Dime Community Bancshares (DCOM)

Regional bank Dime Community Bancshares (NASDAQ:DCOM) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 32% year on year to $115.6 million. Its non-GAAP profit of $0.61 per share was 11.6% below analysts’ consensus estimates.

Company Overview

With roots dating back to 1910 and a name that evokes the historic "dime savings banks" of America's past, Dime Community Bancshares (NASDAQ:DCOM) is a New York-based bank holding company that provides commercial banking and financial services to businesses and consumers throughout Greater Long Island.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Dime Community Bancshares competes with other regional banks serving the New York metropolitan area, including New York Community Bancorp (NYSE:NYCB), Valley National Bancorp (NASDAQ:VLY), and M&T Bank (NYSE:MTB), as well as larger national banks with significant presence in the region.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Over the last five years, Dime Community Bancshares grew its revenue at an incredible 15.2% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Dime Community Bancshares’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.4% over the last two years was well below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Dime Community Bancshares reported wonderful year-on-year revenue growth of 32%, and its $115.6 million of revenue exceeded Wall Street’s estimates by 2.4%.

Net interest income made up 93.9% of the company’s total revenue during the last five years, meaning Dime Community Bancshares lives and dies by its lending activities because non-interest income barely moves the needle.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, Dime Community Bancshares’s efficiency ratio has increased by 2.9 percentage points, going from 72.2% to 57.3%. Said differently, the company’s expenses have increased at a faster rate than revenue, which usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

In Q3, Dime Community Bancshares’s efficiency ratio was 53.8%, beating analysts’ expectations by 37.5 basis points (100 basis points = 1 percentage point). This result was 12.1 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Dime Community Bancshares to rein in some of its expenses as it anticipates an efficiency ratio of 50.7%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Dime Community Bancshares’s EPS grew at an unimpressive 1.6% compounded annual growth rate over the last five years, lower than its 15.2% annualized revenue growth. However, its efficiency ratio actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Dime Community Bancshares, its two-year annual EPS declines of 16.1% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Dime Community Bancshares reported adjusted EPS of $0.61, up from $0.29 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Dime Community Bancshares’s full-year EPS of $2.24 to grow 53%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Dime Community Bancshares’s TBVPS grew at a sluggish 1.9% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 6% annually over the last two years from $23.87 to $26.81 per share.

Over the next 12 months, Consensus estimates call for Dime Community Bancshares’s TBVPS to grow by 8.9% to $29.20, decent growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Dime Community Bancshares has averaged a Tier 1 capital ratio of 10.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Dime Community Bancshares has averaged an ROE of 7.6%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

It was encouraging to see Dime Community Bancshares beat analysts’ revenue expectations this quarter. We were also happy its net interest income outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this was a softer quarter. The stock remained flat at $29.58 immediately after reporting.

Updated: December 3, 2025 at 11:50 PM EST

When considering an investment in Dime Community Bancshares, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Dime Community Bancshares isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was impressive over the last five years and is expected to accelerate over the next 12 months, its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. And while the company’s expanding net interest margin shows its loan book is becoming more profitable, the downside is its net interest margin limits its operating profit potential compared to other banks that can earn more, all else equal..

Dime Community Bancshares’s P/B ratio based on the next 12 months is 0.9x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $35 on the company (compared to the current share price of $29.74).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.