In a move designed to move it closer to its goal of becoming a full-service commercial bank, Dime Community Bancshares will launch a health care banking unit. The Hauppauge, New York-based company has hired Daniel Csillag, a veteran lender in the long-term care space, to lead it.
“Daniel’s hire is the next logical step in the buildout of our middle-market commercial lending business,” Stuart Lubow, the $13.8 billion-asset Dime’s president and CEO, said Tuesday in a press release. “Adding a health care vertical is consistent with our strategic goal of increasing the contribution of business loans to our balance sheet.”
Dime had been considering expanding into health care lending “for a while,” Lubow said Tuesday in a subsequent interview. “When Daniel became available, we thought it was certainly an opportunity.”
Dime Community Bancshares CEO Stuart Lubow
Jim Lennon
Business loans, which Dime defines as commercial-and-industrial and owner-occupied commercial real estate credits, were about 21% of the company’s $10.8 billion loan portfolio on June 30. While that proportion has grown in recent years as Dime has worked to transform itself, the bulk of the loan book remains concentrated in multifamily and investor CRE.
Founded in Brooklyn as Dime Savings Bank of Williamsburgh in 1864, Dime focused on making multifamily loans throughout most of its history. The new health care unit should give Dime another tool to further the current strategy of growing business loans and “rightsizing” other sections of the portfolio, particularly multifamily, Chief Financial Officer Avinash Reddy said Tuesday. As existing loans mature or pay off, “the proceeds will be used to continue to grow the business-banking side,” Reddy said.
According to a research note on Wednesday, Kroll Bond Rating Agency projects multifamily, now nearly 40% of Dime’s portfolio, will decline to between 25% and 30% “over the medium term.”
Csillag joins Dime from the $61.7 billion-asset Valley National Bancorp, where he served as senior vice president and group head New York health care. Csillag’s roots in long-term care extend back to 2007.
Lubow assumed the CEO role Aug. 31, succeeding Kevin O’Connor, who led Dime the past three years.
Dime has been in an expansion mode most of spring and summer. It capitalized on the failures of Signature Bank and First Republic Bank by adding seven deposit-focused banker groups — six from Signature and one from First Republic. Signature Bank failed in March, and First Republic failed in May — both casualties of the financial crisis triggered by the crypto exchange FTX’s collapse last November.
Initial results from the hiring binge appear positive. Through July 31, the new teams had generated $155 million of new deposits, about half of which were demand deposits, according to Lubow.
“A lot of new accounts and relationships have been added,” the CEO said. The teams “are already paying for themselves in terms of profitability.”
The seven teams Dime hired managed approximately $2 billion of deposits for their previous institutions. “As such, there is considerable potential to continue to enhance the core deposit franchise in this difficult operating environment,” Kroll noted in its research note.
Before assuming his role at Valley, Csillag spent five years at Bank Leumi, which had a significant health care focus. Valley National acquired Bank Leumi in April 2022. From 2007 to 2017, Csillag worked at TD Bank managing lending relationships with acute care hospitals and secured nursing facilities.
In venturing into health care lending, Dime is following a path that’s been well trodden by banks, which have long viewed the sector as attractive. Csillag’s hire comes a little more than a year after WSFS Financial in Wilmington, Delaware, tapped veteran lender Kevin McKeown to establish a health care unit. Meanwhile, in November, Spanish bank Santander’s U.S. arm announced plans to offer equipment financing to hospitals, outpatient clinics and other specialized providers as part of a commercial banking expansion. Santander hired John Pack, a banker with nearly 20 years of health care experience, to direct the effort.