Growth in New Commercial Customers Leads to Average Deposits Increasing By $128 Million on a Linked Quarter Basis
Capital Ratios Continue to Grow and Asset Quality Remains Stable
HAUPPAUGE, N.Y., Oct. 19, 2023 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. ( DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “Bank”), today reported net income available to common stockholders of $13.2 million for the quarter ended September 30, 2023, or $0.34 per diluted common share, compared to net income available to common stockholders of $25.7 million for the quarter ended June 30, 2023, or $0.66 per diluted common share, and net income available to common stockholders of $37.7 million for the quarter ended September 30, 2022, or $0.98 per diluted common share.
Third quarter 2023 results include $8.9 million of aggregate pre-tax adjustments related to severance from the previously disclosed Chief Executive Officer succession and loss on equity securities. Excluding these items, adjusted net income available to common stockholders (non-GAAP) totaled $21.9 million for the quarter ended September 30, 2023, or $0.56 per diluted share (see “Non-GAAP Reconciliation” tables at the end of this news release).
Stuart H. Lubow, President and Chief Executive Officer (“CEO”) of the Company, stated, “Our third quarter results were characterized by good overall deposit growth, a stabilization in our non-interest-bearing deposit base and a continued reduction in the pace of net interest margin compression. Given our unique customer-focused platform, we continue to attract quality talent as evidenced by the addition of a senior healthcare banker in the third quarter. In light of the overall environment, we continue to manage expenses prudently and continue to fortify our balance sheet by building capital. I am incredibly proud of our employees for their tremendous contributions towards serving our customers; as a result of their efforts, we continue to be the premier community-based business bank on Greater Long Island.”
Highlights for the Third Quarter of 2023 Included:
- Average total deposits were $10.66 billion for the third quarter of 2023 compared to $10.54 billion for the second quarter of 2023;
- Non-insured deposits (excluding deposits with pass through insurance and collateralized deposits) represented only 29% of total deposits at the end of the third quarter;
- The ratio of average non-interest-bearing deposits to average total deposits for the third quarter and the second quarter of 2023 was 29%;
- Total net loans held for investment of $10.78 billion, remained stable on a linked quarter basis;
- The pace of Net Interest Margin (“NIM”) compression continued to slow in the third quarter; on a linked quarter basis, the NIM declined by 16 basis points in the third quarter of 2023 compared to 24 basis points for the second quarter of 2023 and 41 basis points for the first quarter of 2023;
- Expenses remained well-controlled; excluding the impact of severance, non-interest expenses was $51.0 million for the third quarter of 2023, compared to $51.7 million for the second quarter of 2023;
- Credit quality continues to be stable with non-performing assets and loans 90 days past due and accruing declining by 16% versus the linked quarter and representing only 0.17% of total assets as of September 30, 2023; and
- The Company’s Tier 1 Risk Based Capital Ratio of 10.76% was 26 basis points higher than the prior quarter.
Management’s Discussion of Quarterly Operating Results
Net Interest Income
Net interest income for the third quarter of 2023 was $76.5 million compared to $80.2 million for the second quarter of 2023 and $100.4 million for the third quarter of 2022.
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 2023 | Q2 2023 | Q3 2022 | ||||||||
| Net interest income | $ | 76,479 | $ | 80,219 | $ | 100,438 | |||||
| Purchase accounting amortization (accretion) on loans ("PAA") | 186 | 58 | (57 | ) | |||||||
| Adjusted net interest income excluding PAA on loans (non-GAAP) | $ | 76,665 | $ | 80,277 | $ | 100,381 | |||||
| Average interest-earning assets | $ | 12,984,061 | $ | 12,888,522 | $ | 11,782,361 | |||||
| NIM (1) | 2.34 | % | 2.50 | % | 3.38 | % | |||||
| Adjusted NIM excluding PAA on loans (non-GAAP) (2) | 2.34 | % | 2.50 | % | 3.38 | % | |||||
(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 net interest income on PAA loans divided by average interest-earning assets.
Loan Portfolio
The ending weighted average rate (“WAR”) (1) on the total loan portfolio was 5.20% at September 30, 2023, an 8 basis point increase compared to the ending WAR of 5.12% on the total loan portfolio at June 30, 2023.
Outlined below are loan balances and WARs for the period ended as indicated.
| September 30, 2023 | June 30, 2023 | September 30, 2022 | ||||||||||||||
| (Dollars in thousands) | Balance | WAR | Balance | WAR | Balance | WAR | ||||||||||
| Loans held for investment balances at period end: | ||||||||||||||||
| Business loans (2) | $ | 2,271,768 | 6.72 | % | $ | 2,250,108 | 6.56 | % | $ | 2,002,568 | 5.24 | % | ||||
| One-to-four family residential, including condominium and cooperative apartment | 892,869 | 4.39 | 855,980 | 4.17 | 722,081 | 3.77 | ||||||||||
| Multifamily residential and residential mixed-use (3)(4) | 4,102,024 | 4.45 | 4,132,358 | 4.38 | 3,968,244 | 3.83 | ||||||||||
| Non-owner-occupied commercial real estate | 3,374,281 | 5.09 | 3,406,232 | 5.04 | 3,174,102 | 4.33 | ||||||||||
| Acquisition, development, and construction | 203,402 | 8.92 | 225,580 | 8.99 | 241,019 | 6.75 | ||||||||||
| Other loans | 6,267 | 6.28 | 6,157 | 6.74 | 8,927 | 7.29 | ||||||||||
| Loans held for investment | $ | 10,850,611 | 5.20 | % | $ | 10,876,415 | 5.12 | % | $ | 10,116,941 | 4.33 | % | ||||
(1) Weighted average rate 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, owner-occupied commercial real estate loans and Small Business Administration Paycheck Protection Program (“PPP”) 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 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.
Outlined below are the loan originations, for the quarter ended as indicated.
| (Dollars in millions) | Q3 2023 | Q2 2023 | Q3 2022 | |||||||
| Loan originations | $ | 153.4 | $ | 296.6 | $ | 800.9 | ||||
Deposits and Borrowed Funds
Period end total deposits (including mortgage escrow deposits) at September 30, 2023 were $10.64 billion, compared to $10.53 billion at June 30, 2023 and $10.25 billion at December 31, 2022. CEO Lubow commented, “During the third quarter we had good growth in business deposits driven by the deposit group hires we made in the second quarter. Given the growth in business deposits, we were able to pay down approximately $80 million of retail brokered deposits in the third quarter. Excluding brokered deposits, deposits increased approximately $200 million on a linked quarter basis.”
Total Federal Home Loan Bank advances were $1.12 billion at September 30, 2023 compared to $1.45 billion at June 30, 2023. Mr. Lubow stated, “During the third quarter we proactively paid down our Federal Home Loan Bank advance portfolio and we remain focused on operating a core deposit-funded institution.”
Non-Interest Income
Non-interest income was $7.9 million during the third quarter of 2023, $10.4 million during the second quarter of 2023, and $9.4 million during the third quarter of 2022. Included in non-interest income for the second quarter of 2023 was income related to mortality proceeds from a death claim of $645 thousand. Included in non-interest income during the third quarter of 2022 was a $1.4 million gain on the sale of a branch property.
Non-Interest Expense
Total non-interest expense was $59.5 million during the third quarter of 2023, $52.2 million during the second quarter of 2023, and $48.3 million during the third quarter of 2022. Excluding the impact of severance expense, loss on extinguishment of debt, and amortization of other intangible assets, adjusted non-interest expense was $50.6 million during the third quarter of 2023, $51.4 million during the second quarter of 2023, and $47.9 million during the third quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release).
The ratio of non-interest expense to average assets was 1.73% during the third quarter of 2023, compared to 1.53% during the linked quarter and 1.54% for the third quarter of 2022. Excluding the impact of severance expense, loss on extinguishment of debt, and amortization of other intangible assets, the ratio of adjusted non-interest expense to average assets was 1.48% during the third quarter of 2023, compared to 1.51% during the linked quarter and 1.53% for the third quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release).
The efficiency ratio was 70.5% during the third quarter of 2023, compared to 57.6% during the linked quarter and 44.0% during the third quarter of 2022. Excluding the impact of loss on equity securities, net loss on sale of securities and other assets, severance expense, loss on extinguishment of debt and amortization of other intangible assets the adjusted efficiency ratio was 59.7% during the third quarter of 2023, compared to 56.2% during the linked quarter and 44.2% during the second quarter of 2022 (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 2023 was 35.1% compared to 26.8% for the second quarter of 2023. The increase in tax rate was primarily due to non-deductible severance expense during the period.
Credit Quality
Non-performing loans at September 30, 2023 were $23.3 million, 16% lower than the prior quarter.
A credit loss provision of $1.8 million was recorded during the third quarter of 2023, compared to a credit loss provision of $892 thousand during the second quarter of 2023, and a credit loss provision of $6.6 million during the third quarter of 2022. The credit loss provision in the third quarter of 2023 was primarily associated with increased provisioning for individually analyzed loans.
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, 2023. All of the Company’s and Bank’s risk-based regulatory capital ratios increased in the third quarter of 2023.
Dividends per common share were $0.25 during the third and second quarters of 2023, respectively.
Book value per common share was $28.03 at September 30, 2023 compared to $27.99 at June 30, 2023.
Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by the number of shares outstanding) was $23.87 at September 30, 2023 compared to $23.82 at June 30, 2023. Excluding the impact of accumulated other comprehensive loss, the adjusted tangible common book value per share was $26.63 at September 30, 2023 compared to $26.51 at June 30, 2023 (see “Non-GAAP Reconciliation” tables at the end of this news release).
Earnings Call Information
The Company will conduct a conference call at 8:30 a.m. (ET) on Thursday, October 19, 2023, during which CEO Lubow will discuss the Company’s third quarter 2023 financial performance, with a question-and-answer session to follow.
The conference call will be simultaneously webcast (listen only) and archived for a period of one year at https://events.q4inc.com/attendee/616795871.
Conference Call Details:
| Dial-in for Live Call: United States: International: Access code: Telephone Replay: A recording will be available until Thursday, November 2, 2023. United States: International: Access code: | 1-833-470-1428 +1-929-526-1599 193919 1-866-813-9403 +44-204-525-0658 861279 |
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 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, 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, including conditions caused by the COVID-19 pandemic and any other public health emergency, 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; 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 SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
| September 30, | June 30, | December 31, | ||||||||||
| 2023 | 2023 | 2022 | ||||||||||
| Assets: | ||||||||||||
| Cash and due from banks | $ | 358,824 | $ | 452,504 | $ | 169,297 | ||||||
| Securities available-for-sale, at fair value | 869,879 | 894,856 | 950,587 | |||||||||
| Securities held-to-maturity | 600,291 | 603,960 | 585,798 | |||||||||
| Loans held for sale | 3,924 | 371 | — | |||||||||
| Loans held for investment, net: | ||||||||||||
| Business loans (1) | 2,271,768 | 2,250,108 | 2,211,857 | |||||||||
| One-to-four family and cooperative/condominium apartment | 892,869 | 855,980 | 773,321 | |||||||||
| Multifamily residential and residential mixed-use (2)(3) | 4,102,024 | 4,132,358 | 4,026,826 | |||||||||
| Non-owner-occupied commercial real estate | 3,374,281 | 3,406,232 | 3,317,485 | |||||||||
| Acquisition, development and construction | 203,402 | 225,580 | 229,663 | |||||||||
| Other loans | 6,267 | 6,157 | 7,679 | |||||||||
| Allowance for credit losses | (72,563 | ) | (75,646 | ) | (83,507 | ) | ||||||
| Total loans held for investment, net | 10,778,048 | 10,800,769 | 10,483,324 | |||||||||
| Premises and fixed assets, net | 45,064 | 45,890 | 46,749 | |||||||||
| Restricted stock | 90,085 | 104,724 | 88,745 | |||||||||
| Bank Owned Life Insurance ("BOLI") | 347,400 | 337,083 | 333,292 | |||||||||
| Goodwill | 155,797 | 155,797 | 155,797 | |||||||||
| Other intangible assets | 5,409 | 5,758 | 6,484 | |||||||||
| Operating lease assets | 55,600 | 54,931 | 57,857 | |||||||||
| Derivative assets | 177,369 | 147,740 | 154,485 | |||||||||
| Accrued interest receivable | 53,608 | 51,787 | 48,561 | |||||||||
| Other assets | 109,202 | 146,692 | 108,945 | |||||||||
| Total assets | $ | 13,651,405 | $ | 13,802,862 | $ | 13,189,921 | ||||||
| Liabilities: | ||||||||||||
| Non-interest-bearing checking (excluding mortgage escrow deposits) | $ | 2,935,156 | $ | 2,884,184 | $ | 3,449,763 | ||||||
| Interest-bearing checking | 630,686 | 960,465 | 827,454 | |||||||||
| Savings (excluding mortgage escrow deposits) | 2,309,440 | 2,275,008 | 2,259,909 | |||||||||
| Money market | 3,211,197 | 2,801,652 | 2,532,270 | |||||||||
| Certificates of deposit | 1,442,299 | 1,530,749 | 1,115,364 | |||||||||
| Deposits (excluding mortgage escrow deposits) | 10,528,778 | 10,452,058 | ||||||||||
