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Dime Community Bancshares, Inc. Increases Net Income Available to Common Stockholders By 160% Year-Over-Year

10/29/2021
Non-Interest-Bearing Deposits Increase to 36%, Positioning the Company Well for A Rising Interest Rate Scenario

HAUPPAUGE, N.Y., Oct. 29, 2021 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the “Company” or “Dime” or “its”), the parent company of Dime Community Bank (the “Bank”), today reported net income available to common stockholders of $36.6 million for the quarter ended September 30, 2021, or $0.89 per diluted common share, compared with net income available to common stockholders of $14.0 million for the quarter ended September 30, 2020, or $0.65 per diluted common share. For the quarter ended June 30, 2021, net income available to common stockholders was $49.5 million, or $1.19 per diluted common share.

Adjusted net income to common stockholders (non-GAAP) totaled $41.4 million for the quarter ended September 30, 2021, or $1.01 per diluted share1. Adjusted net income to common stockholders includes the following primary adjustments:

  • Branch restructuring costs: As previously disclosed, the Company combined five branch locations into other existing branches in October 2021; associated branch restructuring costs were $4.5 million during the quarter, pre-tax; and
  • Merger expenses and transaction costs: The Company recorded merger expenses and transaction costs, associated with its February 2021 merger of equals transaction, of $2.5 million, pre-tax, during the quarter.

Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “We continue to improve the quality of our deposit base, as evidenced by non-interest-bearing accounts growing to 36% of total deposits. Our high level of non-interest-bearing deposits, coupled with a balance sheet that does not rely on wholesale leverage, positions us well for the time when the Federal Reserve begins raising interest rates. In the third quarter, we saw a resumption of loan growth (excluding Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans) and we continue to maintain healthy pipelines. Finally, we continue to focus on prudent expense management as demonstrated by a core efficiency ratio of 47% for the third quarter.”

Highlights for the Third Quarter of 2021 Included:

  • The non-interest-bearing deposits to total deposits ratio increased to 35.8% at September 30, 2021;
  • The cost of deposits for the third quarter of 2021 declined to 0.13%;
  • Total loans held for investment, net, excluding PPP loans increased by 4% on an annualized basis versus the linked quarter;
  • The Company purchased 480,039 shares of its common stock, at a weighted average price of $32.15 per share;
  • Non-performing assets represent only 0.28% of total assets as of September 30, 2021; and
  • The Company’s Adjusted Pre-tax Pre-provision Net Revenue (“PPNR”) for the third quarter was $54.8 million compared to $52.7 million for the second quarter.1

1 See reconciliation of this non-GAAP financial measure provided elsewhere herein.

Management’s Discussion of Quarterly Operating Results

The Company’s results of operations for the second and third quarters of 2021 include income for the full quarter from the merger with Bridge Bancorp, Inc. (“Bridge”). The Company’s historical information for the third quarter of 2020 does not include the historical GAAP results of Bridge.

Net Interest Income

Net interest income for the third quarter of 2021 was $94.8 million compared to $93.3 million for the second quarter of 2021 and $44.9 million for the third quarter of 2020.

The table below provides a reconciliation of the reported Net Interest Margin (“NIM”), the adjusted NIM excluding the impact of PPP loans, and the adjusted NIM excluding the combined impact of PPP loans and purchasing accounting accretion on the loan portfolio.

                     
($ in thousands)   Q3 2021   Q2 2021   Q3 2020  
Net interest income   $ 94,828     $ 93,254     $ 44,944    
Less: Net interest income on PPP loans     (2,502 )     (5,375 )     (1,471 )  
Adjusted net interest income excluding PPP loans, (non-GAAP)   $ 92,326     $ 87,879     $ 43,473    
                     
Average interest-earning assets   $ 11,765,298     $ 11,990,107     $ 6,164,452    
Average PPP loan balances     (266,472 )     (1,282,347 )     (316,747 )  
Adjusted average interest-earning assets excluding PPP loans, (non-GAAP)   $ 11,498,826     $ 10,707,760     $ 5,847,705    
                     
NIM (1)     3.20   %     3.12   %   2.92   %
Adjusted NIM excluding PPP loans (non-GAAP) (2)     3.19   %     3.29   %   2.95   %
                     
Adjusted net interest income excluding PPP loans, (non-GAAP)   $ 92,326     $ 87,879     $ 43,473    
Less: Purchase Accounting Accretion on loans ("PAA")     (2,541 )     (1,925 )        
Adjusted net interest income excluding PPP loans and PAA on loans, (non-GAAP)   $ 89,785     $ 85,954     $ 43,473    
Adjusted NIM excluding PPP loans and PAA on loans, (non-GAAP) (3)     3.10   %     3.23   %   2.95   %
                     

 

(1) NIM represents net interest income divided by average interest-earning assets.
(2) Adjusted NIM excluding PPP represents adjusted net interest income, which excludes net interest income on PPP loans divided by average interest-bearing liabilities excluding PPP loans. The net interest income on PPP loans is calculated using interest income on the PPP balances less an assumed cost of funding the PPP loans, using the overall cost of funds of the Company.
(3) Adjusted NIM excluding PPP and PAA represents adjusted net interest income excluding PPP loans and PAA, divided by adjusted average interest-earning assets, excluding PPP loans.


Loan Portfolio

The ending weighted average rate (“WAR”) on the total loan portfolio was 3.72% at September 30, 2021, a 6 basis point increase compared to the ending WAR on the total loan portfolio at June 30, 2021. Excluding the impact of PPP loans, the WAR on the loan portfolio was 3.76% at September 30, 2021, compared to 3.79% at June 30, 2021.

Outlined below are loan balances and WARs(1) for the current quarter, linked quarter and prior year quarter.

                                 
    September 30, 2021   June 30, 2021   September 30, 2020  
($ in thousands)      Balance      WAR      Balance      WAR      Balance      WAR  
Loans held for investment balances at period end:                                
One-to-four family residential, including condominium and cooperative apartment   $ 683,665   3.68 %   $ 704,489   3.72 % $ 186,975   3.97 %
Multifamily residential and residential mixed-use (2)(3)     3,468,262   3.57     3,503,205   3.59     2,919,186   3.77  
CRE     3,814,437   3.80     3,681,331   3.83     1,675,488   4.00  
ADC     285,379   4.69     290,462   4.73     151,866   5.04  
C&I     878,332   4.10     878,331   4.16     323,972   4.49  
Other loans     20,713   4.97     23,275   4.99     1,448   7.56  
Loans held for investment excluding PPP     9,150,788   3.76     9,081,093   3.79     5,258,935   3.93  
                                 
PPP     134,083   1.00     465,538   1.00     318,568   1.00  
Total loans held for investment including PPP   $ 9,284,871   3.72 %   $ 9,546,631   3.66 % $ 5,577,503   3.76 %

 

(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 multifamily loans underlying 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, for the current quarter, linked quarter and prior year.

                     
       
($ in millions)   Q3 2021   Q2 2021      Q3 2020  
Loan originations, excluding PPP   $ 464.9   $ 425.7   $ 318.9  

Deposits and Borrowed Funds

Total deposits decreased by $392.2 million on a linked quarter basis to $10.7 billion at September 30, 2021. The decline in total deposits was primarily due to the Company not renewing higher-cost certificates of deposit accounts. Mr. O’ Connor stated, “We continue to focus on reducing any high-rate, promotional or rate-sensitive deposits from our portfolio as we prepare for higher interest rates. The weighted average rate on our deposit portfolio declined to 0.11% at September 30, 2021.”

Non-interest-bearing deposits increased $132.8 million during the third quarter of 2021 to $3.8 billion at September 30, 2021, representing 35.8% of total deposits.

As of September 30, 2021, the Company had $311.7 million of certificates of deposits, with a weighted average rate of 0.33%, that were set to mature during the fourth quarter of 2021.

Total Federal Home Loan Bank advances were $25.0 million at September 30, 2021 and June 30, 2021.

Non-Interest Income

Non-interest income was $9.7 million during the third quarter of 2021, $29.5 million during the second quarter of 2021, and $6.1 million during the third quarter of 2020. Excluding a $20.7 million gain on sale of PPP loans during the second quarter of 2021, adjusted non-interest income was $8.8 million during the second quarter of 2021. Excluding the gain on sale of securities and other assets, adjusted non-interest income was $5.9 million during the third quarter of 2020 (see “Non-GAAP Reconciliation” table at the end of this news release).

Non-Interest Expense

Total non-interest expense was $56.8 million during the third quarter of 2021, $54.9 million during the second quarter of 2021, and $24.9 million during the third quarter of 2020. Excluding the impact of merger expenses and transaction costs, branch restructuring costs, and amortization of other intangible assets, adjusted non-interest expense was $49.1 million during the third quarter of 2021, compared to $48.5 million during the second quarter of 2021, and $24.1 million during the third quarter of 2020 (see “Non-GAAP Reconciliation” table at the end of this news release).

The ratio of non-interest expense to average assets was 1.80% during the third quarter of 2021, compared to 1.72% during the linked quarter and 1.53% for the third quarter of 2020. Excluding the impact of merger expenses and transaction costs, branch restructuring costs, and amortization of other intangible assets, the ratio of adjusted non-interest expense to average assets was 1.56% during the third quarter of 2021, compared to 1.52% during the linked quarter and 1.48% for the third quarter of 2020 (see “Non-GAAP Reconciliation” table at the end of this news release).

The efficiency ratio was 54.3% during the third quarter of 2021, compared to 44.7% during the linked quarter and 48.6% during the third quarter of 2020. Excluding the impact of merger expenses and transaction costs, branch restructuring costs, and amortization of other intangible assets, the adjusted efficiency ratio was 46.9% during the third quarter of 2021, compared to 47.5% during the linked quarter and 47.3% during the third quarter of 2020 (see “Non-GAAP Reconciliation” table at the end of this news release).

Income Tax Expense

The reported effective tax rate for the third quarter of 2021 was 27.5%, compared to 28.9% for the second quarter of 2021, and 21.9% for the third quarter of 2020. The decrease in the effective tax rate during the third quarter of 2021 was primarily the result of the decrease in taxable income and lower non-deductible expenses during the period. The effective tax rate for the remainder of 2021 is expected to be approximately 27.5%.

Credit Quality

Non-performing loans at September 30, 2021 were $34.0 million, or 0.37% of total loans. Non-performing loans, excluding acquired PCD loans, would have been $30.1 million, or 0.34% of total loans excluding acquired PCD loans.

A credit loss recovery of $5.2 million was recorded during the third quarter of 2021, compared to a credit loss recovery of $4.2 million during the second quarter of 2021, and a credit loss provision of $5.9 million during the third quarter of 2020. The credit loss recovery of $5.2 million for the third quarter of 2021 was primarily associated with a reduction in reserves on acquired PCD loans, given the improvement in economic conditions since the time of the merger closing.

The allowance for credit losses as a percentage of total loans was 0.88% at September 30, 2021 as compared to 0.97% at June 30, 2021 and 0.87% at September 30, 2020. Excluding PPP loans, the ratio of allowance for credit losses at September 30, 2021 would have been 0.89%.

Loans with Payment Deferrals

Full principal and interest (“P&I”) deferrals declined to $26.6 million and represented 0.3% of the total loan portfolio at September 30, 2021.

Capital Management

The Company’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements.

Mr. O’Connor commented, “In August, our Board of Directors approved a new stock repurchase program which authorized the purchase of 5% of outstanding common stock. Our strong balance sheet and internal stress testing analysis results have allowed us to return excess capital to our shareholders. In the third quarter we repurchased 480,039 shares, totaling $15.4 million and we continue to be active on the repurchase front into the fourth quarter.”

Dividends per common share were $0.24 during the third quarter of 2021.

Book value per common share was $26.64 and tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by number of shares outstanding) was $22.60 at September 30, 2021 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Including the impact of the remaining unrecognized fees on PPP loans, net of tax, adjusted tangible common book value per share would have been $22.61 (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 October 29, 2021, during which Kevin M. O’Connor, CEO, will discuss the Company’s third quarter performance, with a question and answer session to follow. Dial-in information for the live call is 1-888-348-2672. Upon dialing in, request to be joined into Dime Community Bancshares, Inc. call with the conference operator.

The conference call will be simultaneously webcast (listen only), and archived for a period of one year, at https://services.choruscall.com/links/dcom211029.html. Dial-in information for the replay is 1-877-344-7529 using access code #10160977. Replay will be available October 29, 2021 (10:30 a.m.) through November 12, 2021 (11:59 p.m.).

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 $12.3 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 "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 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 increasingly work remotely.

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,
    2021
  2021
  2020
Assets:                    
Cash and due from banks   $ 629,011     $ 1,184,183     $ 243,603  
Mortgage-backed securities available-for-sale, at fair value     1,212,383       863,239       426,979  
Investment securities available-for-sale, at fair value     496,680       398,549       111,882  
Investment securities held-to-maturity     40,303              
Marketable equity securities, at fair value                 5,970  
Loans held for sale     14,720       29,335       5,903  
Loans held for investment, net:                   
One-to-four family and cooperative/condominium apartment     683,665       704,489       184,989  
Multifamily residential and residential mixed-use (1)(2)     3,468,262       3,503,205       2,758,743  
Commercial real estate ("CRE")     3,814,437       3,681,331       1,878,167  
Acquisition, development, and construction ("ADC")     285,379       290,462       156,296  
Total real estate loans     8,251,743       8,179,487       4,978,195  
Commercial and industrial ("C&I")     878,332       878,331       319,626  
Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans     134,083       465,538       321,907  
Other loans     20,713       23,275       2,316  
Allowance for credit losses     (81,255 )     (92,760 )     (41,461 )
Total loans held for investment, net     9,203,616       9,453,871       5,580,583  
Premises and fixed assets, net     49,615       51,127       19,053  
Premises held for sale     2,799       2,799        
Restricted stock     37,719       22,449       60,707  
Bank Owned Life Insurance ("BOLI")     293,898       293,113       156,096  
Goodwill     155,339       155,339       55,638  
Other intangible assets     9,077       9,792        
Operating lease assets     56,836       69,189       33,898  
Derivative assets     41,700       45,439       18,932  
Accrued interest receivable     43,284       47,209       34,815  
Other assets     77,401       78,052       27,551  
Total assets   $ 12,364,381     $ 12,703,685     $ 6,781,610  
Liabilities:                   
Non-interest-bearing checking   $ 3,821,832     $ 3,689,072     $ 780,751  
Interest-bearing checking     989,526       1,101,038       290,300  
Savings     1,188,794       1,305,028       414,809  
Money market     3,657,669       3,670,090       1,716,624  
Certificates of deposit     1,016,216       1,300,965       1,322,638  
Total deposits     10,674,037       11,066,193       4,525,122  
FHLBNY advances     25,000       25,000       1,204,010  
Other short-term borrowings     2,629       1,841       120,000  
Subordinated debt, net     197,142       197,188       114,052  
Operating lease liabilities     62,870       72,170       39,874  
Derivative liabilities     38,889       42,892       37,374  
Other liabilities     162,697       94,125       40,082  
Total liabilities     11,163,264       11,499,409       6,080,514  
Stockholders' equity:                   
Preferred stock, Series A     116,569       116,569       116,569  
Common stock     416       416       348  
Additional paid-in capital     493,775       492,848       278,295  
Retained earnings     630,744       613,791       600,641  
Accumulated other comprehensive (loss) gain, net of deferred taxes     (1,042 )     4,576       (5,924 )
Unearned equity awards     (9,417 )     (8,529 )      
Common stock held by the Benefit Maintenance Plan                 (1,496 )
Treasury stock, at cost     (29,928 )     (15,395 )     (287,337 )
Total stockholders' equity     1,201,117       1,204,276       701,096  
Total liabilities and stockholders' equity   $ 12,364,381     $ 12,703,685     $ 6,781,610  

 

(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)

                               
    Three Months Ended   Nine Months Ended
       September 30,       June 30,       September 30,       September 30,       September 30, 
    2021
  2021
  2020   2021
  2020
Interest income:                               
Loans   $ 94,045     $ 94,288     $ 53,245   $ 269,715     $ 161,564
Securities     6,030       5,126       3,422     15,536       10,794
Other short-term investments     583       987       729     2,563       2,577
Total interest income     100,658       100,401       57,396     287,814       174,935
Interest expense:                                
Deposits and escrow     3,565       4,803       6,672     13,666       28,298
Borrowed funds     2,265       2,344       5,780     8,225       17,613
Total interest expense     5,830       7,147       12,452     21,891       45,911
Net interest income     94,828       93,254       44,944     265,923       129,024
(Credit) provision for credit losses     (5,187 )     (4,248 )     5,931     6,344       20,003
Net interest income after (credit) provision     100,015       97,502       39,013     259,579       109,021
                               
Non-interest income:                                
Service charges and other fees     4,581       3,876       1,632     11,377       3,918
Title fees     482       688           1,603      
Loan level derivative income     445       559       1,544     2,796       5,201
BOLI income     2,249       1,593       1,033     5,181       3,831
Gain on sale of SBA loans excluding PPP     348       973       808     1,485       972
Gain on sale of PPP loans           20,697           20,697      
Gain on sale of residential loans     304       506       617     1,533       974
Net gain on equity securities                 175     131       139
Net gain on sale of securities and other assets           20       215     730       3,357
Loss on termination of derivatives                     (16,505 )    
Other     1,319       632       125     2,861       379
Total non-interest income     9,728       29,544       6,149     31,889       18,771
Non-interest expense:                                
Salaries and employee benefits     28,276       27,598       14,316     80,693       45,030
Severance           1,875           1,875       4,000
Occupancy and equipment     7,814       8,122       4,046     22,913       12,061
Data processing costs     3,573       5,031       2,146     12,132       6,177
Marketing     1,054       788       345     2,702       1,140
Professional services     2,751       2,538       935     7,154       2,713
Federal deposit insurance premiums     1,173       934       761     3,046       1,767
Loss on extinguishment of debt           157           1,751      
Curtailment loss                     1,543      
Merger expenses and transaction costs     2,472       1,836       769     42,250       2,427
Branch restructuring costs     4,518       1,659           6,177      
Amortization of other intangible assets     715       835           1,907      
Other     4,437       3,509       1,535     10,327       4,924
Total non-interest expense     56,783       54,882       24,853     194,470       80,239
                               
Income before taxes     52,960       72,164       20,309     96,998       47,553
Income tax expense     14,565       20,886       4,441     28,359       10,327
Net income     38,395       51,278       15,868     68,639       37,226
Preferred stock dividends     1,822       1,822       1,822     5,465       2,962
Net income available to common stockholders   $ 36,573     $ 49,456     $ 14,046   $ 63,174     $ 34,264
                               
Earnings per common share ("EPS"):                                
Basic   $ 0.89     $ 1.19     $ 0.66   $ 1.62     $ 1.57
Diluted   $ 0.89     $ 1.19     $ 0.65   $ 1.62     $ 1.56
                               
Average common shares outstanding for diluted EPS     40,426,161       40,981,585       21,324,187     38,574,857       21,791,080


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

                                 
    At or For the Three Months Ended   At or For the Nine Months Ended  
       September 30,       June 30,      September 30,       September 30,       September 30,   
    2021   2021   2020   2021   2020  
Per Share Data:                                
Reported EPS (Diluted)   $ 0.89   $ 1.19   $ 0.65   $ 1.62   $ 1.56  
Cash dividends paid per common share     0.24     0.24     0.22     0.72     0.65  
Book value per common share     26.64     26.43     26.97              
Tangible common book value per share (1)     22.60     22.41     24.37              
Common shares outstanding     40,715     41,160     21,416              
Dividend payout ratio     26.97  %     20.17  %   33.33  %   44.44 %   41.58  %
                                 
Performance Ratios (Based upon Reported Net Income):                                 
Return on average assets     1.22  %     1.61  %   0.98  %   0.76  %   0.78  %
Return on average equity     12.69     17.22     9.22     8.00     7.59  
Return on average tangible common equity (1)     15.96     22.02     10.88     9.84     8.76  
Net interest margin     3.20     3.12     2.92     3.15     2.83  
Non-interest expense to average assets     1.80     1.72     1.53     2.16     1.68  
Efficiency ratio     54.3     44.7     48.6     65.3     54.3  
Effective tax rate     27.50     28.94     21.87     29.24     21.72  
                                 
Balance Sheet Data:                                 
Average assets   $ 12,584,372   $ 12,756,909   $ 6,492,173   $ 12,009,522   $ 6,363,768  
Average interest-earning assets     11,765,298     11,990,107     6,164,452     11,277,257     6,069,115  
Average tangible common equity (1)     929,131     908,747     516,189     873,481     521,385  
Loan-to-deposit ratio at end of period     87.0     86.3     125.3              
                                 
Capital Ratios and Reserves - Consolidated: (3)                                 
Tangible common equity to tangible assets (1)     7.54  %     7.36  %   7.95  %            
Tangible equity to tangible assets (1)     8.50     8.29     9.73              
Tier 1 common equity ratio     9.92     10.06     10.69              
Tier 1 risk-based capital ratio     11.17     11.34     13.02              
Total risk-based capital ratio     14.13     14.45     16.30              
Tier 1 leverage ratio     8.37     8.24     10.10              
CRE consolidated concentration ratio (2)     516     506     545              
Allowance for credit losses/ Total loans     0.88     0.97     0.87              
Allowance for credit losses/ Non-performing loans     238.84     327.94     390.31              

 

(1) See "Non-GAAP Reconciliation" table for reconciliation of tangible equity, tangible common equity, and tangible assets. Average balances are calculated using the ending balance for months during the period indicated.
(2) The CRE concentration ratio is calculated using the sum of commercial real estate, excluding owner occupied commercial real estate, multifamily, and ADC, divided by consolidated capital. September 30, 2021 amounts are preliminary pending completion and filing of the Company’s regulatory reports.
(3) September 30, 2021 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)

                                                   
    Three Months Ended  
    September 30, 2021   June 30, 2021   September 30, 2020  
                            Average                     Average                  Average  
    Average         Yield/   Average         Yield/   Average         Yield/  
    Balance   Interest   Cost   Balance   Interest   Cost   Balance   Interest   Cost  
Assets:                                                     
Interest-earning assets:                                                     
Real estate loans   $ 8,234,182   $ 78,626   3.79 %   $ 8,156,368   $ 74,437   3.66 % $ 4,874,780   $ 47,482   3.90 %
Commercial and industrial loans     923,698     12,337   5.30     932,297     13,277   5.71     326,636     3,574   4.38  
SBA PPP loans     266,472     2,643   3.94     1,282,347     6,174   1.93     316,747     2,178   2.75  
Other loans     21,992     439   7.92     24,349     400   6.59     1,444     11   3.05  
Mortgage-backed securities     976,198     3,999   1.63     825,949     3,483   1.69     435,920     2,707   2.48  
Investment securities     462,150     2,031   1.74     312,012     1,643   2.11     78,405     715   3.65  
Other short-term investments     880,606     583   0.26     456,785     987   0.87     130,520     729   2.23  
Total interest-earning assets     11,765,298     100,658   3.39 %     11,990,107     100,401   3.36 %   6,164,452     57,396   3.72 %
Non-interest-earning assets     819,074                 766,802               327,721            
Total assets   $ 12,584,372               $ 12,756,909             $ 6,492,173            
                                                   
Liabilities and Stockholders' Equity:                                                     
Interest-bearing liabilities:                                                     
Interest-bearing checking   $ 1,000,435   $ 388   0.15 %   $ 1,067,043   $ 501   0.19 % $ 241,248   $ 186   0.31 %
Money market     3,698,124     1,467   0.16     3,712,344     1,941   0.21     1,696,297     1,858   0.44  
Savings     1,335,310     170   0.05     1,189,460     212   0.07     405,582     170   0.17  
Certificates of deposit     1,138,853     1,540   0.54     1,421,480     2,149   0.61     1,425,083     4,458   1.24  
Total interest-bearing deposits     7,172,722     3,565   0.20     7,390,327     4,803   0.26     3,768,210     6,672   0.70  
FHLBNY advances     25,000     59   0.94     145,324     132   0.36     1,040,127     4,448   1.70  
Subordinated debt, net     197,172     2,206   4.44     197,218     2,211   4.50     113,992     1,330   4.64  
Other short-term borrowings     2,290           5,514     1   0.07     5,283     2   0.12  
Total borrowings     224,462     2,265   4.00     348,056     2,344   2.70     1,159,402     5,780   1.99  
Total interest-bearing liabilities     7,397,184     5,830   0.31 %     7,738,383     7,147   0.37 %   4,927,612     12,452   1.01 %
Non-interest-bearing checking     3,789,623                 3,652,482               652,880            
Other non-interest-bearing liabilities     186,977                 175,031               223,285            
Total liabilities     11,373,784                 11,565,896               5,803,777            
Stockholders' equity     1,210,588                 1,191,013               688,396            
Total liabilities and stockholders' equity   $ 12,584,372               $ 12,756,909             $ 6,492,173            
Net interest income          $ 94,828              $ 93,254             $ 44,944      
Net interest rate spread                 3.08 %               2.99 %             2.71 %
Net interest margin                 3.20 %               3.12 %               2.92 %
Deposits (including non-interest-bearing checking accounts)   $ 10,962,345   $ 3,565   0.13 %   $ 11,042,809   $ 4,803   0.17 % $ 4,421,090   $ 6,672   0.60 %


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

                   
       At or For the Three Months Ended
    September 30,       June 30,       September 30, 
Asset Quality Detail   2021   2021   2020
Non-performing loans (NPLs) (1)                   
One-to-four family residential, including condominium and cooperative apartment   $ 4,938     $ 4,933     $ 867  
Multifamily residential and residential mixed-use     859             1,213  
CRE     4,122       9,152       47  
Acquisition, development, and construction ("ADC")                  
C&I     23,727       14,109       10,287  
Other     374       92       10  
Total Non-accrual loans   $ 34,020     $ 28,286     $ 12,424  
                   
Loans 90 days delinquent and accruing ("90+ Delinquent")                   
One-to-four family residential, including condominium and cooperative apartment   $ 5,021     $ 5,065     $ 470  
Multifamily residential and residential mixed-use           157        
CRE     1,004              
ADC                 1,470  
C&I     257       1,487        
Other                  
90+ Delinquent   $ 6,282     $ 6,709     $ 1,940  
                   
NPAs and 90+ Delinquent   $ 40,302     $ 34,995     $ 14,364  
                   
NPAs and 90+ Delinquent / Total assets     0.33 %     0.28 %     0.21 %
Net charge-offs (recoveries) (NCOs)   $ 4,191     $ 918     $ (69 )
NCOs / Average loans (1)     0.18 %     0.04 %     (0.01 )%
                   

      (1)   Excludes 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 merger with Bridge, as well as branch restructuring costs, and gain on sale of PPP loans.

                                 
    Three Months Ended   Nine Months Ended  
       September 30,       June 30,       September 30,       September 30,    September 30,   
    2021   2021   2020   2021   2020  
Reconciliation of Reported and Adjusted (non-GAAP) Net Income Available to Common Stockholders                                
Reported net income (loss) available to common stockholders   $ 36,573     $ 49,456     $ 14,046     $ 63,174     $ 34,264    
Adjustments to net income (1):                                 
Provision for credit losses - Non-PCD loans (double-count)                       20,278          
Gain on sale of PPP loans           (20,697 )           (20,697 )        
Net gain on sale of securities and other assets                 (215 )     (710 )     (3,357 )  
Loss on termination of derivatives                       16,505          
Severance           1,875             1,875       4,000    
Loss on extinguishment of debt           157             1,751          
Curtailment loss                       1,543          
Merger expenses and transaction costs (2)     2,472       1,836       769       42,250       2,427    
Branch restructuring costs     4,518       1,659             6,177          
Income tax effect of adjustments and other tax adjustments     (2,191 )     4,852       (84 )     (19,187 )     (636 )  
Adjusted net income available to common stockholders (non-GAAP)   $ 41,372     $ 39,138     $ 14,516     $ 112,959     $ 36,698    
                                 
Adjusted Ratios (Based upon non-GAAP as calculated above)                                
Adjusted EPS (Diluted)   $ 1.01     $ 0.94     $ 0.68     $ 2.90     $ 1.68    
Adjusted return on average assets     1.37   %     1.28   %   1.01   %   1.31   %   0.83   %
Adjusted return on average equity     14.27       13.76       9.49       13.80       8.08    
Adjusted return on average tangible common equity     18.02       17.48       11.25       17.44       9.38    
Adjusted non-interest expense to average assets     1.56       1.52       1.48       1.54       1.55    
Adjusted efficiency ratio     46.9       47.5       47.3       47.4       51.1    

(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 net interest income, non-interest income, and non-interest expense to pre-tax pre-provision net revenue (non-GAAP) and adjusted pre-tax pre-provision net revenue (non-GAAP):

             
  Three Months Ended  
  September 30, 2021   June 30, 2021  
Net interest income $ 94,828   $ 93,254    
Non-interest income   9,728     29,544    
Total revenues   104,556     122,798    
Non-interest expense   56,783     54,882    
Pre-tax pre-provision net revenue (non-GAAP) (1) $ 47,773   $ 67,916    
             
Adjustments:            
Gain on sale of PPP loans       (20,697 )  
Severance       1,875    
Loss on extinguishment of debt       157    
Merger expenses and transaction costs   2,472     1,836    
Branch restructuring costs   4,518     1,659    
Adjusted pre-tax pre-provision net revenue (non-GAAP) (2) $ 54,763   $ 52,746    

 

(1) The reported pre-tax pre-provision net revenue is a non-GAAP measure calculated by adding GAAP net interest income and GAAP non-interest loss less GAAP non-interest expense.
(2) The adjusted pre-tax pre-provision net revenue is a non-GAAP measure calculated by adding pre-tax pre-provision net revenue less the net gain on sale of PPP loans, severance, loss on extinguishment of debt, merger expenses and transaction costs, and branch restructuring costs.

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):

                                 
      Three Months Ended     Nine Months Ended  
         September 30,     June 30,     September 30,     September 30,        September 30,  
      2021     2021     2020     2021     2020  
Operating expense as a % of average assets - as reported     1.80   %     1.72   %   1.53   %   2.16   %     1.68   %
Loss on extinguishment of debt                       (0.02 )        
Curtailment loss                       (0.02 )        
Severance           (0.06 )           (0.02 )     (0.08 )  
Merger expenses and transaction costs           (0.06 )     (0.05 )     (0.47 )     (0.05 )  
Branch restructuring costs     (0.08 )     (0.05 )           (0.07 )        
Amortization of other intangible assets     (0.14 )     (0.03 )           (0.02 )        
Adjusted operating expense as a % of average assets (non-GAAP)     1.56       1.52       1.48       1.54       1.55    

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

                                 
    Three Months Ended   Nine Months Ended  
       September 30,      June 30,      September 30,      September 30,   September 30,  
    2021   2021   2020   2021   2020  
Efficiency ratio - as reported (non-GAAP) (1)        54.3   %     44.7   %   48.6   %   65.3   %     54.3   %
Non-interest expense - as reported   $ 56,783     $ 54,882     $ 24,853     $ 194,470     $ 80,239    
Less: Severance           (1,875 )           (1,875 )     (4,000 )  
Less: Merger expenses and transaction costs     (2,472 )     (1,836 )     (769 )     (42,250 )     (2,427 )  
Less: Branch restructuring costs     (4,518 )     (1,659 )           (6,177 )        
Less: Loss on extinguishment of debt           (157 )           (1,751 )        
Less: Curtailment loss                       (1,543 )        
Less: Amortization of other intangible assets     (715 )     (835 )           (1,907 )        
Adjusted non-interest expense (non-GAAP)   $ 49,078     $ 48,520     $ 24,084     $ 138,967     $ 73,812    
Net interest income - as reported   $ 94,828     $ 93,254     $ 44,944     $ 265,923     $ 129,024    
Non-interest income (loss) - as reported   $ 9,728     $ 29,544     $ 6,149     $ 31,889     $ 18,771    
Less: Gain on sale of PPP loans           (20,697 )           (20,697 )        
Less: Net gain on sale of securities and other assets                 (215 )     (710 )     (3,357 )  
Less: Loss on termination of derivatives                       16,505          
Adjusted non-interest income (non-GAAP)   $ 9,728     $ 8,847     $ 5,934     $ 26,987     $ 15,414    
Adjusted total revenues for adjusted efficiency ratio (non-GAAP)   $ 104,556     $ 102,101     $ 50,878     $ 292,910     $ 144,438    
Adjusted efficiency ratio (non-GAAP) (2)     46.9   %     47.5   %   47.3   %   47.4   %     51.1   %

 

(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 (loss) 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 assets, tangible common equity, and adjusted tangible common book value per share calculation (non-GAAP):

                   
       September 30,       June 30,       September 30, 
    2021   2021   2020
Reconciliation of Tangible Assets:                  
Total assets   $ 12,364,381   $ 12,703,685   $ 6,619,391
Less:                  
Goodwill     155,339     155,339     55,638
Other intangible assets     9,077     9,792    
Tangible assets (non-GAAP)   $ 12,199,965   $ 12,538,554   $ 6,563,753
                   
Reconciliation of Adjusted Tangible Common Equity - Consolidated:                  
Total stockholders' equity   $ 1,201,117   $ 1,204,276   $ 694,158
Less:                  
Goodwill     155,339     155,339     55,638
Other intangible assets     9,077     9,792    
Tangible equity (non-GAAP)     1,036,701     1,039,145     638,520
Less:                  
Preferred stock, net     116,569     116,569     116,569
Tangible common equity (non-GAAP)   $ 920,132   $ 922,576   $ 521,951
Add:                  
Unamortized deferred fees on PPP loans, net of tax     612     1,979     5,435
Adjusted tangible common equity (non-GAAP)   $ 920,744   $ 924,555   $ 527,386
                   
Common shares outstanding     40,715     41,160     21,416
Tangible common book value per share (non-GAAP)   $ 22.60   $ 22.41   $ 24.37
Adjusted tangible common book value per share (non-GAAP)   $ 22.61   $ 22.46   $ 24.63

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