Community Banker Dime Community Bancshares to Sell Preferred

Brooklyn based community banker Dime Community Bancshares (DCOM) will be selling a new issue of non-cumulative perpetual preferred shares. The issue will NOT be investment grade.

DCOM is a relatively small banking company with total assets of just $6.3 billion so this offering will be interesting relative to pricing.

DCOM has posted a presentation on the company which can be read by interested potential investors–it is here.

This issue should trade on the OTC grey market, but no ticker has yet been announced yet.

The preliminary prospectus can be found here.

mcg was right on this new issue.

16 thoughts on “Community Banker Dime Community Bancshares to Sell Preferred”

  1. DIMEP versus DCOM

    FITCH RATING: CONTRASTING?

    BB- versus BBB (OS) Long-Term issuer (11/01/19) and

    BAUER FINANCIAL: 5 ***** STARS: SUPERIOR Bank rating

      1. Ha, Tim, no I meant I was agreeing with you. No interest at all in this. Had crazy visions of a 7% small bank issuance to flip. 5.5% isnt getting the job done!

    1. TimH–just saw it. I am somewhat shocked at 5.5%–at this point in time I guess I shouldn’t be.

  2. Hmmm… First blush.. Tier 1 ratio= 12.85%… TCE= 8.59%.. Total capital $1.9B
    Q4- NIM and EPS higher

    1. To GrayhawkAZ; Iam not a banker so when you say Tier 1 ratio is 12.85% what does that mean??? Sorry, I suppose I should know that but I don’t. Also don’t know what TCE of 8.59%. Its sad but now I find myself along with many others looking at stuff that a few years ago we would have laughed and scoffed at. Hope you are having a good day.

      1. Chuck here are the regulatory minimums.
        Under the Basel Accords, banks must have a minimum capital ratio of 8% of which 6% must be Tier 1 capital. The 6% Tier 1 ratio must be composed of at least 4.5% of CET1.
        But bank financials in total are very complicated and way over my head. Looking at one of the key metrics is like seeing someone having a fancy new car and assuming he/she is rich.
        Medallion Bank (MBNKP) has a Tier 1 capital ratio of 15.9% which appears good. But they had to issue an 8% preferred a few months ago. And they havent given their parent a dividend since 2016. Its all very complicated.

        1. Thank You Gridbird, I appreciate hearing from you. Iam not a banker and just not sure how to research a company like Dime. I don’t want to start chasing after junkie type paper because eventually you usually end up getting your head handed back to you on a sliver platter. As the old saying goes “Been There, Done That”.

          1. Chuck, If that is your mind set, stay with it. Its not worth the stress. Liquidity is keeping many afloat. When the debt stays afloat, the preferreds sing and dance. If a companies debt becomes problematic in a rollover, the preferreds sink faster than you can hit the sell button.
            You have been around the block so you know this…Anything can happen and even high quality perpetuals can crater in a specific scenario. But…If say IPLDP (its on my brain since I have been buying it) drops $3, Im not looking to panic, Im looking to buy more somehow. As the credit quality is sound and they will always have access to capital.
            But if you buy some crap issue, and it immediately drops $3 the first thought will be, is it running into a crisis? I dont like that feeling. I do own some crap issues but they are designed for the crap bucket stash.
            Back to banks…About 5 years ago through SA, I had the privilege of corresponding with a guy who was a major big bank senior management who was retired (cant remember the bank). But he said even during senior meetings they all as a group didnt collectively know how good or bad anything was. Banks are leverage on top of leverage…And yes it usually works. But, the word created sure wasnt coined UTILITYrupt it was named BANKrupt. 🙂

            1. Gridbird; Thank You for the very nice well written and detailed reply. I too am willing to contribute $$ to Tims website. Especially if all of us could get a discussion going on maybe our 3 or 4 favorite preferreds that we are still adding to upon any weakness. As an example I own alot of HESM and it had some weakness even after just raising its dividend distribution. Iam now up to 7,500 shares which is usually my stopping point but I continue to like the company alot and as I’ve said previously I have read several extremely positive reports on the company and their plans for continued growth. But its getting harder and harder to find anything. I did take a look at your “IPLDP” but with a 5.10% coupon and trading at a premium and a call date that has “Come and Gone” I just can’t get real excited about it. My threshold is around 5.5% and its just tougher than nails to find something anymore.

              1. That is a good point, Chuck. Different people have different needs and goals. The key is knowing what it is and matching it up in a corresponding manner.
                All issues in my stash arent on an island. I like to keep balance. See in this case IPLDP being past call is what I want. The pinning to par being past call helps in price support. See if you went back in time when 6.5% quality QDI was out there, you would see old 4% issues still hanging in the $75-$90 range. That yield was pitiful compared to 6.5% but they were not going to drop to match that yield because they were quality and market wont give a 40% free call cap gain on normal occasions. Its just the way of illiquidity and redemption price pull effects past call issues. But sometimes one gets lucky. I had a slug of CTWSO (an ancient water utility preferred) I was buying up at $15. And last year next thing you know Connecticut Water was tendered a buyout and they redeemed the things at $21 for me. A pretty sweet cap gain on a 4% ish high quality issue.
                But I dont live just there. I also own adjustables, resets, and term dated issues also. So I am not exposed to the same outcome on all issues. I agree prices are high and yields low. But in Rome….I have kept fully invested and its paying off. Remember there are 3.5% perpetual preferreds on the market still issued 70 years ago. So we have not come close to perpetual preferred stock historic lows yet by a long shot.

              2. Things change, Chuck, sometimes relatively quickly. Here’s a Grid post on IPLDP that I saved from Dec 2018:

                “I did nibble a small amount more of IPL-D [IPLDP] at 21.73 yesterday too. I’m looking recession down the road and this one will hold strong. I am not enthused over $22 here.”

                That was just a little over a year ago. So it goes.

                1. Camroc, that was a great month. A person can hold cash forever waiting for that occur and may never happen or hold a bunch of illiquids instead. While all those great issues were crumbling the illiquids never budged and the standing bids stayed. So I sold off as much illiquids as I could and used the cash to ride the upswings on the cratered ones. We tend to fight last years battles so I am not holding my breath for a freebee ride like that one again anytime soon.

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