DCOM

Dime Community ($DCOM) at Crossroads: 32% Revenue Surge Meets Insider Trading Spike Amid Credit Concerns

11/07/2025 00:15

Dime Community Bancshares ($DCOM) is sending mixed signals to investors. This New York metropolitan area-based regional bank is recording strong revenue growth while simultaneously drawing investor attention with surging insider trading activity and credit quality concerns. Dime Community Bancshares operates 62 branches spanning Long Island and New York City's five boroughs, employing a traditional community banking model focused on commercial lending and deposit growth. The company recently secured regulatory approval for geographic expansion into Lakewood, New Jersey, providing new growth momentum. Most notably, insider trading activity has intensified in the second half of this year. Director Matthew Lindenbaum executed large-scale transactions twice, in June and November. On June 9, he displayed a complex trading pattern, purchasing 40,500 shares while simultaneously selling 40,336 shares. On November 4, he simultaneously bought and sold 20,537 shares at nearly identical prices ($26.25-26.26). While such 'simultaneous buy-sell' patterns typically relate to tax planning or portfolio rebalancing, the transaction sizes exceeding $1 million have captured market attention. Another focal point is Basswood Capital Management's frequent trading. After purchasing 29,000 shares at $32 in November 2024, this institutional investor has shown a pattern of alternating sales and small purchases throughout February 2025. Particularly noteworthy is the sale of 9,815 shares ($31.20) on February 12, followed by small repurchases on the same day and two days later, suggesting market timing strategies. This surge in insider trading contrasts sharply with the company's improving performance. Third-quarter revenue jumped 32% year-over-year to $115.61 million, beating consensus ($111.51 million) by 3.68%. Net interest margin (NIM) improved significantly to 3.01% from 2.50% in the prior year, and the efficiency ratio dramatically enhanced to 53.8% from 65.9%. From an investor perspective, this raises the question: 'Why are insiders trading so actively?' The concern lies in deteriorating credit quality indicators. Non-performing loans (NPLs) surged 35% from $53.2 million in Q2 to $72.1 million in Q3, while credit loss provisions increased 44% to $13.3 million from $9.2 million in the previous quarter. CEO Stuart Lubow attributed this to 'increased charge-offs on owner-occupied and non-owner occupied real estate loans,' but investors worry this might signal the beginning of a larger credit cycle. Stock price movements reflect this complex situation. $DCOM shares surged from the mid-$24 range in July 2024 to the mid-$35 range in November, currently trading around $30. The 6.8% drop ($27.80) following the October earnings release demonstrates that markets are taking credit concerns seriously. Investors should monitor key indicators. First, if the NPL ratio exceeds 0.6%, credit cycle deterioration may accelerate (currently at 0.59%, approaching the threshold). Second, if NIM falls below 3%, profitability momentum could break. Third, if net insider selling consistently exceeds $1 million monthly, this may indicate changing internal outlook. Considering positive scenarios, the Fed's continued rate-cutting cycle could further improve bank NIMs. Additionally, geographic expansion into New Jersey and new branch openings like the Madison Avenue location in Manhattan could simultaneously grow both deposit base and loan portfolio. Current deposit growth (8.1% annually) outpacing loan growth provides stable funding foundation. Conversely, risks are clear. A full New York real estate market correction could directly impact $DCOM's loan portfolio. Given regional banks' typically high commercial real estate exposure, declining property values and rising vacancy rates translate directly into increased NPLs. Frequent insider trading may also reflect diminished confidence in company prospects. For those considering investment at current $30 levels, the next quarterly earnings release (January) will be crucial for monitoring NPL trends and NIM direction. If NPLs stabilize and margins maintain above 3.1%, there's potential for recovery to $35, but accelerating credit deterioration could risk breaking the $25 support level. Analysts' $37 target price implies 23% upside potential from current levels, but this assumes credit risks remain manageable.