Dime Community Bancshares Q1 Earnings Call Highlights

Key Points

• Strong Q1 results: EPS was $0.75, up 67% year-over-year and 10% sequentially, driven by record total core revenues of $124 million and core pre-tax, pre-provision net revenue of $60.5 million.
• Margin improvement and guidance: Net interest margin rose to 3.21% (eighth consecutive quarter) as deposit costs fell to 1.70%, and management expects modest near-term NIM expansion with a goal of >3.50% by Q4 2027 driven by loan repricings.
• Shift toward business lending and lower CRE concentration: Business loans grew ~21% year-over-year (~$575M) with a >$1.5B pipeline, and Dime plans to reduce CRE concentration to ~350% between Q2–Q3 while positioning for mid-single-digit loan growth in H2, supported by strong capital (TCE >9%, CET1 11.87%).

Dime Community Bancshares NASDAQ: DCOM reported first-quarter earnings that management said reflected continued progress on its organic growth strategy, improving net interest margin and ongoing efforts to reshape the balance sheet toward business lending while reducing commercial real estate (CRE) concentration.

First-quarter earnings and revenue growth

President and CEO Stuart Lubow said first-quarter earnings per share rose 67% from the prior year, driven by what he described as record total core revenues of $124 million. Lubow said the company’s revenue gains have been organic, “built by our existing bankers and new hires.”

On the call, the company stated first-quarter EPS was $0.75 per share, representing 10% linked-quarter growth and 67% year-over-year growth. Core pre-tax, pre-provision net revenue was $60.5 million, or 162 basis points of average assets.

Margin performance and funding costs

Chief Operating Officer and CFO Avi Reddy said Dime’s net interest margin (NIM) increased for the eighth consecutive quarter, helped by a reduction in deposit costs. He said deposit costs declined to 170 and reported first-quarter NIM increased to 321. Reddy noted the first quarter is “seasonally elevated” due to the day count convention, and said that excluding the day count impact and purchase accounting benefits, the first-quarter run-rate NIM would have been closer to 314.

Looking ahead, Reddy said the company expects “modest NIM expansion in the second quarter” and “more pronounced NIM expansion in the back half of the year and in 2027” as back-book loan repricing accelerates. For the remainder of 2026, Reddy said Dime has about $1.3 billion of adjustable and fixed-rate loans at a weighted average rate of 4.10 that will reprice or mature, followed by another $1.7 billion in 2027 at a weighted average rate of 4.30.

Based on an assumed 225 to 250 basis point spread to Treasuries on those repricings and maturities, Reddy said the company “could see another 40-45 basis point increase in the quarterly NIM by the end of 2027” from a 3.14 base, and he said management expects NIM “to be over 350” by the fourth quarter of 2027, assuming the forward curve and “rational” competition.

Reddy also said that, given Dime’s current cash position, a 25 basis point move up or down in short-term rates would likely have “not more than a 1-2 basis point impact” on NIM, with future NIM expansion expected to be driven by loan repricing as well as core deposit growth and business loan growth.

Loan growth strategy and CRE concentration

Lubow said the bank continued to execute on its plan to grow business loans while managing its CRE ratio lower. He said business loans grew approximately $575 million year-over-year, a 21% increase, and said the loan pipeline was in excess of $1.5 billion with a weighted average rate between 6.25% and 6.5%.

In response to questions about when total loan growth may turn positive, Lubow cited first-quarter paydowns of $170 million in multifamily and $90 million in investor CRE, and said he expects the bank’s overall loan portfolio to show “nice growth” in the back half of the year as the company reaches a 350% CRE concentration target.

Reddy described the loan portfolio in three segments and suggested the company is trending toward roughly $200 million or more in business loan growth as newer teams reach a “good cadence.” He said a new equipment finance and franchise finance vertical starting in May should begin contributing by the third quarter.

Reddy added that once the company reaches a 350% CRE ratio and a $2.7 billion to $2.8 billion investor CRE portfolio, that segment could grow about $200 million annually at a 5% to 6% growth rate. He said multifamily is being managed down intentionally, with a target of about 25% of total loans, while continuing “relationship multifamily but not transactional multifamily.” He said putting the pieces together should result in mid-single-digit loan growth beginning in the third quarter.

On CRE concentration, Reddy said Dime expects to reduce its CRE concentration ratio to 350% “sometime between the second and third quarter of this year,” driven primarily by reductions in transactional multifamily and transactional investor CRE. He argued operating at 350% or lower would differentiate Dime from local banks operating between 375% and 450%.

Credit updates, capital levels, and selective loan sales

Reddy said the loan loss provision was about $12 million and the allowance for loan losses increased to 95 basis points, the midpoint of management’s stated 90 basis points to 1% range. He also said criticized loans were relatively flat quarter-over-quarter.

Reddy highlighted a post-quarter loan sale: at the end of the first quarter, the company transferred four loans totaling $38 million into held-for-sale status and designated them non-accrual. Reddy said the loans were sold “earlier this week,” generating $36 million of proceeds, and management expects a modest $2 million negative impact in the second quarter’s gain-on-sale line item.

On the flow of non-accruals, management said the $38 million was a new decision at March 31 and was not in the prior period non-accrual bucket. Reddy said the company’s earnings power and capital allow it to “offload relationships and credits where we don’t think it meets our long-term objectives.”

Reddy said capital continued to build, with the tangible equity ratio crossing 9%, Common Equity Tier 1 ratio at 11.87%, and total capital ratio above 16%. He described those levels as “best-in-class” relative to local peers and said strong capital provides flexibility to execute the business plan and withstand external shocks.

Hiring, rebranding, and expense outlook

Lubow said the company has seen strong recruiting momentum, including building out its Lakewood branch, adding management depth in the branch network, and hiring two deposit teams from the former Signature Bank. Lubow said the company is “confident that these hires will be accretive to earnings in 2027.”

Reddy said collectively the recent hires, including the Lakewood build-out, manage “well north of $1 billion of deposits” currently, and characterized the opportunity as “a billion-dollar opportunity” over the medium to longer term. He also said the cost of funds on deposits brought in by previously hired teams has been lower than the bank’s overall cost of funds, citing a 1.6% cost with a high percentage of DDA. Lubow added that the Signature teams historically had “50% of their deposits in DDA.”

Tom Geisel, Chief Commercial Officer, provided details on the new equipment and franchise finance vertical, saying it will focus on middle market to large-ticket equipment finance, targeting borrowers from “single B through investment grade.” He said the group will emphasize financing critical machinery and equipment for manufacturing and warehousing, and will look across industries including material handling, specialty vehicles, medical and waste management.

Lubow also reiterated the company’s plan to rebrand as Dime Commercial Bank, noting that over 70% of deposits come from commercial and municipal customers and about 60% of the loan portfolio is commercial real estate-related.

On expenses, Reddy said core cash operating expenses, excluding intangible amortization, were $63 million in the first quarter, generally in line with expectations. He raised full-year 2026 guidance for core cash operating expenses (excluding intangible amortization) to approximately $260 million from a prior range of $255 million to $257 million, citing recent hires and the build-out of the new vertical. Reddy also said the expected tax rate for the remaining quarters of 2026 is 28.5%.

About Dime Community Bancshares NASDAQ: DCOM

Dime Community Bancshares, Inc is the bank holding company for Dime Community Bank, headquartered in Hauppauge, New York. Through its subsidiary, the company offers a comprehensive suite of banking and financial services to both individual and commercial customers. With a network of branches spanning the New York metropolitan area and South Florida, Dime Community Bancshares emphasizes relationship banking and local decision-making.

The company's core lending activities include commercial and multifamily real estate loans, construction and land development financing, and one-to-four-family residential mortgage lending.

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