DCOMP - Dime Community Bancshares Inc. Reports Strong Second Quarter 2022 Results With Net Income Available to Common Stockholders Increasing By 12% Versus the Prior Quarter

Robust Quarterly Loan Originations of $902 Million Drive Broad-Based Loan Growth Across All Major Loan Categories

Net Interest Margin Expands by 10 Basis Points Versus the Prior Quarter

HAUPPAUGE, N.Y., July 29, 2022 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “Bank”), today reported net income available to common stockholders of $36.7 million for the quarter ended June 30, 2022, or $0.94 per diluted common share, compared to $32.7 million, or $0.82 per diluted common share, for the quarter ended March 31, 2022, and $49.5 million or $1.19 per diluted common share, for the quarter ended June 30, 2021.

Adjusted net income available to common stockholders (non-GAAP) totaled $39.3 million for the quarter ended June 30, 2022, or $1.01 per diluted share. Adjusted net income available to common stockholders for the quarter ended June 30, 2022 included $2.9 million of aggregate pre-tax adjustments related to loss on extinguishment of debt and severance expense (see “Non-GAAP Reconciliation” tables at the end of this news release).

Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “During the second quarter, we experienced record core loan growth of over $400 million driven by robust originations. The high level of non-interest-bearing deposits on our balance sheet allowed us to keep our deposit costs at low levels, and contributed to net interest margin expansion. In addition, we saw a rebound in non-interest income as customer-related loan swap revenue picked up. We continue to prioritize prudent expense management as demonstrated by a core efficiency ratio of 48% on a year-to-date basis.”

“In addition to producing strong financial returns with year-to-date return on assets of approximately 1.2%, I am extremely proud of our employee base for their unwavering focus on being the premier community-based business bank on Greater Long Island. In this regard, I am extremely proud that we recently received an overall Outstanding Community Reinvestment Act (“CRA”) rating from the Federal Reserve Bank of New York.”

Highlights for the Second Quarter of 2022 Included:

• Total loans held for investment, net, excluding Paycheck Protection Program (“PPP”) loans, increased by 18% on an annualized basis versus the linked quarter;
• The net interest margin expanded by 10 basis points versus the linked quarter;
• The cost of deposits remained well-controlled, increasing by only 5 basis points versus the linked quarter;
• Non-interest income increased to $12.1 million in the second quarter, compared to $7.2 million for the first quarter. The increase in non-interest income was due to an increase in customer-related loan swap income, SBA gain on sale revenue and BOLI income;
• Credit quality continues to be strong with non-performing assets and loans 90 days past due and accruing remaining stable and representing only 0.30% of total assets as of June 30, 2022;
• The Company repurchased 717,644 shares of its common stock, which represented approximately 1.8% of shares outstanding at the beginning of the period, at a weighted average price of $31.91 per share; and
• The Company completed an issuance of $160.0 million of fixed-to-floating rate subordinated notes in the second quarter. Proceeds were used to redeem two legacy tranches of subordinated debt totaling $155.0 million.
  

Management’s Discussion of Quarterly Operating Results

Net Interest Income

Net interest income for the second quarter of 2022 was $93.5 million compared to $89.1 million for the first quarter of 2022 and $93.3 million for the second quarter of 2021.

The table below provides a reconciliation of the reported net interest margin (“NIM”) and the adjusted NIM excluding the impact of purchase accounting accretion on the loan portfolio.

Loan Portfolio

The ending weighted average rate (“WAR”) ^{( 1)} on the total loan portfolio was 3.94% at June 30, 2022, an 18 basis point increase compared to the ending WAR on the total loan portfolio at March 31, 2022. Excluding the impact of PPP loans, the WAR on the loan portfolio was 3.95% at June 30, 2022, compared to 3.77% at March 31, 2022.

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

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

Deposits

Total deposits increased by $135.9 million on a linked quarter basis to $10.57 billion at June 30, 2022. The cost of deposits increased by 5 basis points on a linked quarter basis. CEO O’Connor stated, “Managing our cost of funds appropriately in the current rising rate environment is a firm-wide focus. Importantly, average non-interest-bearing deposits for the second quarter were up $283.3 million on a year-over-year basis to $3.94 billion.”

Non-Interest Income

Non-interest income was $12.1 million during the second quarter of 2022, $7.2 million during the first quarter of 2022, and $29.5 million during the second quarter of 2021. Included in non-interest income for the second quarter of 2022 was $2.2 million of income related to mortality proceeds from a death claim. Excluding 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 (see “Non-GAAP Reconciliation” tables at the end of this news release).

Non-Interest Expense

Total non-interest expense was $51.8 million during the second quarter of 2022, $49.9 million during the first quarter of 2022, and $54.9 million during the second quarter of 2021. Excluding the impact of loss on extinguishment of debt, severance expense, and amortization of other intangible assets, adjusted non-interest expense was $48.5 million during the second quarter of 2022. Excluding the impact of amortization of other intangible assets, adjusted non-interest expense was $49.3 million during the first quarter of 2022. 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 $48.5 million during the second 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 1.71% during the second quarter of 2022, compared to 1.64% during the linked quarter and 1.72% for the second 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 1.60% during the second quarter of 2022, compared to 1.62% during the linked quarter and 1.52% for the second quarter of 2021 (see “Non-GAAP Reconciliation” tables at the end of this news release).

The efficiency ratio was 49.1% during the second quarter of 2022, compared to 51.8% during the linked quarter and 44.7% during the second 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 PPP loans, the adjusted efficiency ratio was 45.9% during the second quarter of 2022, compared to 51.2% during the linked quarter and 47.5% during the second 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 second quarter of 2022 was 28.4%, compared to 28.1% for the first quarter of 2022, and 28.9% for the second quarter of 2021.

Credit Quality

Non-performing loans at June 30, 2022 were $36.3 million, or 0.38% of total loans.

A credit loss provision of $44 thousand was recorded during the second quarter of 2022, compared to a credit loss recovery of $1.6 million during the first quarter of 2022, and a credit loss recovery of $4.2 million during the second quarter of 2021. The credit loss provision was associated with growth in the loan portfolio offset by a reduction in reserves on the existing loan portfolio.

The allowance for credit losses as a percentage of total loans was 0.82% at June 30, 2022 as compared to 0.86% at March 31, 2022 and 0.97% at June 30, 2021.

Capital Management

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

CEO O’Connor commented, “During the second quarter, we continued to execute on our share repurchase program and we repurchased $22.9 million of common stock. Our regulatory capital ratios, which exclude the impact of accumulated other comprehensive loss component of stockholders’ equity, continue to be very strong. Our strong balance sheet and internal stress testing analyses continue to provide support for future capital return to shareholders.”

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

Book value per common share was $26.41 at June 30, 2022 compared to $26.32 at March 31, 2022. Tangible common book value per share (which represents common equity less goodwill and other intangible assets, divided by number of shares outstanding) was $22.20 at June 30, 2022 compared to $22.18 at March 31, 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 July 29, 2022, during which CEO O’Connor will discuss the Company’s second 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/191814872 .

Conference Call Details :

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 “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 reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company; changes in the quality and composition of the Company’s loan or investment portfolios or unanticipated or significant increases in loan losses may negatively affect the Company’s financial condition or results of operations; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; and litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. Further, given its ongoing and dynamic nature, it is difficult to predict what effects the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, result in a decline in demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch closures, work stoppages and unavailability of personnel; and increased cybersecurity risks, as employees work remotely. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections entitled “Forward-Looking Statements” and “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and updates set forth in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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

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)

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