DIME COMMUNITY BANCSHARES, INC. REPORTS EARNINGS

 

Dime reports third quarter 2017 net income of $13.3 million, $0.35 diluted EPS

Brooklyn, NY – October 26, 2017 - Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “bank”), today reported net income of $13.3 million for the quarter ended September 30, 2017, or $0.35 per diluted common share, compared with net income of $12.0 million for the quarter ended June 30, 2017, or $0.32 per diluted common share, and net income of $10.5 million for the quarter ended September 30, 2016, or $0.29 per diluted common share.

 

Highlights for the third quarter of 2017 included:

 

·

Robust Business Banking division loan originations of $86.0 million in the third quarter, at an average rate of 4.61%, a 33% increase versus the second quarter of 2017;

 

·

Received approval to serve as a Small Business Administration (“SBA”) lender, positioning the Business Banking division for future expansion;

 

·

Deposit costs remain well-controlled, with total cost of deposits remaining flat on a year-over-year basis and up only 1 basis point compared to the second quarter of 2017;

 

·

Pristine credit quality, with total non-performing loans dropping to 0.01% of total loans; and

 

·

Continued expense discipline with core expenses remaining well-controlled.

 

Kenneth J. Mahon, President and CEO of the Company, stated “We continued the expansion of our Business Banking division and remained focused on growing the relationship-based lending model. Given the strong growth that we saw in this business during the third quarter, we remain on track to achieve the goals we set at the beginning of the year. Becoming an approved SBA lender was also an important step as it allows us to better serve small business customers and help drive economic opportunity in our communities. It is also important to note that we maintained our focus of expense discipline while investing in, and growing, the Business Banking division.”

 

Management’s Discussion of Quarterly Operating Results

 

 

Net interest income in the third quarter of 2017 was $38.5 million, an increase of $405,000 (+1.1%) from the second quarter of 2017 and an increase of $3.1 million (+8.8%) over the third quarter of 2016. Net interest margin (“NIM”) was 2.53% during the third quarter of 2017, compared to 2.57% in the second quarter of 2017, and 2.59% during the third quarter of 2016.  The NIM for the third quarter of 2017 was negatively impacted by 1 basis point as a result of approximately 17 days of interest expense related to the Company’s Trust Preferred securities that were redeemed on July 17, 2017.

 

During the third quarter of 2017, income from prepayment activity totaled $1.4 million, benefiting NIM by 9 basis points, compared to $1.0 million, or 7 basis points, during the second quarter of 2017, and $1.7 million, or 12 basis points, during the third quarter of 2016. Average interest-earning assets were $6.08 billion for the third quarter of 2017, an 11.2% (annualized) increase from $5.92 billion for the second quarter of 2017, and an 11.6% increase from $5.45 billion for the third quarter of 2016.

 

For the third quarter of 2017, the average yield on interest-earning assets (excluding prepayment income) was 3.44%, 3 basis points lower than the 3.47% yield for both the second quarter of 2017 and for the third quarter of 2016. The average cost of funds was 1.14% for the third quarter of 2017, flat compared with the second quarter of 2017, and down 1 basis point compared with the third quarter of 2016.

 

 

Real estate loan portfolio growth was $59.6 million (4.1% annualized) during the third quarter of 2017. Real estate loan originations were $210.6 million during the quarter, at a weighted average interest rate of 3.99%. Real estate loan amortization and satisfactions totaled $148.0 million, or 10.2% (annualized) of the portfolio balance, at an average rate of 4.02%. The annualized loan payoff rate of 10.2% for the third quarter of 2017 was lower than both the second quarter of 2017 (10.5%) and the third quarter of 2016 (12.7%). Average real estate loans were $5.84 billion in the third quarter of 2017, an increase of $83.4 million (5.8% annualized) from the second quarter of 2017 and an increase of $514.2 million (9.6%) from the third quarter of 2016.

 

Included in total real estate loan originations during the third quarter of 2017 were $41.5 million of originations from the Business Banking division at a weighted average rate of 4.62%, compared to $28.8 million of originations at a weighted average rate of 4.67% during the second quarter of 2017.

 

Commercial and industrial (“C&I”) loan originations were $44.6 million during the quarter, at a weighted average rate of 4.60% compared to $35.9 million at a weighted average rate of 4.77% during the second quarter of 2017. Total C&I loan balances were $111.1 million at the end of the third quarter of 2017, compared to $68.2 million at the end of the second quarter of 2017.

 

Approximately 40% of the Business Banking division’s year-to-date originations have been floating rate loans.

 

 

Third quarter 2017 cash and securities balances increased by $81.6 million versus the second quarter of 2017. “In the coming quarters, investors can expect to see trending growth in the bank’s on-balance sheet liquidity, in keeping with our strategic asset diversification objectives,” stated Mr. Mahon. “The appropriate level of investment liquidity for our bank will be based in part on the direction of monetary policy and interest rates, as signaled by the Federal Reserve Open Market Committee, and on our analysis of the bank’s funding needs and the level of core deposit funding.”

 

 

The Company continues to focus on growing relationship-based deposits sourced from its retail branches and Business Banking division. On a year-over-year basis, total average checking account balances increased by 17.9% to $417.6 million for the third quarter of 2017.

 

The average cost of total deposits for the third quarter of 2017 increased 1 basis point on a linked quarter basis to 0.86%, and remained unchanged compared to the third quarter of 2016. While many of the bank’s online competitors increased their posted rates in the second quarter and third quarter of 2017, the posted rate on DimeDirect, the bank’s online channel, remained unchanged, which led to money market account outflows from this channel. Overall, total deposits declined by $47.3 million during the third quarter of 2017 from the linked quarter.

 

“Our funding focus is on core business deposits, therefore we chose a less aggressive online deposit pricing posture last quarter, which caused the loan-to-deposit ratio to rise,” stated Mr. Mahon. “Our strategic goal is to have all of our new extensions of credit include some level of self-funding, and to increase our business loan and deposit services to the small and medium sized enterprises in the branch market areas. The online channel is one element of our strategy and will remain competitively priced.”

 

The loan-to-deposit ratio was 136.8% at September 30, 2017, compared to 133.0% at June 30, 2017 and 132.0% at September 30, 2016.

 

 

Total borrowings increased $202.3 million during the third quarter of 2017 as compared to the second quarter of 2017 as the Company utilized Federal Home Loan Bank advances to offset some of the declines in online money market deposits. The Company also took advantage of lower borrowing rates during the third quarter of 2017 and entered into $97.0 million of long-term borrowings (with initial terms of 2 years and more), at an average rate of 1.74%, versus $60.9 million of long-term borrowings, at an average rate of 1.76%, in the second quarter of 2017.

 

 

Non-interest income was $4.3 million during the third quarter of 2017, which was $2.5 million higher compared to the second quarter of 2017, and up $2.2 million compared to the third quarter of 2016.  The increase in non-interest income during the third quarter of 2017 was due to a gain of $2.6 million from the sale of the Company’s pooled bank trust preferred securities portfolio.

 

 

Total non-interest expense during the third quarter of 2017 was $22.2 million. During the third quarter of 2017, the Company recognized one-time expenses of $1.3 million for losses from the extinguishment of debt related to the redemption of its Trust Preferred securities. In addition, the Company also recognized $1.7 million of one-time expenses related to de-conversion costs associated with the planned change in the bank’s core processor, which is expected to occur in 2018.  Excluding these one-time expense items, adjusted non-interest expense was $19.2 million during the third quarter of 2017, lower than the second quarter of 2017 by $291,000, primarily related to lower salary expense and related employee benefits.

 

The ratio of non-interest expense to average assets was 1.41% during the third quarter of 2017. Excluding the aforementioned one-time expenses, the ratio was 1.22% during the third quarter of 2017, lower than both 1.27% during the second quarter of 2017, and 1.29% during the third quarter of 2016.

 

The efficiency ratio was 55.3% during the third quarter of 2017. Excluding the aforementioned one-time expenses, the ratio was 47.8% during the third quarter of 2017, lower than both the 49.0% during the second quarter of 2017, and the 48.8% during the third quarter of 2016.

 

 

The reported effective tax rate for the third quarter of 2017 was 35.2%. During the quarter, the Company recognized an income tax benefit of $1.5 million for a discrete tax item related to distributions of retirement benefits from the Company’s Benefit Maintenance Plan. The tax benefit was partially offset by a one-time deferred tax expense of $476,000 to adjust the Company’s deferred tax asset. Excluding these one-time tax adjustments and the one-time non-interest income and expense items mentioned above, the effective income tax rate would have been 40.1% for the third quarter, compared to 37.8% for the second quarter of 2017. The increase in the adjusted effective tax rate negatively impacted the third quarter of 2017 adjusted earnings per diluted share, of $0.33, by $0.01.

 

 

Non-performing loans were $806,000, or 0.01% of total loans, at September 30, 2017, a decrease from $3.4 million, or 0.06% of total loans, at June 30, 2017. The decrease in non-performing loans during the third quarter of 2017 was primarily the result of $2.4 million non-performing loans sold at par value. The allowance for loan losses was 0.37% of total loans at September 30, 2017, consistent with June 30, 2017. At September 30, 2017, non-performing assets represented 0.7% of the sum of the bank’s tangible common equity plus the allowance for loan losses and reserve for contingent liabilities (this non-Generally Accepted Accounting Principle (“GAAP”) statistic is otherwise known as the "Texas Ratio") (see “Problem Assets as a Percentage of Tangible Capital and Reserves” table and “Non-GAAP Reconciliation” table at the end of this news release), which is lower than the ratio of 1.0% at June 30, 2017.  A loan loss provision of $23,000 was recorded during the third quarter of 2017, compared to a provision of $1.0 million during the second quarter of 2017, and $1.2 million during the third quarter of 2016.

 

 

The Company’s consolidated Tier 1 capital to average assets (“leverage ratio”), which was 8.58% at September 30, 2017, was in excess of all applicable regulatory requirements.

 

The bank’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements inclusive of conservation buffer amounts.  At September 30, 2017, the bank’s leverage ratio was 9.23%, while Tier 1 capital to risk-weighted assets and Total capital to risk-weighted assets ratios were 11.46% and 11.90%, respectively.

 

Diluted earnings per common share of $0.35 exceeded the quarterly $0.14 cash dividend per share by 150% during the third quarter of 2017, equating to a 40.0% dividend payout ratio.

 

Book value per share was $15.66 and tangible book value (common equity less goodwill divided by number of shares outstanding) per share was $14.17 at September 30, 2017.

 

 

At September 30, 2017, the bank had outstanding real estate loan commitments totaling $46.7 million, at an average interest rate approximating 4.31%, all of which are expected to close during the quarter ending December 31, 2017.

 

During the third quarter of 2017, the Company increased its rack rates on multifamily loans, reflecting the fact that funding costs are moving higher. In 2017, the bank has also built its origination capacity to support new lending channels with higher yields and more deposit opportunities. Therefore, with a lower level of expected originations in the Company’s traditional multifamily market, the multifamily portfolio is expected to be lower on a linked quarter basis. The Business Banking division is expected to meet its 2017 portfolio growth targets, which includes C&I and direct-sourced commercial real estate loans.

 

Loan loss provision for the fourth quarter of 2017 is expected to be driven by loan portfolio growth, subject to management’s assessment of the adequacy of the allowance for loan losses.

 

Non‐interest expense is expected to be approximately $19.5 million during the fourth quarter of 2017.

 

The previously announced sale of the Williamsburg branch office property is now expected to close in the fourth quarter of 2017 and is expected to generate an after-tax gain of approximately $5-6 million.

 

The Company projects that the consolidated effective tax rate will approximate 39% in the December 2017 quarter.

 

ABOUT DIME COMMUNITY BANCSHARES, INC.

 

The Company had $6.44 billion in consolidated assets as of September 30, 2017. The bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-seven branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and the bank can be found on Dime's website at www.dime.com.

 

This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," “continue,” "could," "estimate," "expect," "intend," “likely,” "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.

 

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and/or the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; failure or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates.

 

Contact: Avinash Reddy

Senior Vice President – Corporate Development and Treasurer

718-782-6200 extension 5909

 

		September 30, 2017				June 30, 2017				December 31, 2016
ASSETS:
Cash and due from banks		$	173,060			$	110,044			$	113,503
Investment securities held to maturity			-				5,315				5,378
Investment securities available for sale			4,034				4,049				3,895
Mortgage-backed securities available for sale			27,381				3,496				3,558
Trading securities			2,675				2,687				6,953
Loans:
One-to-four family residential, including condominium and cooperative apartment			66,519				70,982				74,022
Multifamily residential and residential mixed use (1)(2)			4,775,858				4,746,075				4,592,282
Commercial and commercial mixed use real estate			1,003,642				975,771				958,459
Acquisition, development, and construction ("ADC")			9,115				4,000				-
Unearned discounts and net deferred loan fees			11,433				10,105				8,244
Total real estate loans			5,866,567				5,806,933				5,633,007
Commercial and industrial ("C&I")			111,099				68,199				2,058
Other loans			1,092				1,749				1,357
Allowance for loan losses			(22,007	)			(21,985	)			(20,536	)
Total loans, net			5,956,751				5,854,896				5,615,886
Premises and fixed assets, net			22,968				22,315				18,405
Premises held for sale			1,379				1,379				1,379
Federal Home Loan Bank of New York capital stock			61,833				50,961				44,444
Bank Owned Life Insurance ("BOLI")			87,982				87,424				86,328
Goodwill			55,638				55,638				55,638
Other assets			50,728				59,980				50,063
TOTAL ASSETS		$	6,444,429			$	6,258,184			$	6,005,430
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing checking		$	309,126			$	313,351			$	297,434
Interest Bearing Checking			111,612				112,867				106,525
Savings			360,559				365,668				366,921
Money Market			2,564,396				2,729,968				2,576,081
Sub-total			3,345,693				3,521,854				3,346,961
Certificates of deposit			1,025,500				896,626				1,048,465
Total Due to Depositors			4,371,193				4,418,480				4,395,426
Escrow and other deposits			117,765				91,196				103,001
Federal Home Loan Bank of New York advances			1,217,500				944,575				831,125
Subordinated Notes Payable, net			113,575				113,545				-
Trust Preferred Notes Payable			-				70,680				70,680
Other liabilities			38,359				39,260				39,330
TOTAL LIABILITIES			5,858,392				5,677,736				5,439,562
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000 shares authorized, 53,617,919 shares, 53,614,924 shares and 53,572,745 shares issued at September 30, 2017, June 30, 2017 and December 31, 2016, respectively, and 37,422,884 shares, 37,675,379 shares and 37,455,853 shares outstanding at September 30, 2017, June 30, 2017, and December 31, 2016, respectively)			536				536				536
Additional paid-in capital			276,674				280,453				278,356
Retained earnings			524,237				516,165				503,539
Accumulated other comprehensive loss, net of deferred taxes			(4,711	)			(5,647	)			(5,939	)
Unearned Restricted Stock Award common stock			(3,536	)			(4,433	)			(1,932	)
Common stock held by the Benefit Maintenance Plan			(2,736	)			(7,029	)			(6,859	)
Treasury stock (16,195,035 shares, 15,939,545 shares and 16,116,892 shares at September 30, 2017, June 30, 2017 and December 31, 2016, respectively)			(204,427	)			(199,597	)			(201,833	)
TOTAL STOCKHOLDERS' EQUITY			586,037				580,448				565,868
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	6,444,429			$	6,258,184			$	6,005,430

		For the Three Months Ended												For the Nine Months Ended
		September 30, 2017				June 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
Interest income:
Loans secured by real estate		$	51,621			$	51,137			$	48,090			$	153,233			$	141,099
Commercial and industrial ("C&I")			1,043				474				10				1,558				20
Other loans			19				18				18				55				56
Mortgage-backed securities			27				14				2				55				6
Investment securities			108				164				129				462				567
Other short-term investments			811				611				707				2,139				2,089
Total interest  income			53,629				52,418			$	48,956				157,502				143,837
Interest expense:
Deposits and escrow			9,408				9,509				8,635				28,424				23,026
Borrowed funds			5,763				4,856				4,974				15,080				15,223
Total interest expense			15,171				14,365				13,609				43,504				38,249
Net interest income			38,458				38,053				35,347				113,998				105,588
Provision for loan losses			23				1,047				1,168				1,520				1,589
Net interest income after  provision for loan losses			38,435				37,006				34,179				112,478				103,999
Non-interest income:
Service charges and other fees			948				919				1,123				2,661				2,566
Mortgage banking income, net			69				65				16				150				71
Gain on trading securities			28				59				69				162				108
Gain on sale of real estate			-				-				-				-				68,183
Gain on sale of securities and other assets			2,607				-				-				2,607				40
Income from BOLI			558				551				570				1,654				2,173
Other			73				153				293				574				976
Total non-interest income			4,283				1,747				2,071				7,808				74,117
Non-interest expense:
Salaries and employee benefits			8,593				8,960				8,616				27,577				26,132
ESOP and RRP benefit expense			353				381				815				1,030				2,539
Occupancy and equipment			3,492				3,500				3,250				10,620				8,992
Data processing costs			3,392				1,503				1,284				6,502				3,735
Marketing			1,467				1,466				922				4,399				3,278
Federal deposit insurance premiums			875				712				613				2,242				1,933
Loss from extinguishment of debt			1,272				-				-				1,272				-
Other			2,731				2,947				2,732				8,771				7,584
Total non-interest expense			22,175				19,469				18,232				62,413				54,193
Income before taxes			20,543				19,284				18,018				57,873				123,923
Income tax expense			7,230				7,295				7,481				21,414				52,141
Net Income		$	13,313			$	11,989			$	10,537			$	36,459			$	71,782
Earnings per Share ("EPS"):
Basic		$	0.36			$	0.32			$	0.29			$	0.97			$	1.95
Diluted		$	0.35			$	0.32			$	0.29			$	0.97			$	1.95
Average common shares outstanding for Diluted EPS			37,441,855				37,635,798				36,788,307				37,536,816				36,756,618

		At or For the Three Months Ended												At or For the Nine Months Ended
		September 30, 2017				June 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
Per Share Data:
Reported EPS (Diluted)		$	0.35			$	0.32			$	0.29			$	0.97			$	1.95
Cash dividends paid per share			0.14				0.14				0.14				0.42				0.42
Book value per share			15.66				15.41				14.79				15.66				14.79
Tangible book value per share (1)			14.17				13.93				13.31				14.17				13.31
Dividend payout ratio			40.00	%			43.75	%			48.28	%			43.30	%			21.54	%
Performance Ratios (Based upon Reported Net Income):
Return on average assets			0.85	%			0.78	%			0.75	%			0.79	%			1.76	%
Return on average common equity			9.14	%			8.32	%			7.63	%			8.43	%			17.89	%
Return on average tangible common equity (1)			10.11	%			9.20	%			8.49	%			9.34	%			19.97	%
Net interest spread			2.38	%			2.40	%			2.44	%			2.39	%			2.52	%
Net interest margin			2.53	%			2.57	%			2.59	%			2.56	%			2.69	%
Average Interest Earning Assets to Average Interest Bearing Liabilities			115.62	%			117.18	%			116.14	%			116.38	%			116.87	%
Non-interest expense to average assets			1.41	%			1.27	%			1.29	%			1.35	%			1.33	%
Efficiency ratio			55.29	%			48.99	%			48.82	%			52.43	%			48.66	%
Loan-to-deposit ratio at end of period			136.78	%			133.01	%			132.00	%			136.78	%			132.00	%
Effective tax rate			35.19	%			37.83	%			41.52	%			37.00	%			42.08	%
Average Balance Data:
Average assets		$	6,290,568			$	6,128,378			$	5,653,103			$	6,148,620			$	5,444,673
Average interest earning assets			6,084,253				5,918,173				5,453,070				2,942,245				5,239,049
Average loans			5,930,165				5,802,417				5,330,442				5,807,893				5,096,174
Average deposits			4,355,770				4,476,004				3,973,753				4,439,095				3,638,706
Average common equity			582,545				576,689				552,370				576,319				534,851
Average tangible common equity (1)			526,907				521,051				496,733				520,681				479,214
Asset Quality Summary:
Non-performing loans (excluding loans held for sale)		$	806			$	3,374			$	3,875			$	806			$	3,875
Non-performing assets (2)			806				4,661				5,155				806				5,155
Net charge-offs			1				16				29				49				54
Non-performing loans/ Total loans			0.01	%			0.06	%			0.07	%			0.01	%			0.07	%
Non-performing assets/ Total assets			0.01	%			0.07	%			0.09	%			0.01	%			0.09	%
Allowance for loan loss/ Total loans			0.37	%			0.37	%			0.37	%			0.37	%			0.37	%
Allowance for loan loss/ Non-performing loans			2730.40	%			651.60	%			517.39	%			2730.40	%			517.39	%
Loans delinquent 30 to 89 days at period end		$	84			$	1,872			$	20			$	84			$	20
Capital Ratios - Consolidated:
Tangible common equity to tangible assets (1)			8.30	%			8.46	%			8.67	%			8.30	%			8.67	%
Tier 1 common equity ratio			10.65				10.78				11.24				10.65				11.24
Tier 1 risk-based capital ratio			10.65				12.17				12.76				10.65				12.76
Total risk-based capital ratio			13.38				14.96				13.20				13.38				13.20
Tier 1 leverage ratio			8.58				9.86				10.29				8.58				10.29
Capital Ratios - Bank Only:
Tier 1 common equity ratio			11.47	%			11.44	%			11.22	%			11.47	%			11.22	%
Tier 1 risk-based capital ratio			11.47				11.44				11.22				11.47				11.22
Total risk-based capital ratio			11.91				11.88				11.67				11.91				11.67
Tier 1 leverage ratio			9.23				9.25				9.04				9.23				9.04

		For the Three Months Ended
							September 30, 2017												June 30, 2017												September 30, 2016
		Average Balance					Interest				Average Yield/ Cost				Average Balance				Interest				Average Yield/ Cost				Average Balance				Interest				Average Yield/ Cost
Assets:
Interest-earning assets:
Real estate loans		$	5,842,921				$	51,621				3.53	%		$	5,759,565			$	51,137				3.55	%		$	5,328,712			$	48,090				3.61	%
Commercial and industrial loans			86,014					1,043				4.85				41,776				474				4.54				555				10				7.21
Other loans			1,230					19				6.18				1,076				18				6.69				1,175				18				6.13
Mortgage-backed securities			5,631					27				1.92				3,460				14				1.62				456				2				1.75
Investment securities			9,304					108				4.64				16,970				164				3.87				16,718				129				3.09
Other short-term investments			139,153					811				2.33				95,326				611				2.56				105,454				707				2.68
Total interest earning assets			6,084,253				$	53,629				3.53	%			5,918,173			$	52,418				3.54	%			5,453,070			$	48,956				3.59	%
Non-interest earning assets			206,315													210,205												200,033
Total assets		$	6,290,568												$	6,128,378											$	5,653,103
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing checking accounts		$	110,384				$	58				0.21	%		$	114,257			$	65				0.23	%		$	91,979			$	55				0.24	%
Money market accounts			2,643,537					5,961				0.89				2,767,455				6,139				0.89				2,196,387				4,702				0.85
Savings accounts			362,423					45				0.05				367,995				46				0.05				366,921				46				0.05
Certificates of deposit			932,208					3,344				1.42				925,535				3,259				1.41				1,056,346				3,832				1.44
Total interest-bearing deposits			4,048,552					9,408				0.92				4,175,242				9,509				0.91				3,711,633				8,635				0.93
Borrowed Funds			1,213,786					5,763				1.88				875,057				4,856				2.23				983,756				4,974				2.01
Total interest-bearing liabilities			5,262,338				$	15,171				1.14	%			5,050,299			$	14,365				1.14	%			4,695,389				13,609				1.15	%
Non-interest-bearing checking accounts			307,218													300,762												262,120
Other non-interest-bearing liabilities			138,467													200,628												143,224
Total liabilities			5,708,023													5,551,689												5,100,733
Stockholders' equity			582,545													576,689												552,370
Total liabilities and stockholders' equity		$	6,290,568												$	6,128,378											$	5,653,103
Net interest income							$	38,458											$	38,053											$	35,347
Net interest spread												2.38	%											2.41	%											2.44	%
Net interest-earning assets		$	821,915												$	867,874											$	757,681
Net interest margin												2.53	%											2.57	%											2.59	%
Ratio of interest-earning assets to interest-bearing liabilities								115.62	%											117.18	%											116.14	%
Deposits (including non-interest bearing checking accounts)		$	4,355,770					9,408				0.86	%		$	4,476,004			$	9,509				0.85	%		$	3,973,753			$	8,635				0.86	%
SUPPLEMENTAL INFORMATION
Loan prepayment and late payment fee income							$	1,371											$	1,029											$	1,695
Real estate loans (excluding net prepayment and late payment fee income)												3.44	%											3.48	%											3.48	%
Interest-earning assets (excluding net prepayment and late payment fee income)												3.44	%											3.47	%											3.47	%
Net Interest income (excluding net prepayment and late payment fee income)							$	37,087											$	37,024											$	33,652
Net Interest margin (excluding net prepayment and late payment fee income)												2.44	%											2.50	%											2.47	%

		At September 30, 2017								At June 30, 2017								At September 30, 2016
		Balance				WAR				Balance				WAR				Balance				WAR
Loan balances at period end:
One-to-four family residential, including condominium and cooperative apartment		$	66,519				4.31	%		$	70,982				4.29	%		$	75,297				4.24	%
Multifamily residential and residential mixed use (2)(3)			4,775,858				3.39				4,746,075				3.38				4,450,025				3.39
Commercial and commercial mixed use real estate			1,003,642				3.92				975,771				3.91				955,048				3.93
Acquisition, development, and construction ("ADC")			9,115				5.34				4,000				5.25				-				-
Total real estate loans			5,855,134				3.50				5,796,828				3.49				5,480,370				3.50
Commercial and industrial ("C&I")		$	111,099				4.68	%		$	68,199				4.62	%		$	635				6.65	%

Non-Performing Loans		At September 30, 2017				At June 30, 2017				At September 30, 2016
One-to-four family residential, including condominium and cooperative apartment		$	708			$	654			$	485
Multifamily residential and residential mixed use (1)(2)			-				2,618				3,219
Commercial mixed use real estate (2)			96				101				169
Other			2				1				2
Total Non-Performing Loans (3)		$	806			$	3,374			$	3,875
Other Non-Performing Assets
Other real estate owned			-				-				18
Pooled bank trust preferred securities (4)			-				1,287				1,262
Total Non-Performing Assets		$	806			$	4,661			$	5,155
One- to four-family and cooperative/condominium apartment			395				399				410
Multifamily residential and mixed use residential real estate (1)(2)			629				639				667
Mixed use commercial real estate (2)			4,197				4,218				4,282
Commercial real estate			3,313				3,330				3,380
Total Performing TDRs		$	8,534			$	8,586			$	8,739

		At September 30, 2017				At June 30, 2017				At September 30, 2016
Total Non-Performing Assets		$	806			$	4,661			$	5,155
Loans 90 days or more past due on accrual status (5)			3,466				1,265				2,165
TOTAL PROBLEM ASSETS		$	4,272			$	5,926			$	7,320
Tangible common equity - Bank only (6)		$	570,286			$	555,059			$	497,080
Allowance for loan losses and reserves for contingent liabilities			22,032				22,010				20,074
TANGIBLE COMMON EQUITY PLUS RESERVES		$	592,318			$	577,069			$	517,154
TEXAS RATIO (PROBLEM ASSETS AS A PERCENTAGE OF
TANGIBLE COMMON EQUITY AND RESERVES)			0.7	%			1.0	%			1.4	%

		At or For the Three Months Ended												At or For the Nine Months Ended
		September 30, 2017				June 30, 2017				September 30, 2016				September 30, 2017				September 30, 2016
Reconciliation of Reported and Adjusted ("non-GAAP") Net Income:
Reported net income		$	13,313			$	11,989			$	10,537			$	36,459			$	71,782
Adjustments to Net Income (1):
Add: Loss from extinguishment of debt			698				-				-				698				-
Add: De-conversion costs			946				-				-				946				-
Less: Gain on sale of securities			(1,430	)			-				-				(1,430	)			-
Less: After tax gain on the sale of real estate			-				-				-				-				(37,483	)
Tax adjustment			(985	)			-				-				(985	)			-
Adjusted ("non-GAAP") net income		$	12,542			$	11,989			$	10,537			$	35,688			$	34,299
Adjusted Ratios (Based upon "non-GAAP Net Income" as calculated above):
Adjusted EPS (Diluted)		$	0.33			$	0.32			$	0.29			$	0.95			$	0.93
Adjusted return on average assets			0.80	%			0.78	%			0.75	%			0.77	%			0.84	%
Adjusted return on average common equity			8.61	%			8.32	%			7.63	%			8.26	%			8.55	%
Adjusted return on average tangible common equity			9.52	%			9.20	%			8.49	%			9.14	%			9.54	%
Adjusted net interest spread			2.38	%			2.40	%			2.44	%			2.39	%			2.52	%
Adjusted net interest margin			2.53	%			2.57	%			2.59	%			2.56	%			2.69	%
Adjusted non-interest expense to average assets			1.22	%			1.27	%			1.29	%			1.29	%			1.33	%
Adjusted efficiency ratio			47.82	%			48.99	%			48.82	%			49.91	%			48.66	%
Reconciliation of Tangible Assets:
Total assets		$	6,444,429			$	6,258,184			$	5,821,786			$	6,444,429			$	5,821,786
Less:
Goodwill			55,638				55,638				55,638				55,638				55,638
Tangible assets			6,388,791				6,202,546				5,766,148				6,388,791				5,766,148
Reconciliation of Tangible Common Equity - Consolidated:
Total common equity		$	586,037			$	580,448			$	555,291			$	586,037			$	555,291
Less:
Goodwill			55,638				55,638				55,638				55,638				55,638
Tangible common equity			530,399				524,810				499,653				530,399				499,653
Reconciliation of Tangible Common Equity - Bank only:
Total common equity		$	625,924			$	610,697			$	552,718			$	625,924			$	552,718
Less:
Goodwill			55,638				55,638				55,638				55,638				55,638
Tangible common equity			570,286				555,059				497,080				570,286				497,080