(The following statement was released by the rating agency)
NEW YORK, April 08 (Fitch) Fitch Ratings has affirmed the
ratings for Dime
Community Bancshares, Inc. (DCOM) at 'BBB/F2'. The Rating
The Stable Outlook assumes that asset quality will remain
strong, capital levels
will remain relatively stable, and similar to peers, earnings
headwinds in 2014. Fitch believes that earnings will come under
the near term as the mortgage refinancing boom wanes. Given a
sensitive balance sheet, earnings will also be exposed to higher
which will presumably occur over the near to intermediate term.
A full list of
rating actions follows at the end of this press release.
KEY RATING DRIVERS - IDRS, VRs AND SENIOR DEBT
DCOM's conservative risk appetite and demonstrated ability to
execute on its
multifamily lending strategy through various cycles is its
strength. DCOM's asset quality remains strong with NPAs and NCOs
well below peer
averages. Fitch believes that the low level of credit costs at
is attributed to solid underwriting, which includes low
origination, good cash flow coverage, and the usage of elevated
interest rates at underwriting. Additionally, Fitch attributes
to DCOM's focus on multifamily rent-regulated apartments in NY
which tend to
have more stable cash flows and valuations.
Earnings were solid during 2013 with a return on average assets
of 1.10%. Fitch
expects earnings performance to decline somewhat in the near
term due to lower
prepayment fee revenue and the absence of mortgage banking
income, though lower
earnings performance is not expected to impact DCOM's ratings.
exited its mortgage banking operations due primarily to
burden. Since mortgage revenues only comprised less than 1% of
revenues in 2013,
the exit is not expected to material impact earnings in 2014.
spread income is exposed to a higher interest rate environment
given a liability
sensitive balance sheet. Fitch's rating action incorporated a
view that earnings
will likely be challenging over the near to intermediate term as
Similar to its peer banks, DCOM's liquidity profile remains a
constraint on the
overall rating for the institution. DCOM's business strategy
tends to be more
transaction-oriented, and as a result, its funding profile does
not benefit from
a sizeable relationship-driven deposit base. As a result, DCOM
higher loan to deposit ratio. At 140% at YE2013, DCOM's LTD was
the highest of
its four bank peer group. Further, its cost of funds of 1.26% in
2013 was also
higher than peers.
Fitch reviewed DCOM as part of its Niche Bank Peer Review, which
Astoria Financial Corporation, Emigrant Bancorp, Inc., and New
Bancorp, Inc. Niche banks are defined by their narrow business
deposit franchises and geographic concentrations. Fitch views
as ratings constraints across the peer group. The group is
comprised of banks
with total assets ranging from $4 billion to $47 billion that
lend primarily in
the New York City metropolitan, residential real estate market.
RATING SENSITIVITIES - IDRS and VRs and SENIOR DEBT
Fitch believes DCOM's ratings are solidly situated at current
levels. Fitch sees
limited upside in the company's ratings over the near term due
concentrations in the loan portfolio, undiversified earnings
relatively weaker liquidity profile.
Negative ratings pressure could occur if there were a
significant change to rent
regulations in New York City. DCOM has historically benefitted
regulations on multifamily apartments in New York City, which
tend to have more
stable cash flows and valuations.
DCOM's ratings could also under pressure given a material
increase in problem
loans, or a significant loss of business from any of DCOM's main
estate brokers. DCOM is reliant on commercial real estate
brokers for its loan
Additionally, although not anticipated, any significant changes
in the mix of
business, either by product type or geography, would be
carefully considered by
Fitch to determine any potential ratings impact.
KEY RATING DRIVERS - SUBORDINATED DEBT AND OTHER HYBRID
DCOM's trust preferred issuances are notched below DCOM's VR.
differential reflects loss severity and an assessment of
RATING SENSITIVITIES - SUBORDINATED DEBT AND OTHER HYBRID
DCOM's preferred issuances are sensitive to changes in DCOM's
VR. The rating
sensitivities for the VR are listed above.
KEY RATING DRIVERS - HOLDING COMPANY
DCOM's IDR and VR are equalized with those of its bank
subsidiary, Dime Savings
Bank of Williamsburgh, reflecting its role as the bank holding
company, which is
mandated in the U.S. to act as a source of strength for its bank
RATING SENSITIVITIES - HOLDING COMPANY
Should DCOM begin to exhibit signs of weakness, demonstrate
the capital markets, or have inadequate cash flow coverage to
obligations, there is the potential that Fitch could notch the
IDR and VR from the ratings of Dime Savings Bank of
KEY RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR
DCOM's Support Rating and Support Rating Floor of '5' and 'NF'
view that the company is unlikely to procure extraordinary
support should such
support be needed
RATING SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR
DCOM's Support Rating and Support Rating Floor are sensitive to
assumption around capacity to procure extraordinary support in
case of need.
Fitch has affirmed the following ratings:
Dime Community Bancshares, Inc.
--Long-term IDR at 'BBB';
--Short-term IDR at 'F2';
--Viability rating at 'bbb';
--Support at '5';
--Support Floor at 'NF'.
Dime Savings Bank of Williamsburgh
--Long-term IDR at 'BBB';
--Long-term Deposits at 'BBB+';
--Short-Term IDR at 'F2';
--Short-Term Deposits at 'F2';
--Viability rating at 'bbb'.
--Support at '5';
--Support Floor at 'NF'.
Dime Community Capital Trust I
--Trust Preferred at 'BB-'.
Jaymin Berg, CPA
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'2014 Outlook: U.S. Banks' (Nov. 21, 2013);
--'U.S. Banks: Liquidity and Deposit Funding' (Aug. 8, 2013);
--'U.S. Banks: Interest Rate Risks (What Happens When Rates
Rise)' (June 18,
--'U.S. Bank Mergers and Acquisitions -- When Will The Catalysts
Kick In?' (June
--'Fitch Fundamentals Index' (Jan. 15, 2014);
--'Risk Radar Global - 1Q13' (April 1, 2014);
--'U.S. Banking Quarterly Comment: 4Q13 (Earnings Continue to
Tick Up, but
Challenges Remain)' (Jan. 27, 2014);
--'Global Financial Institutions Rating Criteria' (Jan. 31,
--'Assessing and Rating Bank Subordinated and Hybrid Securities
--'Fitch Global Corporate Rating Activity - Third-Quarter 2013'
(Dec. 5, 2013);
--'Corporate Bond Comparator 1Q14: US vs EMEA' (March 26, 2014);
--'Rating FI Subsidiaries and Holding Companies' (Aug. 10,
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