INVESTOR PRESENTATION PIPER JAFFRAY FINANCIAL INSTITUTIONS CONFERENCE May Lending for the Way New Yorkers Live

Transcription

1 INVESTOR PRESENTATION PIPER JAFFRAY FINANCIAL INSTITUTIONS CONFERENCE May 2016 Lending for the Way New Yorkers Live

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3 about DIME NEW YORK CITY S PREMIER COMMUNITY BANK MULTIFAMILY LENDER SINCE 1965 Dime Community Bancshares, Inc., is the holding company for The Dime Savings Bank of Williamsburgh, a $5.53 billion dollar institution. Community retail bank model with an emphasis on New York City Multifamily Lending. Low credit risk model with consistently strong returns. Twenty five branches serving Brooklyn, Queens, The Bronx and Nassau Counties. Split adjusted IPO price of a DCOM share is $2.96. The annualized total return since the IPO has been 12%; cumulative total return has approximated 859%. Current dividend of $0.14/QTR (Yield of 3.17% based on March 31, 2016 closing price of $17.62). Significant management tenure and insider equity ownership. Variety of initiatives underway to continue to drive shareholder value and league leading returns. 3

4 Branch Network 25 Branches in New York City metropolitan area. Average branch size = $137.6 million as of March 31, 2016 County 2015 Market Share Rank (1) Number of Dime Branches (2) Deposits in Market ($mm) Total Market Share (%) Brooklyn $ 1, % Queens % Nassau % Bronx % (1) Data as of December 31, 2015 Source: FDIC (2) As of December 31,

5 Key Officers & Directors Name Title Tenure Inside Ownership* EXECUTIVE OFFICERS and DIRECTORS: Vincent F. Palagiano Chairman & CEO 46 years 2.3% (863,872 shares) Kenneth J. Mahon President & COO 36 years 1.0% (380,665 shares) Total Directors and Executive Officers Ownership 12.7% (4,739,514 shares) OTHER OPERATING OFFICERS: Daniel Harris Chief Lending Officer 8 years (plus 26 years prior combined banking and law) Timothy King Chief Risk Officer 33 years Michael Pucella Chief Accounting Officer 35 years Timothy Lenhoff Chief Technology Officer Since October years IT industry experience Robert Volino Chief Investment Officer 17 years Anthony Rose Chief Administrative Officer (Start Date: April 2016). * Amounts per page 4 of the Company s proxy statement dated April 12,

6 Initiatives: Investing in the Business Plans for three new Brooklyn branches to open by summer Including 2 new branches in Williamsburg and 1 in Park Slope. Business banking outreach to commercial borrowers to grow business deposits. Recently added a seasoned 3 member team to Business Banking division. Development of Outreach Programs to small and micro business customers in the Bank s trade areas. Growth of sales and training staff; introduction of customer relationship management process. Tighter focus on pay for performance. Integration of customer relationship management software. 6

7 Initiatives: Investing in the Business Investments in technology and staffing; major focus on e banking, internet and cybersecurity. Mobile banking for consumers and small business. Development of the internet banking channel to grow deposits more efficiently and rapidly than brick and mortar. Cost cutting initiatives to pay for new project implementations. Internal restructuring to create a leaner, more customer responsive operations department. Monetization of owned real estate in Williamsburg, Brooklyn, creates significant book value and free capital. 7

8 Another Year of Top Performance DIME RANKS 4 th Most Prolific NYC Real Estate Lender, Oct 30, 2015 SNLThrift Investor: DIME RANKS # 5 of 100 For the eighth straight year, Dime ranks fifth or higher in SNL survey. BankDirector: DIME RANKS # 39 in $1 to $5 billion asset group The 200 largest U.S. banks are stronger and more profitable than at any time since the Great Recession. Resurgent Performance, Inc: DIME RANKS # 2 in Lending Performance 8

9 Investor Highlights Focus on Growth Strong Multifamily Expertise Low Cost Operator Shareholder Value Risk Management 9

10 DIME 3 to 5 Year Goals Focus on Asset Growth Tangible Common Equity / Tangible Assets (%) Total Risk Weighted Capital Ratio (Bank) (%) 3 to 5 Year Goals 13.67% 13.36% 12.89% 12.03% 11.93% Grow assets 15% on average over the next 3 years (goal of 15%-20% growth for 2016) 8.97% 9.68% 9.29% 8.98% 9.02% Decrease the loan to deposit ratio Remain focused on NYC commercial real estate lending Maintain tangible common equity sufficient to support growth Raise additional capital from monetization of Williamsburg real estate /31/2016 Increase lower cost commercial and business deposits. 10

11 Loan and Deposit Growth Total Loans Total Deposits Loans / Deposits 141% 148% 155% $4,119 $4, % $5, % Loan CAGR: 9.0% Deposit CAGR: 8.3% $3,506 $3,700 $3,184 $3,440 $2,479 $2,507 $2, /31/2016 Source: SNL Financial 11

12 Deposit Growth Initiatives Increase Percentage of Commercial and Small Business Deposits Deposit Change from % 3% CRE Deposits Business Deposits Category (000's) Mar 15 Avg. Cost Mar 16 Avg. Cost % Growth Branch Consumer Deposits CRE Deposits $ 132, % $ 210, % 59% Business Deposits 80, % 109, % 36% Branch Consumer Deposits 2,629, % 3,119, % 19% TOTAL 2,842, % 3,439, % 21% MAR % 12

13 Investor Highlights Focus on Growth Strong Multifamily Expertise Low Cost Operator Shareholder Value Risk Management 13

14 Loan Portfolio Geographic Distribution BROOKLYN 14

15 New York City Housing Stock* As shown in the adjacent chart, New York City is a city of apartment dwellers. Only 18% of the City s housing stock is classified 1 4 family. Conventional Homes, 18% Dime has historically been one of the primary lenders in the small (10 75 unit, rent regulated) apartment house market in New York City, which is summed up in our mission statement: Lending for the Way New Yorkers Live. Renter- Occupied, 67% Co-op, 10% Condo, 4% * Total housing stock equals 3,124,138 units. Source: 2014 New York City Housing and Vacancy Survey and census data. 15

16 Real Estate Loan Portfolio Commercial w/ Residential, 7.7% Pure Commercial, 10.0% Multifamily w/ Commercial, 29.0% Loans Underlying Co ops, 4.3% 1 4 Family and Small Mixed Use, 1.5% Multifamily, 47.5% $ Amount % of Current Portfolio Risk Segmentation (In Thousands) Portfolio LTV Loans Underlying Coops $ 216, % 18% 1-4 Family and Small Mixed Use 74, % 50% 100% Multifamily 2,395, % 56% Multifamily w/ commercial 1,465, % 55% Commercial w/ residential 388, % 50% Pure Commercial 506, % 52% The perceived risk profile of the loan portfolio by major segment, from "least" to "highest" risk. * As of March 31, Excludes allowance for loan losses. Dime s real estate loan collateral: Approximately 60% of residential units are rent regulated. 16

17 CRE Concentration in Residential Loans 82% of Dime s CRE portfolio consists of New York City & area Multifamily Loans 1250% 1000% 750% 500% 909% CRE CONCENTRATION to TOTAL RISK BASED CAPITAL 1079% 1017% 1036% 1004% 963% 950% 949% 905% 898% 916% 922% 874% 909% 847% 814% 1007% In December 2006, Interagency guidance Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices is issued, defining Commercial Real Estate as including multifamily housing. In recognition of the new regulatory environment, Dime has enhanced its CRE underwriting criteria and built out a strong credit administration and portfolio monitoring function. 250% 0% Dime s consistently low, industry leading CRE loan loss and Non performing loan rates underscores the commitment of the bank s board and management to effectively manage CRE concentration risk

18 DIME CRE Portfolio concentrated in NYC multifamily residential properties Other Includes: Storage Land Religious Mixed Use Resi. Construction Industry* Dime Total CRE Portfolio at 3/31/2016: $4.97 Billion Healthcare 7% Other 12% Multifamily 28% Commercial 19% Retail 16% Hospitality 8% Industrial 12% Office 18% Multifamily 81% *Source: 1 st Annual ABA Commercial Real Estate Survey Report April Survey Participants (77% banks 23% savings institutions); 61% assets under 1 billion. 18

19 Repricing Real Estate Loans $5,000 $4,500 Frequent repricing. Early prepayments add an element of revenue to the P&L. $4,000 $3,500 Annual Repricings Cumulative Repricings 22.8% of total loans reprice by the end of % of total loans reprice by the end of 2021 $3,000 ($ in millions) $2,500 $2,000 $1,500 LEGEND % WEIGHTED AVERAGE RATE OF REPRICING LOANS $ CONTRACTUAL VOLUME OF REPRICING LOANS $1,000 $500 $0 3.40% 3.78% 3.45% 3.64% 3.48% 3.63% 3.58% 4.51% Beyond 2022 As of December 31,

20 Real Estate Loan Originations $1,800 Total Real Estate Originations Total Refinancings of Existing Dime Loans $1,659 $1,500 Originations in $ millions $1,500 $1,200 $900 $600 $300 $1,104 $1,016 $576 $563 $575 $1,087 $466 $542 $679 $1,100 $1,073 $1,147 $1,444 $1,200 $900 $600 $300 Refinancings of Existing Dime Loans $ ** 2015** 2016(a)** Year Ended December 31, (a) Amount calculated as annualized Q12016 originations of $377 million, plus a $152 million loan participation purchase completed in Q ** Includes a $200 million loan re purchase from Fannie Mae in 2014, a $99 million loan participation purchase in 2015 and a $152 million loan participation purchase in $0 20

21 $ loan originations in millions $1, $1, $1, $1, $ $ $ $ Average: DSR = 2.15 LTV = 59% Debt Service & Loan to Value Ratios on New Loans Weighted average LTV consistently at or below 65% Average: DSR = 2.11 LTV = 58% Average: DSR = 1.85 LTV = 59% Average: Average: DSR = 1.52 DSR = 1.53 LTV = 65% LTV = 63% Purchased Average: DSR = 1.47 LTV = 59% Average: DSR = 1.96 LTV = 52% Average: DSR = 1.47 LTV = 59% Average: DSR = 2.40 LTV = 50% Average: DSR = 2.01 LTV = 53% Originated Average: DSR = 2.20 LTV = 56% Average: DSR = 2.37 LTV = 56% Average: Average: DSR = 2.62 DSR = 2.21 LTV = 55% LTV = 54% Average: DSR = 1.98 LTV = 53% Average: DSR = 1.93 LTV = 57% Average: DSR = 1.76 LTV = 63% Average: DSR = 1.55 LTV = 63 $ YTD Year Ended December 31, 21

22 Investor Highlights Focus on Growth Strong Multifamily Expertise Low Cost Operator Shareholder Value Risk Management 22

23 Low Cost Operator Relative to Peers Efficiency Ratio (%) 57.9% 58.1% 57.5% 58.8% 60.8% 61.5% 60.6% 46.8% 42.4% 41.7% 42.3% 46.0% 46.3% 46.0% DCOM Peer Median Net Operating Expense / Avg. Assets (%) 1.51% 1.22% 1.26% 1.30% 1.60% 1.59% 1.56% 1.58% 1.60% 1.35% 1.38% 1.42% 1.34% 1.52% DCOM Peer Median Source: SNL Financial 23

24 Investor Highlights Focus on Growth Strong Multifamily Expertise Low Cost Operator Shareholder Value Risk Management 24

25 Creating Shareholder Value $20.00 $16.00 $5.74 $12.00 $2.80 $3.36 $3.92 $4.48 $5.04 $5.60 $8.00 $4.00 $2.24 $1.68 $1.12 $0.56 $6.41 $6.63 $6.79 $7.09 $8.07 $8.97 $9.67 $10.47 $11.20 $11.96 $13.18 $ Q1 DCOM TBV Per Share DCOM Cumulative Dividends 25

26 Investor Highlights Focus on Growth Strong Multifamily Expertise Low Cost Operator Shareholder Value Risk Management 26

27 Risk Management In 2008, Dime created the position of CHIEF RISK OFFICER, encompassing the fields of : Enterprise Risk, Credit Administration, Compliance, Audit, and Cybersecurity Risk. Credit: Concentration in low risk NYC multifamily market. Interest Rate: Nature of loans is short term (5 and 7 year). Liquidity: Stable sources of available liquidity. 27

28 Credit Risk Management Dime has a long, successful history of managing its highly concentrated CRE portfolio, mainly because multifamily loans are residential housing loans. Dime has historically been one of the leading lenders in the small (10 75 unit) rent regulated multifamily housing market in New York City. NYC rent regulations provide a level of stability in the marketplace, especially to conservative lenders such as Dime (with loans reliant almost solely upon occupancy for debt service). From 2009 to the most recent quarter end, the average debt service ratio on newly originated commercial real estate loans was 2.08x, and the average loan to value ratio was 53%. Dime s Texas ratio (a popular measure of a bank s ability to absorb credit losses) was 1.5% as of the most recent quarter end, one of the lowest nationally. 28

29 Credit Metrics since the onset of the financial crisis Q1 ($ in thousands) Total Loans $3,468,479 $3,458,416 $3,506,368 $3,699,519 $4,119,240 $4,696,776 $5,056,647 Non Performing Loans $20,168 $28,973 $8,888 $12,549 $6,198 $1,611 $1,422 NPLs to Total Loans 0.58% 0.84% 0.25% 0.34% 0.15% 0.03% 0.03% Net Charge Offs (Recoveries) $13,821 $5,925 $3,707 $766 $(212) $(1,351) $(20) NCOs to Total Loans 0.40% 0.17% 0.11% 0.02% 0.01% 0.03% 0.00% Allowance as a % of Loans 0.54% 0.58% 0.59% 0.54% 0.45% 0.39% 0.37% "Texas" ratio (2) end of period end 8.4% 8.9% 2.6% 3.7% 2.5% 1.6% 1.5% (1) "Texas" ratio = sum of non performing assets + accruing loans past due 90 days or more as a % of Tangible Capital + ALLL. 29

30 Credit Metrics vs Peer Group CHARGE OFF HISTORY % 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% -0.10% DIME 0.79% 0.59% 0.40% PEERS (% of Average Total Loans) 0.48% 0.38% 0.27% 0.24% 0.20% 0.17% 0.11% 0.07% 0.02% -0.01% -0.03% Dime s conservative underwriting has resulted in consistent out performance of its peers in credit loss experience. For purposes of this chart, Dime Community Bancshares, Inc.'s peer group consists of the following: Astoria Financial Corporation (AF), First Niagara Financial Group (FNFG), Flushing Savings Bank (FFIC),Investors Bank (ISBC), Kearny Federal Savings Bank (KRNY), New York Community Bancorp (NYCB), Northfield Bancorp Inc (NFBK), OceanFirst Bank (OCFC), Oritani Bank (ORIT), Signature Bank (SBNY), Sterling National Bank (STL), Sun National Bank (SNBC), The Provident Bank (PFS),, Valley National Bank (VLY). 30

31 Interest Rate Risk Management Non interest Bearing Checking Accounts 14.4% CAGR in non interest bearing deposits from 2011 through the first quarter of Non interest bearing accounts to provide significant protection from rising interest rates. 8.3% CAGR growth in deposits (noted previously), and greater emphasis upon deposit growth in 3 to 5 year business plan Q1 Emphasis on deposits for shorter term funding should permit more longer term borrowing activity for interest rate risk management. 31

32 Interest Rate Risk Management $400,000 $300,000 $200, % CD Maturities by Year* 1.42% 1.83% 1.86% $370.0 million of CD s with maturities beyond 2017 $100,000 $0 700, , , , , , , % and beyond Borrowing Maturities by Year* $329.1 million of borrowings with maturities beyond % 1.56% 1.53% 1.73% 2.68% Maturity in Year Ending Dec. 31st * As of March 31, Dollars in thousands. Excludes trust preferred corporate debt. 32

33 Liquidity Risk Management $4,000,000 Outstanding Borrowings** Additional Borrowing Capacity $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 More than sufficient borrowing capacity to meet liquidity demands. Ample access to deposit funding in either the local retail marketplace or via internet. Sufficient capital to support accelerated deposit growth/ borrowings should funding needs warrant. $ As of March 31, ** Excludes holding company trust preferred debt. Dollars in thousands. 33

34 APPENDIX 1 Additional Financial Metrics 10 Year Trendline Q1 ($ in thousands) Total Assets $3,501,175 $4,055,598 $3,501,175 $4,040,295 $4,021,180 $3,905,399 $4,028,190 $4,497,107 $5,032,872 5,517,359 Total loans, net of allowance 2,861,638 3,274,051 2,861,638 3,454,326 3,443,633 3,485,818 3,679,366 4,100,747 4,678,262 5,038,134 Total loan originations 576,298 1,089, , , ,346 1,101,106 1,074,451 1,148,233** 1,445,200** 528,759 Total loan amortization 326, , , , ,928 1,030, , , , ,754 Total deposits 2,179,998 2,260,051 2,216,836 2,350,581 2,343,701 2,479,429 2,507,146 2,659,792 3,184,310 3,439,756 Total borrowings 985,745 1,346,840 1,335,355 1,256,205 1,205, , ,680 1,244,405 1,237,405 1,347,805 Total tangible equity 217, , , , , , , , , ,818 Total equity 268, , , , , , , , , ,907 Tangible equity /tangible assets % 6.29% 5.79% 6.26% 7.01% 7.95% 8.97% 9.68% 9.29% 8.98% 9.02% Core ROA 0.67% 0.79% 0.77% 1.06% 1.14% 1.18% 1.09% 1.01% 0.92% 0.97% Net revenue* $81,433 $89,860 $110,178 $143,436 $147,431 $136,691 $135,950 $133,574 $137,180 $36,139*** Net income 22,443 28,028 26,189 41,389 47,309 40,308 43,548 44,246 44,772 12,554*** * Computed as net interest income (before provision for loan losses) plus non-interest income. ** Includes a $200 million loan re-purchase from Fannie Mae in 2014, a $99 million loan participation purchase in 2015 and a $152 million loan participation purchase in *** Excludes the $68.2 million pre-tax ($37.5 million after-tax) gain on the sale of real estate property. A 1