Dime Community Bancshares, Inc. Reports First Quarter 2021 Results

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Dime Community Bancshares (NASDAQ: DCOM) reported a net loss of $22.9 million or $0.66 per share for Q1 2021, a sharp decline from a profit of $3.3 million in Q4 2020. Adjusted net income was $32.4 million, reflecting significant merger-related costs of $37.9 million. Total deposits surged by over $800 million since the February merger, with $573.3 million in PPP loans originated. The Board has approved a resumption of the share repurchase program. Despite the net loss, management expressed confidence in future growth opportunities and strong capital levels, with a tangible equity ratio of 7.83% as of March 31, 2021.

Positive

Total deposits increased by over $800 million since the merger.
Originated $573.3 million of PPP loans in Q1 2021.
Strong capital levels with a tangible equity ratio of 7.83%.

Negative

Reported a net loss of $22.9 million for Q1 2021, compared to a profit in the previous quarter.
Merger expenses of $37.9 million impacted financial results significantly.

04/30/2021 - 06:00 AM

First Quarter Results Highlighted by Robust Deposit Growth and PPP Originations

Announces Plans to Resume Share Repurchase Program

HAUPPAUGE, N.Y., April 30, 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 a net loss to common stockholders of $22.9 million for the quarter ended March 31, 2021, or $0.66 per diluted common share, compared with net income to common stockholders of $3.3 million for the quarter ended December 31, 2020, or $0.16 per diluted common share, and net income to common stockholders of $8.4 million for the quarter ended March 31, 2020, or $0.37 per diluted common share.

Adjusted net income to common stockholders (non-GAAP) totaled $32.4 million for the quarter ended March 31, 2021, or $0.94 per diluted share¹. Adjusted net income to common stockholders includes the following primary adjustments:

Merger expenses and transaction costs: The Company completed its merger of equals transaction in the first quarter of 2021; associated merger expenses and transaction costs were $37.9 million, pre-tax;
Termination of Borrowings and Sale of Securities: The Company utilized excess liquidity on the balance sheet to restructure its wholesale borrowings portfolio and also repositioned its securities portfolio in the first quarter of 2021; this resulted in a pre-tax loss on termination of derivatives of $16.5 million, a pre-tax loss on extinguishment of debt of $1.6 million, and a pre-tax gain on sale of securities of $0.7 million;
Provision for credit losses on acquired non-purchase credit deteriorated (“Non-PCD”) loans of $20.3 million, pre-tax.

Kevin M. O’Connor, Chief Executive Officer (“CEO”) of the Company, stated, “Our merger closed on February 1, 2021, creating the premier community-based business bank from Montauk to Manhattan with over $13 billion in total assets. Since the closing, we have had significant growth in our client base – in fact, since February 1, total deposits increased by over $800 million and we were again the leading community bank provider of Paycheck Protection Program (“PPP”) loans in our footprint with approximately $575 million of originations. I am also pleased to announce we successfully converted our core system over the weekend of April 17^th. Having completed this conversion, we see a significant opportunity to capitalize on the disruption in our marketplace from recently announced large M&A transactions involving our competitors.”

Mr. O’ Connor continued, “While accounting rules under the CECL standard required us to book a large provision for credit loss expense in the first quarter on acquired Non-PCD loans, contributing to the reported net loss for the quarter, I am extremely pleased with the underlying fundamental trends in our business as well as our pipelines for future growth. The loss absorption capacity on the balance sheet post-merger, and the unique culture we have forged through our core conversion gives me tremendous confidence in our future prospects.”

Highlights for the First Quarter of 2021 Included:

The non-interest-bearing deposits to total deposits ratio increased to 32.7% at March 31, 2021 and the cost of deposits for the first quarter of 2021 was proactively managed lower to 0.25%;
Originated $573.3 million of PPP loans during the first quarter of 2021. Net unrecognized deferred fees related to PPP loans were $24.4 million at March 31, 2021;
The total provision for credit losses was $15.8 million. The provision expense on the acquired Non-PCD loans was $20.3 million and the provision for unfunded commitments (“UFC”) was $3.1 million. The provision on the remainder of the portfolio was negative $7.6 million primarily as a result of improvement in forecasted macroeconomic conditions. The provision expenses for the acquired Non-PCD loans and UFC are the result of the accounting requirements for mergers under the Current Expected Credit Loss standard (“CECL Standard”), which the Company adopted on January 1, 2021;
Significant allowance for credit losses and credit marks on the balance sheet due to provision for credit losses and purchase accounting marks;
Capital levels remain strong; the tangible equity to tangible assets ratio was 7.83% at March 31, 2021. Excluding the impact of PPP loans, the ratio would have been 8.82%;
Our Board of Directors has approved the resumption of share repurchases. Our existing share repurchase plan has approximately 797,780 shares remaining;
The results for the first quarter of 2021 include the operations of Bridge Bancorp Inc. (“Legacy Bridge”) for the final two months of the quarter. For the two-month period following the merger completion on February 1, 2021, the Company’s Adjusted Pre-Provision Net Revenue (“PPNR”) was $34.1 million.¹

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

Management’s Discussion of Quarterly Operating Results

Net Interest Income

Net interest income for the first quarter of 2021 was $77.8 million compared to $48.7 million for the fourth quarter of 2020 and $40.5 million for the first quarter of 2020.

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

($ in thousands)

Q1 2021

Q4 2020

Q1 2020

Net interest income

77,841

48,680

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