Dime Community Bancshares, Inc. 5.50% Non-Cumulative Perpetual Preferred Stock, Series A

Company Overview

Business Model: Dime Community Bancshares, Inc. (the "Company") is a bank holding company primarily engaged in commercial banking and financial services through its wholly-owned subsidiary, Dime Community Bank (the "Bank"). The Bank, established in 1910 and headquartered in Hauppauge, New York, offers full-service commercial and consumer banking. This includes accepting time, savings, and demand deposits from businesses, consumers, and local municipalities. These funds, along with operations-generated funds and borrowings, are primarily invested in commercial real estate (CRE) loans, multi-family mortgage loans, residential mortgage loans, secured and unsecured commercial and consumer loans, home equity loans, construction and land (ADC) loans, and various securities (mortgage-backed, U.S. Treasury, municipal, U.S. Government-sponsored enterprise, and corporate bonds). The Company also provides specialized services such as merchant credit and debit card processing, treasury management, escrow services, online banking, and investment services through Dime Financial Services LLC. Its subsidiary, Dime Abstract LLC, acts as a broker for title insurance services.

Market Position: The Company operates in a highly competitive environment, facing numerous financial institutions, many with greater financial and marketing resources. Its principal market area is Greater Long Island (Nassau and Suffolk counties) and New York City (Manhattan, Kings, Queens, Richmond, and Bronx boroughs), Westchester County, and New Jersey. The Company differentiates itself through a century-long focus on building customer relationships and providing exceptional service. Its loan portfolio has a significant concentration in non-owner-occupied commercial real estate and multi-family residential loans, accounting for 59% of total loans held for investment as of December 31, 2025. The Bank was rated "Outstanding" by the Federal Reserve Bank of New York in its most recent Community Reinvestment Act examination on July 15, 2024.

Recent Strategic Developments:

• Securities Portfolio Restructuring: In 2024, the Company undertook a securities portfolio restructuring, which significantly impacted non-interest income.
• Investment in Private and Commercial Bank: During 2025 and 2024, the Company made significant investments in its Private and Commercial Bank, including hiring and onboarding several deposit-gathering teams to support core deposit and business loan growth.
• Pension Plan Termination: The BNB Bank Pension Plan was effectively terminated by March 31, 2025, with all related liabilities fully settled. The Employee Retirement Plan was also adopted for termination effective December 31, 2023.
• Subordinated Debt Redemption: On January 26, 2026, the Company announced its intent to redeem at par on March 30, 2026, all outstanding $40.0 million principal amount of Fixed/Floating Subordinated Debentures due 2030.

Geographic Footprint: As of December 31, 2025, the Company operated 63 branch locations across Greater Long Island, the New York City boroughs of Brooklyn, Queens, Manhattan, Staten Island, and the Bronx, Westchester County, and New Jersey. Its corporate headquarters is in Hauppauge, New York, and the Bank's main office is in Bridgehampton, New York.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Interest Margin: 3.01% (2025) vs. 2.48% (2024)
• Operating Margin: 21.47% (2025) vs. 7.96% (2024)
• Net Margin: 15.15% (2025) vs. 4.50% (2024)

Investment in Growth:

• Capital Expenditures: $4.1 million (2025)
• Strategic Investments: $97.3 million in Bank Owned Life Insurance (BOLI) purchases (2025), completion of BOLI restructuring initiative.

Business Segment Analysis

The Company operates as one reportable segment, "Community Banking." All activities are interrelated and assessed as a single operating unit. Therefore, a detailed breakdown by major business segment is not applicable.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No repurchases of common stock during the year ended December 31, 2025. As of December 31, 2025, 1,566,947 shares remained available for purchase under the authorized stock repurchase program.
• Dividend Payments: $43.8 million in common stock dividends and $7.3 million in preferred stock dividends during the year ended December 31, 2025.
• Future Capital Return Commitments: The stock repurchase program has no termination date and may be suspended, terminated, or modified at any time.

Balance Sheet Position:

• Cash and Equivalents: $2.35 billion (as of December 31, 2025)
• Total Debt: $0.78 billion (as of December 31, 2025), comprising $508.0 million in FHLBNY advances and $272.5 million in subordinated debt.
• Net Cash Position: $1.57 billion (as of December 31, 2025)
• Debt Maturity Profile: FHLBNY advances mature between 2026 and 2029, with a weighted average interest rate of 4.00% at December 31, 2025. Subordinated debentures mature in 2030, 2032, and 2034, with the 2030 debentures callable in 2025 (and announced for redemption in March 2026).

Cash Flow Generation:

• Operating Cash Flow: $186.6 million (2025)
• Free Cash Flow: $182.4 million (2025)

Operational Excellence

Production & Service Model: The Company focuses on providing full-service commercial and consumer banking, emphasizing customer relationships and customized banking solutions. It leverages an extensive branch network and offers digital platforms for online banking and remote deposit capture.

Supply Chain Architecture: Key Suppliers & Partners:

• Investment Services: Dime Financial Services LLC offers investment products and services through a third-party broker-dealer.
• Title Insurance: Dime Abstract LLC acts as a broker for title insurance services.
• Loan Servicing: The Bank outsources servicing of a portion of its one-to-four family mortgage loan portfolio to an unrelated third-party sub-servicer.
• Derivative Counterparties: Engages with unaffiliated and reputable bank counterparties for interest rate derivatives.
• Pension Plan Trustees/Managers: Bank of America, N.A. is the Trustee for pension plan assets, with Merrill Lynch, Pierce, Fenner & Smith, Inc. and Blackrock as investment managers.

Facility Network:

• Branch Network: 63 branch locations across Greater Long Island, New York City boroughs, Westchester County, and New Jersey as of December 31, 2025. Of these, 53 were leased and 10 were owned.
• Headquarters: Corporate headquarters in Hauppauge, New York. Bank's main office in Bridgehampton, New York.

Operational Metrics:

• Non-interest expense as a percentage of average assets: 1.77% (2025).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Enterprise sales force for small and medium-sized businesses, municipal relationships, and consumers.
• Digital Platforms: Online banking services, remote deposit capture, merchant credit and debit card processing.
• Branch Network: 63 physical branch locations serve as key points of customer interaction.

Customer Portfolio: Enterprise Customers: The customer base is principally comprised of small and medium-sized businesses, municipal relationships, and consumer relationships. Customer Concentration: No single customer accounted for more than 10% of the Company's consolidated revenue for the years ended December 31, 2025, 2024, or 2023.

Geographic Revenue Distribution: All revenues are derived from banking operations within the United States, primarily from the Greater Long Island, New York City boroughs, Westchester County, and New Jersey markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The banking and financial services industry in the Company's market area is highly competitive, with numerous financial institutions, including larger regional and national banks. The fixed cost of regulatory compliance remains high for community banks compared to larger competitors. The local economy in Greater Long Island and Manhattan significantly impacts loan originations, loan quality, borrower repayment ability, and collateral values. Rent control and stabilization regulations in New York City can impact multi-family real estate loan performance.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Local commercial banks, other commercial banks with branches in the market area, savings banks, credit unions, mortgage brokers, and other financial services firms (investment and insurance companies). Many of these competitors are significantly larger with greater resources.

Emerging Competitive Threats: Rapidly evolving cyber threats, potential policy changes from local administrations (e.g., New York City Mayor's support for rent freezes and expanded tenant protections), and the increasing reliance on and integration of artificial intelligence (AI) and machine learning (ML) technologies.

Competitive Response Strategy: The Company emphasizes strong community ties, customer focus, and customized banking solutions. It employs heightened risk management practices for its concentrated loan portfolios, including board and management oversight, portfolio management, underwriting standards, market analysis, and stress testing. The Company also invests in its Private and Commercial Bank to drive core deposit and business loan growth.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Concentration of the loan portfolio in Greater Long Island and Manhattan makes the Company vulnerable to local economic downturns, inflation, recession, and unemployment. Decreases in tenant occupancy or adverse changes in real estate values could negatively affect financial condition.
• Technology Disruption: Rapidly evolving cyber threats and the potential reliance on AI/ML technologies expose the Company to operational, data, regulatory, and reputational risks.
• Customer Concentration: No single customer accounts for more than 10% of consolidated revenue, mitigating this specific concentration risk.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Reliance on third-party service providers for critical IT systems and loan servicing introduces risks if these providers encounter difficulties or security breaches.
• Capacity Constraints: Expansion of the branch network involves risks related to suitable locations, qualified personnel, effective marketing, and the time required to generate sufficient income to cover operating expenses.
• System Failures & Security Breaches: Information technology systems are critical, and failures, interruptions, or security breaches could damage reputation, lead to loss of customers, regulatory scrutiny, litigation, and financial liability.
• Fraud and Financial Crimes: Exposure to risk of loss due to fraud and other financial crimes, despite policies and procedures.
• Loss of Key Personnel: Future success depends on retaining executive officers and key management, and the ability to attract qualified replacements.

Financial & Regulatory Risks

• Market & Financial Risks: Changes in interest rates significantly affect net interest income, loan demand, borrower defaults, and the fair value of the securities portfolio. Liquidity risk arises from the ability to generate deposits and manage liabilities.
• Credit & Liquidity: Inability to raise funds through deposits or borrowings could negatively affect liquidity. Deterioration in business and economic conditions (inflation, inverted yield curve, rising prices, unemployment) could lead to higher loan delinquencies and nonperforming assets.
• Regulatory & Compliance Risks: Highly regulated environment by NYSDFS, FRB, and FDIC. Failure to comply with CRA, fair lending laws, BSA, USA PATRIOT Act, and cybersecurity regulations could lead to significant penalties, restrictions on operations, and reputational damage. Banks with over $10 billion in assets are subject to CFPB examination and higher operating costs.
• Debt Securities: Subordinated debentures rank senior to common shareholders, impacting dividend payments and distributions in bankruptcy.

Geopolitical & External Risks

• Geopolitical Exposure: Global market fluctuations, natural disasters, widespread health emergencies, cyberattacks, military conflict, or terrorism could adversely affect business liquidity, revenue, and financial condition.
• Geographic Dependencies: Market area is susceptible to severe weather events, especially coastal and flood-prone areas. The metropolitan New York area remains a target for potential acts of terrorism.

Innovation & Technology Leadership

Research & Development Focus: The Company maintains comprehensive information technology and cybersecurity programs. It is actively assessing and managing cybersecurity threats and has a Chief Information Security Officer (CISO) and Chief Risk Officer (CRO) overseeing the program. The Company also acknowledges the potential reliance on and integration of artificial intelligence (AI) and machine learning (ML) technologies, recognizing associated operational, data, regulatory, and reputational risks.

Intellectual Property Portfolio: The filing mentions risks related to IP rights claims from third parties concerning open-source software, generative AI, and potential trademark infringement. However, it does not detail the Company's own IP portfolio or patent strategy.

Technology Partnerships: The Company utilizes third-party service providers for various IT systems and interfaces, and engages with reputable bank counterparties for derivative transactions.

Leadership & Governance

Information regarding the Executive Leadership Team and Board Composition is incorporated by reference from the definitive Proxy Statement and is not available in this filing.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, the Company employed 902 full-time equivalent employees. Employees are not represented by a collective bargaining agreement.

Talent Management:

• Acquisition & Retention: The Company is committed to retaining employees through competitive cash and non-cash rewards, benefits, recognition, and professional development. It offers an 8-week summer internship program for a post-graduation pipeline. Equity incentive plans are maintained to incentivize officers, employees, and directors.
• Employee Value Proposition: Offers a comprehensive benefits package supporting physical, mental, and financial health, including wellness programs.

Diversity & Development: The Company is an equal opportunity employer, committed to unbiased selection and promotion to build a diverse and inclusive team. It promotes career development and continuing education through internal training programs and tuition reimbursement.

Business Cyclicality & Seasonality

Demand Patterns: The Company's profitability is sensitive to changes in market interest rates, which are affected by factors like inflation, recession, and monetary policy. Loan prepayments and demand for loan products can fluctuate with interest rate changes. Delinquency levels for loans are monitored monthly, but are considered less accurate indicators of near-term credit quality trends than non-accrual loans.

Planning & Forecasting: The Asset Liability Management Committee (ALCO) evaluates the impact of interest rate changes on assets, liabilities, net interest margin, capital, and liquidity at least quarterly, utilizing models to project net interest income under various interest rate scenarios.

Regulatory Environment & Compliance

Regulatory Framework: The Bank is a New York State-chartered trust company and a member of the Federal Reserve System, subject to extensive regulation by the New York State Department of Financial Services (NYSDFS) and the Board of Governors of the Federal Reserve System (FRB). Deposit accounts are insured by the FDIC. The Company, as a bank holding company, is subject to the Bank Holding Company Act of 1956 and FRB regulations. It is also subject to the Community Reinvestment Act (CRA), Equal Credit Opportunity Act, Fair Housing Act, Bank Secrecy Act (BSA), USA PATRIOT Act, and Consumer Financial Protection Bureau (CFPB) oversight (due to assets exceeding $10 billion). NYSDFS also issued amended cybersecurity regulations in November 2023.

Trade & Export Controls: The Company is subject to regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) related to sanctions and export controls.

Legal Proceedings: In the ordinary course of business, the Company is routinely involved in legal actions. As of December 31, 2025, management believes no ongoing legal proceedings are likely to have a material adverse impact on the Company’s consolidated financial condition and results of operations.

Tax Strategy & Considerations

Tax Profile: The Company, the Bank, and its subsidiaries report income on a consolidated basis and are subject to federal taxation, as well as income tax in New York State, New York City, New Jersey, and Florida (due to remote employees). The consolidated tax rate was 29.4% in 2025, 43.5% in 2024, and 29.8% in 2023.

• Effective Tax Rate: 29.41% (2025).
• Federal NOL Carryforward: $1.8 million (as of December 31, 2025).
• Bad Debt Reserves: $15.1 million (as of December 31, 2025) for which no income tax provision was required.
• Uncertain Tax Position: $6.9 million (as of December 31, 2025) with accrued interest of $1.9 million.

Geographic Tax Planning: The Company's tax structure includes operations in New York, New Jersey, and Florida, leading to state and local tax exposures in these jurisdictions.

Tax Reform Impact: The Company adopted ASU No. 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures, effective January 1, 2025, on a prospective basis, resulting in expanded disclosures.

Insurance & Risk Transfer

Risk Management Framework: The Company manages economic risks, including interest rate, liquidity, and credit risk, by managing its assets and liabilities and using derivative financial instruments. Risk assessments are governed by policies and limits established by senior management and approved by the Board of Directors. The Bank maintains comprehensive information technology and cybersecurity programs.

Insurance Coverage: The Company maintains insurance, but its risk factors note that potential litigation and financial losses from system failures or security breaches may not be fully covered by insurance.

Risk Transfer Mechanisms:

• Derivatives: The Company uses interest rate swaps for fair value hedges (to protect against changes in fair value of interest rate sensitive assets) and cash flow hedges (to protect against variability in cash flows from short-term borrowings). It also uses freestanding derivatives to manage interest rate risk in its loan portfolio.
• Collateral: The Bank pledges real estate loans (Residential, Multifamily, and CRE) as collateral for FHLBNY advances. It also obtains collateral from derivative counterparties above certain exposure thresholds.
• Loan Securitization: In a 2017 securitization of multifamily loans, the Company has a reimbursement agreement with Freddie Mac, obligating it to reimburse for defaulted loan payments up to 10% of the original principal amount ($28.0 million maximum exposure), collateralized by $27.9 million of U.S. GSE mortgage-backed securities.