Release Details

Robust Quarterly Loan Originations and Net Interest Margin Expansion Drive Net Interest Income Growth

Deposit Costs Remain Well Controlled

HAUPPAUGE, N.Y., Oct. 28, 2022 (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 $37.7 million for the quarter ended September 30, 2022, or $0.98 per diluted common share, compared to $36.7 million, or $0.94 per diluted common share, for the quarter ended June 30, 2022, and $36.6 million, or $0.89 per diluted common share, for the quarter ended September 30, 2021.

Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “During the third quarter, we had robust loan originations resulting in another quarter of record loan growth of over $450 million. The high level of non-interest-bearing deposits on our balance sheet allowed us to keep our deposit costs well contained. Strong growth in average earning assets and net interest margin expansion resulted in quarterly net interest income surpassing $100 million. We continue to prioritize prudent expense management as demonstrated by a core efficiency ratio of 47% on a year-to-date basis.”

Highlights for the Third Quarter of 2022 Included:

• Total loans held for investment, net, excluding Paycheck Protection Program (“PPP”) loans, increased by 19% on an annualized basis versus the linked quarter;
• The net interest margin expanded by 9 basis points versus the linked quarter;
• The cost of deposits remained well-controlled; on a linked quarter basis, the cost of deposits increased by only 23 basis points compared to the 150 basis points change in the Federal Funds rate between July and September;
• Credit quality continues to be strong with non-performing assets and loans 90 days past due and accruing remaining stable and representing only 0.34% of total assets as of September 30, 2022; and
• The Company repurchased 200,346 shares of its common stock, which represented approximately 0.5% of shares outstanding at the beginning of the period, at a weighted-average price of $30.97 per share.

Management’s Discussion of Quarterly Operating Results

Net Interest Income

Net interest income for the third quarter of 2022 was $100.4 million compared to $93.5 million for the second quarter of 2022 and $94.8 million for the third quarter of 2021.

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.

⁽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 4.33% at September 30, 2022, a 39 basis point increase compared to the ending WAR on the total loan portfolio at June 30, 2022.

Outlined below are loan balances and WARs for the period ended as indicated.

⁽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 amount of loans in the category.
⁽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.

Outlined below are the loan originations, excluding PPP loans, for the quarter ended as indicated.

Deposits

Total average deposits for the third quarter were $10.6 billion, compared to $10.3 billion for the second quarter. The cost of deposits increased by 23 basis points on a linked quarter basis. CEO O’Connor stated, “Despite the significant increase in interest rates, we grew average deposit balances on a linked quarter basis, maintained our non-interest bearing deposit ratio at approximately 37% and kept overall deposits costs relatively well-contained.”

Non-Interest Income

Non-interest income was $9.4 million during the third quarter of 2022, $12.1 million during the second quarter of 2022, and $9.7 million during the third quarter of 2021. Included in non-interest income during the third quarter of 2022 was a $1.4 million gain on the sale of a branch property. Included in non-interest income for the second quarter of 2022 was $2.2 million of income related to mortality proceeds from a death claim. Excluding the net gain on sale of securities and other assets, adjusted non-interest income was $8.0 million during the third quarter of 2022 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Non-Interest Expense

Total non-interest expense was $48.3 million during the third quarter of 2022, $51.8 million during the second quarter of 2022, and $56.8 million during the third quarter of 2021. Excluding the impact of merger expenses and transaction costs, branch restructuring, severance expense, loss on extinguishment of debt, and amortization of other intangible assets, adjusted non-interest expense was $47.9 million during the third quarter of 2022, $48.5 million during the second quarter of 2022, and $49.1 million during the third quarter of 2021 (see “Non-GAAP Reconciliation” tables at the end of this news release).

The ratio of non-interest expense to average assets was 1.54% during the third quarter of 2022, compared to 1.71% during the linked quarter and 1.80% for the third quarter of 2021. Excluding the impact of merger expenses and transaction costs, branch restructuring, severance expense, loss on extinguishment of debt, and amortization of other intangible assets, the ratio of adjusted non-interest expense to average assets was 1.53% during the third quarter of 2022, compared to 1.60% during the linked quarter and 1.56% for the third quarter of 2021 (see “Non-GAAP Reconciliation” tables at the end of this news release).

The efficiency ratio was 44.0% during the third quarter of 2022, compared to 49.1% during the linked quarter and 54.3% during the third quarter of 2021. Excluding the impact of merger expenses and transaction costs, branch restructuring, severance expense, loss on extinguishment of debt, amortization of other intangible assets, and gain on sale of securities and other assets, the adjusted efficiency ratio was 44.2% during the third quarter of 2022, compared to 45.9% during the linked quarter and 46.9% during the third quarter of 2021 (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 2022 was 28.1%, compared to 28.4% for the second quarter of 2022, and 27.5% for the third quarter of 2021.

Credit Quality

Non-performing loans at September 30, 2022 were $41.1 million, or 0.41% of total loans.

A credit loss provision of $6.6 million was recorded during the third quarter of 2022, compared to a credit loss provision of $44 thousand during the second quarter of 2022, and a credit loss recovery of $5.2 million during the third quarter of 2021. The credit loss provision for the third quarter was primarily associated with changes to the forecasted macroeconomic conditions used in the Bank’s allowance for credit loss model.

The allowance for credit losses as a percentage of total loans was 0.81% at September 30, 2022 as compared to 0.82% at June 30, 2022 and 0.88% at September 30, 2021.

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, 2022.

CEO O’Connor commented, “During the third quarter, we continued to execute on our share repurchase program and we repurchased $6.2 million of common stock. On a year-to-date basis we have repurchased approximately $46.5 million of common stock, representing approximately 4% of shares outstanding at the beginning of the year. Our regulatory capital ratios, which exclude the impact of the accumulated other comprehensive loss component of stockholders’ equity, continue to be very strong. Our solid asset quality metrics and internal stress testing analyses continue to provide support for growing our balance sheet and future capital return to shareholders.”

Dividends per common share were $0.24 during the third quarter of 2022.

Book value per common share was $26.55 at September 30, 2022 compared to $26.41 at June 30, 2022. Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by the number of shares outstanding) was $22.34 at September 30, 2022 compared to $22.20 at June 30, 2022. Excluding the impact of AOCI, the adjusted tangible common book value per share was $24.75 at September 30, 2022 compared to $24.01 at June 30, 2022 (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 Friday, October 28, 2022, during which CEO O’Connor will discuss the Company’s third quarter 2022 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/927279052.

Conference Call Details:

Dial-in for Live Call:

Telephone Replay:

A recording will be available until Friday, November 11, 2022.

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 $12.8 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 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; 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. Further, given its ongoing and dynamic nature, it is difficult to predict what effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, result in a decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch closures, work stoppages and unavailability of personnel; and increased cybersecurity risks, as employees work remotely. 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.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)

⁽¹⁾  Includes loans underlying multifamily cooperatives.
⁽²⁾  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 SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands except share and per share amounts)

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share amounts)

⁽¹⁾  See "Non-GAAP Reconciliation" tables for reconciliation of tangible equity, tangible common equity, and tangible assets.
⁽²⁾  The CRE consolidated concentration ratio is calculated using the sum of commercial real estate, excluding owner-occupied commercial real estate, multifamily, and acquisition, development, and construction, divided by consolidated capital. September 30, 2022 amounts are preliminary pending completion and filing of the Company’s regulatory reports.
⁽³⁾  September 30, 2022 amounts are preliminary pending completion and filing of the Company’s regulatory reports.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME
(Dollars in thousands)

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS
(Dollars in thousands)

⁽¹⁾  Calculated based on annualized NCOs to average loans, excluding loans held for sale.    

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION
(Dollars in thousands except per share amounts)

The following tables below provide a reconciliation of certain financial measures calculated under generally accepted accounting principles ("GAAP") (as reported) and non-GAAP measures. A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts that are required to be disclosed in the most directly comparable measure calculated and presented in accordance with GAAP in the United States. The Company’s management believes the presentation of non-GAAP financial measures provide investors with a greater understanding of the Company’s operating results in addition to the results measured in accordance with GAAP. While management uses these non-GAAP measures in its analysis of the Company’s performance, this information should not be viewed as a substitute for financial results determined in accordance with GAAP or considered to be more important than financial results determined in accordance with GAAP.

The following non-GAAP financial measures exclude pre-tax income and expenses associated with the Company’s February 2021 merger with Bridge Bancorp, Inc., as well as a gain on sale of a branch property, branch restructuring, gain on sale of PPP loans, severance, and loss on extinguishment of debt:  

⁽¹⁾  Adjustments to net income are taxed at the Company's statutory tax rate of approximately 31% unless otherwise noted.
⁽²⁾  Certain merger expenses and transaction costs are non-taxable expense.

The following table presents a reconciliation of operating expense as a percentage of average assets (as reported) and adjusted operating expense as a percentage of average assets (non-GAAP):

The following table presents a reconciliation of efficiency ratio (non-GAAP) and adjusted efficiency ratio (non-GAAP):

⁽¹⁾  The reported efficiency ratio is a non-GAAP measure calculated by dividing GAAP non-interest expense by the sum of GAAP net interest income and GAAP non-interest income.
⁽²⁾  The adjusted efficiency ratio is a non-GAAP measure calculated by dividing adjusted non-interest expense by the sum of GAAP net interest income and adjusted non-interest income.

The following table presents the tangible common equity to tangible assets, tangible equity to tangible assets, and tangible common book value per share calculations (non-GAAP):