Dime Community Bancshares, Inc. Reports First Quarter 2021 Results
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.
Rhea-AI Summary
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.
Details
News Market Reaction – DCOM
In the trading session that priced this news, DCOM declined 0.39%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
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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
Adjusted net income to common stockholders (non-GAAP) totaled
- 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
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 to0.25% ; - 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 been8.82% ; - 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
$34.1 million .1
1 See reconciliation of this non-GAAP financial measure provided elsewhere herein.
Management’s Discussion of Quarterly Operating Results
Net Interest Income
Net interest income for the first quarter of 2021 was
The table below provides a reconciliation of the reported Net Interest Margin (“NIM”), the NIM excluding the impact of SBA PPP loans, and the NIM excluding purchasing accounting accretion on the loan portfolio.
| ($ in thousands) | Q1 2021 | Q4 2020 | Q1 2020 | ||||||||
| Net interest income | $ | 77,841 | $ | 48,680 | |||||||