-- Net interest margin was 3.46%, compared to 3.48% in the December 2009
quarter. The average cost of deposits declined 2 basis points to 1.37%
from 1.39% during the December 2009 quarter.
-- Total loan credit costs were $3.4 million.
-- The allowance for loan loss reserve increased to 0.71% of total loans
from 0.63% at December 31, 2009.
-- The allowance for loan losses stood at 83.4% of non-performing loans at
March 31, 2010.
-- Loans delinquent between 30 and 89 days decreased to $19.7 million at
March 31, 2010 compared to $29.5 million at December 31, 2009.
-- Total assets increased by $162.0 million to $4.11 billion at March 31,
2010, as the Company grew its real estate loan portfolio by $92.5
million through a combination of loan originations and purchases as
well as lower than expected prepayment activity.
-- Real estate loan originations were $146.4 million, up from the $122.3
million level in the December 2009 quarter. The Company supplemented
these originations with purchases of $22.8 million of seasoned first
and second mortgages on multifamily residential properties with very
low combined loan-to-value ratios.
-- Despite the significant asset growth, the Company's consolidated ratio
of tangible capital to tangible assets grew to 6.35% at March 31, 2010
from 6.26% at December 31, 2009.
-- Non-performing assets increased to $30.9 million, or 0.75% of total
assets, due primarily to further deterioration in the payment
status of a few previously identified problem credits.
The Company's earnings for the quarter ended March 31, 2010 reflected an
after-tax other-than-temporary impairment ("OTTI") charge of approximately
$91,000 on three pooled bank trust preferred securities, and an additional
after-tax charge of $125,000 on the write-down of other real estate owned
("OREO") properties. Partially offsetting these items was an after-tax
gain of $160,000 on the sale of some mutual fund equity holdings on which
the Company recognized an OTTI charge during the March 2009 quarter.
Earnings for the quarter ended December 31, 2009 reflected an after-tax
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 the Company's corporate debt and an after-tax charge of
$123,000 on the write-down of OREO properties. The Company's earnings for
the quarter ended March 31, 2009 reflected aggregate after-tax OTTI charges
of $2.8 million related to three pooled bank trust preferred securities and
five equity mutual funds. Earnings for the quarter ended March 31, 2009
also included an after-tax gain of $272,000 on the disposal of municipal
securities and an after-tax charge of $117,000 on the prepayment of FHLBNY
advances.
According to Vincent F. Palagiano, Chairman and Chief Executive Officer of
the Company, "Overall, the results for the first quarter of 2010 were quite
favorable, as evidenced by a 71% increase in core earnings per share
compared with the same quarter of 2009. Net interest margin approximated
3.5% again during the most recent quarter, and credit costs dropped to $3.4
million. While non-performing assets increased during the quarter, they
still remained well below 1% of total assets and wholly manageable. In
addition, since the increase in non-performing loans resulted primarily
from the deterioration in payment status of a few borrower relationships
that had previously been identified as problematic, the additional reserves
estimated on these loans at March 31, 2010 were modest, resulting in lower
total credit costs compared to the December 2009 quarter."
Dime's net interest margin decreased slightly during the quarter ended
March 31, 2010. Several components contributed to this modest decline.
Asset growth during the most recent quarter was achieved at slightly lower
average spreads than the 3.48% level experienced during the December 2009
quarter. In addition, the growth in non-performing loans had a minor
adverse impact upon the average yield on real estate loans. Finally,
management did not immediately deploy a significant portion of the $96
million in deposit balances gathered during the March 2010 quarter, and
instead retained the funds in liquid cash balances, earning a negative
interest rate spread. Offsetting these items was the favorable re-pricing
of $36.9 million of loans re-financed during the quarter, along with $22.8
million of loans purchased at an average yield to Dime that exceeded the
weighted average portfolio rate at December 31, 2009. Overall, the net
interest margin was 3.46% during the March 2010 quarter, approximating the
December 2009 quarterly level, and still far more favorable than the levels
experienced from 2005 through 2008. The $114.1 million cash position at
March 31, 2010 is likely to result in a reduction in the net interest
margin during the second quarter of 2010, however, it should help to
stabilize net interest margin thereafter as it is beneficially deployed
during the second half of 2010.
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 variety of
collateral types. Dime's loan portfolio is collateralized primarily by
multifamily apartment buildings in New York City, widely considered 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. This
factor 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 $32.8 million during the March 2010 quarter, up
$681,000 from the December 2009 quarter. An increase of $105 million in
the average balance of interest earning assets and a decline of 5 basis
points in the average cost of interest bearing liabilities contributed to
the growth in net interest income.
Net interest income exceeded the March 2009 quarterly level by $8.6
million, driven by growth of 95 basis points in net interest margin from
the quarter ended March 31, 2009 to the quarter ended March 31, 2010,
reflecting declines of 111 basis points and 32 basis points in the average
cost of deposits and borrowings, respectively, combined with an increase of
21 basis points in the average yield on interest earning assets during the
period.
Mr. Palagiano commented, "Net interest margin remained at a favorable level
during the most recent quarter despite 16% annualized growth in assets and
approximately $75 million of liquid funds added during the period. As we
complete our current deposit promotional activities during the upcoming
quarter, and commence the deployment of some of these liquid funds during
the second half of 2010, the net interest margin is likely to decline
during the second quarter of 2010, while stabilizing thereafter."
PROVISION/ALLOWANCE FOR LOAN LOSSES AND PROBLEM PORTFOLIO LOANS
Non-performing loans were $29.5 million at March 31, 2010 compared to $11.3
million at December 31, 2009 and $13.1 million at March 31, 2009. As a
percentage of total loans, non-performing loans totaled 0.85% at March 31,
2010, compared to 0.33% at December 31, 2009 and 0.40% at March 31, 2009.
While non-performing loans increased during the most recent quarter, loans
delinquent between 30 and 89 days decreased to $19.7 million as of March
31, 2010 from $29.5 million at December 31, 2009. Loans delinquent between
30 and 89 days totaled $19.3 million at March 31, 2009.
The Company recorded a $3.4 million provision to its allowance for loan
losses during the quarter ended March 31, 2010, compared to $4.5 million
during the quarter ended December 31, 2009. Provisions totaled $2.6
million during the quarter ended March 31, 2009. Charge-offs recorded on
problem loans totaled $769,000 during the March 2010 quarter, compared to
$3.0 million in the December 2009 quarter and $1.9 million in the March
2009 quarter. Approximately 60% of the charge-offs recognized during the
March 2010 quarter related to a write down to the likely disposal value of
one new problematic loan.
Mr. Palagiano stated, "The increase in non-performing loans during the most
recent quarter resulted primarily from a further deterioration in the
payment status of a few previously identified problem loans. Dime has
continued to recognize likely potential losses on problem loans in a timely
manner, and thus had already applied reserves to the previously identified
problematic loans. Total credit costs thus declined from the December 2009
quarter to the March 2010 quarter despite the increase in non-accrual
loans."
The timing and severity of charge-offs are unpredictable. At March 31,
2010, the allowance for loan losses was $24.6 million, or 83% of
non-performing loans.
NON-INTEREST INCOME
OTTI, Gain on the Sale of Other Assets and Re-Acquisition of Corporate Debt
During the quarter ended March 31, 2010, the pre-tax credit component of
OTTI charges totaled $166,000, compared to $1.4 million during the previous
linked quarter. At March 31, 2010, six of Dime's eight trust preferred
securities were deemed to meet the criteria for OTTI. The decline in the
credit component of OTTI charges reflected a reduction in new payment
deferrals during the March 2010 quarter within the collateral pool
underlying certain of Dime's eight trust preferred collateralized debt
obligation securities.
At March 31, 2010, Dime had failed to receive contractual principal or
interest payments on two trust preferred securities with an aggregate
recorded balance of $709,000 ($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 March
31, 2010, Dime did not receive a small portion of the interest due on two
trust preferred securities having a recorded balance of $376,000 ($568,000
excluding the $292,000 total non-credit component of OTTI). The remaining
four trust preferred securities, with a total cost basis of $10.2 million
net of credit-related OTTI, are current on all contractual obligations.
The Company sold mutual funds totaling $769,000 during the most recent
quarter, recognizing a pre-tax gain of $327,000 on the sale. The Company
also transferred $1.4 million of mutual funds from available for sale to
trading during the most recent quarter, moving a pre-tax gain of $242,000
from other comprehensive income into reported earnings as a result of the
transfer. In both instances, the gains represented recoveries from the cost
basis of these mutual funds subsequent to the recognition of OTTI charges
during the March 2009 quarter. The mutual funds transferred to trading
during the most recent quarter represent assets owned by the Company that
are earmarked for the future settlement of certain benefits earned under
the Company's Benefit Maintenance Plan ("BMP"). In March 2010, the Company
commenced recognizing benefit expense related to the fluctuation in value
of these mutual funds. By transferring the mutual funds to trading, future
changes in their valuation will have no impact upon the Company's net
operating results.
The Company re-acquired a portion of its outstanding corporate debt at a
discount during the quarter ended December 31, 2009, recognizing a pre-tax
gain of $505,000 on the transaction. During the quarter ended March 31,
2009, the Company sold its entire $10 million portfolio of municipal agency
securities, recognizing an aggregate pre-tax gain of $431,000 on the sale.
While there were no sales of OREO and other assets during the three months
ended March 31, 2010, December 31, 2009 or March 31, 2009, the Company did
recognize pre-tax write-downs of OREO totaling $200,000 and $196,000,
respectively, during the quarterly periods ended March 31, 2010 and
December 31, 2009. These write-downs, which are reflected in non-interest
expense, were deemed warranted in order to reduce the recorded balance of
OREO to their likely disposal value.
Mortgage Banking Income and Delinquent Serviced Loans
Loan sales were negligible during the quarters ended March 31, 2010,
December 31, 2009, and March 31, 2009, and were limited to one- to
four-family mortgage loans.
Mortgage banking income totaled $211,000 during the quarter ended March 31,
2010, primarily reflecting servicing fee income. 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. Mortgage banking losses totaled $1.2
million during the quarter ended March 31, 2009, reflecting a $1.5 million
provision for probable losses on loans sold with recourse to Fannie Mae,
that was partially offset by servicing fee income of $255,000.
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 $428.0 million at March 31, 2010.
Within the Fannie Mae portfolio, loans delinquent 90 days or more were
$16.4 million at March 31, 2010 compared to $14.2 million at December 31,
2009. Of the March 31, 2010 total, $14.2 million was comprised of five
loans involving the same borrower. Dime currently intends to repurchase
these five loans from Fannie Mae during the second quarter of 2010, solely
to facilitate a sale transaction that is currently expected to be finalized
in June 2010. At March 31, 2010, there were $4.6 million of loans
delinquent between 30 and 89 days within the pool of loans serviced for
Fannie Mae, compared to $3.6 million at December 31, 2009. At March 31,
2009, there were $17.3 million of loans delinquent 90 days or more, and
$3.0 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 $18.7 million
as of March 31, 2010, against which a reserve of $4.2 million existed at
March 31, 2010. This reserve approximated 1.0% of the remaining principal
balance of loans in the Fannie Mae pool as of March 31, 2010. Additions to
the reserve for the first loss position are charged against mortgage
banking (non-interest) income, and probable losses related to the entire
pool of loans sold with recourse to Fannie Mae are reflected in the $4.2
million reserve balance.
Other Components of Non-Interest Income
Other components of non-interest income totaled $1.9 million during the
quarter ended March 31, 2010, relatively unchanged from the December 2009
quarter and up $164,000 from the March 2009 quarter. The increase from the
March 2009 quarter resulted from additional fees collected on portfolio
loans.
NON-INTEREST EXPENSE
Non-interest expense was $15.7 million during the quarter ended March 31,
2010, an increase of $1.0 million from the December 2009 quarter. Over
one-half of this increase was attributable to an increase of $664,000 in
salaries and benefits that primarily reflected a one-time adjustment of
approximately $460,000 to the manner of expense recognition on a component
of the Company's BMP. The remaining increase in non-interest expense
reflected a $200,000 write-down in the carrying value of OREO, $183,000 of
additional occupancy and equipment expense resulting from higher snow
removal and utility costs, and a $374,000 increase in marketing expense
related to deposit promotional activities planned for 2010.
Compared to the March 2009 quarter, non-interest expense increased $2.1
million during the quarter ended March 31, 2010, due primarily to the
aforementioned $200,000 write-down in the carrying value of OREO, as well
as increases of $1.3 million in compensation and benefits, $183,000 in
FDIC insurance assessments, $172,000 in occupancy and equipment expense and
$439,000 in other expenses. The increase in compensation and benefits
expense reflected the aforementioned BMP charge, as well as ongoing staff
salary increases. The increase in FDIC insurance assessments reflected
ongoing increases from an FDIC recapitalization program effective April 1,
2009. The growth in occupancy and equipment expense was primarily
attributable to increased rental expense on leased branches, while the
additional other expenses reflected higher marketing and legal costs of
$299,000 and $184,000, respectively.
INCOME TAX EXPENSE
The Company's customary consolidated effective tax rate approximates 37%.
During the three months ended March 31, 2010, the Company recognized gains
totaling $569,000 on both the sale of mutual funds and the transfer of
mutual funds into trading. From a tax perspective, since: (i) these events
triggered the reversal of deferred tax assets previously recognized when
the Company recorded OTTI charges in March 2009; and (ii) the deferred tax
assets on the OTTI charges were established at a long-term rate
approximating 45% (significantly in excess of the current consolidated 37%
tax rate), their reversal created a higher effective tax rate of 41.3%
during the March 2010 quarter. The impact of $4.6 million in OTTI charges
reduced the effective tax rate for the quarter ended March 31, 2009 to 26%,
as the tax provision applied to these OTTI items was made at the long-term
45% rate.
BALANCE SHEET
Total assets increased $161.7 million, to $4.11 billion, from December 31,
2009 to March 31, 2010. The increase in assets was experienced primarily
in real estate loans, as originations and loan purchases outpaced
amortization and satisfactions during the period. Real estate loans
increased $92.5 million as a result of $146.4 million of originations and
$22.8 million in purchases during the period. Cash and due from banks
increased $74.7 million as Dime temporarily kept deposit funds gathered
during the quarter highly liquid. Management currently anticipates
deployment of a large portion of these increased cash balances into real
estate loans, investments or mortgage-backed securities, or borrowing
repayments during the remainder of 2010.
Total liabilities increased by $147.9 million during the most recent
quarter, primarily as a result of the additions of $95.8 million in
deposits, $33.3 million in mortgagor escrow balances and $20.0 million in
borrowings. The growth in deposits was achieved in both money market
accounts and certificates of deposit ("CD's"). Mortgagor escrow balances
increased as borrowers continued to fund real estate tax amounts in advance
of semi-annual payments made by Dime on their behalf during the 2nd and 4th
quarters of each year. The Company also added a $20.0 million fixed-rate
Federal Home Loan Bank of New York advance with a three-year term and an
average cost of 1.79%.
Real Estate Lending and Loan Amortization
Real estate loan originations, which were $122.3 million during the
December 2009 quarter, totaled $146.4 million during the quarter ended
March 31, 2010 and $83.7 million during the quarter ended March 31, 2009.
The average rate on real estate loan originations during the March 2010
quarter was 5.60%, compared to 5.72% during the quarter ended December 31,
2009 and 6.21% during the quarter ended March 31, 2009. In addition,
during the March 2010 quarter, the Bank purchased $22.8 million of seasoned
first and second mortgages secured by multifamily residential properties
located in the New York City metropolitan marketplace. At March 31, 2010,
these loans had a weighted average yield of approximately 6.00% and a
weighted average combined loan-to-value ratio under 25%.
Real estate loan amortization approximated 9% of the real estate loan
portfolio on an annualized basis during each of the quarterly periods ended
March 31, 2010, December 31, 2009 and March 31, 2009.
Deposits
Deposits increased $95.8 million from December 31, 2009 to March 31, 2010.
Core deposits (i.e., non-CDs) grew $21.7 million during this period fueled
by an additional $26.1 million of money market balances. CDs increased
$74.1 million during the three months ended March 31, 2010, due primarily
to the success of a promotional deposit gathering program on 15-month
individual retirement account ("IRA") CDs. As a result of a multi-year
effort, IRA deposits have increased from $106.5 million, or 5.30% of total
deposits, as of December 31, 2006 to $220.0 million, or 9.5% of total
deposits, at March 31, 2010.
During the March 2010 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
extend the average duration of its liabilities while retaining its net
interest margin at a favorable level. Dime has extended the average
duration of CDs from approximately 8.6 months at March 31, 2009 to
approximately 15.2 months at March 31, 2010. Depending upon continued
favorable market conditions, the mix of retail versus wholesale funding
will be managed opportunistically. Marketing efforts during the first
quarter of 2010 continued to support sales of checking accounts and medium
and long-term CDs, and such efforts are expected to continue during the
second quarter of 2010. Dime anticipates that the cost of deposits has
likely approached its cyclical bottom.
Average deposits per branch were $100.5 million at March 31, 2010, slightly
above the $96.4 million level at December 31, 2009, while down from $101.5
million at March 31, 2009. Core deposits comprised 54% of total deposits
at March 31, 2010, down slightly from 56% at December 31, 2009, while up
from 52% at March 31, 2009. The loan-to-deposit ratio was 151% at March
31, 2010, compared to 153% at December 31, 2009 and 141% at March 31, 2009.
Dime currently anticipates opening its 24th retail banking office, in
Cedarhust, New York, in June 2010. This location will be Dime's 6th branch
in Nassau County, New York.
Stockholders' Equity
Stockholders' equity at March 31, 2010 totaled $308.5 million, or 7.50% of
total assets, compared to $294.8 million, or 7.46% of total assets, at
December 31, 2009.
After dividends, the Company's tangible stockholders' equity increased to
$257.6 million at March 31, 2010, from $243.9 million at December 31, 2009.
The quarterly cash dividend declared on April 22, 2010 represented a payout
ratio of 48% of first quarter 2010 core earnings. At March 31, 2010, the
consolidated tangible stockholders' equity ratio was 6.35% of tangible
assets and tangible book value per share was $7.49.
The Company did not participate in the TARP program and thus has no TARP
capital.
There were no stock repurchases during the quarter ended March 31, 2010.
As of March 31, 2010, 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 March 31, 2010, the reported returns on average
stockholders' equity and average tangible equity were 12.6% and 15.2%,
respectively. The core returns on average stockholders' equity and average
tangible equity were 12.7% and 15.3%, respectively. Core returns primarily
exclude OTTI charges, gains on the sale of securities, write-downs of OREO,
other significant non-recurring transactions and related income tax
effects. Finally, the core cash return on average tangible stockholders'
equity (the fundamental measure of new internally generated capital) was
16.3%.
OUTLOOK
The average cost of deposits decreased to 1.37% during the March 2010
quarter from 1.39% during the December 2009 quarter, as Dime continued to
take advantage of the historically low short-term interest rate environment
to maintain pricing discipline on its deposits. 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 first quarter of
2010, are expected to run in the 10% to 15% range during the second quarter
of 2010, with the increase reflecting a higher volume of
multifamily/commercial real estate loans reaching their contractual
maturity or repricing.
Dime has no additional FDIC special assessments forecasted for the second
quarter of 2010.
At March 31, 2010, the loan commitment pipeline was approximately $96.8
million, skewed primarily toward multifamily residential properties, with
an approximate weighted average rate of 5.55%.
Operating expenses for the June 2010 quarter are expected to approximate
$14.9 million, again assuming no further FDIC special assessments or
increases in deposit insurance premiums.
Quarterly credit costs were $3.4 million, $4.0 million, $2.3 million and
$6.4 million during the March 2010 quarter and the three prior quarters.
Management assumes that credit costs will remain range bound for the near
term, as the increase in non-performing assets during the first quarter of
2010 primarily reflected loans that were already delinquent and problematic
at December 31, 2009.
ABOUT DIME COMMUNITY BANCSHARES
The Company (
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
March 31, December 31,
2010 2009
----------- -----------
ASSETS:
Cash and due from banks $ 114,069 $ 39,338
Investment securities held to maturity 7,306 7,240
Investment securities available for sale 53,193 43,162
Trading securities 1,390 -
Mortgage-backed securities available for sale 200,610 224,773
Federal funds sold and other short-term
investments 5,847 3,785
Real Estate Loans:
One-to-four family and cooperative apartment 128,146 131,475
Multifamily and underlying cooperative 2,477,963 2,377,278
Commercial real estate 844,998 834,724
Construction and land acquisition 29,830 44,544
Unearned discounts and net deferred loan fees 4,239 4,017
----------- -----------
Total real estate loans 3,485,176 3,392,038
----------- -----------
Other loans 2,551 3,221
Allowance for loan losses (24,620) (21,505)
----------- -----------
Total loans, net 3,463,107 3,373,754
----------- -----------
Loans held for sale - 416
Premises and fixed assets, net 29,897 29,841
Federal Home Loan Bank of New York capital stock 54,983 54,083
Other real estate owned, net 707 755
Goodwill 55,638 55,638
Other assets 127,193 119,489
----------- -----------
TOTAL ASSETS $ 4,113,940 $ 3,952,274
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing checking $ 103,676 $ 106,449
Interest Bearing Checking 109,199 114,416
Savings 305,955 302,340
Money Market 734,652 708,578
----------- -----------
Sub-total 1,253,482 1,231,783
----------- -----------
Certificates of deposit 1,059,128 985,053
----------- -----------
Total Due to Depositors 2,312,610 2,216,836
----------- -----------
Escrow and other deposits 99,187 65,895
Securities sold under agreements to repurchase 195,000 230,000
Federal Home Loan Bank of New York advances 1,064,675 1,009,675
Subordinated Notes Sold 25,000 25,000
Trust Preferred Notes Payable 70,680 70,680
Other liabilities 38,248 39,415
----------- -----------
TOTAL LIABILITIES 3,805,400 3,657,501
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000 shares
authorized, 51,131,784 shares and 51,131,784
shares issued at March 31, 2010 and December 31,
2009, respectively and 34,385,355 shares and
34,395,531 shares outstanding at March 31, 2010
and December 31, 2009, respectively) 511 511
Additional paid-in capital 223,046 214,654
Retained earnings 311,748 306,787
Unallocated common stock of Employee Stock
Ownership Plan (3,644) (3,701)
Unearned common stock of Restricted Stock Awards (2,114) (2,505)
Common stock held by the Benefit Maintenance Plan (7,979) (8,007)
Treasury stock (16,746,429 shares and 16,736,253
shares at March 31, 2010, and December 31, 2009,
respectively) (208,036) (207,884)
Accumulated other comprehensive loss, net (4,992) (5,082)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 308,540 294,773
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,113,940 $ 3,952,274
=========== ===========
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except per share amounts)
For the Three Months Ended
----------------------------------
March 31, December 31, March 31,
2010 2009 2009
---------- ---------- ----------
Interest income:
Loans secured by real estate $ 50,122 $ 49,277 $ 48,329
Other loans 39 33 37
Mortgage-backed securities 2,271 2,551 3,280
Investment securities 407 359 245
Federal funds sold and
other short-term investments 742 744 503
---------- ---------- ----------
Total interest income 53,581 52,964 52,394
---------- ---------- ----------
Interest expense:
Deposits and escrow 7,593 7,706 14,212
Borrowed funds 13,222 13,173 14,042
---------- ---------- ----------
Total interest expense 20,815 20,879 28,254
---------- ---------- ----------
Net interest income 32,766 32,085 24,140
Provision for loan losses 3,447 4,491 2,640
---------- ---------- ----------
Net interest income after
provision for loan losses 29,319 27,594 21,500
---------- ---------- ----------
Non-interest income:
Service charges and other fees 936 1,091 858
Mortgage banking income (loss), net 211 (1,708) (1,169)
Other than temporary impairment
("OTTI") charge on securities (1) (166) (1,433) (5,040)
Gain on sale of other real estate
owned and other assets 327 - 431
Gain on transfer of securities into
trading 242
Gain on re-acquisition of debt - 505 -
Other 960 884 874
---------- ---------- ----------
Total non-interest income (loss) 2,510 (661) (4,046)
---------- ---------- ----------
Non-interest expense:
Compensation and benefits 8,886 8,455 7,801
Occupancy and equipment 2,258 2,075 2,086
Other 4,548 4,206 3,721
---------- ---------- ----------
Total non-interest expense 15,692 14,736 13,608
---------- ---------- ----------
Income before taxes 16,137 12,197 3,846
Income tax expense 6,667 4,100 996
---------- ---------- ----------
Net Income $ 9,470 $ 8,097 $ 2,850
========== ========== ==========
Earnings per Share:
Basic $ 0.29 $ 0.24 $ 0.09
========== ========== ==========
Diluted $ 0.28 $ 0.24 $ 0.09
========== ========== ==========
Average common shares outstanding
for Diluted EPS 33,249,082 33,143,496 32,888,319
(1) Total other-than-temporary impairment ("OTTI") on securities was $216
and $6,104, during the three months ended March 31, 2010 and March 31,
2009, respectively. The non-credit component of OTTI recognized
in accumulated other comprehensive loss was $50 and $1,064 during the
three months ended March 31, 2010 and March 31, 2009, respectively.
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, 2009.
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
----------------------------------
March 31, December 31, March 31,
2010 2009 2009
---------- ---------- ----------
Net income as reported $ 9,470 $ 8,097 $ 2,850
Loss on sales or writedowns of other
real estate owned 200 196 -
Impairment charge on equity mutual
funds - - 3,063
Credit related impairment charge on
trust preferred securities 166 1,433 1,977
Gain on sale of investment securities
available-for-sale (327) - (431)
Gain on re-acquisition of debt - (505)
Expense associated with prepayment of
FHLBNY advances - - 185
Tax effect of adjustments and other
non-recurring tax items 16 (533) (2,185)
---------- ---------- ----------
Core Earnings $ 9,525 $ 8,688 $ 5,459
---------- ---------- ----------
Cash Earnings Additions :
Non-cash stock benefit plan expense 660 618 640
---------- ---------- ----------
Core Cash Earnings $ 10,185 $ 9,306 $ 6,099
---------- ---------- ----------
Performance Ratios (Based upon Core
Earnings):
Core EPS (Diluted) $ 0.29 $ 0.26 $ 0.17
Core Return on Average Assets 0.95% 0.89% 0.54%
Core Return on Average Stockholders'
Equity 12.66% 11.88% 7.82%
Core Return on Average Tangible
Stockholders' Equity 15.25% 14.36% 9.36%
Core Cash EPS (Diluted) $ 0.31 $ 0.28 $ 0.19
Core Cash Return on Average Assets 1.01% 0.95% 0.60%
Core Cash Return on Average Tangible
Stockholders' Equity 16.31% 15.38% 10.46%
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
For the Three Months Ended
-------------------------------------
March 31, December 31, March 31,
2010 2009 2009
----------- ----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.28 $ 0.24 $ 0.09
Return on Average Assets 0.94% 0.83% 0.28%
Return on Average Stockholders'
Equity 12.59% 11.07% 4.08%
Return on Average Tangible
Stockholders' Equity 15.17% 13.38% 4.89%
Net Interest Spread 3.23% 3.28% 2.21%
Net Interest Margin 3.46% 3.48% 2.51%
Non-interest Expense to Average
Assets 1.56% 1.51% 1.35%
Efficiency Ratio 45.00% 45.55% 55.09%
Effective Tax Rate 41.31% 33.61% 25.90%
Performance Ratios (Based upon Core
Earnings):
Core EPS (Diluted) $ 0.29 $ 0.26 $ 0.17
Core Return on Average Assets 0.95% 0.89% 0.54%
Core Return on Average Stockholders'
Equity 12.66% 11.88% 7.82%
Core Return on Average Tangible
Stockholders' Equity 15.25% 14.36% 9.36%
Book Value and Tangible Book Value
Per Share:
Stated Book Value Per Share $ 8.97 $ 8.57 $ 8.18
Tangible Book Value Per Share 7.49 7.09 6.80
Average Balance Data:
Average Assets $ 4,015,428 $ 3,902,218 $ 4,039,762
Average Interest Earning Assets 3,790,014 3,685,509 3,853,692
Average Stockholders' Equity 300,874 292,480 279,072
Average Tangible Stockholders'
Equity 249,781 242,071 233,200
Average Loans 3,447,529 3,332,367 3,311,006
Average Deposits 2,247,985 2,197,708 2,321,613
Asset Quality Summary:
Net charge-offs $ 769 $ 2,970 $ 1,876
Nonperforming Loans 29,520 11,294 13,123
Nonperforming Loans/Total Loans 0.85% 0.33% 0.40%
Nonperforming Assets (1) 30,936 12,737 13,423
Nonperforming Assets/Total Assets 0.75% 0.32% 0.33%
Allowance for Loan Loss/Total Loans 0.71% 0.63% 0.56%
Allowance for Loan
Loss/Nonperforming Loans 83.40% 190.41% 139.84%
Loans Delinquent 30 to 89 Days at
period end $ 19,688 $ 29,548 $ 19,278
Regulatory Capital Ratios:
Consolidated Tangible Stockholders'
Equity to
Tangible Assets at period end 6.36% 6.26% 5.83%
Tangible Capital Ratio (Bank Only) 7.77% 7.59% 7.85%
Leverage Capital Ratio (Bank Only) 7.77% 7.59% 7.85%
Risk Based Capital Ratio (Bank Only) 11.79% 11.22% 11.83%
(1) Amount comprised of total nonperforming loans, other real estate owned
and the recorded balance of 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
-----------------------------------
March 31, 2010
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,446,103 $ 50,122 5.82%
Other loans 1,426 39 10.94
Mortgage-backed securities 206,466 2,271 4.40
Investment securities 57,159 407 2.85
Other short-term investments 78,860 742 3.76
----------- ---------- ----------
Total interest earning assets 3,790,014 $ 53,581 5.65%
----------- ----------
Non-interest earning assets 225,414
-----------
Total assets $ 4,015,428
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 104,117 $ 182 0.71%
Money Market accounts 716,696 1,710 0.97
Savings accounts 302,151 200 0.27
Certificates of deposit 1,015,951 5,501 2.20
----------- ---------- ----------
Total interest bearing
deposits 2,138,915 7,593 1.44
Borrowed Funds 1,344,911 13,222 3.99
----------- ---------- ----------
Total interest-bearing
liabilities 3,483,826 $ 20,815 2.42%
----------- ---------- ----------
Non-interest bearing checking
accounts 109,070
Other non-interest-bearing
liabilities 121,658
-----------
Total liabilities 3,714,554
Stockholders' equity 300,874
-----------
Total liabilities and stockholders'
equity $ 4,015,428
===========
Net interest income $ 32,766
==========
Net interest spread 3.23%
==========
Net interest-earning assets $ 306,188
===========
Net interest margin 3.46%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.79%
==========
Deposits (including non-interest
bearing
checking accounts) $ 2,247,985 $ 7,593 1.37%
Interest earning assets (excluding
prepayment and other fees) 5.62%
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%
For the Three Months Ended
----------------------------------
March 31, 2009
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,309,307 $ 48,329 5.84%
Other loans 1,699 37 8.71
Mortgage-backed securities 292,865 3,280 4.48
Investment securities 22,806 245 4.30
Other short-term investments 227,015 503 0.89
----------- ---------- ----------
Total interest earning assets 3,853,692 $ 52,394 5.44%
----------- ----------
Non-interest earning assets 186,070
-----------
Total assets $ 4,039,762
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 109,621 $ 407 1.51%
Money Market accounts 712,311 3,596 2.05
Savings accounts 272,893 353 0.52
Certificates of deposit 1,130,672 9,856 3.54
----------- ---------- ----------
Total interest bearing
deposits 2,225,497 14,212 2.59
Borrowed Funds 1,321,340 14,042 4.31
----------- ---------- ----------
Total interest-bearing
liabilities 3,546,837 28,254 3.23%
----------- ---------- ----------
Non-interest bearing checking
accounts 96,116
Other non-interest-bearing
liabilities 117,737
-----------
Total liabilities 3,760,690
Stockholders' equity 279,072
-----------
Total liabilities and stockholders'
equity $ 4,039,762
===========
Net interest income $ 24,140
==========
Net interest spread 2.21%
==========
Net interest-earning assets $ 306,855
===========
Net interest margin 2.51%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.65%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,321,613 $ 14,212 2.48%
Interest earning assets (excluding
prepayment and other fees) 5.41%
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
March 31, December 31, March 31,
2010 2009 2009
---------- ---------- -----------
Non-Performing Loans
One- to four-family $ 634 $ 371 $ 427
Multifamily residential 22,101 5,885 4,848
Commercial real estate 4,694 3,070 5,337
Mixed Use 1,998 1,935 2,445
Cooperative apartment 71 26 45
Other 22 7 21
---------- ---------- -----------
Total Non- Performing Loans (1) $ 29,520 $ 11,294 $ 13,123
---------- ---------- -----------
Other Non-Performing Assets
Other real estate owned (2) 707 755 300
Pooled bank trust preferred
securities 709 688 -
---------- ---------- -----------
Total Non-Performing Assets 30,936 12,737 13,423
---------- ---------- -----------
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
("TDRs") (1) $ 1,040 $ 1,040 $ -
---------- ---------- -----------
(1) Total non-performing loans include loans that have been modified in a
manner that would meet the criteria for a TDR should the loans return
to accrual status. These, loans which are excluded from the TDR amount
shown above, totaled $15.7 million and $4.3 million at March 31, 2010
and December 31, 2009, respectively. There were no such loans at
March 31, 2009.
(2) Amount was fully comprised of multifamily residential loans at
March 31, 2010 and December 31, 2009. Amount was fully comprised of
commercial real estate loans at March 31, 2009.
PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES
At At
March 31, December 31,
2010 2009
---------- ----------
Total Non-Performing Assets 30,936 12,737
Loans over 90 days past due on accrual
status - -
---------- ----------
PROBLEM ASSETS 30,936 12,737
---------- ----------
Tier 1 Capital - Dime Savings Bank of
Williamsburgh 314,018 294,808
Allowance for loan losses 24,620 21,505
---------- ----------
TANGIBLE CAPITAL PLUS RESERVES 338,638 316,313
---------- ----------
PROBLEM ASSETS AS A PERCENTAGE OF
TANGIBLE CAPITAL AND RESERVES 9.1% 4.0%
Contact Information: Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279