Dime Community Bancshares Inc. Reports Operating Results (10-Q)
Dime Community Bancshares Inc. has a market cap of $414.47 million; its shares were traded at around $12.05 with a P/E ratio of 12.05 and P/S ratio of 1.99. The dividend yield of Dime Community Bancshares Inc. stocks is 4.65%. Dime Community Bancshares Inc. had an annual average earning growth of 14.4% over the past 10 years.DCOM is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Within the Bank's portfolio, non-accrual loans totaled $29.5 million and $11.3 million at March 31, 2010 and December 31, 2009, respectively. During the three months ended March 31, 2010, thirteen loans totaling $19.2 million were added to non-accrual status. Partially offsetting this increase were two loans totaling $623,000 that were removed from non-accrual status as they were satisfied during the period, and one non-accrual loan totaling $320,000 that was transferred to OREO. Of the thirteen loans that were added to non-accrual status during the period, five loans totaling $13.2 million involved one borrower relationship. The difficulties experienced in both the national real estate and financial services marketplaces combined to adversely impact the metropolitan NYC area multifamily and commercial real estate markets during the three-month period ended March 31, 2010.
A loan is considered impaired when it is probable that all contractual amounts due will not be collected in accordance with the terms of the loan. A loan is not deemed impaired, even during a period of delayed payment by the borrower, if the Bank ultimately expects to collect all amounts due, including interest accrued at the contractual rate. Generally, the Bank considers non-accrual and troubled-debt restructured multifamily residential and commercial real estate loans, along with non-accrual one- to four-family loans exceeding $625,500, to be impaired. Non-accrual one-to four-family loans of $625,500 or less, as well as all consumer loans, are considered homogeneous loan pools and are not required to be evaluated individually for impairment. Impairment is measured by the amount that the carrying balance of the loan, including all accrued interest, exceeds the estimated fair value of the collateral. A reserve is established on all impaired loans to the extent of impairment and comprises a portion of the allowance for loan losses. The recorded investment in loans deemed impaired was approximately $43.2 million, consisting of thirty-one loans, at March 31, 2010, compared to $15.0 million, consisting of nineteen loans, at December 31, 2009. During the three months ended March 31, 2010, fourteen loans totaling $29.0 million were added to impaired status, while two loans totaling $820,000 were removed from impaired status. Of the $820,000 removed from impaired status, $500,000 represented a satisfaction that occurred during the period, and the remainder represented a transfer to OREO. During the three months ended March 31, 2009, seven loans totaling $16.4 million were added to impaired status, while one loan totaling $1.2 million was removed from impaired status. At March 31, 2010, total impaired loans exceeded total non-accrual loans by $13.6 million due to one troubled-debt restructured loan with a balance of $1.0 million that was deemed impaired at March 31, 2010, and seven additional loans totaling $13.3 million that were near 90 days delinquent at March 31, 2010 and were deemed impaired despite being on accrual status. The impaired loans that remained on accrual status were partially offset by eight non-accrual loans totaling $726,000 which, while on non-accrual status, were not deemed impaired since they were either one- to four-family loans with individual outstanding balances of $625,500 or less or consumer loans.
The Bank had 32 real estate loans, totaling $19.7 million, that were delinquent between 30 and 89 days at March 31, 2010, a net reduction of $9.9 million compared to 38 such loans totaling $29.5 million at December 31, 2009. Included within the 30 to 89 day delinquent loans as of March 31, 2010 were 7 loans totaling $13.3 million that are included in the previously discussed $43.2 million of loans deemed impaired at March 31, 2010. The 30 to 89 day delinquent levels fluctuate monthly, and are generally considered a less accurate indicator of credit quality trends than non-accrual loans. However, given the challenges facing the NYC area real estate market at March 31, 2010, it is anticipated that 30-89 day delinquencies will remain above $10 million for the foreseeable future.
The allowance for loan losses was $24.6 million at March 31, 2010, up from $3.1 million at December 31, 2009. In addition, the Bank had a reserve liability related to loan origination commitments (recorded in other liabilities) that totaled $243,000 at March 31, 2010 and $679,000 at December 31, 2009. During the three months ended March 31, 2010, the Bank recorded a provision of $3.4 million to its allowance for loan losses in order to provide for additional inherent losses in the portfolio and loans committed for funding at period end. During the same period, the Bank also recorded net charge-offs of approximately $769,000 against its allowance for loan losses, and transferred $437,000 of reserves from the liability related to loan origination commitments into the allowance for loan losses (See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies – Allowance for Loan Losses" for a further discussion).
Cash and due from banks increased $74.7 million during the period. During the first three months of 2010, the Company gathered $95.8 million in new deposits and elected to retain a significant portion of these funds in liquid balances to fund some required cash payments during the quarter ending June 30, 2010. Portfolio real estate loans increased $92.5 million during the period, as a result of $146.3 million of originations and aggregate purchases of $24.8 million of real estate loans, which were partially offset by amortization and satisfactions of $76.8 million and sales of $1.6 million during the same period. Investment securities available-for-sale increased $10.0 million, primarily as a result of purchases of $12.0 million in agency notes. MBS available-for-sale declined $24.2 million during the period on principal repayments of $24.1 million on these securities during the March 2010 quarter.
General. Net income was $9.5 million during the three months ended March 31, 2010, an increase of $6.6 million from net income of $2.9 million during the three months ended March 31, 2009. During the comparative period, net interest income increased $8.6 million and non-interest income increased $6.6 million, while the provision for loan losses increased $807,000 and non-interest expense increased $2.1 million, resulting in an increase in pre-tax income of $12.3 million. Income tax expense increased $5.7 million during the comparative period due to both the increase in pre-tax earnings as well as a higher effective tax rate.
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