Dime Community Bancshares, Inc. Reports Third Quarter 2024 Results
Acceleration in Core Deposit Growth Drives Increase in Quarterly Net Interest Margin to 2.50%
Balance Sheet Well Positioned to Benefit From Federal Reserve Rate Cuts
HAUPPAUGE, N.Y., Oct. 22, 2024 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. (NASDAQ:DCOM) (the "Company" or "Dime"), the parent company of Dime Community Bank (the "Bank"), today reported net income available to common stockholders of $11.5 million for the quarter ended September 30, 2024, or $0.29 per diluted common share, compared to $16.7 million, or $0.43 per diluted common share, for the quarter ended June 30, 2024, and $13.2 million, or $0.34 per diluted common share for the quarter ended September 30, 2023.
Stuart H. Lubow, President and Chief Executive Officer ("CEO") of the Company, stated, "Strong growth in low-cost core deposits drove a significant linked quarter expansion in the Net Interest Margin. Importantly, following the recent 50 basis point reduction in the Federal Funds rate, we lowered deposit costs and expect to benefit from these actions in the fourth quarter and beyond. Since the Federal Reserve rate cut in mid-September, the spread between the weighted average rate on loans and core deposits has improved by approximately 15 basis points. We anticipate the full quarter impact of this spread improvement to drive continued Net Interest Margin expansion in the fourth quarter."
Mr. Lubow commented, "During the third quarter, our Business loan portfolio increased by over $120 million and we continue to have strong pipelines in our Middle Market and Healthcare verticals. Compared to the prior quarter, the level of net charge-offs and criticized and classified loans remained stable and we continued to prudently build our allowance for credit losses to total loans and risk-based capital levels. In conclusion, I am extremely proud of our employees for their unwavering focus on our customers and enabling us to be the premier business bank on Greater Long Island."
Highlights for the Third Quarter of 2024 Included:
Total deposits increased $389 million compared to the second quarter of 2024;
Core deposits (excluding brokered and time deposits) increased $505 million compared to the second quarter of 2024;
The ratio of average non-interest-bearing deposits to average total deposits for the third quarter was 29% compared to 28% for the second quarter of 2024;
The cost of total deposits declined by 4 basis point versus the prior quarter;
The net interest margin increased to 2.50% for the third quarter of 2024 compared to 2.41% for the prior quarter;
The loan to deposit ratio declined to 95.4% at the end of the third quarter compared to 98.2% for the prior quarter;
Net charge-offs to average loans was 0.15% for the third quarter of 2024 compared to 0.14% for prior quarter;
The allowance for credit losses to total loans increased to 0.78% at the end of the third quarter compared to 0.72% for the prior quarter; and
The Company's total risk based capital ratio increased to 14.76% at the end of the third quarter compared to 14.46% for the prior quarter.
Management's Discussion of Quarterly Operating Results
Net Interest Income
Net interest income for the third quarter of 2024 was $79.9 million compared to $75.5 million for the second quarter of 2024 and $76.5 million for the third quarter of 2023.
The table below provides a reconciliation of the reported net interest margin ("NIM") and adjusted NIM excluding the impact of purchase accounting accretion on the loan portfolio.
(Dollars in thousands)
Q3 2024
Q2 2024
Q3 2023
Net interest income
$
79,924
$
75,502
$
76,479
Purchase accounting amortization (accretion) on loans ("PAA")
(266
)
(101
)
186
Adjusted net interest income excluding PAA on loans (non-GAAP)
$
79,658
$
75,401
$
76,665
Average interest-earning assets
$
12,734,246
$
12,624,556
$
12,984,061
NIM (1)
2.50
%
2.41
%
2.34
%
Adjusted NIM excluding PAA on loans (non-GAAP) (2)
2.49
%
2.40
%
2.34
%
(1) NIM represents net interest income divided by average interest-earning assets.(2) Adjusted NIM excluding PAA on loans represents adjusted net interest income, which excludes PAA amortization on acquired loans divided by average interest-earning assets.
During the quarter ended June 30, 2024, there was a recovery of interest income from a loan that was previously on non-accrual status in the amount of $1.3 million. Excluding the impact of this item, the second quarter NIM was 2.37%.
Loan Portfolio
The ending WAR on the total loan portfolio was 5.40% at September 30, 2024, a 1 basis point increase compared to the ending WAR of 5.39% on the total loan portfolio at June 30, 2024.
Outlined below are loan balances and WARs for the quarter ended as indicated.
September 30, 2024
June 30, 2024
September 30, 2023
(Dollars in thousands)
Balance
WAR (1)
Balance
WAR (1)
Balance
WAR (1)
Loans held for investment balances at period end:
Business loans (2)
$
2,653,624
6.82
%
$
2,530,896
6.92
%
$
2,271,768
6.72
%
One-to-four family residential, including condominium and cooperative apartment
934,209
4.65
906,949
4.55
892,869
4.39
Multifamily residential and residential mixed-use (3)(4)
3,866,931
4.60
3,920,354
4.59
4,102,024
4.45
Non-owner-occupied commercial real estate
3,281,923
5.25
3,315,100
5.25
3,374,281
5.09
Acquisition, development, and construction
149,299
8.46
144,860
8.96
203,402
8.92
Other loans
6,058
10.71
6,699
3.39
6,267
6.28
Loans held for investment
$
10,892,044
5.40
%
$
10,824,858
5.39
%
$
10,850,611
5.20
%
(1) WAR is calculated by aggregating interest based on the current loan rate from each loan in the category, adjusted for non-accrual loans, divided by the total balance of loans in the category.(2) Business loans include commercial and industrial loans and owner-occupied commercial real estate loans. (3) Includes loans underlying multifamily cooperatives. (4) While the loans within this category are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.
Outlined below are the loan originations, for the quarter ended as indicated.
(Dollars in millions)
Q3 2024
Q2 2024
Q3 2023
Loan originations
$
122.7
$
162.4
$
153.4
Deposits and Borrowed Funds
Period end total deposits (including mortgage escrow deposits) at September 30, 2024 were $11.42 billion, compared to $11.03 billion at June 30, 2024 and $10.53 billion at December 31, 2023.
Total Federal Home Loan Bank advances were $508.0 million at September 30, 2024 compared to $633.0 million at June 30, 2024 and $1.31 billion at December 31, 2023.
Mr. Lubow commented, "During the third quarter of 2024, we continued our strategy of utilizing core deposit growth to reduce our wholesale funding position."
Non-Interest Income
Non-interest income was $7.6 million during the third quarter of 2024, $11.8 million during the second quarter of 2024, and $7.9 million during the third quarter of 2023. Included in non-interest income for the second quarter of 2024, was income related to the sale of premises of approximately $3.7 million.
Non-Interest Expense
Total non-interest expense was $57.7 million during the third quarter of 2024, $55.7 million during the second quarter of 2024, and $59.5 million during the third quarter of 2023. Excluding the impact of the loss on extinguishment of debt, amortization of other intangible assets and severance expense, adjusted non-interest expense was $57.4 million during the third quarter of 2024, $55.4 million during the second quarter of 2024, and $50.6 million during the third quarter of 2023 (see "Non-GAAP Reconciliation" tables at the end of this news release).
Mr. Lubow commented, "As we have communicated previously, the increase in non-interest expense has been due to the significant investments and hires in the Private and Commercial Bank and the Middle Market C&I Lending operations. Third quarter results reflected a fully-loaded run-rate for these initiatives and we expect to keep our expense base relatively flat in the fourth quarter of 2024."
The ratio of non-interest expense to average assets was 1.71% during the third quarter of 2024, compared to 1.66% during the linked quarter and 1.73% for the third quarter of 2023. Excluding the impact of the loss on extinguishment of debt, amortization of other intangible assets and severance expense, the ratio of adjusted non-interest expense to average assets was 1.70% during the third quarter of 2024, compared to 1.65% during the linked quarter and 1.48% for the third quarter of 2023 (see "Non-GAAP Reconciliation" tables at the end of this news release).
The efficiency ratio was 65.9% during the third quarter of 2024, compared to 63.8% during the linked quarter and 70.5% during the third quarter of 2023. Excluding the impact of net (gain) loss on sale of securities and other assets, fair value change in equity securities and loans held for sale, severance expense, loss on extinguishment of debt and amortization of other intangible assets the adjusted efficiency ratio was 65.6% during the third quarter of 2024, compared to 65.9% during the linked quarter and 59.7% during the third quarter of 2023 (see "Non-GAAP Reconciliation" tables at the end of this news release).
Income Tax Expense
The reported effective tax rate for the third quarter of 2024 was 26.9% compared to 29.0% for the second quarter of 2024, and 35.1% for the third quarter of 2023.
Credit Quality
Non-performing loans were $49.5 million at September 30, 2024, compared to $24.8 million for the prior quarter.
A credit loss provision of $11.6 million was recorded during the third quarter of 2024, compared to a credit loss provision of $5.6 million during the second quarter of 2024, and a credit loss provision of $1.8 million during the third quarter of 2023.
Capital Management
The Company's and the Bank's regulatory capital ratios continued to be in excess of all applicable regulatory requirements as of September 30, 2024. All risk-based regulatory capital ratios increased in the third quarter of 2024.
Dividends per common share were $0.25 during the third and second quarters of 2024, respectively.
Book value per common share was $29.31 at September 30, 2024 compared to $28.97 at June 30, 2024.
Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by the number of shares outstanding) was $25.22 at September 30, 2024 compared to $24.87 at June 30, 2024 (see "Non-GAAP Reconciliation" tables at the end of this news release).
Earnings Call Information
The Company will conduct a conference call at 9:00 a.m. (ET) on Tuesday, October 22, 2024, during which CEO Lubow will discuss the Company's third quarter 2024 financial performance, with a question-and-answer session to follow.
Participants may access the conference call via webcast using this link: https://edge.media-server.com/mmc/p/hfnjf6ym. To participate via telephone, please register in advance using this link: https://register.vevent.com/register/BI017781a02def49c0ad228b72ba201600. Upon registration, all telephone participants will receive a one-time confirmation email detailing how to join the conference call, including the dial-in number along with a unique PIN that can be used to access the call. All participants are encouraged to dial-in 10 minutes prior to the start time.
A replay of the conference call and webcast will be available on-demand for 12 months at https://edge.media-server.com/mmc/p/hfnjf6ym.
ABOUT DIME COMMUNITY BANCSHARES, INC.Dime Community Bancshares, Inc. is the holding company for Dime Community Bank, a New York State-chartered trust company with over $13.7 billion in assets and the number one deposit market share among community banks on Greater Long Island(1).
(1) Aggregate deposit market share for Kings, Queens, Nassau & Suffolk counties for community banks with less than $20 billion in assets.
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 "annualized," "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 affect demand for our products and reduce interest margins and the value of our investments; changes in deposit flows, the cost of funds, loan demand or real estate values may adversely affect the business of the Company; changes in the quality and composition of the Company's loan or investment portfolios or unanticipated or significant increases in loan losses may negatively affect the Company's financial condition or results of operations; 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 socio-economic conditions, public health emergencies, international conflict, inflation, and recessionary pressures, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates and may adversely affect our customers, our financial results and our operations; legislation or regulatory changes may adversely affect the Company's business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; there may be difficulties or unanticipated expense incurred in the consummation of new business initiatives or the integration of any acquired entities; and 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. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections entitled "Forward-Looking Statements" and "Risk Factors" in the Company's most recent Annual Report on Form 10-K and updates set forth in the Company's subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Contact: Avinash Reddy
Senior Executive Vice President, Chief Financial Officer
718-782-6200 extension 5909
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(In thousands)
September 30,
June 30,
December 31,
2024
2024
2023
Assets:
Cash and due from banks
$
626,056
$
413,983
$
457,547
Securities available-for-sale, at fair value
774,608
819,222
886,240
Securities held-to-maturity
592,414
588,000
594,639
Loans held for sale
13,098
14,766
10,159
Loans held for investment, net:
Business loans (1)
2,653,624
2,530,896
2,310,379
One-to-four family and cooperative/condominium apartment
934,209
906,949
889,236
Multifamily residential and residential mixed-use (2)(3)
3,866,931
3,920,354
4,017,703
Non-owner-occupied commercial real estate
3,281,923
3,315,100
3,381,842
Acquisition, development and construction
149,299
144,860
168,513
Other loans
6,058
6,699
5,755
Allowance for credit losses
(85,221
)
(77,812
)
(71,743
)
Total loans held for investment, net
10,806,823
10,747,046
10,701,685
Premises and fixed assets, net
35,066
36,054
44,868
Premises held for sale
,
—
905
Restricted stock
64,235
68,445
98,750
Bank Owned Life Insurance ("BOLI")
372,367
354,761
349,816
Goodwill
155,797
155,797
155,797
Other intangible assets
4,181
4,467
5,059
Operating lease assets
48,537
51,703
52,729
Derivative assets
105,636
134,489
122,132
Accrued interest receivable
54,578
55,588
55,666
Other assets
93,133
104,442
100,013
Total assets
$
13,746,529
$
13,548,763
$
13,636,005
Liabilities:
Non-interest-bearing checking (excluding mortgage escrow deposits)
$
3,231,160
$
3,012,481
$
2,884,378
Interest-bearing checking
938,070
633,721
515,987
Savings (excluding mortgage escrow deposits)
1,845,266
2,340,222
2,335,354
Money market
3,898,509
3,607,090
3,125,996
Certificates of deposit
1,416,467
1,382,271
1,607,683
Deposits (excluding mortgage escrow deposits)
11,329,472
10,975,785
10,469,398
Non-interest-bearing mortgage escrow deposits
87,841
52,647
61,121
Interest-bearing mortgage escrow deposits
5
2
136
Total mortgage escrow deposits
87,846
52,649
61,257
FHLBNY advances
508,000
633,000
1,313,000
Subordinated debt, net
272,300
262,814
200,196
Derivative cash collateral
68,960
130,090
108,100
Operating lease liabilities
51,362
54,530
55,454
Derivative liabilities
98,108
122,567
121,265
Other liabilities
66,552
66,732
81,110
Total liabilities
12,482,600
12,298,167
12,409,780
Stockholders' equity:
Preferred stock, Series A
116,569
116,569
116,569
Common stock
416
416
416
Additional paid-in capital
488,607
488,760
494,454
Retained earnings
827,690
826,080
813,007
Accumulated other comprehensive loss ("AOCI"), net of deferred taxes
(72,970
)
(82,780
)
(91,579
)
Unearned equity awards
(10,111
)
(12,023
)
(8,622
)
Treasury stock, at cost
(86,272
)
(86,426
)
(98,020
)
Total stockholders' equity
1,263,929
1,250,596
1,226,225
Total liabilities and stockholders' equity
$
13,746,529
$
13,548,763
$
13,636,005
(1) Business loans include commercial and industrial loans, owner-occupied commercial real estate loans and Paycheck Protection Program ("PPP") loans.(2) Includes loans underlying multifamily cooperatives.
(3) While the loans within this category are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands except share and per share amounts)
Three Months Ended
Nine Months Ended
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
Interest income:
Loans
$
151,828
$
147,099
$
142,995
$
442,492
$
409,744
Securities
7,766
7,907
7,916
23,553
24,261
Other short-term investments
4,645
4,412
6,930
18,621
16,599
Total interest income
164,239
159,418
157,841
484,666
450,604
Interest expense:
Deposits and escrow
74,025
72,878
62,507
219,972
152,395
Borrowed funds
8,764
9,033
16,925
32,494
50,855
Derivative cash collateral
1,526
2,005
1,930
5,244
4,904
Total interest expense
84,315
83,916
81,362
257,710
208,154
Net interest income
79,924
75,502
76,479
226,956
242,450
Provision (recovery) for credit losses
11,603
5,585
1,806
22,398
(950
)
Net interest income after provision (recovery)
68,321
69,917
74,673
204,558
243,400
Non-interest income:
Service charges and other fees
4,267
3,972
3,963
12,783
12,633
Title fees
190
294
291
617
829
Loan level derivative income
132
1,085
783
1,623
6,353
BOLI income
2,606
2,484
2,317
7,551
