Dime Community Bancshares Q4 Earnings Call Highlights

Dime Community Bancshares (NASDAQ:DCOM) executives used the company’s fourth-quarter earnings call to highlight accelerating core earnings, deposit growth, and continued progress in building a more diversified commercial banking platform heading into 2026.

Fourth-quarter performance and balance sheet trends

President and CEO Stuart Lubow said core earnings power continued to improve, citing core EPS of $0.79 in the fourth quarter, an 88% increase from the prior year. Lubow attributed the growth to record total revenues of $124 million, a 10-basis-point increase in net interest margin (NIM), and a linked-quarter increase of more than $650 million in average earning assets. He emphasized that the company’s growth has been organic and not driven by M&A-related purchase accounting adjustments.

Chief Operating Officer and CFO Avi Reddy added that core results excluded approximately $2.4 million in pre-tax severance and $2.7 million of discrete tax items, as outlined in the company’s GAAP-to-non-GAAP reconciliations. He reported core pre-tax, pre-provision net revenue of $61.5 million, representing about 163 basis points of average assets.

Reddy said fourth-quarter reported NIM was 311 basis points, including about two basis points of benefit from prepayment fees. Excluding those fees, NIM would have been 309 basis points, compared with 298 basis points in the third quarter (excluding prepayment fees). He also noted the bank’s NIM has increased for seven consecutive quarters and has now surpassed the 3% mark.

Deposits: growth, seasonality, and mix

Management highlighted strong deposit growth across channels. Lubow said core deposits rose $1.2 billion year over year, while Reddy said total deposits increased about $800 million from the prior quarter.

Reddy cautioned that fourth-quarter deposits and liquidity were elevated by municipal activity and seasonal patterns. Deposit growth included:

• About $100 million of seasonal Tax Receiver municipal deposits that typically arrive in December and leave in mid-January
• About $225 million tied to a municipal bond offering that management expects to leave at the end of February

Excluding those items and typical East End of Long Island seasonality, Reddy estimated fourth-quarter core deposit growth would have been closer to $400 million. He also said quarter-end cash and balance sheet size were elevated by roughly $400 million due to those deposit inflows and seasonal effects.

On pricing, Reddy said new relationships generally require offering “high twos to low threes” on money market rates, typically accompanied by 20% to 30% DDA, resulting in an “all-in” cost in the low twos. The cost of total deposits was 185 basis points in the fourth quarter, down 24 basis points linked quarter, and the spot cost of deposits at year-end was 168 basis points.

In response to questions about deposit mix, management said non-interest-bearing deposits were nearly 31% of total deposits. Reddy referenced a prior range of 35% to 40% following a past merger period and said the ratio had fallen to 25% before rebuilding to around 30% to 31%. He said management views around 30% as a reasonable floor and aims for gradual improvement over time, supported by relationship-driven deposit gathering.

Commercial loan growth and portfolio strategy

Lubow said the company continued executing its plan to expand business lending while managing concentration in commercial real estate. He noted the bank’s CRE concentration ratio is now below 400%, and business loans increased by more than $175 million linked quarter and more than $500 million year over year. The company also reported a loan pipeline of more than $1.3 billion with a weighted average rate between 6.25% and 6.5%.

Chief Commercial Officer Tom Geisel outlined the buildout of multiple commercial and specialty finance verticals since joining in February 2025, including:

• Fund finance focused on capital call lines
• Lender finance focused on institutions providing business credit (not consumer credit)
• Mid-corporate lending for companies larger than typical middle-market borrowers
• Sponsor finance targeting non-cyclical industries and “good risk-adjusted returns”
• Syndications to syndicate self-originated loans while staying within risk tolerances
• Geographic expansion, including added coverage in New Jersey

Geisel said that of the roughly $500 million year-over-year increase in business loans, about $400 million came from specialty groups, including healthcare, lender finance, fund finance, sponsor finance, and not-for-profit. He said healthcare had the most momentum in 2025, and he estimated about half of that $400 million specialty-group growth came from healthcare.

On geographic exposure, Geisel said about 8% to 10% of the loan portfolio is tied to Northern New Jersey, while deposit presence there is less substantial, estimating a 15% to 20% deposit-to-loan ratio for New Jersey clients.

Credit, capital, and 2026 guidance

Lubow said nonperforming assets declined in the fourth quarter and now represent 34 basis points of total assets. He also said multifamily credit remained strong with zero NPAs. Reddy reported the loan loss provision declined to $10.9 million, while the allowance increased to 91 basis points of loans, within the company’s stated operating range of 90 basis points to 1%.

Management also emphasized capital strength. Lubow said total capital ratio exceeded 16%, while Reddy reported the common equity tier 1 ratio increased to 11.66%, describing best-in-class capital ratios as a competitive advantage.

Looking ahead, Reddy guided investors to use the fourth-quarter NIM excluding prepayment fees (3.09%) as a starting point for modeling. He said Dime expects modest NIM expansion in the first half of 2026 and more substantial expansion in the second half as “backbook” loan repricing accelerates. He added that due to the bank’s current cash position, a 25-basis-point move in short-term rates is expected to affect NIM by no more than two to three basis points.

Reddy detailed a repricing schedule that management views as a key tailwind:

• In 2026, approximately $1.4 billion of adjustable and fixed-rate loans at a weighted average rate of 4.0% are expected to reprice or mature. Assuming a 250-basis-point spread over the forward five-year Treasury, management said this could increase quarterly NIM by about 20 basis points by the end of 2026.
• In 2027, another $1.7 billion of loans at a weighted average rate of 4.25% are expected to reprice or mature, which management said could add another 20 to 25 basis points of quarterly NIM expansion by the end of 2027 under similar assumptions.

On growth expectations, Reddy said the balance sheet is expected to be relatively flat in the first half of 2026, citing seasonal slowdown and year-end loan closings. He also said the bank plans to reduce its CRE concentration ratio to the mid-350% range by reducing transactional multifamily and transactional CRE, partially offset by continued business loan growth. He projected an inflection point in CRE balances around the third quarter, followed by mid-single-digit balance sheet growth once overall growth resumes. For 2026, management’s point-to-point total loan growth estimate was in the lowest single digits, with growth weighted to the second half; for 2027, the bank is internally modeling mid-to-high single-digit end-of-year loan growth.

Reddy guided 2026 expenses and other key line items as follows:

• Core cash operating expenses (excluding intangible amortization): $255 million to $257 million, including the full-year impact of de novo branches in Manhattan, Lakewood, and Locust Valley and teams hired in 2025
• Provision for loan losses: approximately $10 million to $11 million in the next couple of quarters, trending down to single digits in the second half to cover charge-offs
• Non-interest income: $45 million to $46 million for the full year, with quarterly variability tied to swap fees, SBA fees, and title revenue
• Tax rate: approximately 28% for 2026

In Q&A, management also addressed liquidity deployment. Reddy said there is no set timeline to deploy excess cash into securities and noted the bank purchased about $150 million of securities in the fourth quarter. He said management values balance sheet flexibility and expects loan growth to be stronger in the second half of 2026, which would increase cash usage for lending.

On loan structure, Reddy said a majority of new specialty vertical production is floating rate. He estimated floating-rate loans are currently 35% to 40% of the portfolio, fixed-rate loans around 25%, with the remainder in adjustable-rate structures.

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.