Dime Commercial Bancshares (DCOM) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $18.5 million, down from $27.5 million in Q2 2023, but up 5% sequentially to $16.7 million available to common stockholders, driven by core deposit and business loan growth.

• Net interest margin increased by 20 basis points sequentially to 2.41%, though down from 2.50% a year ago; Q1 2024 marked the trough for NIM and net interest income.

• Asset quality remained solid, with non-performing assets down 29% sequentially and classified assets expected to be down 14% quarter-over-quarter, representing 0.18% of total assets.

• Significant expansion in deposit gathering teams and new verticals, including healthcare and not-for-profit lending, with eight new deposit groups onboarded in Q2 2024.

• Subordinated debt offering raised $65 million in Q2 2024 (plus $9.8 million in July), boosting the total risk-based capital ratio to 14.5%.

Financial highlights

• Reported EPS was $0.43, up from $0.41 in Q1 2024, but down from $0.66 in Q2 2023.

• Net interest income was $75.5 million, up from $71.5 million in Q1 2024, but down from $80.2 million in Q2 2023.

• Non-interest income for the quarter was $11.8 million, including a $3.7 million gain from a branch sale-leaseback.

• Core cash operating expenses (excluding intangible amortization) were $55.4 million, with total non-interest expense at $55.7 million, reflecting higher salaries and investments in new teams.

• Loan loss provision was $5.6 million, up from $892 thousand in Q2 2023, with allowance to loans at 0.72%.

Outlook and guidance

• Management expects slow and steady NIM improvement absent rate cuts, with potential acceleration if rate cuts occur.

• Approximately $2 billion in loans at 3.9% are set to reprice or mature in the second half of 2025 and 2026, potentially increasing NIM by 35 basis points.

• Core cash operating expenses projected at ~$57 million for Q3 and to remain at that level with nominal growth in 2025.

• Loan portfolio expected to grow low single digits in the second half of the year, with business lending offsetting declines in multifamily and CRE.

• Effective tax rate for Q3 2024 is expected to be approximately 27%.