DIME COMMUNITY BANCSHARES, INC (NASDAQ: DCOM) Investor Presentation May 2017 PROFILE
Descriptive Highlights Historical Financials
For the Year Ended 2012 2013 2014 2015 2016 • Founded as The Dime Savings Bank of Williamsburgh Balance Sheet Items in 1864; converted to public ownership in 1996 Total Assets $3,905 $4,028 $4,497 $5,033 $6,005 Total Gross Loans 3,506 3,700 4,119 4,697 5,636 Total Deposits 2,479 2,507 2,660 3,184 4,395 • 27 branches in Kings, Queens, Nassau and Bronx Loans / Deposits 141.4 % 147.6 % 154.9 % 147.5 % 128.2 % Tangible Common Equity $336 $380 $404 $438 $510 • Historically, Dime has specialized in lending against Deposit Composition Non-Interest Bearing 6.4 % 7.0 % 7.1 % 8.1 % 6.8 % New York City multifamily properties Savings, NOW and MMDA 57.6 60.0 58.1 64.9 69.4 Time Deposits 36.0 33.0 34.8 27.0 23.9 Mainly pre-WWII, rent-regulated buildings Cost of Deposits 0.91 0.77 0.75 0.78 0.85 Loan Composition Strong legacy relationships with NYC Multi-Family 76.3 % 79.0 % 80.1 % 80.1 % 81.6 % brokers/borrowers; consistently ranked CRE 21.0 19.0 18.1 18.4 17.0 amongst Top 5 Multi-family lenders Yield on Loans 5.56 4.76 4.27 3.96 3.68 Profitability 2007-2016 annual avg. NCOs / loans of 0.10% Reported Net Income $40.3 $43.5 $44.2 $44.8 $72.5 (1) ROA 1.02 % 1.09 % 1.03 % 0.96 % 1.31 % ROATCE 12.2 11.9 11.1 10.4 14.7 • Launched a new Business Banking division in Q1 2017 Reported NIM 2.92 3.39 3.03 2.89 2.68 Core Efficiency Ratio 42.3 46.2 46.3 48.0 47.9 • Nationwide brand recognition as a result of Dime’s Core Expenses / Average Assets 1.59 1.57 1.42 1.41 1.31 iconic logo, longevity and authenticity Asset Quality and Capital Nonaccruals / Loans 0.27 % 0.34 % 0.15 % 0.03 % 0.08 % Reserves / Loans 0.59 0.54 0.45 0.39 0.36 • Headquartered in Brooklyn Heights NCOs / Avg Loans 0.11 0.02 (0.01) (0.03) 0.00 Tangible Common Ratio 8.73 9.56 9.10 8.81 8.58
th Tangible Book Value Per Share $9.67 $10.47 $11.20 $11.96 $13.78 • Market Capitalization: $769M (as of May 10 2017) Diviends Per Share 0.56 0.56 0.56 0.56 0.56
(1) Includes $37M gain from real estate sale and $11M expense associated with ESOP acquisition 2 INVESTMENT HIGHLIGHTS
1. Significant scarcity value
2. Key investments have already been made to improve franchise
3. Newly launched Business Banking group gaining significant traction
4. Deposit franchise has been growing robustly
5. Excellent stewards of capital
6. Potential benefit from Corporate Tax Reform
7. Will never compromise on core foundational strengths: low expenses and low credit costs
3 1. Significant Scarcity Value
• Dime is Brooklyn’s pre-eminent community bank
Brooklyn is the 2nd most densely populated county in the country (after Manhattan)
Brooklyn is also one of the fastest growing population centers for millennials
• Dime is the only community bank with ~$1B of deposits in all 3 of its primary counties
Nassau (ranks #11 by population density) and Queens (#4 by population density) are also very attractive banking markets Brooklyn Nassau Queens
(1) (1) (1) Rank Company Branches Deposits Rank Company Branches Deposits Rank Company Branches Deposits
1 Dime 12 $1,829 1 Flushing 4 $2,411 1 Ridgewood 12 $1,944
2 Ridgewood 5 380 2 First of LI 24 1,638 2 Maspeth FS&LA 5 1,067
3 Northfield 9 345 3 Dime 7 1,071 3 Flushing 9 1,006
4 Flushing 5 315 4 Ridgewood 6 975 4 Dime 7 957
5 First American 2 191 5 Bridge 9 453 5 Alma Bank 4 618
We have unique brand recognition and the opportunity to become the dominant bank in our markets
Note: Deposit market share analysis by county from SNL Financial. Dime also has 1 branch in Bronx county. (1) Ranking amongst “Community Banks”. Community Banks defined as institutions with <$10B of total assets 4 2. Key Investments Have Already Been Made
Executive management team has been significantly bolstered
. Over LTM hired a new: Chief Administrative Officer, Head of Human Resources, Chief Retail Officer, Head of Business Banking, Head of DimeDirect, and Treasurer
Scaled up IT talent pool
Core systems conversion in process
Opened 2 new branches (Bedford Avenue and Park Slope) in Q1 2017
Successfully launched our online, direct bank initiative
Built out human capital programs and more disciplined pay-for-performance programs
Pivoting brick-and-mortar branches towards small business/professional marketplace
Successfully launched Business Banking group
We have accomplished all of the above and still kept our expenses / average assets at an industry- low of ~1.3-1.4%; Q2 non-interest expense is expected to be marginally lower than Q1 2017
5 3. Business Banking Group Gaining Traction
Description Stu Lubow - Biography • In January 2017, Dime hired proven bank executive Stu • Banking executive for over 37 years Lubow to spearhead its Business Banking group • Prior to joining Dime, was Chairman, CEO, Opportunistic hire capitalizing on local M&A and President of Community National (sold (Community National sale to Bridge Bancorp) to Bridge Bancorp in 2015) Dime effectively created a new business line • Previous to that, was Founder, CEO, and without putting on any Goodwill/Intangibles, as President of Community State Bank is customary with an M&A transaction Relationship banking model will compliment • Prior to Community State Bank, held Dime’s existing indirect/broker driven platform executive positions at Garden State Bank, Dollar Dry Dock Bank, and People's Bank Lubow’s team has access to Dime’s larger balance sheet, iconic brand and support services Historical Perspective – Community National’s Balance Sheet • Melville office is now open at 1 Huntington Quadrangle • Midtown Manhattan office scheduled to open soon 12/31/05 12/31/10 3/31/15 • Assets $92M $477M $951M Q1 Highlights for Business Banking Group • Deposits $64M $360M $825M • C&I loans grew $28.1M • Non-Interest % N/A 18.5% 27.2% • Directly-sourced CRE loans grew $7.1M • Total Loans $52M $332M $782M • Brought in ~$14M of new deposits at an avg. rate of 4bp • C&I Loans % 0.3% 24.4% 22.6% • CRE Loans % 30.9% 29.5% 42.0% Key future opportunities include: (1) Capitalizing on disruption from the Astoria/Sterling merger (2) Hiring additional high quality relationship banking teams (3) Adding additional scale in SBA Lending
6 4. Deposit Franchise Has Been Growing Robustly
Cumulative Growth in Deposits / Share Over Last 5 Years (Q1 2012-Q1 2017) 90% 80% 70% 60% 50% 40% 77% 30% 49% 48% 47% 20% 43% 10% 23% 14% 12% 12% 0% 7% Dime Flushing CNOB First of LI OCFC Peapack Provident NYCB Lakeland Bridge At 3/31/12 Deposits $2,387 $3,170 $1,153 $1,561 $1,680 $1,412 $5,195 $22,941 $2,288 $1,202 Shares (M) 35.2 30.9 16.3 20.0 18.6 8.9 60.2 439.1 28.3 8.5 Deposits / Share $67.87 $102.53 $70.63 $78.21 $90.38 $159.11 $86.32 $52.24 $80.82 $141.92
At 3/31/17 Over the last 5 years, Dime has demonstrated its ability to grow deposits organically Deposits $4,508 $4,411 $3,355 $2,748 $4,199 $3,431 $6,530 $28,727 $4,293 $2,983 Shares (M) 37.6 28.8 32.0 23.9 32.5 17.6 66.4 489.0 47.4 19.7 Deposits / Share $120.00 $153.09 $104.84 $114.95 $129.33 $195.15 $98.41 $58.75 $90.67 $151.43
7 5. Excellent Stewards of Capital
• Dime has historically generated sufficient capital to support organic growth; during the financial crisis of 2008, we did NOT take TARP Capital creation (and return) over last 5 Years
Dime ConnectOne Lakeland NYCB Bridge Peapack First of LI Provident Flushing OceanFirst
3/31/2012 Tangible Common ($M) $313 $114 $155 $3,097 $108 $111 $194 $607 $406 $220 Shares (M) 35.2 16.3 28.3 439.1 8.5 8.9 20.0 60.2 30.9 18.6 TBV Per Share $8.89 $6.98 $5.47 $7.05 $12.70 $12.46 $9.74 $10.08 $13.13 $11.86
3/31/2017 Tangible Common ($M) $518 $391 $419 $3,708 $319 $338 $316 $845 $509 $424 Shares (M) 37.6 32.0 47.4 489.0 19.7 17.6 23.9 66.4 28.8 32.5 TBV Per Share $13.78 $12.23 $8.84 $7.58 $16.19 $19.22 $13.23 $12.73 $17.68 $13.07
Per Share Change Over 5 Yrs $s of TBV Per Share $4.88 $5.26 $3.37 $0.53 $3.49 $6.75 $3.49 $2.65 $4.55 $1.22 $ of Cumulative Dividends 2.80 1.42 1.54 4.60 4.60 1.00 2.47 3.30 3.01 2.54 (TBV Created + Dividends) $7.68 $6.68 $4.91 $5.13 $8.09 $7.75 $5.95 $5.95 $7.56 $3.76
As, % of 5 Years Ago TBV 86% 96% 90% 73% 64% 62% 61% 59% 58% 32%
We rank amongst the top-end of our peers in terms of growing TBV per share and paying dividends; given the high level of insider and ESOP ownership, we have an “owner-operated” mentality
Source: SNL Financial
8 6. Potential Benefit from Corporate Tax Reform
Reported Effective Tax Rate for Q1 2017
40%
35%
30%
25%
20% 38% 37% 32% 32% 15% 31% 30% 29% 26% 24% 24% 10%
5%
0% Dime NYCB Bridge Peapack Lakeland Flushing ConnectOne Provident First of LI OceanFirst
Q1 2017 Reported 1.20% 1.35% 1.34% 1.20% 1.38% 1.14% 1.53% 1.34% 1.33% 1.21% PTX ROA
Source: SNL Financial. Does not adjust for any one-time items
9 7. Will Never Compromise on Core Foundational Strengths
Committed to being the Lowest-Cost Operator
3.00% Expenses / Average Assets 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dime Committed to maintaining a Conservative Credit Culture Peers 0.60% NCOs / Average Loans 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% -0.10% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Peers include : Bridge, ConnectOne, First of Long Island, Flushing, Lakeland, New York Community, OceanFirst, Peapack, and Provident. Data in the charts represent median values. Dime’s expenses exclude one-time items
10 Q1 2017 Financial Highlights
• Q1 2017 EPS of $0.30; TBV per share grew to $13.92, a 5.6% y-o-y increase
• Real estate loans grew 6.3% (annualized) on a linked quarter basis and 13.2% over the first quarter of 2016
• Successfully launched our Business Banking division, with C&I loans growing $28.1M and direct-sourced CRE loans growing $7.1M at March 31st 2017
• Deposits grew 10.3% (annualized) on a linked quarter basis and 31.1% over Q1 2016
• Loans/Deposits ratio declined to 127.6%
• Non-interest expense / average assets of 1.38%
• NIM of 2.57% for the quarter versus 2.67% for Q4 2016
. Excluding income from prepayment activity, NIM was 2.48% for the quarter, unchanged from Q4 2016
• Continued strong credit quality, with NPLs / Loans of only 7 bp
• Opened 2 new branches – Bedford Avenue and Park Slope; in addition, Business Banking division’s Long Island office is now open and midtown Manhattan office scheduled to open soon
11 FORWARD OUTLOOK
Q2 Guidance 3 Year Goals • As of date of Q1 earnings release (April 27th): • Base case organic annual growth in Balance Sheet of ~$500M Outstanding real estate loan commitments of $155M at an average rate of 3.86% • C&I and directly-sourced CRE loans to constitute a larger portion of the loan portfolio • Includes $35.9M from Business Banking group at an interest rate of 4.60% • Take advantage of disruptions in the local marketplace by hiring high quality relationship lenders C&I pipeline totaled $41.3M, at an average interest rate of 4.54% • Increase lower cost commercial deposits • Balance sheet growth objective for FY 2017 of ~10% • Leverage the unique brand recognition we have by • Continued preference for utilizing retail deposits for pivoting our branches towards serving small businesses most of the funding needs • Prudently manage our expense base; focused on • Funding costs are expected to remain near current remaining the lowest-cost operator historically low levels • Efforts to generate additional fee income underway; SBA • Provisions will be driven by loan portfolio growth lender already hired • Non-Interest Expense of approximately $20.5M • Opportunistic M&A, focused on targets that improve our Versus reported Q1 expenses of $20.8M deposit funding and generate fee income; acquisition of high quality talent is always important • Sale of Williamsburg branch office now expected to close during Q3 2017 • Work tirelessly towards achieving a 1% ROA 12 Rankings from SNL Financial
DIME RANKS #3 Amongst the 50 Largest Publically Traded Thrifts in 2016
Median 3-Yr NCOs / NPLs / Rank Company Score (1) ROAA ROATCE Efficiency TBVPS Growth Loans Loans 1 BofI Holdings (BOFI) 169.41 1.68 % 18.59 % 36.18 % 30.2 % 0.02 % 0.50 % 2 Hingham Institution (HIFS) 148.54 1.22 15.59 32.09 16.5 0.00 0.26 3 Dime Community (DCOM) 111.48 1.31 14.91 47.96 7.0 0.00 0.23 4 FS Bancorp (FSBW) 91.71 1.31 14.93 66.62 8.3 0.00 0.12 5 Greene County (GCBC) 91.61 1.15 13.32 52.41 10.1 0.05 0.78 6 Malvern Bancorp (MLVF) 79.67 1.49 13.33 65.05 6.1 0.00 0.48 7 NY Community (NYCB) 70.74 1.00 13.64 44.73 1.3 0.00 0.16 8 Timberland Bancorp (TSBK) 67.45 1.24 12.15 61.81 9.5 0.01 1.46 9 First Defiance (FDEF) 66.75 1.20 13.12 60.87 7.6 -0.01 1.28 10 Oritani Financial (ORIT) 58.07 1.20 8.30 40.23 0.6 0.02 0.32 11 Severn Bancorp (SVBI) 50.99 2.00 18.59 81.65 4.4 -0.09 4.50 12 WSFS Financial (WSFS) 36.19 1.06 12.76 59.75 6.5 0.25 0.84 13 Provident Financial (PFS) 31.29 0.95 11.11 57.59 4.3 0.07 1.03 14 BSB Bancorp (BLMT) 30.59 0.61 7.66 56.58 6.5 0.00 0.34 15 Meridian Bancorp (EBSB) 28.01 0.87 5.91 55.73 5.8 0.01 0.68 16 Charter Financial (CHFN) 27.22 0.93 7.06 66.06 3.6 -0.20 0.63 17 Territorial Bancorp (TBNK) 27.15 0.88 7.20 56.30 3.5 0.00 0.43 18 TrustCo Bank (TRST) 23.18 0.89 9.96 55.66 4.6 0.11 1.07 19 Investors Bancorp (ISBC) 14.42 0.88 6.29 52.63 2.0 0.06 0.55 20 Waterstone Financial (WSBF) 13.81 1.45 6.34 74.45 4.7 0.04 1.14 21 First Capital (FCAP) 13.06 0.94 10.08 63.48 5.5 0.18 0.95 22 Flagstar Bancorp (FBC) 10.25 1.23 11.65 71.61 5.2 0.32 1.18 23 United Financial (UBNK) 9.55 0.78 9.81 61.59 4.4 0.10 1.01 24 Capitol Federal (CFFN) 4.21 0.74 5.96 43.19 -2.2 0.00 0.73 25 Provident MHC (PVBC) 1.34 0.84 5.98 68.59 NA 0.00 0.69 26 EverBank (EVER) -1.14 0.53 8.01 66.76 7.2 0.10 0.79 27 Meta Financial (CASH) -4.12 0.94 13.69 71.70 -0.2 0.57 0.10 28 SI Financial (SIFI) -11.56 0.75 8.26 73.14 4.5 0.02 1.25 29 OceanFirst Financial (OCFC) -11.70 0.62 7.25 60.70 4.7 0.15 1.06 30 Riverview Bancorp (RVSB) -13.31 0.72 8.00 74.66 5.3 -0.07 1.86 Source: SNL Financial: “The best of the biggest public thrifts”. Table above only shows the top 30 companies in the rankings. (1) Score based on a scale of -200 to 200. Analysis limited to the 50 largest thrifts by total assets at December 31st 2016, trading on the Nasdaq, NYSE or NYSE MKT. Companies ranked according to six weighted metrics: ROAA (20%), ROATCE (20%), Efficiency Ratio (20%), TBV per share median 3-year growth (20%), NCOs / Average Loans (10%) and NPLs / Loans (10%) 13 VISION Where is the company headed?
Our vision is to be a highly profitable, cost efficient, technology-driven community commercial bank with diverse, reliable sources of income; to be an aggregator of additional financial service companies; to be the company of choice for clients, an employer of choice for individuals, and an investment of choice for investors.
14 Appendix
15 Repricing Loans
16 Loan Portfolio Yields among selected local peers
Q1 2017 MRQ Reported Institution Name Loan Yield (%) Texas Ratio Relationship banking Bridge Bancorp 4.51 1.5 and diversification of Sterling Bancorp 4.48 8.2 loan products is ConnectOne 4.38 21.6 expected to improve OceanFirst 4.36 11.7 loan portfolio yield Lakeland Bancorp 4.20 6.7 relative to peers TrustCo Bank 4.19 8.6 Flushing Financial 4.18 7.6 As of date of Q1 Oritani Financial 3.95 1.9 earnings release (April - MEDIAN YIELD - 3.95 27th), the bank had Northfield Bancorp 3.95 4.6 outstanding real Provident Financial 3.89 9.0 estate commitments Customers Bancorp 3.84 5.2 of $155M at an Kearny Financial 3.73 2.5 average interest rate Dime Community 3.55 2.7 of 3.86% and a C&I Peapack-Gladstone 3.53 7.3 pipeline totaling First of Long Island 3.50 0.9 $41.3M at an average Astoria Financial 3.45 16.7 interest rate of 4.54%
17 OPERATING EFFICIENCY “Best in Class” Efficiency Ratio
DEC 2013 DEC 2014 DEC 2015 DEC 2016 3-year growth rate Includes prepayment fee income: ______GROSS REVENUE $ 182,565 $ 180,390 $ 182,134 $ 203,255 11% OpEx has outpaced growth -1% 1% 12% revenue growth over three years, however NET (OPERATING) REVENUE $ 135,595 $ 131,974 $ 135,907 $ 151,114 11% ` -3% 3% 11% calendar 2016 tells a different story. CORE OPERATING EXPENSES $ 62,692 $ 61,076 $ 65,887 $ 72,512 16% growth -3% 8% 10%
Excludes prepayment fee income: ______When volatile GROSS REV less PREPAY INC $ 169,170 $ 166,372 $ 170,821 $ 194,295 15% growth -2% 3% 14% prepayment fee income is excluded, NET (OP) REV less PREPAY $ 122,200 $ 117,956 $ 124,594 $ 142,154 16% revenue kept pace growth -3% 6% 14% with OpEx growth CORE OPERATING EXPENSES $ 62,692 $ 61,076 $ 65,887 $ 72,512 16% over 3 years. growth -3% 8% 10%
SUPPLEMENTAL DATA:
PREPAYMENT FEE INCOME $ 13,395 $ 14,018 $ 11,313 $ 8,960 -33% growth 5% -19% -21% OpEx as a percent of average OPERATING EXP/AVG ASSETS 1.57% 1.42% 1.41% 1.31% assets continues to decline. EFFICIENCY RATIO 46.2% 46.3% 48.0% 47.9%
18 Forward-Looking Statements
This presentation contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "seek," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.
Forward-looking statements are based upon various assumptions and analyses made by Dime Community Bancshares, Inc. (the "Holding Company," and together with its direct and indirect subsidiaries, the "Company") in light of management’s experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual conditions or results to differ materially from those expressed or implied by such forward-looking statements. These factors include, without limitation, the following:
• the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; • there may be increases in competitive pressure among financial institutions or from non-financial institutions; • the net interest margin is subject to material short-term fluctuation based upon market rates; • changes in deposit flows, loan demand or real estate values may adversely affect the business of Dime Community Bank (the "Bank"); • changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; • changes in corporate and/or individual income tax laws may adversely affect the Company's business or financial condition; • general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; • legislation or regulatory changes may adversely affect the Company’s business; • technological changes may be more difficult or expensive than the Company anticipates; • success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; • litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates; and • The risks referred to in the section entitled "Risk Factors."
The Company has no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.
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