Kroll Bond Rating Agency Revises Dime Community Bancshares, Inc.'s Ratings Outlook from Stable to Positive

Kroll Bond Rating Agency (KBRA) revised Dime Community Bank's ratings outlook from Stable to Positive, citing the bank's strong execution of strategic initiatives, particularly capitalizing on disruption following area bank failures in 2023. Dime has added $2 billion in core deposits over the past two years and has outperformed peers on key liquidity and funding metrics due to onboarding deposit-focused teams. KBRA also noted Dime's consistent outperformance in credit quality, with a low NCO ratio averaging 15 bps since the global financial crisis.

Analysis

Kroll Bond Rating Agency (KBRA) has revised its ratings outlook for Dime Community Bancshares, Inc. (NASDAQ: DCOM) from Stable to Positive, while affirming Dime Community Bank's deposit and senior unsecured debt rating at BBB+. This outlook revision, dated June 17, 2025, is primarily attributed to DCOM's strong execution of strategic initiatives, notably its ability to capitalize on market disruptions following regional bank failures in 2023. A key driver has been the successful onboarding of deposit-focused teams, which significantly enhanced the bank's liquidity and funding profile, leading to outperformance against peers on most key metrics. Specifically, Dime has attracted $2 billion in core deposits over the past two years, featuring a healthy demand deposit account (DDA) mix that has contributed to lower deposit costs compared to most KBRA-rated peers. This substantial inflow of liquidity has facilitated a reduction in wholesale funding and supported efforts in loan diversification. Furthermore, KBRA highlighted Dime's consistent outperformance in credit quality across multiple economic cycles, evidenced by an average net charge-off (NCO) ratio of just 15 basis points since the global financial crisis, minimal problem loans, and improving risk ratings. The CEO, Stuart H. Lubow, acknowledged this recognition, emphasizing the progress made in building a high-quality balance sheet. Dime Community Bancshares holds over $14 billion in assets and maintains the top deposit market share among community banks on Greater Long Island. The provided sentiment signals reinforce this positive development, with a general sentiment score of 0.75 (strongly positive) and a specific sentiment for DCOM at 0.9.

Key Decisions for Investors

• Investors should view the Positive outlook revision by KBRA as a significant credit positive, reflecting DCOM's enhanced financial strength and successful strategic execution which may lead to improved borrowing costs and investor perception.
• Consider DCOM's demonstrated ability to organically grow core deposits ($2 billion in two years) and maintain superior credit quality (15 bps average NCO) as strong indicators of operational excellence and defensive characteristics, potentially warranting a re-evaluation of its weighting in portfolios focused on regional banks.
• Monitor DCOM's continued progress in loan diversification and its ability to sustain its low-cost deposit base, as these factors are crucial for maintaining its competitive advantage and supporting the positive ratings trajectory.