BROOKLYN, N.Y., July 28, 2020 (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 to common stockholders of $11.8 million for the quarter ended June 30, 2020, or $0.35 per diluted common share, compared with net income to common stockholders of $8.4 million for the quarter ended March 31, 2020, or $0.24 per diluted common share, and net income to common stockholders of $13.0 million for the quarter ended June 30, 2019, or $0.36 per diluted common share.
Excluding the pre-tax impact of $3.9 million of severance expenses related to an organizational restructuring, $1.1 million of merger related expenses, and $3.1 million of income from gain on sale of securities, earnings per share (“EPS”) for the quarter ended June 30, 2020 would have been $0.39 per diluted share.Mr. Kenneth J. Mahon, Chief Executive Officer (“CEO”) of the Company, stated, “Our extremely strong second quarter results were underpinned by linked quarter net interest margin (“NIM”) expansion of 14 basis points and year-over-year non-interest income growth (excluding gain on sale of securities) of 83%. In the month of June we fortified already very strong capital ratios through the issuance of perpetual preferred stock. During this challenging period in the midst of the pandemic and economic downturn, Dime’s earnings profile and robust capital base helps position us well to serve our customers and communities, our employees and investors. Earlier this month, we announced our intention to merge with Bridge Bancorp, Inc. and create a premier community-based business bank with over $11 billion in assets. I am proud of the hard work and collaboration from our respective integration teams and am extremely excited that we are on our way to create a foundational franchise that has the opportunity to dominate the New York community banking landscape in the years ahead.”Highlights for the Second Quarter of 2020 Included:The Company raised net proceeds of $44 million from its perpetual preferred stock offering in the second quarter of 2020. The Company had previously raised net proceeds of $72 million from its perpetual preferred stock offering in the first quarter of 2020. Outlined below are the Company’s consolidated capital ratios.Linked quarter NIM expansion of 14 basis points primarily driven by a 27 basis point linked quarter decrease in the cost of deposits;Strong growth in checking account balances. Compared to the second quarter of 2019, the sum of average non-interest-bearing checking account balances and average interest-bearing checking account balances for the second quarter of 2020 increased by 53.7% to $840.8 million;Loans to small businesses under the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) totaled $310.5 million at June 30, 2020. Total potential unrecognized income from processing these loans is approximately $8.9 million;Loan-to-deposit ratio declined to 122.7% at June 30, 2020, versus 124.7% at June 30, 2019. Excluding the $310.5 million of PPP loans, the loan-to-deposit ratio would have been 115.7% at June 30, 2020; Our Municipal Banking division, which began operations in the fourth quarter of 2019, grew its deposit portfolio to approximately $351 million at June 30, 2020; Total non-interest income grew to $8.4 million in the second quarter of 2020, driven by $2.5 million of customer-related loan level swap income, $0.9 million of BOLI income (the Company purchased $20.0 million of additional BOLI in the month of June) and $3.1 million of gain on sale of securities, versus $2.8 million of non-interest income for the second quarter of 2019; andThe Company repurchased 975,064 shares of its common stock, which represented 2.9% of beginning period shares outstanding, in the second quarter of 2020, at a weighted average price of $14.62.Loans with Payment DeferralsWe are focused on supporting our clients who may be experiencing financial hardships due to COVID-19, including making deferrals on payments as needed. Our deferral program began in April 2020. Total loans with payment deferrals as of June 30, 2020, declined to $916.3 million versus $1.09 billion as of May 31, 2020. Of the tranche of $489.1 million of loans that were provided payment deferrals in the month of April, $120.1 million are now paying full interest and escrow (i.e., only principal is being deferred on these loans) and $194.9 million are no longer requiring any form of payment relief.We continue to closely monitor segments of our loan portfolio that may be disproportionately impacted by the pandemic. As of June 30, 2020, the Company had 15 loans aggregating $27.0 million to restaurants and 13 loans aggregating $176.3 million to hotels. As of June 30, 2020, loans with payment deferrals to restaurants totaled $12.4 million and loans with payment deferrals to hotels totaled $43.1 million. The Company does not have any exposure to the energy industry, airline industry, leveraged lending, shared national credits, credits card loans, or auto loans.Mr. Mahon concluded, “Our capital strength, earnings profile and the nature of our asset classes provides me confidence that we will be able to navigate through the pandemic. The largest segment within our loan portfolio remains multifamily loans, which constituted 55% of our loan portfolio at June 30, 2020. New York City multifamily loans were one of the best performing asset classes during the financial crisis of 2008. Year after year, Dime had one of the lowest loss rates in the nation. Given the low loan-to-value (“LTV”) nature of our multifamily portfolio (weighted average of approximately 50% at June 30, 2020), we anticipate our track record will continue.”Management’s Discussion of Quarterly Operating ResultsNet Interest IncomeNet interest income in the second quarter of 2020 was $43.6 million, an increase of $3.0 million (7.5%) from the first quarter of 2020 and an increase of $7.1 million (19.3%) from the second quarter of 2019. The table below provides a reconciliation of the reported NIM and the NIM excluding the impact of loan prepayment fees.Mr. Mahon commented, “Our NIM (excluding the impact of prepayment fees) has now increased for seven consecutive quarters. As anticipated, our business model transformation is producing the desired trends on NIM.”Average interest-earning assets were $6.10 billion for the second quarter of 2020, a 9.6% (annualized) increase from $5.95 billion for the first quarter of 2020, and a 0.7% decrease from $6.13 billion for the second quarter of 2019. For the second quarter of 2020, the average yield on interest-earning assets was 3.85%, a decrease of 11 basis points compared with the first quarter of 2020, and a decrease of 6 basis points compared to the second quarter of 2019. The decline in the yield on earning assets reflected the full quarter impact of the 150 basis point reduction in the federal funds rate by the Federal Reserve in March 2020 and the related decline in market interest rates.The ending weighted average rate (“WAR”) on the total loan portfolio was 3.77% at June 30, 2020, which represents a 23 basis point decrease versus the ending WAR on the total loan portfolio at March 31, 2020, and a 22 basis point decrease versus the ending WAR on the total loan portfolio at June 30, 2019. The WAR on the total loan portfolio as of June 30, 2020 was negatively impacted by PPP loans ($310.5 million of loans at June 30, 2020 with a WAR of 1.00%). Excluding the impact of PPP loans, the WAR on the loan portfolio was 3.94% at June 30, 2020, which represents a 6 basis point decrease versus the ending WAR on the total loan portfolio at March 31, 2020, and a 5 basis point decrease versus the ending WAR on the total loan portfolio at June 30, 2019.The average cost of borrowed funds (which primarily consist of Federal Home Loan Bank advances) was 2.00% for the second quarter of 2020, a decrease of 15 basis points versus the first quarter of 2020, and a decrease of 44 basis points versus the second quarter of 2019.LoansThe real estate loan portfolio decreased by $63.1 million (5.2% annualized) during the second quarter of 2020, primarily due to managed run-off in the Bank’s lower-yielding legacy multifamily business. Total real estate loan originations were $208.8 million during the second quarter of 2020, at a weighted average interest rate of 2.91%. Real estate loan amortization and satisfactions totaled $278.6 million, or 23.1% (annualized) of the portfolio balance, at an average rate of 3.65%. The annualized real estate loan payoff rate of 23.1% for the second quarter of 2020 was comparable to the first quarter of 2020 (23.5% annualized) and higher than the second quarter of 2019 (20.6% annualized).Average real estate loans were $4.87 billion in the second quarter of 2020, a decrease of $86.4 million (-7.0% annualized) from the first quarter of 2020, and a decrease of $333.4 million (-6.4%) from the second quarter of 2019.Average C&I loans were $519.0 million in the second quarter of 2020 (including average SBA PPP loans of $192.8 million), an increase of $191.3 million (233.6% annualized) from the first quarter of 2020, and an increase of $229.2 million (79.1%) from the second quarter of 2019.Outlined below are the loan originations for the current quarter, linked quarter and prior year quarter.Deposits and Borrowed FundsThe Company continues to focus on growing relationship-based business deposits. Mr. Mahon commented, “Importantly, we continue to improve the quality of our deposit base, as evidenced by the non-interest- bearing deposits to total deposits ratio increasing to approximately 15.0% at June 30, 2020, compared to 9.6% at June 30, 2019.”Total deposits increased by $198.6 million on a linked quarter basis to $4.44 billion at June 30, 2020. Mr. Mahon commented, “The increase in total deposits was driven by strength in our municipal deposit business and an inflow of PPP-related deposits. PPP-related deposits were approximately $104 million at June 30, 2020.”The cost of total deposits decreased 27 basis points on a linked quarter basis. As of June 30, 2020, the Company had $875.6 million of certificates of deposits (19.7% of total deposits), with a weighted average rate of 1.52%, that were set to mature in the second half of 2020. Mr. Mahon commented, “Given the significant repricing opportunity for certificates of deposits in the second half of the year, we expect our deposit costs to continue trending downwards.”Given the increase in deposit funding, total borrowings (excluding subordinated debt securities) were reduced to $1.02 billion at June 30, 2020, compared to $1.12 billion at the first quarter of 2020, and $1.17 billion at the second quarter of 2019.Non-Interest IncomeNon-interest income was $8.4 million during the second quarter of 2020, $4.2 million during the first quarter of 2020, and $2.8 million during the second quarter of 2019. Excluding gains and losses on equity securities and from sales of securities and other assets, non-interest income was $4.8 million during the second quarter of 2020 compared to $4.7 million during the first quarter of 2020 and $2.7 million during the second quarter of 2019.Mr. Mahon commented, “Our commercial bank operation has produced the desired results on fee income growth, especially as it relates to gaining significant traction with our commercial customers on interest rate swap products. Fees associated with customer level swaps were $2.5 million for the second quarter of 2020 versus $1.2 million for the first quarter of 2020 and $0.3 million for the second quarter of 2019.”Non-Interest Expense (Excluding Non-recurring Items) Down SlightlyTotal non-interest expense was $29.3 million during the second quarter of 2020, $26.0 million during the first quarter of 2020, and $22.3 million during the second quarter of 2019. Excluding the impact of severance and merger-related expenses, non-interest expense was $24.3 million during the second quarter of 2020, $25.4 million during the first quarter of 2020, and $22.3 million during the second quarter of 2019.The ratio of non-interest expense to average assets was 1.84% during the second quarter of 2020, compared to 1.68% during the linked quarter and 1.40% for the second quarter of 2019. Excluding the impact of severance and merger-related expenses, the ratio of non-interest expense to average assets was 1.52% during the second quarter of 2020, compared to 1.64% during the linked quarter and 1.40% for the second quarter of 2019.The efficiency ratio was 60.7% during the second quarter of 2020, compared to 57.6% during the linked quarter and 56.8% during the second quarter of 2019. Excluding the impact of severance and merger-related expenses and gain on sale of securities, the efficiency ratio was 50.3% during the second quarter of 2020, compared to 56.1% during the linked quarter and 56.8% during the second quarter of 2019.Income Tax ExpenseThe reported effective tax rate for the second quarter of 2020 was 21.6%, compared to 21.6% for the first quarter of 2020, and 25.4% for the second quarter of 2019.Credit QualityNon-performing loans at June 30, 2020 were $15.4 million, or 0.3% of total loans, compared to $18.2 million, or 0.4% of total loans, at March 31, 2020.Under Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES” Act), financial institutions had the option to delay the adoption of the Current Expected Credit Loss (“CECL”) framework until the earlier of December 31, 2020 or when the national emergency is lifted. The Bank elected to defer adoption of CECL and is utilizing its existing incurred loss framework.A loan loss provision of $6.1 million was recorded during the second quarter of 2020, compared to a loan loss provision of $8.0 million during the first quarter of 2020, and a loan loss credit of $0.4 million during the second quarter of 2019. The $6.1 million provision for the second quarter of 2020 was primarily associated with an increase in the general loan loss reserve due to the adjustment of qualitative factors tied to the Bank’s existing incurred loss framework, to account for the effects of the COVID-19 pandemic and related economic disruption.The allowance for loan losses was 0.78% of total loans at June 30, 2020 as compared to 0.70% of total loans at March 31, 2020. Excluding $310.5 million of PPP loans, the ratio of allowance for losses to total loans at June 30, 2020 would have been 0.83%.At June 30, 2020, non-performing assets represented 2.9% of the sum of tangible equity plus the allowance for loan losses and reserve for contingent liabilities (see “Problem Assets as a Percentage of Tangible Equity and Reserves” table and “Non-GAAP Reconciliation” table at the end of this news release). Capital ManagementThe Company’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements. At June 30, 2020, the Consolidated Tier 1 capital to average assets (“leverage ratio”) was 10.11%, while the Tier 1 capital to risk-weighted assets and Total capital to risk-weighted assets ratios were 13.07% and 16.29%, respectively.The Bank’s regulatory capital ratios continued to be in excess of all applicable regulatory requirements. At June 30, 2020, the Bank’s leverage ratio was 9.98%, while the Tier 1 capital to risk-weighted assets and Total capital to risk-weighted assets ratios were 12.97% and 13.85%, respectively.Mr. Mahon commented, “Over the course of 2020, we have raised approximately $117 million from the issuance of perpetual preferred stock. As a result, our capital position is very strong as demonstrated by a tangible equity to tangible assets ratio of 9.76% at June 30, 2020. Excluding the impact of the PPP loans, our tangible equity to tangible assets ratio would have been 10.26% at June 30, 2020; this is well above the previously communicated 9.25% minimum target for this ratio that we disclosed during our first quarter earnings call.”Diluted earnings per common share of $0.35 exceeded the quarterly $0.14 cash dividend per share by 150.0% during the second quarter of 2020, equating to a 40.0% dividend payout ratio.Book value per common share increased to $17.07 and tangible common book value per share (common equity less goodwill divided by number of shares outstanding) (see “Non-GAAP Reconciliation” tables at the end of this news release) increased to $15.39 at June 30, 2020.Earnings Call InformationThe Company will conduct a conference call at 8:00 a.m. (ET) on July 29, 2020, during which Chief Executive Officer, Kenneth J. Mahon, will discuss the Company’s second quarter performance, with a Q&A 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/dcom200729.html. Dial-in information for the replay is 1-877-344-7529 using access code #10146095. Replay will be available July 29, 2020 (9:30 a.m. (ET)) through August 5, 2020 (11:59 p.m. (ET)).ABOUT DIME COMMUNITY BANCSHARES, INC.
The Company had $6.47 billion in consolidated assets as of June 30, 2020. The Bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has 28 retail branches located throughout Brooklyn, Queens, the Bronx, Nassau and Suffolk Counties, New York. More information on the Company and the Bank can be found on Dime’s website at www.dime.com. 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 include statements regarding the proposed merger of the Company with Bridge Bancorp, Inc. (the “Merger”). 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; 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; we may incur unexpected expenses and delays related to the Merger; or we may be unable to obtain regulatory approvals or satisfy other closing conditions required to complete the Merger. 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
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