Hello, everyone, and welcome to Dime Community Bancshares, Inc. Q3 earnings call. My name is Charlie, and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register your question, please press star followed by one on your telephone keypads. Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with the U.S. Securities and Exchange Commission, to which we refer you.
During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For information about these non-GAAP measures and for reconciliation to GAAP, please refer to today's earnings release. I'm going to hand over to host, Kevin O'Connor, Chief Executive, set to begin. Kevin, please go ahead.
Good morning. Thank you, Charlie. Thank you all for joining us this morning on our Q3 earnings call. With me, again, are Stuart Lubow, our President and COO, and Avi Reddy, our CFO. We're proud to report this was another strong quarter for Dime Community Bank. We generated net income of almost $38 million or EPS of $0.98 a share, an increase on both a linked-quarter basis and year-over-year. This success was the result of another impressive quarter of strong net loan growth, expanding margins, and prudent cost control. Our results further illustrate our execution capabilities and the quality and structure of our balance sheet in a rising rate environment. I have to again give full credit to each of our 800+ employees on delivering record loan growth and 10% year-over-year EPS growth.
Capitalizing on the strong long pipelines we have discussed on prior calls, we grew net loans in excess of $450 million. Loan growth this quarter was weighted towards multifamily, an asset class that has performed extremely well for us over many credit cycles. The quality of originations remained strong as our focus remains on the application of loan growth in the face of an uncertain economic environment. As we begin putting together our budgets for 2023 and beyond, I'm confident our team will continue servicing and growing our loan portfolio. Over the past year, we bolstered Dime by hires of revenue producers and support staff from banks in our footprint impacted by merger transactions. Stu, I'm sure, will provide more color on this as well as our current pipeline and the mix in the Q&A.
Apart from strong loan growth, we've continued to execute well on each of our strategic plan priorities. Managing our cost of funds and prioritizing NIM expansion, prudently managing expenses, and as always, maintaining solid asset quality. Our Q3 deposit costs were only 23 basis points as we continue to outperform the industry and certainly our Metro New York City competitors. Our cumulative total deposit beta for cycle to date tightening has been approximately 10%. Our relatively lower betas have been driven by the significant level of non-interest bearing deposits on our balance sheet. This remains the clear differentiator versus other community banks in our footprint. While many banks across the country witnessed notable declines in DDA deposits this quarter, we were able to keep balances fairly stable. The improvement in our loan yields more than offset the increase in deposit costs and contributed to linked quarter margin expansion.
Our core efficiency ratio this quarter was 44%, and on a year to date basis, we've operated at approximately 47%. Well within our stated goal of operating at sub 50% regardless of the prevailing environment. Asset quality remains very strong, with NPAs representing only 34 basis points of total assets. Avi will provide some detail on the loan loss provision in his comments. Suffice to say, we feel very comfortable with the level of reserves and the overall health of our balance sheet. Thus far, we have not seen any meaningful early warning indicators of credit deterioration. As you know, Dime's credit losses have been well below the bank index over multiple cycles. Underprinting our strong historical credit performance has been our bulletproof multifamily portfolio that comes through every cycle unscathed, including the pandemic-induced shutdown of New York City.
The LTV on this portfolio, representing 39% of our entire loan portfolio, is less than 60%. We continue to believe this portfolio will outperform in any recessionary environment. Turning to capital. We continued to repurchase shares in the Q3 while still supporting significant balance sheet growth. Similar to the rest of the banking industry, rising rates did impact the fair value of our AFS portfolio, contributing to a $23 million decline in AOCI. Despite this, tangible book value per share increased $0.14 this quarter. Regulatory capital ratios remained strong as our Tier 1 leverage stood at a healthy 8.61% for the Q3. As we said before, our low risk balance sheet performs favorably in stress testing relative to the industry, providing us with the opportunity to grow our balance sheet and be active on the capital return front. To conclude my prepared remarks, we had a strong quarter. Our balance sheet is well positioned to produce strong returns in any economic environment, as evidenced by our quarterly and year-to-date ROAs of over 1.2% and this quarter's return on tangible equity of over 17%.
The quarter's results and momentum make me even more excited for Dime's future. We are delivering on the opportunities in front of us as a true community commercial bank, highly focused on being responsive to market conditions and our customers' needs. As you can expect, we're well underway in our annual budgeting process and look forward to sharing our 2023 outlook with you on our next call in January. At this point, I'd like to turn the conference call over to Avi, who'll provide some additional color on our quarterly results.
Thank you, Kevin. Our reported net income to common for the Q3 was $37.7 million. Excluding the impact of gain on sale of a branch property, adjusted net income to common would have been $36.7 or $0.95 per share. The reported NIM and the adjusted NIM for the quarter was 3.38%. This represents approximately 9 basis points of linked quarter margin expansion. A couple of housekeeping items. Net accretable balance from purchase accounting currently stands at approximately $1.8 million. While purchase accounting accretion was fairly immaterial this quarter, as mentioned previously, there could be lingering impacts on the income statement in future periods depending on payoff activity on premium and discount loans. Included in the 3.38% margin for this quarter was 3 basis points of prepayment related income.
Given the significant increase in market interest rates, we expect prepayment fees to dry up in the quarters ahead. We grew average deposits by over $300 million in the quarter while keeping our cost of deposits relatively well controlled. The average cost of deposits increased by only 23 basis points compared to the Q2 . The spot rate on deposits at quarter end was approximately 47 basis points. We are again pleased with our deposit beta significantly lagging the level of Fed funds increases in the Q3. That said, given the rapid pace of rate increases, we do expect deposit betas to increase from the low levels seen cycle to date. Offsetting future increases in deposit costs is a repricing opportunity on our loan portfolio. As you'd expect, given the current interest rate environment, we continue to proactively manage our loan pricing.
The rate on our total pipeline is approximately 5.25%, and new additions to the pipeline are in the high 5% to low 6% area. This is significantly higher than our existing loan portfolio rate of 4.33%. While there'll be a lingering impact of deposit costs catch up even after the Fed stops hiking, the medium to longer term opportunity for us is to reprice our loan portfolio at new origination rates, which are approximately 150-200 basis points above the overall portfolio rate. Moving over to expenses. Core cash operating expense excluding intangible amortization for the Q3 came in at $47.9 million. Annualized expenses on a year-to-date basis have been below our expense guidance for the full year 2022.
We remain highly focused on expense discipline while making necessary investments in our franchise and have built this into our culture on a very granular level. Non-interest income for the Q2 was approximately $9.4 million. Included in non-interest income was $1.4 million from the sale of a branch property. Of note, we expect revenue from the back-to-back loan swap program to pick up in the Q4 compared to Q3 levels. I would also note that this quarter was the first time the company was subject to the Durbin Amendment cap on interchange income, which reduced our interchange fees by approximately $600,000 for the quarter. This is the final material headwind we face from crossing the $10 billion asset regulatory threshold. Moving on to credit quality. Our provision for the quarter was $6.5 million.
The provision for the quarter was primarily due to a change in Moody's economic forecast that drive our loan loss reserve models. In addition, we had strong loan growth in the quarter of over $450 million. Needless to say, we are comfortable with the level of reserves on our balance sheet. Our existing allowance for credit losses of 81 basis points is still above the historical pre-pandemic combined levels of the legacy institutions. During the Q3, we bought back approximately 200,000 shares at $30.97. We believe share repurchases continue to be attractive given our current trading levels. With that said, growing our balance sheet and supporting loan growth in our clients are the first and best use of our capital base.
As a reminder, our balance sheet performed very favorably under stress testing and provides us ample flexibility to continue growing the balance sheet and returning capital to shareholders. We will continue to manage our balance sheet efficiently and our tangible equity ratio of 7.70%, including the full impact of AOCI, and 8.36%, excluding the impact of AOCI, is within our comfort zone. To conclude, we look forward to ending the year strong and providing you our thoughts on 2023 during our earnings call in January. With that, I'll turn the call back to Charlie for questions.
Thank you. If you'd like to ask a question, please press star followed by one on your telephone keypads. If you'd like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure you're unmuted locally. As a reminder, that's star followed by one on your telephone keypad now. Our first question comes from Mark Fitzgibbon of Piper Sandler. Mark, your line is open. Please proceed.
Hey, guys. Good morning.
Good morning.
Just to clarify, I missed what you had said about the pipeline. Did you say how large the pipeline is currently?
Hi Mark, it's Stu. The pipeline is today at $1.8 billion. Still very robust. The average yield, weighted average rate on that pipeline is about 5.28%. It's really quite diversified at this point. Probably the largest Portion of that is C&I at $425 million. Our owner-occupied CRE has grown to $365 million. Getting back to the weighted average rates on the C&I portfolio, the weighted average rate is 6.10%. The CRE portfolio's at about 5% on the owner-occupied. We're really moving away from multifamily. The total multifamily pipeline at this point is about $300 million with only $170 million in new application. The weighted average rate on that is about 5.20%. Our rate today on the multifamily is about 6.38 %. We're really kind of cycling and rotating sectors now that we have a very strong C&I group and all our teams in place.
You know, our plan is to really keep multifamily relatively flat, as you know, previous time had done and really focus on growing the other sectors. You know, we think the multifamily portfolio is a very strong risk-adjusted asset, but we do have other opportunities to really grow the C&I book, which is a floating rate portfolio, and also provides us with more deposit balances. Still very strong. Overall, we're very pleased with, you know, how the Q4 has started in the first month, and we expect a very strong Q4.
Okay, great. Then secondly, Avi, could you share with us the term and rate on that $520 million of Federal Home Loan Bank advances you guys booked this quarter?
Yeah. Mark, the way our FHLB portfolio is structured is. There's around $600 million in our book. $150 million of that is longer term with 5- to 6-year durations. The cost on that is around 80 basis points. We'd lock that in upfront. The remainder is really, you know, overnight to one month on the FHLB side. We kind of use that, you know, as a, you know, asset-liability management tool in terms of, you know, making sure, you know, we get to outcomes that we want. At the moment, it's fairly short-term, the FHLB book.
Okay. I think you said, deposit betas thus far have been around 10%. When you do your modeling, for the full cycle, what are you assuming for a deposit beta?
Yeah, Mark, the way most models work is they kind of base it on what you know historical experience was. You go back and look at you know both legacy companies and do a blended beta. We were you know somewhere between 28%-30%. I think that being said, if you go back in time and look at the first three you know 250, 300 basis points of rate hikes you know in the past you know we've completely outperformed this cycle so far with having only a 10% beta. You know the simulations you see in our 10-Q are probably closer to 30%. You know, in reality, I think we've said our guidance was around 45% cumulative total deposit beta through the cycle, and we're reasonably comfortable with that at this point. Now obviously rates are up, you know, a lot more than when we started giving the guidance initially, but I think we're still sticking with that, you know, 25% total deposit beta over the cycle at this point.
Okay. Lastly, I heard your comments about the tangible common equity ratio. Optically, it does start to look a little light if you're growing fast and buying back stock. I guess I'm curious, how low would you be willing to take that?
Yeah, we don't really look at that, Mark, in terms of, you know, our internal budgeting process. You know, we really base our capital return on stress testing and our portfolio, honestly, you know, it's as strong as it's ever been. You know, the first and best use of capital is always, you know, growing the balance sheet. To the extent we have, you know, double-digit loan growth, you know, we'll, you know, do a little bit less on the buyback. You know, earning a return on assets of 1.25%, as Kevin said, you know, high teens return on tangible equity. There's gonna be a lot of capital to do a lot of good things with it. You know, we continue to believe the stock is very cheap at these levels and, you know, given our earnings profile. You know, I think the other part of our capital structure is we do have preferred in our capital structure. The way we do think about it is our tangible equity is 7.70, and, you know, even with the AOCI impact, and that's very healthy when you look at us, you know, compared to the industry.
Avi, I know you don't like to give margin guidance, but, you know, should we assume that based upon what you all see, the margin should sort of slowly rise from here with remixing and repricing?
Yeah. I think we've been very happy so far, Mark, with you know, how we've performed. I think we've always said we're a moderately asset sensitive bank. You go back to the last 2 or 3 quarters, you know, the margin was up 5 basis points, 10 basis points. You know, we got you know, 20%-25% of our balance sheet floating rate loans. Obviously, you know, when the Fed reprices, you know, those are gonna go up you know, immediately. Look, I mean, we're you know, we're happy with how we've done so far. You know, again, the opportunity is really repricing the whole you know, the whole loan portfolio.
You know, again, I'd point you to our EVE disclosures in our 10-Q, which really takes into account, you know, the full repricing of the whole portfolio, just cash flows of assets and liabilities. You go to the start of the year, our EVE disclosure was, you know, the economic value of equity was around $1.2 billion back then. In our latest 10-Q, it's, you know, somewhere between $1.7 billion and $1.8 billion. We feel like we've created around $500 million of franchise value by keeping deposit costs as low as we can. Obviously we're monitoring competition, but you know, we're very happy with where the NIM is. Again, as Kevin said, our balance sheet's really set up to perform well in any rate environment really.
Thank you.
Thank you. Our next question comes from Matthew Breese of Stephens Inc. Matthew, your line is open. Please proceed.
Good morning.
Good morning.
A few questions. Maybe first, could you just talk a little bit about, I don't know if I saw it, the prepayment penalty income for the quarter, and then how in this rate environment, how the duration on multifamily commercial real estate has changed. Just curious what the assumed duration on that book is now.
Yeah. I mean, at this point, Matt, the prepayment fees have really dropped to historical low levels. I mean, I think, in the last month, we were down to about 4% on an annualized basis. I mean, in June and July, we were in the 20%. Or excuse me, in July and August, we were in the 20%. I mean, as expected, with rates have gone up and the market has really moved, in terms of the multifamily book, you know, prepayments, refinancings have dried up. Purchase transactions are on the wane. And we expected that.
Our view going forward is we're not expecting over the next 12 months, a lot of prepayment fee income. What we are seeing is a lot of our book is repricing at the contractual amount. Most of our deals were 5 + 5, and they reprice at 250-275 over the corresponding treasury. A lot of those are repricing. The cash out market is really dried up to some degree. You know, the good news is our average LTV on our portfolio is about 59%. And you know, it's a very strong and it's seasoned portfolio. You know, that's where we really are on prepayments and what our expectations for the next 12 months are very limited in terms of prepayment fees.
Got it. Just thinking about, on the reset and as loans kinda go from rates we saw at 2017, 2018 into the, you know, the 5%-6% range now, particularly for rent-regulated multifamily, which hasn't been able to see the rent increases of the market rate apartments. Have you seen any stress, or can you give us some color on debt service coverage ratios on those loan resets?
Yeah. You know, our average debt service coverage ratios are about 1.5% on our multifamily book, which is, as I said, about 58%-59% LTV. You know, from that perspective, we have not seen any stress. Our delinquencies are probably at all-time lows in that portfolio. You know, we really have not seen any stress there. In terms of underwriting, you know, even going back several years when the whole rent control issue became, you know, materialized in terms of New York City rent control increases, we at Dime had increased our debt service coverage ratio requirements going back, you know, 'cause we expected that, landlords were gonna have a hard time raising rent.
Subsequent to that, you know, in the recent past, obviously, you know, rents of, you know, the Rent Guidelines Board have allowed landlords to increase rates. That that's actually helped. You know, at this point, we have not seen any stress in our portfolio. Going back in time, as I said, we had taken steps to really be a little more rigorous in terms of requiring higher levels of debt service coverage in terms of new originations going back, you know, 2, 3, 4 years ago, you know, that's proving to be the right decision now.
Matt, the other thing I'd say, obviously, you can look at our asset quality. I mean, so far, there's really nothing in the multifamily book that's, you know, over 60 days past due. The other thing that I would add is, you know, back in 2018, so those are the loans that are resetting, you know, in 2023, right? That's the time, you know, Legacy Dime had moved away a bit from the multifamily market to remix the whole balance sheet. We only have around $350 million-$400 million of those loans that are repricing next year. It's a smaller piece of our overall portfolio. You know, we've done a lot of originations in the last year, obviously, and those ones are not gonna reset for another 5 years. Those are, you know, very strong DSCR ratios, you know, going into this. We had the hindsight of, you know, the pandemic, so we have a lot of, you know, reserves and things like that associated with individual loans when we make them. You know, six months of coverage, things like that. We feel very comfortable overall.
Understood. I appreciate all the color there. Maybe going back to loan growth, I don't have it at my fingertips, but the $1.8 billion pipeline, does that support the kinda growth that we've seen over the last couple quarters, call it, you know, double digits, to say the least? And then within that, you know, just thinking about some of the components. You know, two areas I've been surprised by in terms of strength has been, you know, resi growth, which has been higher than we've seen over the last year or two, and then multifamily as well. I'm just curious, overall loan growth and then those two portfolios in particular.
Yeah. I think overall loan growth in the near term will sustain. You know, if you go back to midsummer, I think our pipeline was about $2.9 billion. Now, not all of those deals come to fruition and, you know, make it through to a closing. You know, the overall total pipeline is down, as expected given the current rate environment. I think in the near term, you know, we expect to sustain that growth. Over the longer term, as I said earlier, we don't expect to see the growth in multifamily.
We're really kind of rotating sectors and looking more toward the C&I book, where we have really, you know, increased our population, our teams in terms of relationship managers and our opportunities. You know, as far as the residential portfolio. You know, we're basically doing $10 million a month. It's really solid, you know, A- paper residential ARMs. The average yield or weighted average rate on that is in the fives right now. So it's a good asset. We have no delinquencies, you know, A- paper, and we expect that to continue. That's really all purchase paper. Obviously, the refinance market has really dried up. It's for the most part non-conforming because, you know, the Fannie Mae fixed- rate market. We sell our Fannie and Freddie fixed- rate product into the secondary market, but that's really slowed down. It's rotated into portfolio ARMs. You know, we expect that to remain constant over the coming year.
Yeah. Matt, I think both those, you know, asset classes are where payoffs have slowed more than the relationship-based portfolio, right? I mean, just on regular multifamily and residential. It is natural that you're gonna see some, you know, additional growth there when payoffs slow down.
Yep.
Okay. Avi, just thinking about the other you know, asset components here. Securities were down a little bit this quarter, a little less than last quarter, but I just wanted to get a sense for how much you're thinking about using securities cash flows to go into loans, and if we should expect kind of a similar pace of decrease in the securities portfolio going forward.
Yeah, I mean, look, I mean, we did purchase some securities, you know, in Q3. I think we're always opportunistic around the securities portfolio. I mean, we like managing the balance sheet with having around, you know, 8%-10% in liquid assets that are not encumbered. You know, 2023, we probably have $125 million of cash flows from the securities portfolio. Really, 2024 and 2025 are the big years for us because when we sold our PPP loans last year, we put that into three- and four-year treasuries, and that's all coming due.
Look, in the near term, if we feel like yields are, you know, are attractive on the securities portfolio, we may look to, you know, purchase some towards the end of the year into next year. Because at some point, you know, rates go back down, you know, everybody's then gonna be buying at much lower yields. I think we feel very comfortable from the liquidity side. At the end of the day, we wanna support loan growth, and we wanna manage our deposit cost. It's kind of a dynamic moving target over time.
Got it. Okay. I'll leave it there. I appreciate you taking my questions. Thank you.
Thank you.
Thanks.
Thank you. As another reminder, if you would wish to submit a question, please press star followed by one on your telephone keypad. Our next question comes from Chris O'Connell of KBW. Chris, your line is open. Please proceed.
Morning.
Thank you.
I wanted to start off circling back to, you know, the multifamily discussion. You know, I hear you on the long-term growth, you know, becoming, you know, more flat. In the near term, I mean, should that continue to be, you know, a pretty strong driver? I mean, so far this year, it's, you know, the strongest category, and it sounds like with, you know, a decent pipeline in prepays, you know, falling to near zero here, that it could continue to be a good driver for the next couple quarters.
You know, we really control that. You know, multifamily is really a commodity priced product. You know, we've determined, given our pipeline, the size of the pipeline and the ability to diversify and you know focus a little bit more on higher yielding relationship type businesses, particularly in the C&I world, that you know our pipeline can certainly support growth. You know, the kind of growth we've had over the last several quarters and just be in a maintenance mode on the multifamily side. Certainly, you know, it's elastic, it's price dependent, and if we determine that you know we wanna move in that direction, we certainly have the ability to move pricing slightly and move origination growth significantly.
You know, for us, we really are focusing on relationship based businesses like C&I, like owner-occupied CRE that come with balances and total relationships. Multifamily tends to be more of a transaction. Good business, good risk-adjusted business, good credit, but you know, we think this is the right time to kind of slow that part of the business down and move toward the other relationship-based businesses, 'cause we have the ability to do significant amounts in that, in those other sectors.
Got it. That makes sense. With the multifamily that's on the portfolio, you know, that that'll be coming off, you know, call it over the next 12 months or so. Even with balances flat, you know, what's the spread in terms of, you know, what's falling off into what it's repricing into? Yeah.
What's coming off is at 3.75% and what's coming on is in the mid-5% range. You know, there is a net pickup in terms of margin in that business.
Great. Switching gears to the deposit side, you know, good, great flows this quarter in terms of, you know, product mix. As you guys are moving forward here, rising rate cycle. Are you starting to, you know, do a little bit more in terms of, you know, the CDs in money market? Are you running any, like, specials there? Or, you know, kind of strictly focused on, you know, the core deposit growth?
Yeah. Chris, we did a small special in the Q2 , you know, just to test out our capabilities. You know, it's very successful. We raised around $200 million pretty quickly then. I think the one point that, you know, maybe gets lost in our, you know, deposit numbers because we don't have the breakouts in our press release, but we have grown business deposits by $200 million on a year-to-date basis. We've grown, you know, municipal probably by $100-$150. We've seen some, you know, outflows on the consumer side. A lot of it managed where we've allowed, you know, higher cost CDs or higher cost money markets to leave the bank.
Look, we may go back into the market at some point to replace some of those lost, you know, consumer deposits. I think, you know, underlying everything here is growing business deposits. You know, the consumer book is gonna reach a, you know, it was gonna reach a stability point regardless at some point. It's probably down to 30% of our overall base. When we put the two companies together, we're probably closer to 40%-45%. I think in the near term, sure, you could see some, you know, additional CDs on the balance sheet. I think in the medium to longer term, it's two-sided. You know, growing C&I, growing owner-occupied, it's really about growing business deposits and keeping our overall betas pretty low.
Got it. On the credit side, just wondering if you could give a little color around the drivers of, you know, net charge-offs this quarter. Just any, you know, you know, update in terms of, you know, any pockets of concern that you're seeing in the market. You mentioned pipeline's pretty well diversified. Yeah, I guess anything that you're seeing kind of in the local economy that you're trying to stay away from.
Yeah. Nothing of concern, Chris. I mean, the charge offs were 15 basis points, so pretty low. There was a couple of, you know, operational items, you know, with one or two PPP loans that we had. So it wasn't really part of the core portfolio. We just did a cleanup this quarter and, you know, moved on. The balances on our PPP portfolio is down to less than $10 million. So really a bit of cleanup. Nothing that we're seeing, you know, overall. Our classified assets, and you'll see this in our 10-Q disclosure, you know, that's coming out, you know, next month.
You know, we started the year, you know, with a relatively higher level of classified assets than a lot of peers because we believe we did the right thing in terms of classifying some of the assets during the pandemic because they were not cash flowing when a lot of peers just put them into watch. We've actually seen around a $300 million decline in our classified assets, year to date. We're really not seeing any specific areas at this point. You know, credit's pretty good. Our stress testing is probably producing better results now than they were, you know, 3 and 6 months back. Not really seeing anything at this point.
Okay, great. On the opening comments, I think I might have missed it, but did you change the expense guide for the year? 'Cause I think you're running, you know, a touch below.
No, I think we just said we're happy with where we are, and we're running below, you know, the guidance, you know, for the year. We generally provide annual guidance. Look, this year I think we're gonna beat the guidance, and we're happy with that. We'll just see where Q4 ends up.
Got it. All right. Great. Thanks for taking my questions.
Thank you.
Thank you, Chris. As another reminder, if you wish to submit a question, please press star followed by one on your telephone keypad now. Our next question comes from Manuel Navas of D.A. Davidson. Manuel, your line is open. Please proceed.
Hey, good morning. I just wanted to follow up on thinking about the NIM trajectory with kind of the longer term repricing opportunity. Would you see the NIM kind of flat stabilize when the Fed stops raising rates or kind of still be able to keep going? If we assume the Fed raises rates then stops, could you still have some further NIM expansion?
Yeah. Manuel, we don't really give, you know, trajectory guidance, you know, in the longer term. I think what we'd say is, look, we're moderately asset sensitive bank. We're happy with, you know, the performance so far. I think like everybody else, you know, when the Fed stops, you know, there's always a catch up in deposit costs, but that happens every cycle for every bank that's out there. That being said, you know, we've set the balance sheet up to perform in, you know, any rate environment. I think, you know, we've guided to getting to a 1.25 ROA. You know, we're pretty much there at this point, slightly below. It's really growing the balance sheet, servicing our customers and producing the right returns. I think we're overall comfortable. You know, we're gonna work on, you know, making sure our deposit costs continue to lag the peer group, and I think that's a focus for all of us over here.
Okay. I appreciate that. Just, I might have missed this. On the end of period basis, for deposits, what kind of drove the slight decline? I know you were up on an average basis, but on the end of period. Are you planning to fully fund loan growth with deposits? Just as a follow-up.
Yeah. I mean, you always have customers, you know, at the end of the quarter sometimes that come in, you know, pull balances in. I mean, at the end of the day, as you know, average balance, you know, what drive the income statement. So we're more focused on that. You know, look, I think in terms of, you know, our loan- to- deposit ratio, we're running at, you know, 96%-97% right now. We're comfortable where we're at. It's all about, you know, supporting our customers, and we'd ideally like to fund it, you know, 100% with core deposits. So that's always the plan.
Okay. Perfect. Thank you.
Thank you. As a final reminder, if you wish to submit a question, please press star followed by one on your telephone keypad now. At this time, we currently have no further questions. I'll hand back over to Kevin O'Connor and the team for any closing remarks.
Well, thank you, everybody. I appreciate your interest in Dime. I think hopefully from the presentations we made and the way we've answered the questions, we're pretty optimistic about the future for us and look forward to. If there's anything specific that has not been answered, please give Avi a call. Have a great day. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.