DCOMP - Dime Community Bancshares Inc. Reports Strong Fourth Quarter 2022 Results With Earnings Per Share Increasing By 19% On a Year-Over-Year Basis

Robust Loan Originations Drive Over $1.3 Billion in Loan Growth for Fiscal Year 2022

Fourth Quarter Results Highlighted by Strong Non-Interest Income Growth,
Prudent Expense Management and Improved Credit Quality

HAUPPAUGE, N.Y., Jan. 27, 2023 (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 $145.3 million for the year ended December 31, 2022, or $3.73 per diluted common share, compared to $96.7 million for the year ended December 31, 2021 or $2.45 per diluted common share.

Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “As we close the book on 2022, we can reflect on an extremely successful year for our Company. Reported net income available to common shareholders for the twelve months ended December 31, 2022 increased by 50% on a year-over-year basis. Importantly, we delivered consistent financial results throughout 2022 as demonstrated by an annual return on assets in excess of 1.20% and an efficiency ratio below 50%. We made numerous investments in our business and people over the year, including a buildout of our middle market commercial lending operations. Finally, we were very proud to achieve an overall “Outstanding” rating for our Community Reinvestment Act rating from the Federal Reserve Bank of New York.”

For the quarter ended December 31, 2022, net income available to common stockholders was $38.2 million, or $0.99 per diluted common share, compared to $37.7 million, or $0.98 per diluted common share, for the quarter ended September 30, 2022, and $33.5 million, or $0.83 per diluted common share, for the quarter ended December 31, 2021.

Highlights for the Fourth Quarter of 2022 Included:

• Total loans held for investment, net, increased by $450 million or 18% on an annualized basis versus the linked quarter;
• Total business loan balances increased by $215 million or 43% on an annualized basis versus the linked quarter;
• Non-interest income increased to $9.5 million during the fourth quarter of 2022. Excluding the impact of a $1.4 million gain on sale of a branch property in the third quarter, non-interest income during the third quarter of 2022 was $8.0 million. The increase in non-interest income was driven by customer-related loan swap revenue and SBA gain on sale revenue;
• Non-interest expense to average assets remained well controlled at 1.56% for the fourth quarter, compared to 1.54% for the prior quarter and 1.64% for the year-ago quarter; and
• Credit quality continues to be strong with non-performing assets and loans 90 days past due and accruing declining by 22% versus the linked quarter and representing only 0.26% of total assets as of December 31, 2022.
  

Management’s Discussion of Quarterly Operating Results

Net Interest Income

Net interest income for the fourth quarter of 2022 was $96.8 million compared to $100.4 million for the third quarter of 2022 and $91.7 million for the fourth 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 4.76% at December 31, 2022, a 43 basis point increase compared to the ending WAR on the total loan portfolio at September 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, for the quarter ended as indicated.

Deposits

Total average deposits for the fourth quarter of 2022 were $10.4 billion, compared to $10.6 billion for the third quarter of 2022. The cost of deposits increased by 46 basis points on a linked quarter basis. CEO O’Connor stated, “Despite the rapid increase in market interest rates and the competitive environment for deposit balances, we were able to maintain average non-interest bearing deposit balances to average total deposit balances at approximately 36.2% for the fourth quarter of 2022.”

Non-Interest Income

Non-interest income was $9.5 million during the fourth quarter of 2022, $9.4 million during the third quarter of 2022, and $10.2 million during the fourth 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.

Non-Interest Expense

Total non-interest expense was $50.7 million during the fourth quarter of 2022, $48.3 million during the third quarter of 2022, and $50.8 million during the fourth 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 $50.3 million during the fourth quarter of 2022, $47.9 million during the third quarter of 2022, and $48.7 million during the fourth 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 1.56% during the fourth quarter of 2022, compared to 1.54% during the linked quarter and 1.64% for the fourth 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 1.55% during the fourth quarter of 2022, compared to 1.53% during the linked quarter and 1.57% for the fourth quarter of 2021 (see “Non-GAAP Reconciliation” tables at the end of this news release).

The efficiency ratio was 47.7% during the fourth quarter of 2022, compared to 44.0% during the linked quarter and 49.9% during the fourth 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 47.3% during the fourth quarter of 2022, compared to 44.2% during the linked quarter and 48.2% during the fourth 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 fourth quarter of 2022 was 27.5%, compared to 28.1% for the third quarter of 2022, and 30.9% for the fourth quarter of 2021.

Credit Quality

Non-performing loans at December 31, 2022 were $34.2 million, or 0.32% of total loans.

A credit loss provision of $0.3 million was recorded during the fourth quarter of 2022, compared to a credit loss provision of $6.6 million during the third quarter of 2022, and a credit loss recovery of $132 thousand during the fourth quarter of 2021. The credit loss provision for the fourth quarter of 2022 was associated with growth in the loan portfolio offset by a reduction in reserves on individually evaluated loans and unfunded commitments.

The allowance for credit losses as a percentage of total loans was 0.79% at December 31, 2022 as compared to 0.81% at September 30, 2022 and 0.91% at December 31, 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 December 31, 2022.

CEO O’Connor commented, “Our strong internal capital generation allowed us to keep our capital ratios steady in the quarter, while supporting approximately $450 million of quarterly loan growth. Over the course of 2022, we repurchased approximately $47 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.”

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

Book value per common share was $27.41 at December 31, 2022 compared to $26.55 at September 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 $23.20 at December 31, 2022 compared to $22.34 at September 30, 2022. Excluding the impact of accumulated other comprehensive income, the adjusted tangible common book value per share was $25.54 at December 31, 2022 compared to $24.75 at September 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, January 27, 2023, during which CEO O’Connor will discuss the Company’s fourth 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/499210648 .

Conference Call Details :

Dial-in for Live Call:

Telephone Replay:

A recording will be available until Friday, February 10, 2023.

ABOUT DIME COMMUNITY BANCSHARES, INC.
Dime Community Bancshares, Inc. is the holding company for Dime Community Bank, a New York State-chartered trust company with over $13.1 billion in assets and the number one deposit market share among community banks on Greater Long Island ⁽¹⁾ .

⁽¹⁾ Aggregate deposit market share for Kings, Queens, Nassau & Suffolk counties for community banks less than $20 billion in assets.

This news release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as “annualized," “anticipate," "believe," “continue,” "could," "estimate," "expect," "intend," “likely,” "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Accordingly, you should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may affect demand for our products and reduce interest margins and the value of our investments; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company; changes in the quality and composition of the Company’s loan or investment portfolios or unanticipated or significant increases in loan losses may negatively affect the Company’s financial condition or results of operations; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general socio- economic conditions, including conditions caused by the COVID-19 pandemic and any other public health emergency, international conflict, inflation, and recessionary pressures, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates and may adversely affect our customers, our financial results and our operations; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; and litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. 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. December 31, 2022 amounts are preliminary pending completion and filing of the Company’s regulatory reports.
⁽³⁾ December 31, 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)