Dime Community Bancshares is selling more of its shares, the latest bank to raise cash from the market to capitalize on what it sees as growth opportunities.
On Tuesday, the Hauppauge, New York-based bank disclosed plans for a common stock offering aimed at raising $125 million. The move follows Valley National Bancorp's announcement last week that it planned to conduct a
Valley National analysts characterized its equity raise as an offensive move, aimed at putting the $62 billion-asset, New York-based bank in a position to seize on growth opportunities. In a presentation Tuesday, the $13.7 billion-asset Dime indicated cash raised from its stock sale would help it take advantage of the disruption in New York's banking market,
Once the stock sale is complete, Dime envisions selling $400 million of securities carrying an average yield of 1.25%, along with $100 million in underperforming bank-owned life insurance policies. The sales would trigger after-tax losses totaling about $41 million but would result in about 10 basis points of net interest margin expansion.
The remaining share proceeds would bolster Dime's capital levels. Dime's common equity Tier 1 ratio would spike 70 basis points to 10.9%. Its risk-based capital would surpass 15%.
Dime, the holding company for Dime Community Bank, expects to sell about 3.9 million shares at $32 each, a 7% discount to Monday's closing price on the Nasdaq exchange. Underwriters have an option to purchase an additional 586,000 shares. It's possible Dime's underwriters will make use of the option; Valley National ultimately raised $449 million, selling 42.8 million shares to investors plus the underwriter option of 6.4 million shares.
Dime had about 39.2 million common shares outstanding before the offering, according to S&P Capital IQ. The bank expects the offering to close Wednesday.
Dime has been locked in expansion mode the past 18 months. It has hired 15 banker teams in that span, and CEO Stuart Lubow said last month that the company is open to adding more. As it has onboarded bankers, Dime said it has also grown market share. Dime held a 3.41% share of the $308 billion Greater Long Island deposit market on Sept. 30, up from 2.82% at the end of 2022.
