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. $(DCOM)$ (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, 
                          September 30, 2024        June 30, 2024              2023 
                          ------------------      -----------------      ----------------- 
                                        WAR                    WAR                    WAR 
(Dollars in thousands)      Balance     (1)         Balance    (1)         Balance    (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."

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October 22, 2024 07:30 ET (11:30 GMT)