Dime Community Up to Strong Buy on Organic Growth - Analyst Blog

On Nov 29, Zacks Investment Research upgraded Dime Community Bancshares Inc. (DCOM) to a Zacks Rank #1 (Strong Buy).
 
Why the Upgrade?

Dime Community has been witnessing rising earnings estimates on the back of strong third-quarter 2014 results, which included robust organic growth, disciplined expenses and credit resulting from recapture of a portion of allowance for loan loss reserve. In all the trailing four quarters, the company recorded positive earnings surprises with an average beat of 8.3%.

On Oct 23, Dime Community reported third-quarter 2014 earnings of 33 cents per share, beating the Zacks Consensus Estimate by 22.2%. Results were primarily driven by lower expenses, recapture of loan losses and a rise in net interest income, partially offset by a fall in non-interest income.

Non-interest expenses declined 5.5% year over year to $14.7 million. During the quarter, recapture of a portion of the allowance for loan loss reserve of $501,000 was recorded due primarily to lower losses applied to pass-graded loans. Net interest income inched up 1% year over year to $32.0 million.   

As of Sep 30, 2014, average loans came in at $4.0 billion, up 10.2% year over year. Average deposits amounted to $2.6 billion, up 0.5% year over year. Further, during the quarter, around $275 million of real estate loans were originated, jumping 50% from the previous quarter. Moreover, management believes that the bank is set to meet its loan growth target of 12% by the year-end.

On the flip side, non-interest income declined 9.5% to $1.8 million. Capital ratios also deteriorated during the quarter.

For 2014, the Zacks Consensus Estimate increased 4.5% to $1.16 per share over the last 60 days. For 2015, the Zacks Consensus Estimate edged up 0.9% to $1.23 per share over the same time period.

Other Stocks to Consider

Apart from Dime Community, other financial savings and loan institutions worth considering include Banner Corporation (BANR), Beneficial Mutual Bancorp Inc. (BNCL) and Great Southern Bancorp Inc. (GSBC). All these stocks sport a Zacks Rank #1 (Strong Buy).