Why Dime Commercial Bancshares Stock Rocked the Market Today
Key PointsIt's also acquiring a peer lender.
On Tuesday, Dime Commercial Bancshares (DCOM) outperformed other bank stocks in the sector, soaring by 6% while the S&P 500 index only gained 0.3%. This impressive performance was driven by an impressive quarterly earnings report and the announcement of a new acquisition. Dime's total revenue for the third quarter increased by 19% year-over-year, reaching over $135 million, despite a slight decline in loans to under $10.8 billion.
Deposits, however, grew by 7% to $12.8 billion. The bank's net income, using non-GAAP methodology, rose by nearly 50% to $39.1 million, or $0.91 per share. CEO Stuart Lubow explained that the bank's conservative strategy, which included a substantial cash reserve ($2.2 billion) and an 83% loan-to-deposit ratio, had proven beneficial.
Dime is looking to expand through acquisitions, and on Tuesday, it announced a deal to purchase ES Bancshares (ESBS) for approximately $58 million. This acquisition will strengthen Dime's position in Brooklyn and Staten Island. Both the strong earnings and acquisition are seen as positive for Dime, as it manages to boost its bottom line despite a less robust loan portfolio, and gains market share in its region.
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