Dime Community Bancshares, Inc. Posts Higher Quarterly EPS

BROOKLYN, NY--(Marketwired - Oct 23, 2014) -  Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the "Company" or "Dime"), the parent company of The Dime Savings Bank of Williamsburgh (the "Bank"), today reported financial results for the quarter ended September 30, 2014. Consolidated net income for the quarter ended September 30, 2014 was $11.8 million, or $0.33 per diluted share, compared to $10.5 million, or $0.29 per diluted share, for the quarter ended June 30, 2014, and $10.6 million, or $0.30 per diluted share, for the quarter ended September 30, 2013. 

Vincent F. Palagiano, Chairman and Chief Executive Officer of Dime, commented, "We were pleased to report earnings of $0.33 during the most recent quarter, which were elevated above both the previous quarter and quarterly consensus estimate by a combination of higher prepayment fee income, a reserve recapture of $501,000, and lower operating expenses."

Mr. Palagiano concluded, "During the most recent quarter, approximately $275 million of real estate loans were originated, a 50% increase from the June 2014 quarter, and were mainly comprised of our core 5-year repricing term loans. As we move closer to year-end, the Bank remains on pace to achieve our annual loan growth target of 12%."

Management's Discussion of Quarterly Operating Results

• Net Interest Margin

Reported net interest margin ("NIM") was 3.09% during the quarter ended September 30, 2014 compared to 2.96% during the June 2014 quarter, and 3.35% during the September 2013 quarter. Net interest income recognized from loan prepayment activity, which varies from quarter to quarter, positively impacted the Company's NIM during each of the reporting periods presented. For the third quarter 2014, income from prepayment activity was $3.9 million, or 38 basis points of impact upon NIM, compared to $2.2 million, or 21 basis points of impact upon NIM, during the quarter ended June 30, 2014. The "core" NIM, which excludes the impact of these items, decreased from 2.75% during the June 2014 quarter to 2.71% during the September 2014 quarter, caused primarily by a reduction of 5 basis points in the average yield on interest earning assets. Core NIM for the September 2013 quarter was 2.98%.

Commenting on the margin, Kenneth J. Mahon, Chief Operating Officer, said, "As long as rates stay unchanged, we expect only basis point movements in the margin over the next two quarters, leading to a range-bound NIM."

Loan amortization and prepayments, which had moderated during the first six months of 2014 compared to their historically high levels during 2013, increased in the September 2014 quarter primarily as a result of the refinancing of loans by the Bank's largest borrower relationship, which contributed an additional $2.2 million in prepayment fee income from the level experienced in the June 2014 quarter.

The average cost of funds declined by 2 basis points from the June 2014 to the September 2014 quarter, reflecting reductions of 5 basis points in the average cost of borrowings and 1 basis point in the average cost of deposits, as funding costs continued to remain at historically low levels. 

• Net Interest Income

Net interest income ("NII") was $32.0 million in the quarter ended September 30, 2014, up $1.4 million from $30.6 million reported in the June 2014 quarter, and $305,000 higher than the $31.7 million reported in the September 2013 quarter. The increase from the June 2014 quarter reflected a 13 basis point increase in the average yield on interest earning assets, which benefitted from both the addition of $1.8 million in prepayment fee income, as well as a reduction of $60.4 million in the average balance of cash reservesthat were yielding less than 25 basis points. The increase in NII from the September 2013 quarter resulted from $476,000 of higher prepayment fee income coupled with the growth of $356.8 million in average interest earnings assets. 

• Provision/Allowance For Loan Losses

A recapture of a portion of the allowance for loan loss reserve resulted in a credit, rather than a charge, to earnings in the third quarter of $501,000, due primarily to a lower loss experience applied to pass graded loans.

• Non-Interest Income

Non-interest income was $1.8 million for the quarter ended September 30, 2014, an increase of $252,000 from the June 2014 quarter, and resulted primarily from higher seasonal administrative fees collected on portfolio loans. 

• Non-Interest Expense

Non-interest expense was $14.7 million in the quarter ended September 30, 2014, approximately $574,000 below the $15.3 million level experienced in the June 2014 quarter, due primarily to reductions of $355,000 in compensation and benefits, and approximately $100,000 in both marketing and legal costs, respectively. These items also accounted for the great majority of the reduction from the $15.5 million of non-interest expense forecasted for the September 2014 quarter. 

Non-interest expense was 1.36% of average assets during the most recent quarter, compared to 1.42% during the June 2014 quarter. The efficiency ratio approximated 43.54% during the September 2014 quarter. 

• Income Tax Expense

The effective tax rate approximated 39.8% during the most recent quarter, lower than the forecasted 41.0% level, due to a favorable adjustment related to a prior year tax return. The lower effective tax rate contributed approximately $0.01 to diluted earnings per share during the September 2014 quarter.

Management's Discussion of the September 30, 2014 Balance Sheet

Total assets were $4.38 billion at September 30, 2014, up $82.7 million, or 1.9%, from June 30, 2014. 

• Real Estate Loans

Real estate loan net portfolio growth was $78.7 million for the quarter. Real estate loan originations were $274.5 million, at a weighted average interest rate of 3.32%. Of this amount, $88.1 million represented loan refinances from the existing portfolio. Approximately 80% of the loans originated during the quarter contained repricing terms of 5-years or less. Loan amortization and satisfactions totaled $194.1 million, or 19.4% (annualized) of the quarterly average portfolio balance, at an average rate of 4.72%. The average yield on the loan portfolio (excluding income recognized from prepayment activity) during the quarter ended September 30, 2014 was 3.90%, compared to 4.01% during the June 2014 quarter and 4.28% during the September 2013 quarter.

• Credit Summary

Non-performing loans were $11.5 million, or 0.28% of total loans, at September 30, 2014, compared to $12.3 million, or 0.31% of total loans, at June 30, 2014. The decline in dollar amount resulted primarily from both a non-performing loan returning to accrual status and a significant reduction in the principal balance of another non-performing loan during the period. Accruing loans delinquent between 30 and 89 days were $1.1 million, or approximately 0.03% of total loans, at September 30, 2014, compared to $2.3 million or 0.06% of total loans, at June 30, 2014. 

At September 30, 2014, the Bank also had $10.7 million of troubled debt restructured loans that remained on accrual status and were deemed performing loans. 

As a result of both the net reduction in the allowance balance and the growth in the loan portfolio, the allowance for loan losses as a percentage of total loans declined from 0.49% at June 30, 2014 to 0.47% at September 30, 2014. 

At September 30, 2014, non-performing assets represented 3.9% of the sum of tangible capital plus the allowance for loan losses (this statistic is otherwise known as the "Texas Ratio") (see table on page 10). This number compares very favorably to both national and regional industry averages.

• Deposits and Borrowed Funds

Deposits declined by $30.5 million during the most recent quarter, reflecting net reductions of $11.2 million in money market deposits and $19.9 million in certificates of deposit ("CDs"). The Bank did not compete aggressively for deposit funding in the September 2014 quarter, but expects to ramp up a deposit campaign in the fourth quarter. A recently implemented promotional program targeting money market and checking accounts is expected to raise deposit funding in the December 2014 quarter. Mortgagor escrow deposits experienced a seasonal increase of $18.9 million during the September 2014 quarter. 

The Bank's Federal Home Loan Bank of New York ("FHLBNY") advances grew by $85.1 million during the September 2014 quarter. Approximately $45.1 million of this growth consisted of a combination of 3-year, 4-year and 5-year fixed rate advances at a weighted average cost approximating 1.50% that were structured to mitigate interest rate risk. The remaining $40.0 million borrowing growth during the period was short-term in nature.

• Capital

The Company's consolidated tangible capital increased $7.6 million during the most recent quarter, and the consolidated Tier 1 core leverage ratio (tangible common equity to tangible assets) was 9.35% at September 30, 2014, relatively unchanged from June 30, 2014.

The Bank's tangible (leverage) capital ratio was 9.25% at September 30, 2014, up from 9.20% at June 30, 2014, due to retained earnings during the most recent quarter. The Bank's Total Risk-Based Capital Ratio was 12.84% at September 30, 2014, compared to 12.85% at June 30, 2014.

Reported diluted EPS exceeded the quarterly cash dividend rate per share by 136% during the quarter ended September 30, 2014, equating to a 42% payout ratio. Additions to capital from earnings during the most recent quarterly period enabled tangible book value per share to increase $0.20 sequentially during the most recent quarter, to $10.98 at September 30, 2014.

Outlook for the Quarter Ending December 31, 2014

At September 30, 2014, Dime had outstanding loan commitments totaling $170.9 million, all of which are likely to close during the quarter ending December 31, 2014, at an average interest rate approximating 3.25%. 

It now appears that the Company will achieve its balance sheet growth objective for the year ending December 31, 2014, of about 10%. Loan prepayments and amortization are currently projected to run in the 15% - 20% range through the remainder of the year.

On the funding side of the balance sheet, deposit funding costs are expected to remain near current historically low levels through the remainder of 2014. The Bank has $113.9 million of CDs maturing at an average cost of 1.07% during the quarter ending December 31, 2014. Offering rates on 12-month term CDs currently approximate 40 basis points. During the quarter ending December 31, 2014, the Bank has $214.5 million in borrowings due to mature at an average cost of 2.39%. In the upcoming quarter, management expects to utilize a combination of FHLBNY advances and retail deposits to fund growth. 

As previously mentioned, the Bank recently implemented a promotional campaign related to money market and checking accounts, the success of which will determine the direction and degree of funding from both deposits and borrowings, as well as the overall cost of funds for the December 2014 quarter.

Loan loss reserve provisions or credits will likely depend upon annualized loan portfolio growth, incurred and anticipated losses, and the overall performance of the loan portfolio.

Absent any unforeseen items, non-interest expense is expected to approximate $15.3 million during the December 2014 quarter. The Company projects that the consolidated effective tax rate will approximate 41.0% in the December 2014 quarter.

ABOUT DIME COMMUNITY BANCSHARES, INC.

The Company (NASDAQ: DCOM) had $4.38 billion in consolidated assets as of September 30, 2014, and is the parent company of the Bank. The Bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-five branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and Dime can be found on the Dime's Internet website at www.dime.com.

This News Release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions.

Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of Dime; changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company's business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
			September 30,				June 30,				December 31,
			2014				2014				2013
ASSETS:
Cash and due from banks			$	58,977			$	57,213			$	45,777
Investment securities held to maturity				5,352				5,330				5,341
Investment securities available for sale				3,708				3,766				18,649
Trading securities				7,056				7,058				6,822
Mortgage-backed securities available for sale				27,721				29,015				31,543
Federal funds sold and other short-term investments				250				250				-
Real Estate Loans:
	One-to-four family and cooperative/condomnium apartment			75,576				74,442				73,956
	Multifamily and loans underlying cooperatives (1)			3,214,225				3,156,599				2,917,380
	Commercial real estate			755,979				736,129				700,606
	Construction and land acquisition			-				-				268
	Unearned discounts and net deferred loan fees			5,482				5,381				5,170
	Total real estate loans			4,051,262				3,972,551				3,697,380
	Other loans			1,913				2,440				2,139
	Allowance for loan losses			(19,098	)			(19,633	)			(20,153	)
Total loans, net				4,034,077				3,955,358				3,679,366
Loans held for sale				1,481				-				-
Premises and fixed assets, net				25,607				25,875				29,701
Federal Home Loan Bank of New York capital stock				55,235				53,269				48,051
Other Real Estate Owned				18				18				18
Goodwill				55,638				55,638				55,638
Other assets				109,285				108,904				107,284
TOTAL ASSETS			$	4,384,405			$	4,301,694			$	4,028,190
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing checking			$	176,328			$	172,876			$	174,457
Interest Bearing Checking				75,375				79,076				87,301
Savings				378,500				377,618				376,900
Money Market				1,145,248				1,156,494				1,040,079
	Sub-total			1,775,451				1,786,064				1,678,737
Certificates of deposit				847,162				867,016				828,409
Total Due to Depositors				2,622,613				2,653,080				2,507,146
Escrow and other deposits				95,830				76,930				69,404
Federal Home Loan Bank of New York advances				1,103,225				1,018,150				910,000
Trust Preferred Notes Payable				70,680				70,680				70,680
Other liabilities				35,854				34,330				35,454
TOTAL LIABILITIES				3,928,202				3,853,170				3,592,684
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000 shares authorized, 52,871,443 shares, 52,871,443 shares and 52,854,483 shares issued at September 30, 2014, June 30, 2014 and December 31, 2013, respectively, and 36,858,556 shares, 36,858,556 shares and 35,712,951 shares outstanding at September 30, 2014, June 30, 2014 and December 31, 2013, respectively)				529				529				528
Additional paid-in capital				254,103				253,840				252,253
Retained earnings				420,170				413,437				402,986
Accumulated other comprehensive loss, net of deferred taxes				(4,284	)			(4,408	)			(4,759	)
Unallocated common stock of Employee Stock Ownership Plan				(2,603	)			(2,660	)			(2,776	)
Unearned Restricted Stock Award common stock				(3,626	)			(4,128	)			(3,193	)
Common stock held by the Benefit Maintenance Plan				(9,164	)			(9,164	)			(9,013	)
Treasury stock (16,012,887 shares, 16,012,887 shares and 16,141,532 shares at September 30, 2014, June 30, 2014 and December 31, 2013, respectively)				(198,922	)			(198,922	)			(200,520	)
TOTAL STOCKHOLDERS' EQUITY				456,203				448,524				435,506
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	4,384,405			$	4,301,694			$	4,028,190
(1) While the loans within this category are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying this significant component of the total loan portfolio.

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except share and per share amounts)
					For the Three Months Ended
					September 30,				June 30,				September 30,
					2014				2014				2013
Interest income:
	Loans secured by real estate				$	43,477			$	41,973			$	42,451
	Other loans					26				29				25
	Mortgage-backed securities					223				236				310
	Investment securities					68				136				84
	Federal funds sold and other short-term investments					551				536				416
		Total interest income				44,345				42,910				43,286
Interest expense:
	Deposits and escrow					4,976				4,992				4,908
	Borrowed funds					7,410				7,324				6,725
		Total interest expense				12,386				12,316				11,633
			Net interest income			31,959				30,594				31,653
Provision for (recapture of) loan losses						(501	)			(1,130	)			240
Net interest income after provision for (recapture of) loan losses						32,460				31,724				31,413
Non-interest income:
	Service charges and other fees					1,084				769				1,015
	Mortgage banking income, net					71				82				76
	Gain (loss) on sale of securities and other assets					-				-				(21	)
	Gain (loss) on trading securities					(43	)			63				104
	Other					705				651				834
		Total non-interest income				1,817				1,565				2,008
Non-interest expense:
	Compensation and benefits					8,760				9,115				9,466
	Occupancy and equipment					2,513				2,392				2,697
	Federal deposit insurance premiums					547				524				515
	Other					2,904				3,267				2,897
		Total non-interest expense				14,724				15,298				15,575
		Income before taxes				19,553				17,991				17,846
Income tax expense						7,788				7,531				7,215
Net Income					$	11,765			$	10,460			$	10,631
Earnings per Share ("EPS"):
	Basic				$	0.33			$	0.29			$	0.30
	Diluted				$	0.33			$	0.29			$	0.30
Average common shares outstanding for Diluted EPS						35,974,339				35,957,291				35,527,503
					For the Nine Months Ended
					September 30,				September 30,
					2014				2013
Interest income:
	Loans secured by real estate				$	126,311			$	130,291
	Other loans					80				74
	Mortgage-backed securities					707				1,123
	Investment securities					274				316
	Federal funds sold and other short-term investments					1,609				1,423
		Total interest income				128,981				133,227
Interest expense:
	Deposits and escrow					14,590				15,240
	Borrowed funds					21,583				20,267
		Total interest expense				36,173				35,507
			Net interest income			92,808				97,720
Provision for (recapture of) loan losses						(1,350	)			425
Net interest income after provision for (recapture of) loan losses						94,158				97,295
Non-interest income:
	Service charges and other fees					2,507				2,554
	Mortgage banking income, net					1,153				350
	Gain (loss) on sale of securities and other assets					-				89
	Gain (loss) on trading securities					684				187
	Other					2,098				2,446
		Total non-interest income				6,442				5,626
Non-interest expense:
	Compensation and benefits					27,384				28,715
	Occupancy and equipment					7,656				7,735
	Federal deposit insurance premiums					1,576				1,470
	Other					9,229				9,311
		Total non-interest expense				45,845				47,231
		Income before taxes				54,755				55,690
Income tax expense						22,496				22,450
Net Income					$	32,259			$	33,240
Earnings per Share ("EPS"):
	Basic				$	0.90			$	0.95
	Diluted				$	0.90			$	0.95
Average common shares outstanding for Diluted EPS						35,940,745				35,157,647

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
		For the Three Months Ended
		September 30,				June 30,				September 30,
		2014				2014				2013
Performance Ratios (Based upon Reported Earnings):
Reported EPS (Diluted)		$	0.33			$	0.29			$	0.30
Return on Average Assets			1.09	%			0.97	%			1.07	%
Return on Average Stockholders' Equity			10.37	%			9.36	%			10.19	%
Return on Average Tangible Stockholders' Equity			11.74	%			10.62	%			11.49	%
Net Interest Spread			2.92	%			2.77	%			3.17	%
Net Interest Margin			3.09	%			2.96	%			3.35	%
Non-interest Expense to Average Assets			1.36	%			1.42	%			1.56	%
Efficiency Ratio			43.54	%			47.66	%			46.38	%
Effective Tax Rate			39.83	%			41.86	%			40.43	%
Book Value and Tangible Book Value Per Share:
Stated Book Value Per Share		$	12.38			$	12.17			$	11.57
Tangible Book Value Per Share			10.98				10.78				10.30
Average Balance Data:
Average Assets		$	4,321,228			$	4,311,701			$	3,980,840
Average Interest Earning Assets			4,138,802				4,127,883				3,782,043
Average Stockholders' Equity			453,813				446,785				417,459
Average Tangible Stockholders' Equity			400,822				393,820				369,982
Average Loans			4,017,867				3,945,287				3,646,845
Average Deposits			2,636,593				2,623,386				2,623,840
Asset Quality Summary:
Net (recoveries) charge-offs		$	34			$	(335	)		$	202
Non-performing Loans (excluding loans held for sale)			11,527				12,305				8,838
Non-performing Loans/ Total Loans			0.28	%			0.31	%			0.24	%
Nonperforming Assets (1)		$	13,929			$	13,224			$	9,735
Nonperforming Assets/Total Assets			0.32	%			0.31	%			0.24	%
Allowance for Loan Loss/Total Loans			0.47	%			0.49	%			0.56	%
Allowance for Loan Loss/Non-performing Loans			165.69	%			159.55	%			232.41	%
Loans Delinquent 30 to 89 Days at period end		$	1,113			$	2,274			$	3,763
Consolidated Tangible Stockholders' Equity to Tangible Assets at period end			9.35	%			9.36	%			9.51	%
Regulatory Capital Ratios (Bank Only):
Tier One Core Leverage Ratio (Tangible Common Equity)			9.25	%			9.20	%			10.24	%
Tier One Risk Based Capital Ratio			12.25	%			12.23	%			13.35	%
Total Risk Based Capital Ratio			12.84	%			12.85	%			14.07	%
(1) Amount comprised of total non-accrual loans (including loans held for sale) and the recorded balance of pooled bank trust preferred security investments for which the Bank had not received any contractual payments of interest or principal in over 90 days.
		For the Nine Months Ended
		September 30,				September 30,
		2014				2013
Performance Ratios (Based upon Reported Earnings):
Reported EPS (Diluted)		$	0.90			$	0.95
Return on Average Assets			1.01	%			1.11	%
Return on Average Stockholders' Equity			9.62	%			10.91	%
Return on Average Tangible Stockholders' Equity			10.95	%			12.35	%
Net Interest Spread			2.84	%			3.24	%
Net Interest Margin			3.04	%			3.45	%
Non-interest Expense to Average Assets			1.44	%			1.58	%
Efficiency Ratio			46.51	%			45.82	%
Effective Tax Rate			41.08	%			40.31	%
Book Value and Tangible Book Value Per Share:
Stated Book Value Per Share		$	12.38			$	11.57
Tangible Book Value Per Share			10.98				10.30
Average Balance Data:
Average Assets		$	4,258,512			$	3,978,466
Average Interest Earning Assets			4,071,994				3,781,782
Average Stockholders' Equity			446,962				406,219
Average Tangible Stockholders' Equity			392,921				358,740
Average Loans			3,928,115				3,585,641
Average Deposits			2,596,830				2,603,607
Asset Quality Summary:
Net (recoveries) charge-offs		$	(295	)		$	435
Non-performing Loans (excluding loans held for sale)			11,527				8,838
Non-performing Loans/ Total Loans			0.28	%			0.24	%
Nonperforming Assets (1)		$	12,448			$	9,735
Nonperforming Assets/Total Assets			0.32	%			0.24	%
Allowance for Loan Loss/Total Loans			0.47	%			0.56	%
Allowance for Loan Loss/Non-performing Loans			165.69	%			232.41	%
Loans Delinquent 30 to 89 Days at period end		$	1,113			$	3,763
Consolidated Tangible Stockholders' Equity to Tangible Assets at period end			9.35	%			9.51	%
Regulatory Capital Ratios (Bank Only):
Tier One Core Leverage Ratio (Tangible Common Equity)			9.25	%			10.24	%
Tier One Risk Based Capital Ratio			12.25	%			13.35	%
Total Risk Based Capital Ratio			12.84	%			14.07	%
(1) Amount comprised of total non-accrual loans (including loans held for sale) and the recorded balance of pooled bank trust preferred security investments for which the Bank had 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
					September 30, 2014
												Average
					Average							Yield/
					Balance			Interest				Cost
Assets:
	Interest-earning assets:
		Real estate loans			$	4,015,816		$	43,477			4.33	%
		Other loans				2,051			26			5.07
		Mortgage-backed securities				27,011			223			3.30
		Investment securities				15,827			68			1.72
		Other short-term investments				78,097			551			2.82
			Total interest earning assets			4,138,802		$	44,345			4.29	%
	Non-interest earning assets					182,426
Total assets					$	4,321,228
Liabilities and Stockholders' Equity:
	Interest-bearing liabilities:
		Interest Bearing Checking accounts			$	76,623		$	51			0.26	%
		Money Market accounts				1,153,517			1,692			0.58
		Savings accounts				378,527			47			0.05
		Certificates of deposit				852,188			3,186			1.48
			Total interest bearing deposits			2,460,855			4,976			0.80
	Borrowed Funds					1,119,859			7,410			2.63
		Total interest-bearing liabilities				3,580,714		$	12,386			1.37	%
	Non-interest bearing checking accounts					175,738
	Other non-interest-bearing liabilities					110,962
		Total liabilities				3,867,414
	Stockholders' equity					453,814
Total liabilities and stockholders' equity					$	4,321,228
Net interest income								$	31,959
Net interest spread												2.92	%
Net interest-earning assets					$	558,088
Net interest margin												3.09	%
Ratio of interest-earning assets to interest-bearing liabilities									115.59	%
Deposits (including non-interest bearing checking accounts)					$	2,636,593		$	4,976			0.75	%
SUPPLEMENTAL INFORMATION
Loan prepayment and late payment fee income, net of accelerated premium amortization								$	3,943
Real estate loans (excluding net prepayment and late payment fee income)												3.94	%
Interest earning assets (excluding net prepayment and late payment fee income)												3.90	%
Net Interest income (excluding net prepayment and late payment fee income)								$	28,016
Net Interest margin (excluding net prepayment and late payment fee income)												2.71	%

					For the Three Months Ended
					June 30, 2014
												Average
					Average							Yield/
					Balance			Interest				Cost
Assets:
	Interest-earning assets:
		Real estate loans			$	3,943,414		$	41,973			4.26	%
		Other loans				1,873			29			6.19
		Mortgage-backed securities				28,487			236			3.31
		Investment securities				15,585			136			3.49
		Other short-term investments				138,524			536			1.55
			Total interest earning assets			4,127,883		$	42,910			4.16	%
	Non-interest earning assets					183,818
Total assets					$	4,311,701
Liabilities and Stockholders' Equity:
	Interest-bearing liabilities:
		Interest Bearing Checking accounts			$	79,490		$	60			0.30	%
		Money Market accounts				1,114,169			1,548			0.56
		Savings accounts				379,819			47			0.05
		Certificates of deposit				873,733			3,337			1.53
			Total interest bearing deposits			2,447,211			4,992			0.83
	Borrowed Funds					1,096,742			7,324			2.68
		Total interest-bearing liabilities				3,543,953		$	12,316			1.39	%
	Non-interest bearing checking accounts					176,175
	Other non-interest-bearing liabilities					144,788
		Total liabilities				3,864,916
	Stockholders' equity					446,785
Total liabilities and stockholders' equity					$	4,311,701
Net interest income								$	30,594
Net interest spread												2.77	%
Net interest-earning assets					$	583,930
Net interest margin												2.96	%
Ratio of interest-earning assets to interest-bearing liabilities									116.48	%
Deposits (including non-interest bearing checking accounts)					$	2,623,386		$	4,992			0.76	%
SUPPLEMENTAL INFORMATION
Loan prepayment and late payment fee income, net of accelerated premium amortization								$	2,175
Real estate loans (excluding net prepayment and late payment fee income)												4.04	%
Interest earning assets (excluding net prepayment and late payment fee income)												3.95	%
Net Interest income (excluding net prepayment and late payment fee income)								$	28,419
Net Interest margin (excluding net prepayment and late payment fee income)												2.75	%

					For the Three Months Ended
					September 30, 2013
												Average
					Average							Yield/
					Balance			Interest				Cost
Assets:
	Interest-earning assets:
		Real estate loans			$	3,644,557		$	42,451			4.66	%
		Other loans				2,288			25			4.37
		Mortgage-backed securities				35,219			310			3.52
		Investment securities				29,122			84			1.15
		Other short-term investments				70,857			416			2.35
			Total interest earning assets			3,782,043		$	43,286			4.58	%
	Non-interest earning assets					198,797
Total assets					$	3,980,840
Liabilities and Stockholders' Equity:
	Interest-bearing liabilities:
		Interest Bearing Checking accounts			$	88,471		$	49			0.22	%
		Money Market accounts				1,122,644			1,413			0.50
		Savings accounts				380,088			48			0.05
		Certificates of deposit				862,792			3,398			1.56
			Total interest bearing deposits			2,453,995			4,908			0.79
	Borrowed Funds					810,191			6,725			3.29
		Total interest-bearing liabilities				3,264,186		$	11,633			1.41	%
	Non-interest bearing checking accounts					169,845
	Other non-interest-bearing liabilities					129,350
		Total liabilities				3,563,381
	Stockholders' equity					417,459
Total liabilities and stockholders' equity					$	3,980,840
Net interest income								$	31,653
Net interest spread												3.17	%
Net interest-earning assets					$	517,857
Net interest margin												3.35	%
Ratio of interest-earning assets to interest-bearing liabilities									115.86	%
Deposits (including non-interest bearing checking accounts)					$	2,623,840		$	4,908			0.74	%
Loan prepayment and late payment fee income, net of accelerated premium amortization								$	3,467
Real estate loans (excluding net prepayment and late payment fee income)												4.28	%
Interest earning assets (excluding net prepayment and late payment fee income)												4.21	%
Net Interest income (excluding net prepayment and late payment fee income)								$	28,186
Net Interest margin (excluding net prepayment and late payment fee income)												2.98	%

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS ("TDRs")
(Dollars In thousands)
			At September 30,			At June 30,			At September 30,
Non-Performing Loans			2014			2014			2013
	One- to four-family and cooperative/condominium apartment		$	1,363		$	1,422		$	1,136
	Multifamily residential and mixed use residential real estate (1)(2)			1,039			1,431			1,993
	Mixed use commercial real estate (2)			4,400			4,400			-
	Commercial real estate			4,717			5,047			5,707
	Other			8			5			2
Total Non-Performing Loans (3)			$	11,527		$	12,305		$	8,838
Other Non-Performing Assets
	Non-performing loans held for sale			1,481			-			-
	Other real estate owned			18			18			-
	Pooled bank trust preferred securities (4)			903			901			897
Total Non-Performing Assets			$	13,929		$	13,224		$	9,735
TDRs not included in non-performing loans (3)
	One- to four-family and cooperative/condominium apartment			607			609			938
	Multifamily residential and mixed use residential real estate (1)(2)			1,115			1,126			1,899
	Mixed use commercial real estate (2)			-			-			711
	Commercial real estate			9,025			7,033			29,570
Total Performing TDRs			$	10,747		$	8,768		$	33,118

(1)	Includes loans underlying cooperatives.
(2)	While the loans within these categories are often considered "commercial real estate" in nature, they are classified separately in the table above to provide further emphasis of the discrete composition of their underlying real estate collateral.
(3)	Total non-performing loans include some loans that were modified in a manner that met the criteria for a TDR. These non-accruing TDRs, which totaled $9,117 at September 30, 2014, $9,447 at June 30, 2014 and $5,707 at September 30, 2013, are included in the non-performing loan table, but excluded from the TDR amount shown above.
(4)	These assets were deemed non-performing since the Company had, as of the dates indicated, not received any payments of principal or interest on them for a period of at least 90 days.

PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES
			At September 30,				At June 30,				At September 30,
			2014				2014				2013
Total Non-Performing Assets			$	13,929			$	13,224			$	9,735
Loans 90 days or more past due on accrual status (5)				2,400				2,604				1,398
	TOTAL PROBLEM ASSETS		$	16,329			$	15,828			$	11,133
Tier One Capital - The Dime Savings Bank of Williamsburgh			$	399,062			$	389,369			$	404,022
Allowance for loan losses				19,098				19,633				20,540
	TANGIBLE CAPITAL PLUS RESERVES		$	418,160			$	409,002			$	424,562
PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES				3.9	%			3.9	%			2.6	%

(5)	These loans were, as of the respective dates indicated, expected to be either satisfied, made current or re-financed within the following twelve months, and were not expected to result in any loss of contractual principal or interest. These loans are not included in non-performing loans.