The presence of PPP loans while additive to net interest income in the amount…

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions]. All right. We do have a question from Collyn Gilbert with KBW.

Thanks. Good morning, everyone. Stu, if you could just kind of go through sort of how you're seeing some of these deferrals playing out, kind of as they move into the fourth quarter and then longer-term, and if you have a sense at all, as to where you think maybe the risk of loss content is within that book?

Yes. So first of all, obviously we've seen significant migration from June 30th to September 30. If you look at June 30th, we were at $916 million; we're down to $335 million. And that includes some portion about $60 million of which is interest -- paying interest in escrow. Our next big period is at October 31st. We have approximately $200 million in additional loans coming off of their three-month forbearance period, their second three-month forbearance period. And we expect that number to dramatically reduce and migrate to full paying, and that's been the trend so far. And then, the remainder, as we get into fourth quarter, we're looking at all the loans individually, but we are seeing is those that were paying that were on Principal and Interest forbearance are moving towards at least an interest-only forbearance. And again the average LTVs are in the mid-50s. We're not really seeing impairment issues at this point. And we're not seeing any real change in delinquencies. So, at this point, we're fairly comfortable with the portfolio and the resulting potential exposure that we have. And we think that these numbers are going to continue to work down. We've been working with our borrowers; we're down to a very manageable level. And, we're very granular in our discussions and our approvals. And because we kept everything short, in our initial timeframes, and really work with the borrowers early on, we've really been able to migrate forbearance more quickly. I think than some of our peers out there who took a much broader approach to forbearance. So, at this point, we're not seeing impairment, and obviously, potential risk of loss out there. We do have very low LTVs. And some of these will take a longer period of time to come back to full payment. But again the equity, the value is there. And these are borrowers we know very well and have a significant history with.

Okay, that's helpful. Just curious as to -- if we -- looking at the kind of the mixed-use loans, what are these borrowers doing to kind of keep them payment current or satisfactory in their debt coverage? Are they modifying their businesses or I mean -- what we're seeing from you guys this quarter, tells a pretty positive message in terms of the proactivity and behavior and then loan growth, which I'll get to in a minute. So just curious what you're seeing some of your borrowers do?

Yes, so what's remaining in the mixed-use, multifamily mixed-use portfolio is basically the classic New York City streetscape with five, six storey walk-ups and for retail. I think what's happened over the last three months is there's been partial openings, businesses are coming back slowly, they are -- tenants are getting partial payments and working and excuse me, landlords are getting partial payments and working with their commercial tenants. The multifamily or a residential piece of that is remaining fairly steady and stable in terms of payments. And so the real change has been an improvement is in the partial payment or payment of some of the commercial rents that were either not paying initially or coming out of the gate with when COVID first came to us in April and May, there were no payments whatsoever, the City was closed and commercial businesses were closed. So there's been a migration as the City has opened up to better pay. Now with that said, that's clearly a stress area, and we'll continue to monitor that in terms of, as we continue through the pandemic and into the recovery stage. But the landlords are working with their tenants and certainly, the residential piece is quite -- remains quite stable.

Okay, that's helpful. And then just to get a little more color on the loan growth that you saw this quarter, because again that was really, really strong. How much of the growth was current customers versus new customers, or maybe just talk about kind of the dynamic that you're seeing there in terms of loan demand?

We're seeing quite a bit of demand, our teams are in place. This is kind of a building block scenario, where over the last few years, we've really built and brought in loan teams that had relationships from elsewhere, and we've been able to really -- we had a significant pipeline moving into the pandemic. And it's continued to grow. And even in this environment, we're taking businesses from other commercial institutions, and -- and a lot of these relationships are relationships that our team members or relationship managers have previous to their moving to Dime. So -- it's -- and what we're seeing today is a very strong pipeline still, where we're taking business from other commercial banks. And some of it is as well; I say it's 60% new business, 40% existing customers.

Okay, okay. That's helpful. Okay, thanks. I'll leave it there. Thanks, guys.

Thank you. [Operator Instructions]. All right. There's nothing else at present. I would like to return the conference over to Mr. Mahon for any closing comments.

Sure. Keith, thank you very much. And thanks folks for joining us this morning. I hope the lack of questions means that the press release was satisfactory to your needs. Thank you very much.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.