Dime Community Bancshares, Inc. /NY/ (DCOM)·Q4 2024 Earnings Summary

Executive Summary

• Q4 GAAP EPS was $(0.54) on a net loss to common of $(22.2)M, driven by a $42.8M pretax loss on securities repositioning, $9.1M BOLI-related tax expense, $1.3M severance, and $1.2M pension termination costs; underlying adjusted EPS rose 45% q/q to $0.42 as NIM expanded 29 bps to 2.79% on lower deposit costs and core deposit growth .
• Core deposit momentum and active repricing cut total deposit cost by 37 bps q/q and lifted the average non-interest-bearing mix to 30%; loan-to-deposit fell to 93% and CET1 rose to 11.07% post the $136M equity raise, de-risking funding and capital .
• 2025 setup: management sees a clear path to ~3.0% NIM by Q1 (Dec core NIM ~2.84% plus 5–6 bps from Dec Fed cut) and >3% through 2025, with 5–6 bps tailwind per future 25 bp cuts; 2025 guidance includes noninterest income of $40–$42M, core cash OpEx of $234–$235M, and a 27–28% tax rate .
• Stock reaction catalysts: visible NIM inflection, best-in-class capital in footprint >$10B, continued core deposit capture, and balanced loan mix shift toward higher-yielding business/healthcare lending; note the one-time Q4 charges masked strong adjusted profitability trends .

What Went Well and What Went Wrong

What Went Well

• NIM inflected sharply: reported NIM rose to 2.79% (+29 bps q/q) as total deposit cost fell 37 bps; CEO: “continued core deposit growth and NIM expansion” .
• Deposit mix/scale improved: core deposits +$513M q/q (ex-brokered/time) with average DDA ratio at 30%, driving LDR down to 93% and enabling FHLB reduction y/y (~$700M) .
• Capital strengthened: $136M net common equity raised in November; CET1 to 11.07% and total risk-based capital 15.65% (prelim); CEO: “best-in-class…with over $10 billion of assets” .

Management quotes:

• “We have a clear line of sight to returning to a 3% plus net interest margin” .
• “The monthly December core NIM was approximately 2.84%…a good base NIM to use” .
• “Our capital ratios are now best-in-class…with over $10 billion of assets” .

What Went Wrong

• GAAP loss from strategic actions: $42.8M pretax loss on securities repositioning and $9.1M BOLI tax drove $(0.54) GAAP EPS despite stronger core trends .
• Credit provisioning and charge-offs rose: provision increased to $13.7M (from $11.6M) and NCOs/Avg loans annualized to 0.39% (from 0.15%), albeit NPLs flat q/q at $49.5M .
• Borrowings ticked up q/q: FHLB advances $608M (vs. $508M in Q3) given timing/seasonality; management highlighted seasonal municipal and title deposits elevated cash at year-end .

Financial Results

Balance sheet and capital KPIs

Segment breakdown – Loans and yields (WAR)

KPIs – Deposit mix and costs

Notes: Q4 non-interest income included $(42.8)M pretax loss on sale of securities related to AFS repositioning; December press release detailed $379M sales (1.20% yield) redeployed into $379M at 5.08% .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We have a clear line of sight to returning to a 3% plus net interest margin.” — CEO Stuart Lubow .
• “The monthly December core NIM was approximately 2.84%…a good base NIM to use as you build out your models for 2025.” — CFO Avinash Reddy .
• “Should the Federal Reserve cut rates again this year, we expect another 5–6 bps in quarterly NIM improvement per 25 bp rate cut…We see a pathway to a 3% NIM in 2025 and >3.25% in 2026.” — CFO .
• “Our capital ratios are now best-in-class…with over $10 billion of assets.” — CEO .
• “Core deposits were up approximately $500 million in the fourth quarter…excluding seasonals, period-end core deposit growth…~$150 million.” — CFO .

Q&A Highlights

• NIM trajectory and back-book repricing: ~$1.9B of fixed/adjustable loans at ~3.95% reprice H2’25–2026; +35–40 bps NIM potential over time; another ~$1.75B at ~4.25% in 2027 .
• Noninterest income: $40–$42M guide reflects $85–$90M of new BOLI in Jan, adding ~$5–$5.5M, embedded in 27–28% tax rate .
• Loan growth: business loans grew ~$425M in 2024; 2025 period-end growth low single digits as CRE/multifamily attrition masks business growth; mid-single-digit growth expected in 2026 .
• Deposits: marginal funding cost ~2–2.5% given ~40% DDA on new relationships; current weighted average deposit rate ~2.05% (as of Jan 22) .
• Credit: Q4 charge-offs were diversified without single large credits; 2025 charge-offs expected 20–30 bps for a commercial bank .

Estimates Context

• S&P Global consensus estimates for Q4 2024 (EPS, revenue/fees) could not be retrieved due to SPGI daily request limits at time of analysis; therefore, we cannot quantify beats/misses vs Street for this quarter. We will update with consensus vs actual once accessible. [Values intended from S&P Global; unavailable due to rate limits]*

Where estimates may need to adjust:

• NIM run-rate: Dec core 2.84% and Q1 implied ~2.90% plus sensitivity to additional cuts suggest upward revisions to 2025 NIM/EPS trajectories versus models that don’t reflect the repositioning and deposit cost push-through .
• Noninterest income uplift from BOLI and loan swap variability could skew quarterly cadence despite steady annual outlook .
• Core OpEx guardrails ($234–$235M) should anchor opex assumptions unless hiring ramps in Q2+; pension settlement in Q1 is already reflected in AOCI with minimal TBV impact .

Key Takeaways for Investors

• Core earnings power inflecting: NIM jump to 2.79% and Dec core 2.84% provide line-of-sight to ~3.0% in Q1 and >3% in 2025; the Q4 GAAP loss masks strong adjusted EPS momentum (+45% q/q) .
• Funding advantages: higher DDA mix (30%), sharply lower deposit costs, and reduced wholesale reliance (LDR 93%) underpin further margin expansion with rational competition .
• Capital optionality: CET1 11.07% and total risk-based 15.65% post equity raise support organic growth and selective M&A; tangible book per share grew to $25.68 .
• Mix shift raises ROA potential: business/healthcare pipelines at ~7.6–7.75% yields vs runoff in lower-yielding multifamily should lift asset yields over time .
• Credit normalizing, still manageable: 2025 charge-offs expected in 20–30 bps range; NPLs stable q/q; reserve build to 0.82% approaches 90–100 bps target .
• Watch list of catalysts: additional Fed cuts (5–6 bps NIM tailwind per 25 bps), deposit betas execution, CRE concentration to low 400s, and incremental banker hires in Q2+ .
• One-time charges behind: AFS/BOLI repositioning and pension actions completed/telegraphed; expect cleaner P&L and more transparent core run-rate in 2025 .

Appendix: One-time/Non-GAAP adjustments (Q4 2024)

• Items impacting GAAP: $(42.8)M pretax securities loss; $9.1M BOLI-related tax; $1.3M severance; $1.2M pension settlement; adjusted noninterest expense $57.7M; adjusted efficiency 58.0% .
• Underlying results: Adjusted net income to common $17.4M; Adjusted EPS $0.42 .

Additional Context and Prior Announcements

• Investment portfolio repositioning (Dec 12): Sold $379M AFS at 1.20% yield, bought $379M at 5.08% (one-time ~$43M pretax loss), extending duration to 4.2 years, supporting future NIM .
• Equity raise: ~$136M net common equity in Nov; capital ratios increased across the board .
• Dividends: common $0.25 in Q4; Series A preferred $0.34375 payable Feb 13, 2025 .

*Estimates disclaimer: Consensus values to compare against results could not be retrieved due to S&P Global daily request limits at time of analysis; we will supplement when available.