-- Net interest margin was 3.48%, up from 3.11% in the September 2009
quarter. The average cost of deposits declined 22 basis points to 1.39%
from 1.61% during the September 2009 quarter.
-- Non-performing assets fell from 0.41% of total assets at September
30, 2009 to 0.32% of total assets.
-- Total loan credit costs were $6.4 million, comprised of a $4.5
million provision for loan losses and a $1.9 million provision for losses
on loans sold with recourse.
-- The allowance for loan loss reserve increased to 0.63% of total loans
from 0.61% at September 30, 2009.
-- The allowance for loan losses stood at 190.4% of non-performing loans
at December 31, 2009 compared to 143.1% at September 30, 2009.
-- Loans delinquent between 30 and 89 days increased to $29.5 million at
December 31, 2009 compared to $11.3 million at September 30, 2009.
-- Total assets increased by $44.5 million to $3.95 billion at December
31, 2009, as the Company grew its real estate loan portfolio by $89.6
million through a combination of loan originations and purchases.
-- The Company's consolidated ratio of tangible capital to tangible
assets grew to 6.26% at December 31, 2009 from 6.23% at September 30, 2009.
-- Real estate loan originations were $122.3 million, below the $147.1
million level in the September 2009 quarter. The Company supplemented
these originations with purchases of $45.4 million of seasoned underlying
mortgages on cooperative apartment buildings.
-- The Company prepaid $14.3 million of FDIC assessments on December 31,
2009, representing estimated FDIC assessments through December 31, 2012.
The Company's earnings for the quarter ended December 31, 2009 reflected an
after-tax other-than-temporary impairment ("OTTI") charge of approximately
$786,000 on two pooled bank trust preferred securities, as well as an
after-tax gain of $318,000 on the re-acquisition of a portion of its
corporate debt and an after-tax charge of $123,000 on the write-down of
other real estate owned properties. The Company's earnings for the quarter
ended September 30, 2009 reflected an after-tax OTTI charge of
approximately $305,000, as well as an after-tax charge of $277,000 related
to the prepayment of a portion of Dime's Federal Home Loan Bank of New York
borrowings. Earnings for the quarter ended December 31, 2008 reflected an
after-tax OTTI charge of $1.7 million on two pooled bank trust preferred
securities.
FISCAL YEAR CORE EARNINGS PER SHARE OF $0.92
For the year ended December 31, 2009, the Company's earnings were $26.2
million, or $0.79 per diluted share, compared to $28.0 million, or $0.85
per diluted share, during the year ended December 31, 2008. Core earnings
were $30.5 million, or $0.92 per diluted share during the year ended
December 31, 2009, compared to $29.3 million, or $0.89 per share, during
the year ended December 31, 2008. Core earnings for the year ended
December 31, 2009 excluded $4.3 million of credit-related OTTI charges on
investment securities, an after-tax charge of $394,000 related to the
prepayment of borrowings, and an aggregate after-tax charge of $181,000 on
the disposal or writedown of other real estate owned. Core earnings for
the year ended December 31, 2009 also excluded aggregate after-tax income
of $590,000 resulting from gains on the sale of investment securities and
the early re-acquisition of a portion of the Company's corporate debt at a
discount. Core earnings for the year ended December 31, 2008 excluded an
after-tax OTTI charge of $1.7 million on investment securities,
non-recurring income tax benefits of $510,000 and an after tax loss of
approximately $70,000 on the sale of two foreclosed properties.
According to Vincent F. Palagiano, Chairman and Chief Executive Officer of
the Company, "While credit costs hit their highest level of the year during
the fourth quarter, the Company continued to benefit from growth in its net
interest margin resulting from the current interest rate environment
offering low deposit costs and cyclically high spreads between loan
origination rates and benchmark Treasury rates. Charge-offs came in
slightly below their September 2009 quarterly level, and primarily
reflected the write-down of a group of loans to one borrower. The Company
continues to have one of the best performing balance sheets in the industry
in terms of asset quality, with non-performing assets representing just
0.32% of total assets at December 31, 2009. Dime also took advantage of
favorable lending conditions, excess liquidity and an attractive loan
purchase opportunity to grow its real estate loans and total assets during
the most recent quarter. On January 21, 2010, the Company was pleased to
declare its 51st consecutive quarterly dividend, $0.14 per share. As we
close another eventful year, we continue to manage our balance sheet in
preparation for the likelihood of higher interest rates, as well as
continued stress on the New York City real estate market, and more
restrictive banking regulation. Nevertheless, we believe the Company is on
solid financial footing. I want to thank all of Dime's employees for their
efforts in making this year successful."
Dime's net interest margin increased substantially during the quarter ended
December 31, 2009, due to both a decline of 22 basis points in the average
cost of deposits [primarily due to the favorable repricing of certificates
of deposit ("CDs") during the second half of 2009], coupled with the
utilization of a substantial portion of approximately $200 million in
liquid cash balances that were being held at a negative spread to funding
costs. In the second half of 2009, Dime utilized a great majority of these
funds to repay maturing borrowings and replace deposit outflows.
Prepayment fees remained modest, reflecting continued moderation in the
pace of refinancing from the Bank's portfolio.
Commercial Real Estate and Dime's Business Model
The term "commercial real estate" ("CRE") encompasses a wide variety of
collateral types. Dime's loan portfolio is collateralized primarily by
multifamily apartment buildings in New York City, widely thought to be the
least risky type of CRE. Further, significant portions of these
multifamily apartment buildings are subject to rent regulation. In New
York City, where residential vacancy rates are low and there is limited
available space to construct new buildings, rent regulation has had the
affect of keeping regulated apartment rents below market rates. It is this
factor that enhances the intrinsic value of Dime's already low-risk
collateral, and, management believes, is the primary reason for the
Company's low level of non-performing assets compared to the wider generic
asset class designated as CRE.
NET INTEREST INCOME
Net interest income was $32.1 million during the December 2009 quarter, up
$3.1 million from the September 2009 quarter. A decline of 22 basis points
in the average cost of deposits, coupled with an increase of 15 basis
points in the average yield on assets, generated the increase in the linked
quarter net interest income. The resulting 37 basis point increase in net
interest margin from 3.11% during the three months ended September 30, 2009
to 3.48% during the three months ended December 31, 2009, benefited from
the previously mentioned allocation of a portion of liquid cash balances
that were carried at a negative spread to funding costs during the first
six months of 2009.
Mr. Palagiano commented, "Our short-term balance sheet strategy shifted
late in 2008 toward liquidity and capital preservation, resulting in the
decision to curb asset growth during 2009. Deposit inflows that occurred in
late 2008 and early 2009, as our focus was shifting, were retained in
highly liquid funds, which helped provide considerable flexibility in
managing our funding costs downward during 2009."
Net interest income exceeded the December 2008 quarterly level by $8.3
million, driven by growth of $56 million in average interest earning assets
and an increase in the net interest margin of 86 basis points from the
quarter ended December 31, 2008 to the quarter ended December 31, 2009.
The growth in average interest earning assets reflected significant loan
origination volume and asset growth during 2008 which contributed to higher
average asset balances during the year ended December 31, 2009, while the
increase in the net interest margin reflected a decline of 130 basis points
in the average cost of deposits during the December 2009 quarter compared
to the December 2008 quarter.
PROVISION/ALLOWANCE FOR LOAN LOSSES AND PROBLEM PORTFOLIO LOANS
Non-performing loans were $11.3 million at December 31, 2009 compared to
$14.2 million at September 30, 2009 and $7.4 million at December 31, 2008.
As a percentage of total loans, non-performing loans totaled 0.33% at
December 31, 2009, compared to 0.43% at September 30, 2009 and 0.22% at
December 31, 2008. While non-performing loans declined during the most
recent quarter, loans delinquent between 30 and 89 days increased to $29.5
million as of December 31, 2009 from $11.3 million at September 30, 2009.
Loans delinquent between 30 and 89 days totaled $5.1 million at December
31, 2008.
The quarterly review of the adequacy of the allowance for loan losses,
which covers both performing and non-performing loans, led the Company to
record a $4.5 million provision to its allowance for loan losses during the
quarter ended December 31, 2009, compared to $3.8 million during the
quarter ended September 30, 2009. Provisions totaled $1.0 million during
the quarter ended December 31, 2008. Charge-offs recorded on problem loans
totaled $3.0 million during the December 2009 quarter, compared to $3.6
million in the September 2009 quarter and $350,000 in the December 2008
quarter. Approximately 3/4ths of the charge-offs recognized during the most
recent quarter related to a write down to the current appraised collateral
value on loans outstanding to one borrower.
Mr. Palagiano stated, "During the most recent quarter, we continued to
recognize likely potential losses on problem loans in a timely manner, and
to sell off both problem loan notes and/or foreclosed real estate. These
efforts resulted in a decline in the ratio of non-performing assets to just
32 basis points of total assets at December 31, 2009."
The timing and severity of charge-offs is unpredictable. At December 31,
2009, the allowance for loan losses was $21.5 million, or 190% of
non-performing loans.
NON-INTEREST INCOME
OTTI, Gain (Loss) on the Re-Acquisition of a Portion of Corporate Debt and
Sale of Other Assets.
During the quarter ended December 31, 2009, the pre-tax credit component of
OTTI charges totaled $1.4 million, compared to $556,000 during the previous
linked quarter. At December 31, 2009, six of Dime's eight trust preferred
securities were deemed to meet the criteria for OTTI. The increase in the
credit component of OTTI reflected additional payment deferrals during the
December 2009 quarter within the collateral pool underlying certain of
Dime's eight trust preferred collateralized debt obligation securities.
At December 31, 2009, Dime had failed to receive contractual principal or
interest payments on two trust preferred securities with an aggregate
recorded balance of $688,000 ($2.8 million excluding $2.1 million of
unrealized losses included in accumulated other comprehensive loss). Both
securities are classified as non-performing assets. In addition, at
December 31, 2009, Dime did not receive a small portion of the interest due
on two trust preferred securities having a recorded balance of $342,000
($640,000 excluding the $298,000 total non-credit component of OTTI). The
remaining four trust preferred securities, with a total cost basis of $10.4
million net of credit-related OTTI, are current on all contractual
obligations.
There were no sales of investment securities during the three months ended
December 31, 2009, September 30, 2009 and December 31, 2008.
During the quarter ended December 31, 2009, the Company re-acquired a
portion of its outstanding corporate debt at a discount, recognizing a
pre-tax gain of $505,000 on the transaction. There were no sales of other
real estate owned and other assets during the three months ended December
31, 2009, September 30, 2009 and December 31, 2008.
Mortgage Banking Income and Delinquent Serviced Loans
Loan sales were negligible during the quarters ended December 31, 2009,
September 30, 2009 and December 31, 2008, and were limited primarily to
one- to four-family mortgage loans.
The Company recognized a loss of $1.7 million on mortgage banking
activities during the quarter ended December 31, 2009 due primarily to a
$1.9 million provision for probable losses on loans sold with recourse that
was partially offset by servicing fee income of $175,000. The provision
for losses resulted from the write down of loans sold with recourse related
to one borrower. Mortgage banking activities generated net revenue of
$246,000 during the quarter ended September 30, 2009, resulting primarily
from $208,000 of servicing fee revenue. Mortgage banking losses were $1.8
million during the December 2008 quarter, reflecting a $1.9 million
provision to the reserve for losses associated with recourse exposure on
Fannie Mae serviced loans, which was partially offset by approximately
$200,000 of servicing fee income.
Since the inception of the Fannie Mae program, Dime has sold approximately
$660 million of multifamily loans to Fannie Mae. This portfolio had an
outstanding principal balance of $437.8 million at December 31, 2009.
Within the Fannie Mae portfolio, loans delinquent 90 days or more were
$14.2 million at both December 31, 2009 and September 30, 2009. The full
$14.2 million balance was comprised of five loans involving the same
borrower. At December 31, 2009, there were additionally $3.6 million of
loans delinquent between 30 and 89 days within the pool of loans serviced
for Fannie Mae, compared to $2.0 million at September 30, 2009. At
December 31, 2008, there were $23.7 million of loans delinquent 90 days or
more, and $3.6 million of loans delinquent between 30 and 89 days within
the pool of loans serviced for Fannie Mae.
Dime's first loss position for loans sold to Fannie Mae was $20.2 million
as of December 31, 2009, against which a reserve of $4.4 million existed at
December 31, 2009. This reserve approximated 1.0% of the remaining
principal balance of loans in the Fannie Mae pool as of December 31, 2009.
Additions to the liability for the first loss position are charged against
mortgage banking (non-interest) income, and probable losses related to all
problem loans within the pool of loans sold with recourse to Fannie Mae are
reflected in the $4.4 million liability balance.
Other Components of Non-Interest Income
Other components of non-interest income totaled $2.0 million during the
quarter ended December 31, 2009, down $439,000 from the September 2009
quarter and $126,000 from the December 2008 quarter. The decline from the
September quarter resulted from an annual loan administrative fee assessed
and recognized during the third quarter of each year. The decline from the
December 2008 quarter reflected lower rental and loan inspection fee
income.
NON-INTEREST EXPENSE
Non-interest expense was $14.7 million during the quarter ended December
31, 2009, an increase of $1.1 million from the September 2009 quarter,
reflecting an increase of $514,000 in salaries and benefits, a write-down
of $196,000 in the carrying value of other real estate owned, and an
increase of $189,000 in rental expense on leased branch offices.
Compared to the December 2008 quarter, non-interest expense increased $2.2
million during the quarter ended December 31, 2009, due primarily to
increases of $1.4 million in compensation and benefits and $692,000 in FDIC
insurance assessments. The increase in FDIC insurance assessments
reflected ongoing increases from an FDIC recapitalization program effective
April 1, 2009, while several factors contributed to the increase in
compensation and benefits expense. Occupancy and equipment expense also
increased $258,000 as a result of the aforementioned increased rental
expense on leased branches.
INCOME TAX EXPENSE
The Company's customary consolidated effective tax rate approximates 37%.
The impact of the OTTI charges reduced the effective tax rate for the
December 2009 quarter to 33.6%. The impact of reconciling the tax returns
for December 31, 2008 increased the effective tax rate for the quarter
ended September 30, 2009 to 39%. The OTTI charges reduced the effective
tax rate for the December 2008 quarter to 33.5%.
BALANCE SHEET
Total assets increased $44.5 million, to $3.95 billion, during the quarter
ended December 31, 2009. The increase in assets was experienced primarily
in real estate loans, as originations and loan purchases outpaced
amortization and satisfactions during the period. Cash and due from banks
declined $60.2 million as Dime removed much of the remaining excess
liquidity in its balance sheet in order to fund loan originations and
purchases of loans and medium-term agency notes.
Total liabilities increased by $39.4 million during the most recent
quarter, primarily as a result of the net addition of $50.0 million of
Federal Home Loan Bank of New York ("FHLBNY") advances. During the most
recent quarter, the Company repaid $95.0 million of maturing FHLBNY
advances, while adding $145.0 million of fixed rate, non-callable FHLBNY
advances with a weighted average cost of 2.6% and a weighted average term
to maturity of 4.4 years. These new borrowings helped extend the weighted
average duration of the Company's interest bearing liabilities, thus
offering protection against possible future increases in deposit funding
costs (which remained well below historical levels during the most recent
quarter).
Real Estate Lending and Loan Amortization
Real estate loan originations, which were $147.1 million during the
September 2009 quarter, totaled $122.3 million during the quarter ended
December 31, 2009 and $230.0 million during the quarter ended December 31,
2008. The average rate on real estate loan originations during the
December 2009 quarter was 5.72%, compared to 5.81% during the quarter ended
September 30, 2009 and 6.09% during the quarter ended December 31, 2008.
In addition, during the December 2009 quarter, the Bank purchased $45.4
million of seasoned underlying second mortgages on cooperative apartment
buildings located in the New York City metropolitan marketplace. At
December 31, 2009, these loans had a weighted average yield of
approximately 6.00% (net of servicing fees paid by Dime) and a weighted
average loan-to-value ratio under 25% (determined based upon the combined
outstanding 1st and 2nd mortgages).
Real estate loan amortization during the December 2009 quarter approximated
9% of the real estate loan portfolio on an annualized basis, compared to
12% in the September 2009 quarter, and well below the 16% level experienced
during the December 2008 quarter. This was slightly below management's
forecast of prepayment speeds disclosed at the commencement of the year.
Deposits
Deposits increased $20.8 million from September 30, 2009 to December 31,
2009. CDs accounted for the full growth in deposits; increasing $32.2
million during the period as a result of a marketing promotion initiated in
the second half of 2009. Core deposits (i.e., non-CDs) declined $11.4
million during the three months ended December 31, 2009. Within core
deposits, money market accounts decreased $25.1 million, while checking
accounts increased by $10.1 million and passbook savings increased $3.7
million.
Throughout the past year, short-term interest rates have remained at or
near historic lows, due in large part to the ongoing turmoil in global
credit markets. During this period the Treasury yield curve steepened
considerably, while credit spreads have yet to return to their pre-crisis
historical averages. The Bank took advantage of these beneficial conditions
in 2009 by adopting a strategy of extending the average duration on its
deposit and wholesale funding portfolios while the spreads to new loan
originations remained favorable. During the 4th quarter, the rates required
by depositors on medium term CDs as well as those available on medium term
advances from the FHLBNY remained well below the yields available on the
Bank's primary lending products, providing an opportunity for the Bank to
continue to significantly extend the average duration of its liabilities
while enhancing its net margin. Dime has extended the average duration of
CDs from approximately 9 months at December 31, 2008 to approximately 15.5
months at December 31, 2009. Depending upon continued favorable market
conditions, the mix of retail versus wholesale funding will be managed
opportunistically. Marketing efforts for the first quarter of 2010 should
continue to support sales of checking accounts and medium and long-term
CDs. Dime anticipates that the cost of deposits has likely approached its
cyclical bottom.
Average deposits per branch were $96.4 million at December 31, 2009,
slightly above the $95.5 million level at September 30, 2009, while down
from $98.3 million at December 31, 2008. Core deposits comprised 56% of
total deposits at December 31, 2009, down slightly from 57% at September
30, 2009, while up from 49% at December 31, 2008. The loan-to-deposit
ratio was 153% at December 31, 2009, compared to 151% at September 30, 2009
and 146% at December 31, 2008.
Stockholders' Equity
Stockholders' equity at December 31, 2009 totaled $294.8 million, or 7.46%
of total assets, compared to $289.6 million, or 7.41% of total assets, at
September 30, 2009.
After dividends, the Company's tangible stockholders' equity increased to
$243.9 million at December 31, 2009, from $239.7 million at September 30,
2009. The quarterly cash dividend declared on January 21, 2010 represented
a payout ratio of 58% of fourth quarter 2009 core earnings. At December
31, 2009, the consolidated tangible stockholders' equity ratio was 6.26% of
tangible assets and tangible book value per share was $7.09.
The Company did not participate in the TARP program and thus has no TARP
capital.
There were no stock repurchases during the quarter ended December 31, 2009.
As of December 31, 2009, the Company had an additional 1,124,549 shares
remaining eligible for repurchase under its twelfth stock repurchase
program, approved in June 2007.
For the quarter ended December 31, 2009, the reported returns on average
stockholders' equity and average tangible equity were 11.1% and 13.4%,
respectively. The core returns on average stockholders' equity and average
tangible equity were 11.9% and 14.4%, respectively. Core returns primarily
exclude OTTI charges, borrowing prepayment expenses and related income tax
effects. Finally, the core cash return on average tangible stockholders'
equity (the fundamental measure of new internally generated capital) was
15.4%.
OUTLOOK
The average cost of deposits decreased to 1.39% during the December 2009
quarter from 1.61% during the September 2009 quarter, as the Company
limited promotional deposit gathering campaigns for the majority of 2009 to
medium- and long-term CDs, and lowered its offering rates on both
non-promotional CDs as well as most of its core deposit products. As
mentioned previously, deposit funding costs have likely approached their
cyclical lows.
Amortization rates (including prepayments and loan refinancing activity),
which approximated 9% on an annualized basis during the fourth quarter of
2009, are expected to run in the 10% to 15% range during the first quarter
of 2010, with the increase reflecting a higher volume of multifamily/
commercial mortgage loans reaching their contractual maturity or
repricing.
Dime funded approximately $14 million in prepaid deposit insurance
assessments to the FDIC on December 31, 2009 and has no FDIC special
assessments forecasted for the first quarter of 2010.
At December 31, 2009, the loan commitment pipeline was approximately $117.2
million, skewed primarily toward multifamily residential properties, with
an approximate weighted average rate of 5.64%.
Operating expenses for the March 2010 quarter are expected to approximate
$14.4 million, again assuming no further FDIC special assessments or
increases in deposit insurance premiums.
Quarterly credit costs were $4.0 million, $2.3 million, $3.8 million and
$6.4 million during the first, second, third and fourth quarters of 2009,
respectively. Management assumes that credit costs will remain range bound
for the near term, for although non-performing assets declined in the
fourth quarter of 2009, loans internally rated "substandard" (and still
accruing) rose slightly to $14.9 million.
ABOUT DIME COMMUNITY BANCSHARES
The Company (
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
December 31, December 31, September 30,
2009 2008 2009
----------- ----------- -----------
ASSETS:
Cash and due from banks $ 39,338 $ 211,020 $ 99,500
Investment securities held to
maturity 7,240 10,861 8,562
Investment securities available for
sale 43,162 16,602 29,059
Mortgage-backed securities available
for sale 224,773 301,351 243,869
Federal funds sold and other
short-term investments 3,785 - 560
Real Estate Loans:
One-to-four family and
cooperative apartment 132,095 142,295 135,164
Multifamily and underlying
cooperative 2,377,278 2,242,542 2,286,191
Commercial real estate 834,724 848,208 832,431
Construction and land acquisition 44,544 52,982 45,419
Unearned discounts and net
deferred loan fees 4,017 3,287 3,845
----------- ----------- -----------
Total real estate loans 3,392,658 3,289,314 3,303,050
----------- ----------- -----------
Other loans 2,601 2,191 2,564
Allowance for loan losses (21,505) (17,454) (20,261)
----------- ----------- -----------
Total loans, net 3,373,754 3,274,051 3,285,353
----------- ----------- -----------
Loans held for sale 416 - -
Premises and fixed assets, net 29,841 30,426 29,678
Federal Home Loan Bank of New York
capital stock 54,083 53,435 51,833
Other real estate owned, net 755 300 168
Goodwill 55,638 55,638 55,638
Other assets 119,489 101,914 103,523
----------- ----------- -----------
TOTAL ASSETS $ 3,952,274 $ 4,055,598 $ 3,907,743
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Non-interest bearing checking $ 106,449 $ 90,710 $ 99,854
Interest Bearing Checking 114,416 112,687 110,909
Savings 302,340 270,321 298,681
Money Market 708,578 633,167 733,696
----------- ----------- -----------
Sub-total 1,231,783 1,106,885 1,243,140
----------- ----------- -----------
Certificates of deposit 985,053 1,153,166 952,858
----------- ----------- -----------
Total Due to Depositors 2,216,836 2,260,051 2,195,998
----------- ----------- -----------
Escrow and other deposits 65,895 130,121 81,315
Securities sold under agreements to
repurchase 230,000 230,000 230,000
Federal Home Loan Bank of New York
advances 1,009,675 1,019,675 959,675
Subordinated Notes Sold 25,000 25,000 25,000
Trust Preferred Notes Payable 70,680 72,165 72,165
Other liabilities 39,415 41,622 53,947
----------- ----------- -----------
TOTAL LIABILITIES 3,657,501 3,778,634 3,618,100
----------- ----------- -----------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000
shares authorized, 51,131,784
shares, 51,131,784 shares and
51,122,319 shares issued at
December 31, 2009, September 30, 2009
and December 31, 2008, respectively and
34,395,531 shares, 34,395,531 shares and
34,179,900 shares outstanding at
December 31, 2009, September 30, 2009
and December 31, 2008, respectively) 511 511 511
Additional paid-in capital 214,655 213,917 214,255
Retained earnings 306,787 297,848 303,330
Unallocated common stock of Employee
Stock Ownership Plan (3,701) (3,933) (3,759)
Unearned common stock of Restricted
Stock Awards (2,505) (1,790) (2,760)
Common stock held by the Benefit
Maintenance Plan (8,007) (8,007) (8,007)
Treasury stock (16,736,253 shares,
16,736,253 and 16,942,419 shares at
December 31, 2009, September 30, 2009
and December 31, 2008, respectively) (207,885) (210,471) (207,885)
Accumulated other comprehensive
loss, net (5,082) (11,111) (6,042)
----------- ----------- -----------
TOTAL STOCKHOLDERS' EQUITY 294,773 276,964 289,643
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 3,952,274 $ 4,055,598 $ 3,907,743
=========== =========== ===========
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except per share amounts)
For the Three Months Ended
----------------------------------
December September December
31, 30, 31,
2009 2009 2008
---------- ---------- ----------
Interest income:
Loans secured by real estate $ 49,277 $ 48,422 $ 47,987
Other loans 33 35 40
Mortgage-backed securities 2,551 2,748 3,489
Investment securities 359 76 538
Federal funds sold and
other short-term investments 744 809 594
---------- ---------- ----------
Total interest income 52,964 52,090 52,648
---------- ---------- ----------
Interest expense:
Deposits and escrow 7,706 9,156 14,631
Borrowed funds 13,173 13,965 14,188
---------- ---------- ----------
Total interest expense 20,879 23,121 28,819
---------- ---------- ----------
Net interest income 32,085 28,969 23,829
Provision for loan losses 4,491 3,769 1,040
---------- ---------- ----------
Net interest income after
provision for loan losses 27,594 25,200 22,789
---------- ---------- ----------
Non-interest income:
Service charges and other fees 1,091 1,376 1,077
Mortgage banking income (loss), net (1,708) 246 (1,782)
Other than temporary impairment
("OTTI") charge on securities (1) (1,433) (556) (3,209)
(Loss) Gain on sale of other real
estate owned and other assets - - -
Gain on re-acquisition of debt 505 - -
Other 884 1,038 1,024
---------- ---------- ----------
Total non-interest income (loss) (661) 2,104 (2,890)
---------- ---------- ----------
Non-interest expense:
Compensation and benefits 8,455 7,941 7,011
Occupancy and equipment 2,075 1,926 1,817
Other 4,206 3,774 3,694
---------- ---------- ----------
Total non-interest expense 14,736 13,641 12,522
---------- ---------- ----------
Income before taxes 12,197 13,663 7,377
Income tax expense 4,100 5,337 2,084
---------- ---------- ----------
Net Income $ 8,097 $ 8,326 $ 5,293
========== ========== ==========
Earnings per Share:
Basic $ 0.24 $ 0.25 $ 0.16
========== ========== ==========
Diluted $ 0.24 $ 0.25 $ 0.16
========== ========== ==========
Average common shares outstanding
for Diluted EPS 33,143,496 33,126,941 32,903,141
For the Year Ended
----------------------
December December
31, 31,
2009 2008
---------- ----------
Interest income:
Loans secured by real estate $ 193,689 $ 182,934
Other loans 143 166
Mortgage-backed securities 11,548 12,685
Investment securities 874 1,950
Federal funds sold and
other short-term investments 2,914 4,919
---------- ----------
Total interest income 209,168 202,654
---------- ----------
Interest expense:
Deposits and escrow 42,792 59,978
Borrowed funds 54,893 51,324
---------- ----------
Total interest expense 97,685 111,302
---------- ----------
Net interest income 111,483 91,352
Provision for loan losses 13,152 2,006
---------- ----------
Net interest income after
provision for loan losses 98,331 89,346
---------- ----------
Non-interest income:
Service charges and other fees 4,209 4,766
Mortgage banking income (loss), net (1,774) (2,190)
Other than temporary impairment
("OTTI") charge on securities (1) (7,915) (3,209)
(Loss) Gain on sale of other real
estate owned and other assets 339 (129)
Gain on re-acquisition of debt 505 -
Other 3,891 3,576
---------- ----------
Total non-interest income (loss) (745) 2,814
---------- ----------
Non-interest expense:
Compensation and benefits 31,814 28,624
Occupancy and equipment 7,878 6,967
Other 17,618 14,382
---------- ----------
Total non-interest expense 57,310 49,973
---------- ----------
Income before taxes 40,276 42,187
Income tax expense 14,087 14,159
---------- ----------
Net Income $ 26,189 $ 28,028
========== ==========
Earnings per Share:
Basic $ 0.79 $ 0.85
========== ==========
Diluted $ 0.79 $ 0.85
========== ==========
Average common shares outstanding
for Diluted EPS 33,029,655 32,824,802
(1) Total other-than-temporary impairment ("OTTI") on securities was $2,980
and $675, during the three months ended December 31, 2009 and
September 30, 2009, respectively. The non-credit component of OTTI
recognized in accumulated other comprehensive loss was $1,547 and $119
during the three months ended December 31, 2009 and September 30, 2009,
respectively. Total OTTI on securities was $10,919 during the year
ended December 31, 2009. The non-credit component of OTTI recognized
in accumulated other comprehensive loss was $3,004 during the year
ended December 31, 2009. There was no non-credit componentof OTTI
recognized during the year ended December 31, 2008.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
Unaudited Core Earnings and Core Cash Earnings Reconciliations
(Dollars In thousands except per share amounts)
Core earnings and related data are "Non-GAAP Disclosures." These
disclosures present information which management considers useful to the
readers of this report since they present a measure of the results of the
Company's ongoing operations during the period (exclusive of gains or
losses on sales of securities and other real estate owned and other
material non-recurring items).
Core cash earnings and related data are also "Non-GAAP Disclosures." These
disclosures present information which management considers useful to the
readers of this report since they present a measure of the tangible equity
generated from operations during each period presented. Tangible
stockholders' equity is derived from stockholders' equity, with various
adjustment items that are based upon standards of the Company's primary
regulator, the Office of Thrift Supervision. Tangible stockholders' equity
generation is a significant financial measure since banks are subject to
regulatory requirements involving the maintenance of minimum tangible
capital levels. A reconciliation between GAAP stockholders' equity
(GAAP capital) and tangible stockholders' equity (regulatory capital) can
be found in the Company's Form 10-K for the year ended December 31, 2008.
The following tables present a reconciliation of GAAP net income and both
core earnings and core cash earnings, as well as financial performance
ratios determined based upon core earnings and core cash earnings, for each
of the periods presented:
For the Three Months Ended
----------------------------------
December September December
31, 30, 31,
2009 2009 2008
---------- ---------- ----------
Net income as reported $ 8,097 $ 8,326 $ 5,293
Loss on sales or writedowns of other
real estate owned 196 - -
Impairment charge on equity mutual
funds - - -
Credit related impairment charge on
trust preferred securities 1,433 556 3,209
Gain on sale of municipal agency
securities - - -
Gain on re-acquisition of debt (505)
Non-recurring adjustment to income
taxes - - 36
Expense associated with prepayment of
FHLBNY advances - 440 -
Tax effect of adjustments and other
non-recurring tax items (533) (414) (1,449)
---------- ---------- ----------
Core Earnings $ 8,688 $ 8,908 $ 7,089
---------- ---------- ----------
Cash Earnings Additions :
Non-cash stock benefit plan expense 618 638 685
---------- ---------- ----------
Core Cash Earnings $ 9,306 $ 9,546 $ 7,774
---------- ---------- ----------
Performance Ratios (Based upon Core
Earnings):
Core EPS (Diluted) $ 0.26 $ 0.27 $ 0.22
Core Return on Average Assets 0.89% 0.91% 0.73%
Core Return on Average Stockholders'
Equity 11.88% 12.47% 10.28%
Core Return on Average Tangible
Stockholders' Equity 14.36% 15.05% 12.28%
Core Cash EPS (Diluted) $ 0.28 $ 0.29 $ 0.24
Core Cash Return on Average Assets 0.95% 0.98% 0.80%
Core Cash Return on Average Tangible
Stockholders' Equity 15.38% 16.13% 13.47%
For the Year Ended
----------------------
December December
31, 31,
2009 2008
---------- ----------
Net income as reported $ 26,189 $ 28,028
Loss on sales or writedowns of other
real estate owned 288 129
Impairment charge on equity mutual
funds 3,063 -
Credit related impairment charge on
trust preferred securities 4,852 3,209
Gain on sale of municipal agency
securities (431) -
Gain on re-acquisition of debt (505)
Non-recurring adjustment to income
taxes - (510)
Expense associated with prepayment of
FHLBNY advances 625 -
Tax effect of adjustments and other
non-recurring tax items (3,565) (1,507)
---------- ----------
Core Earnings $ 30,516 $ 29,349
---------- ----------
Cash Earnings Additions :
Non-cash stock benefit plan expense 2,561 2,572
---------- ----------
Core Cash Earnings $ 33,077 $ 31,921
---------- ----------
Performance Ratios (Based upon Core
Earnings):
Core EPS (Diluted) $ 0.92 $ 0.89
Core Return on Average Assets 0.77% 0.79%
Core Return on Average Stockholders'
Equity 10.72% 10.78%
Core Return on Average Tangible
Stockholders' Equity 12.91% 13.12%
Core Cash EPS (Diluted) $ 1.00 $ 0.97
Core Cash Return on Average Assets 0.83% 0.86%
Core Cash Return on Average Tangible
Stockholders' Equity 13.99% 14.26%
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
For the Three Months Ended
-----------------------------------------
December September December
31, 30, 31,
2009 2009 2008
----------- ----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.24 $ 0.25 $ 0.16
Return on Average Assets 0.83% 0.85% 0.55%
Return on Average Stockholders'
Equity 11.07% 11.66% 7.67%
Return on Average Tangible
Stockholders' Equity 13.38% 14.07% 9.17%
Net Interest Spread 3.28% 2.91% 2.42%
Net Interest Margin 3.48% 3.11% 2.63%
Non-interest Expense to Average
Assets 1.51% 1.39% 1.29%
Efficiency Ratio 45.55% 43.13% 51.86%
Effective Tax Rate 33.61% 39.06% 28.25%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.26 $ 0.27 $ 0.22
Core Return on Average Assets 0.89% 0.91% 0.73%
Core Return on Average
Stockholders' Equity 11.88% 12.47% 10.28%
Core Return on Average Tangible
Stockholders' Equity 14.36% 15.05% 12.28%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.57 $ 8.42 $ 8.10
Tangible Book Value Per Share 7.09 6.97 6.79
Average Balance Data:
Average Assets $ 3,902,218 $ 3,912,313 $ 3,873,395
Average Interest Earning Assets 3,685,509 3,721,680 3,629,527
Average Stockholders' Equity 292,480 285,688 275,896
Average Tangible Stockholders'
Equity 242,071 236,680 230,886
Average Loans 3,332,367 3,267,984 3,237,562
Average Deposits 2,197,708 2,255,479 2,163,553
Asset Quality Summary:
Net charge-offs $ 2,970 $ 3,619 $ 350
Nonperforming Loans 11,294 14,162 7,402
Nonperforming Loans/ Total Loans 0.33% 0.43% 0.22%
Nonperforming Assets 12,737 (1) 16,090 7,702
Nonperforming Assets/Total
Assets 0.32% 0.41% 0.19%
Allowance for Loan Loss/Total
Loans 0.63% 0.61% 0.53%
Allowance for Loan
Loss/Nonperforming Loans 190.41% 143.07% 235.80%
Loans Delinquent 30 to 89 Days
at period end $ 29,548 $ 11,340 $ 5,075
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.26% 6.23% 5.79%
Tangible Capital Ratio (Bank
Only) 7.59% 8.03% 7.63%
Leverage Capital Ratio (Bank
Only) 7.59% 8.03% 7.63%
Risk Based Capital Ratio (Bank
Only) 11.22% 11.73% 11.43%
For the Year Ended
----------------------------
December 31, December 31,
2009 2008
----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.79 $ 0.85
Return on Average Assets 0.66% 0.76%
Return on Average Stockholders'
Equity 9.20% 10.29%
Return on Average Tangible
Stockholders' Equity 11.08% 12.52%
Net Interest Spread 2.73% 2.34%
Net Interest Margin 2.96% 2.60%
Non-interest Expense to Average
Assets 1.44% 1.35%
Efficiency Ratio 48.65% 51.25%
Effective Tax Rate 34.98% 33.56%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.92 $ 0.89
Core Return on Average Assets 0.77% 0.79%
Core Return on Average
Stockholders' Equity 10.72% 10.78%
Core Return on Average Tangible
Stockholders' Equity 12.91% 13.12%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.57 $ 8.10
Tangible Book Value Per Share 7.09 6.79
Average Balance Data:
Average Assets $ 3,966,441 $ 3,709,924
Average Interest Earning Assets 3,761,865 3,512,771
Average Stockholders' Equity 284,610 272,299
Average Tangible Stockholders'
Equity 236,455 223,778
Average Loans 3,287,445 3,090,032
Average Deposits 2,268,442 2,131,211
Asset Quality Summary:
Net charge-offs $ 8,993 $ 584
Nonperforming Loans 11,294 7,402
Nonperforming Loans/ Total Loans 0.33% 0.22%
Nonperforming Assets 12,737 (1) 7,702
Nonperforming Assets/Total
Assets 0.32% 0.19%
Allowance for Loan Loss/Total
Loans 0.63% 0.53%
Allowance for Loan
Loss/Nonperforming Loans 190.41% 235.80%
Loans Delinquent 30 to 89 Days
at period end $ 29,548 $ 5,075
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.26% 5.79%
Tangible Capital Ratio (Bank
Only) 7.59% 7.63%
Leverage Capital Ratio (Bank
Only) 7.59% 7.63%
Risk Based Capital Ratio (Bank
Only) 11.22% 11.43%
(1) Amount comprised of total nonperforming loans, other real
estate owned and the recorded balance of $688,000 on two pooled
bank trust preferred security investments for which the Bank has
not received any contractual payments of interest or principal in over
90 days.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME
(Dollars In thousands)
For the Three Months Ended
-----------------------------------
December 31, 2009
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,330,848 $ 49,277 5.92%
Other loans 1,519 33 8.69
Mortgage-backed securities 226,224 2,551 4.51
Investment securities 46,329 359 3.10
Other short-term investments 80,589 744 3.69
----------- ---------- ----------
Total interest earning assets 3,685,509 $ 52,964 5.75%
----------- ----------
Non-interest earning assets 216,709
-----------
Total assets $ 3,902,218
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 106,428 $ 237 0.88%
Money Market accounts 713,234 1,651 0.92
Savings accounts 298,604 200 0.27
Certificates of deposit 969,370 5,618 2.30
----------- ---------- ----------
Total interest bearing
deposits 2,087,636 7,706 1.46
Borrowed Funds 1,268,568 13,173 4.12
----------- ---------- ----------
Total interest-bearing
liabilities 3,356,204 $ 20,879 2.47%
----------- ---------- ----------
Non-interest bearing checking
accounts 110,072
Other non-interest-bearing
liabilities 143,462
-----------
Total liabilities 3,609,738
Stockholders' equity 292,480
-----------
Total liabilities and stockholders'
equity $ 3,902,218
===========
Net interest income $ 32,085
==========
Net interest spread 3.28%
==========
Net interest-earning assets $ 329,305
===========
Net interest margin 3.48%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 109.81%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,197,708 $ 7,706 1.39%
Interest earning assets (excluding
prepayment and other fees) 5.70%
September 30, 2009
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,266,416 $ 48,422 5.93%
Other loans 1,568 35 8.93
Mortgage-backed securities 246,354 2,748 4.46
Investment securities 26,039 76 1.17
Other short-term investments 181,303 809 1.78
----------- ---------- ----------
Total interest earning assets 3,721,680 $ 52,090 5.60%
----------- ----------
Non-interest earning assets 190,633
-----------
Total assets $ 3,912,313
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 105,938 $ 179 0.67%
Money Market accounts 730,634 1,738 0.94
Savings accounts 297,450 201 0.27
Certificates of deposit 1,016,246 7,038 2.75
----------- ---------- ----------
Total interest bearing
deposits 2,150,268 9,156 1.69
Borrowed Funds 1,265,644 13,965 4.38
----------- ---------- ----------
Total interest-bearing
liabilities 3,415,912 $ 23,121 2.69%
----------- ---------- ----------
Non-interest bearing checking
accounts 105,211
Other non-interest-bearing
liabilities 105,502
-----------
Total liabilities 3,626,625
Stockholders' equity 285,688
-----------
Total liabilities and stockholders'
equity $ 3,912,313
===========
Net interest income $ 28,969
==========
Net interest spread 2.91%
==========
Net interest-earning assets $ 305,768
===========
Net interest margin 3.11%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.95%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,255,479 $ 9,156 1.61%
Interest earning assets (excluding
prepayment and other fees) 5.53%
December 31, 2008
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,235,756 $ 47,987 5.93%
Other loans 1,806 40 8.86
Mortgage-backed securities 306,652 3,489 4.55
Investment securities 27,456 538 7.84
Other short-term investments 57,857 594 4.11
----------- ---------- ----------
Total interest earning assets 3,629,527 $ 52,648 5.80%
----------- ----------
Non-interest earning assets 243,868
-----------
Total assets $ 3,873,395
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 104,224 $ 603 2.30%
Money Market accounts 606,647 4,074 2.67
Savings accounts 269,153 382 0.56
Certificates of deposit 1,090,661 9,572 3.49
----------- ---------- ----------
Total interest bearing
deposits 2,070,685 14,631 2.81
Borrowed Funds 1,317,166 14,188 4.29
----------- ---------- ----------
Total interest-bearing
liabilities 3,387,851 28,819 3.38%
----------- ---------- ----------
Non-interest bearing checking
accounts 92,868
Other non-interest-bearing
liabilities 116,780
-----------
Total liabilities 3,597,499
Stockholders' equity 275,896
-----------
Total liabilities and stockholders'
equity $ 3,873,395
===========
Net interest income $ 23,829
==========
Net interest spread 2.42%
==========
Net interest-earning assets $ 241,676
===========
Net interest margin 2.63%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 107.13%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,163,553 $ 14,631 2.69%
Interest earning assets (excluding
prepayment and other fees) 5.70%
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS AND TROUBLED DEBT
RESTRUCTURINGS
(Dollars In thousands except per share amounts)
At At At
December September December
31, 30, 31,
2009 2009 2008
---------- ---------- -----------
Non-Performing Loans
One- to four-family $ 371 $ 371 $ 566
Multifamily residential 5,885 8,495 776
Commercial real estate 3,070 2,739 3,439
Mixed Use 1,935 2,525 2,590
Cooperative apartment 26 26 26
Other 7 6 5
---------- ---------- -----------
Total Non-Performing Loans
$ 11,294 $ 14,162 $ 7,402
---------- ---------- -----------
Other Non-Performing Assets
Other real estate owned (1) 755 168 300
Pooled bank trust preferred securities 688 1,760 -
---------- ---------- -----------
Total Non-Performing Assets 12,737 16,090 7,702
---------- ---------- -----------
Troubled Debt Restructurings not
included in non-performing loans
Multifamily residential - - -
Commercial real estate - - -
Mixed Use 1,040 1,040 -
Other - - -
---------- ---------- -----------
Total Troubled Debt Restructurings $ 1,040 $ 1,040 $ -
---------- ---------- -----------
Loans internally rated "Substandard" on
accrual status 14,942 1,810 -
(1) Amount was fully comprised of multifamily residential loans at
December 31, 2009 and September 30, 2009.
Amount was fully comprised of commercial real estate loans at
December 31, 2008.
PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES
At At
December 31, September 30,
2009 2009
---------- ----------
Total Non-Performing Assets 12,737 16,090
Loans over 90 days past due on accrual
status - -
---------- ----------
PROBLEM ASSETS 12,737 16,090
---------- ----------
Tier 1 Capital - Dime Savings Bank of
Williamsburgh 294,808 308,244
Allowance for loan losses 21,505 20,261
---------- ----------
TANGIBLE CAPITAL PLUS RESERVES 316,313 328,505
---------- ----------
PROBLEM ASSETS AS A PERCENTAGE OF
TANGIBLE CAPITAL AND RESERVES 4.0% 4.9%
Contact Information: Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279