SOURCE: Dime Community Bancshares, Inc.

January 26, 2007 07:45 ET

Dime Community Bancshares Reports Earnings

Diluted Earnings Per Share of 17 Cents in Fourth Quarter; 87 Cents for 2006 Year

BROOKLYN, NY -- (MARKET WIRE) -- January 26, 2007 -- Dime Community Bancshares, Inc. (NASDAQ: DCOM), (the "Company"), the parent company of The Dime Savings Bank of Williamsburgh (the "Bank"), today reported net income of $6.0 million, or 17 cents per diluted share, for the quarter ended December 31, 2006, compared to $9.0 million, or 25 cents per diluted share, for the quarter ended December 31, 2005 and $7.2 million, or 20 cents per diluted share for the quarter ended September 30, 2006. Absent both a non-recurring income item in the September quarter and the impact of gains on the sale of assets, net income was relatively flat on a sequential basis, at $6.0 million, or 17 cents per diluted share, during the quarter ended December 31, 2006.

For the year ended December 31, 2006, net income was $30.6 million, or $0.87 per diluted share, compared to $36.2 million, or $1.02 per diluted share, for the year ended December 31, 2005. Absent non-recurring items, earnings were $29.1 million, or $0.83 per diluted share, for the year ended December 31, 2006, compared to $39.2 million, or $1.10 per diluted share, for the year ended December 31, 2005.

According to Vincent F. Palagiano, Chairman and Chief Executive Officer of the Company, "Despite an extremely challenging operating environment, we once again posted a profitable year, maintained our cash dividend level and preserved the quality of our balance sheet."

Mr. Palagiano continued, "As we look toward 2007, we anticipate that competition for both loans and deposits will remain strong, however, it appears that the run-up in short-term interest rates is behind us, which gives us reason to be optimistic about the resumption of quarterly earnings growth beginning in the second half of the year."

Fiscal Year Highlights

--  Total assets increased by $47.2 million, or 1.5%.
    
--  Total deposits increased by $93.8 million, or 4.9%.
    
--  Net interest margin declined 36 basis points.
    
--  Real estate loan originations totaled $563.2 million, with an average
    interest rate of 6.43%.
    
--  The real estate loan portfolio grew 3.5%, within which the commercial
    real estate segment of total real estate loans grew by 16%.
    
--  Loans sold in the secondary market totaled $145.4 million, with a
    weighted average term to the earlier of maturity or next repricing of 12.1
    years.
    
--  The Bank's credit profile remained outstanding, with non-performing
    loans approximating 0.13% of total loans.
    
--  The Company repurchased 777,539 shares into treasury during the year.
    
--  Tangible equity grew slightly to $241.8 million, while the tangible
    equity ratio declined slightly to 7.74% at year-end.
    
Moving to the fourth quarter, the net interest margin declined 19 basis points sequentially mainly due to the increase in deposit costs. Previously, the Company stated its intention to increase the deposit base as a prelude to growth in 2007. The fourth quarter annualized deposit growth rate was 16%. New promotional deposits carry a higher rate for a period of 3 to 6 months. As of December 31, 2006, most of the deposit base is competitively priced.

Fourth Quarter 2006 Highlights

--  Real estate loan originations were $123.8 million at an average rate
    of 6.50%, compared to $174.5 million at an average interest rate of 6.58%
    during the third quarter of 2006.
    
--  Loans in the pipeline approximated $68.9 million at quarter-end,
    including commitments for sale to Fannie Mae of $12.2 million.
    
--  The annualized loan amortization rate fell to 9% compared to 15%
    during the previous quarter.  Prepayment fee income was $561,000, compared
    to $1.3 million in the September 2006 quarter and $786,000 in the December
    2005 quarter.
    
--  Deposits increased by 16% annualized, and linked quarter average cost
    of deposits rose from 3.10% to 3.35% during the quarter.
    
--  Net interest margin was 2.34%, 19 basis points lower sequentially.
    
--  The Company repurchased 209,332 shares of its common stock.  The
    consolidated tangible equity ratio fell to 7.74% at December 31, 2006 from
    7.88% at September 30, 2006.
    
--  Quarterly non-interest expense remained relatively constant year-over-
    year, and declined by 2% from the September 2006 quarter.
    
FINANCIAL RESULTS

For the quarter ended December 31, 2006, the Company's pre-tax income, excluding gains and losses on the sale of assets, was $9.4 million, compared to $13.7 million in the same quarter of the previous year. The $4.3 million decrease was due to a decline of $4.4 million in net interest income.

Average earning assets declined by $18.9 million from the December 2005 quarter to the December 2006 quarter. The net interest margin contracted 57 basis points, from 2.91% during the December 2005 quarter to 2.34% during the December 2006 quarter.

Pre-tax income, excluding gains and losses on the sale of assets, decreased from $10.4 million during the September 2006 quarter to $9.4 million during the December 2006 quarter, primarily due to a decline in net interest income of $1.2 million. Of this $1.2 million decline, $764,000 resulted from a reduction in interest expense due to a borrowing restructuring that occurred during the September quarter. The net interest margin decreased 19 basis points, from 2.53% during the September 2006 quarter to 2.34% in the December 2006 quarter.

The remaining decline in net interest income from the September 2006 quarter to the December 2006 quarter resulted from a reduction in prepayment fee income. Prepayment fee income was $561,000 in the quarter ended December 31, 2006, compared to $1.3 million in the quarter ended September 30, 2006 and $786,000 in the quarter ended December 31, 2005. The loan repayment speed declined to 9% in the December 2006 quarter, compared to 15% in the previous quarter. During the year ended December 31, 2006, annualized loan repayment speed approximated 12%, compared with speeds of 14% and 24% during the years ended December 31, 2005 and 2004, respectively.

Excluding prepayment fee income from the calculation of net interest margin, the margin deteriorated on a linked quarter basis from 2.36% to 2.25% due to an increase of 25 basis points in the average cost of deposits that resulted from increases in short-term interest rates during 2006.

The yield on interest earning assets decreased 1 basis point on a linked quarter basis, due solely to the decline in prepayment fee income. Excluding the effect of prepayment fee income, the yield on interest earning assets would have increased 9 basis points on a linked quarter basis, reflecting an increase in yield on the Company's real estate loans (excluding prepayment fee income), which resulted from interest rate increases during 2005 and 2006, fourth quarter returns on various equity investments, and the movement of a greater percentage of total interest earning assets from securities into real estate loans, a higher yielding asset category. The average yield on real estate loans, excluding the effects of prepayment fee income, was 5.72% during the quarter ended December 31, 2006 and 5.70% during the quarter ended September 30, 2006. The interest rates on newly originated real estate loans averaged 6.50% during the fourth quarter of 2006, compared to an average rate on loans repaid of 6.01% during the period. In addition, during the quarter ended December 31, 2006, the Company received returns of approximately $500,000, or 27%, on its approximately $7.0 million in equity investments, which helped the overall yield on interest earning assets during the period. Excluding the effects of both prepayment fee income and equity returns, the yield on interest earning assets increased 2 basis points, from 5.59% during the September 2006 quarter to 5.61% during the December 2006 quarter.

As a result of promotional activities during the fourth quarter of 2006, deposits increased $77.8 million, reflecting increases of $40.1 million in non-certificate (mainly money market) deposits and $37.8 million in certificates of deposit.

Average deposits per branch approximated $96 million at December 31, 2006, unchanged from the December 2005 quarter and up from the $92 million average at September 30, 2006. The loan-to-deposit ratio was 135% at December 31, 2006, compared to 136% at December 31, 2005 and 137% at September 30, 2006. The increase in average deposits per branch and the decrease in the loan-to-deposit ratio during the December 2006 quarter compared to the September 2006 quarter resulted from the $77.8 million growth in deposits during the period. Core deposits comprised 47% of total deposits at both December 31, 2006 and September 30, 2006, core deposits decreased slightly from the 49% level at December 31, 2005 as a result of the $86.1 million growth in certificates of deposit from December 31, 2005 through December 31, 2006.

Non-interest income, excluding gains or losses on the sale of assets, totaled $2.3 million during the quarter ended December 31, 2006, relatively constant from both the December 2005 and September 2006 quarters.

The Company sold loans to Fannie Mae totaling $5.0 million, $23.2 million and $92.3 million, recording gains of $84,000, $353,000 and $779,000, during the quarters ended December 31, 2006, December 31, 2005 and September 30, 2006, respectively. Each of the loans sold during these periods was designated for sale upon origination. The loans sold during the quarter ended December 31, 2006 had a weighted average term to the earlier of maturity or next repricing of 18.0 years.

Non-interest expense totaled $10.4 million during the quarter ended December 31, 2006, relatively flat from the December 2005 quarter and down $240,000, or 2.3%, from the September 2006 quarter.

Non-interest expense to average assets was 1.32% in the December 2006 quarter, compared to 1.30% for the quarter ended December 31, 2005, and 1.37% for the quarter ended September 2006. The decline from the September 2006 quarter to the December 2006 quarter resulted from the $240,000 decrease in non-interest expense during the period.

The effective tax rate was 36.8% for the quarter ended December 31, 2006, 35.9% for the quarter ended September 30, 2006 and 36.2% for the quarter ended December 31, 2005. The effective tax rate is expected to approximate 36.0% for the year ending December 31, 2007.

REAL ESTATE LENDING AND CREDIT QUALITY

Real estate loan originations totaled $123.8 million during the quarter ended December 31, 2006. The average rate on total loan originations during the quarter was 6.50%, compared to 5.98% during the quarter ended December 31, 2005 and 6.58% during the quarter ended September 30, 2006. Commercial real estate originations, which possess higher interest rates, equaled $16.0 million, or 13% of total real estate loan originations, during the December 2006 quarter, compared to $33.3 million, or 19% of total real estate loan originations, during the quarter ended September 30, 2006. Commercial real estate represented 25% of the gross loan portfolio at December 31, 2006, compared with 22% as of December 31, 2005.

Real estate loan prepayment and amortization during the December 2006 quarter approximated 9% of the loan portfolio on an annualized basis, down from 12% during the December 2005 quarter and 15% during the September 2006 quarter. The average interest rate on real estate loan prepayment and amortization during the most recent quarter was 6.01%.

Non-performing loans were $3.6 million at December 31, 2006, representing only 0.13% of total loans.

STOCKHOLDERS' EQUITY AND SHARE REPURCHASE PROGRAM

The Company's total stockholders' equity at December 31, 2006 was $290.6 million, or 9.16% of total assets, compared to $295.7 million, or 9.43% of total assets, at September 30, 2006. The majority of the decline during the fourth quarter resulted from a $3.8 million increase in the other comprehensive loss that resulted from the adoption of a new accounting standard related to retirement and other defined benefit plans. After outlays for dividends paid to shareholders and share repurchases, by the end of 2006 the Company's tangible equity declined slightly to $241.8 million, compared to $243.4 million at September 30, 2006. The quarterly cash dividend paid in November 2006 represented a payout ratio of 82% of fourth quarter 2006 earnings. At December 31, 2006, tangible stockholders' equity was 7.74% of tangible assets and the tangible book value per share was $6.63.

During the quarter ended December 31, 2006, the return on average stockholders' equity was 8.1%, the return on average tangible equity was 9.8%, and the cash return on average tangible equity was 10.1%.

During the fourth quarter of 2006, the Company repurchased into treasury 209,332 shares, or 0.6%, of its common stock outstanding at September 30, 2006. As of December 31, 2006, the Company had an additional 1,686,610 shares remaining eligible for repurchase under its eleventh stock repurchase program, approved in December 2005.

OUTLOOK

At present, the overall yield on the Company's interest-earning assets is rising (excluding the effects of prepayment fee income). The average yield on interest earning assets, excluding the effects of prepayment fee income and fourth quarter 2006 equity returns, rose on a linked quarter basis, from 5.59% to 5.61%.

The cost of deposits rose from 3.10% during the September 30, 2006 quarter to 3.35% during the December 2006 quarter. This trend is likely to continue during the first quarter of 2007. The rising cost of deposits is due to a combination of repricing lower rate deposits already on the books, plus the cost of attracting new deposits.

Prepayment and amortization rates, which approximated 12% during 2006, are expected to remain in the 10% to 12% range during 2007. At December 31, 2006, the real estate loan commitment pipeline approximated $68.9 million, with a weighted average interest rate of 6.36%, including $12.2 million of loan commitments intended for sale to Fannie Mae.

Operating expenses are expected to be approximately $10.9 million in the first quarter of 2007. Share repurchases are expected to be in line with recent practices. The Company is positioned, however, to be opportunistic in the purchase of its own shares should conditions warrant. Based on this outlook, the Company now expects first quarter 2007 earnings per diluted share to be in the range of $0.15 to $0.17.

Mr. Palagiano stated, "It appears that deposit costs are leveling off, barring any additional Fed tightening. With a strong capital base and a low level of nonperforming assets, we continue to preserve future profitability without accepting undue risk to our asset quality."

ABOUT DIME COMMUNITY BANCSHARES

Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the "Company") has $3.17 billion in consolidated assets as of December 31, 2006, and is the parent company of The Dime Savings Bank of Williamsburgh (the "Bank"). The Bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-one branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and Bank can be found on the Bank's Internet website at www.dimedirect.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 the Bank; 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
              CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    (In thousands except share amounts)


                                                  December 31,
                                                     2006      December 31,
                                                  (Unaudited)      2005
                                                  -----------  -----------
ASSETS:
Cash and due from banks                           $    26,264  $    40,199
Investment securities held to maturity                    235          455
Investment securities available for sale               29,548       44,832
Mortgage-backed securities available for sale         154,437      193,453
Federal funds sold and other short-term assets         78,752       60,014
Real Estate Loans:
   One-to-four family and cooperative apartment       153,847      145,754
   Multifamily and underlying cooperative           1,855,106    1,873,940
   Commercial real estate                             666,927      576,561
   Construction and land acquisition                   23,340       12,098
   Unearned discounts and net deferred loan fees        1,048          501
                                                  -----------  -----------
   Total real estate loans                          2,700,268    2,608,854
                                                  -----------  -----------
   Other loans                                          2,205        2,341
   Allowance for loan losses                          (15,514)     (15,785)
                                                  -----------  -----------
Total loans, net                                    2,686,959    2,595,410
                                                  -----------  -----------
Loans held for sale                                     1,200          900
Premises and fixed assets, net                         22,886       16,527
Federal Home Loan Bank of New York capital stock       31,295       29,917
Goodwill                                               55,638       55,638
Other assets                                           86,163       88,881
                                                  -----------  -----------
TOTAL ASSETS                                      $ 3,173,377  $ 3,126,226
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Checking, NOW and Super NOW                       $   130,734  $   135,698
Savings                                               298,522      335,527
Money Market                                          514,607      464,962
                                                  -----------  -----------
   Sub-total                                          943,863      936,187
                                                  -----------  -----------
Certificates of deposit                             1,064,669      978,585
                                                  -----------  -----------
Total Due to Depositors                             2,008,532    1,914,772
                                                  -----------  -----------
Escrow and other deposits                              46,373       47,518
Securities sold under agreements to repurchase        120,235      205,455
Federal Home Loan Bank of New York advances           571,500      531,500
Subordinated Notes Sold                                25,000       25,000
Trust Preferred Notes Payable                          72,165       72,165
Other liabilities                                      38,941       38,102
                                                  -----------  -----------
TOTAL LIABILITIES                                   2,882,746    2,834,512
                                                  -----------  -----------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000 shares
 authorized,  50,862,867 shares and 50,633,881
 shares issued at December 31, 2006 and December
 31, 2005, respectively,  and 36,456,354 shares
 and 36,956,907 shares outstanding at December
 31, 2006 and December 31, 2005, respectively)            509          506
Additional paid-in capital                            206,601      204,083
Retained earnings                                     285,420      274,579
Unallocated common stock of Employee Stock
 Ownership Plan                                        (4,395)      (4,627)
Unearned common stock of Recognition and
 Retention Plan                                        (3,452)      (2,979)
Common stock held by the Benefit Maintenance Plan      (7,941)      (7,941)
Treasury stock (14,406,513 shares and 13,676,974
 shares at December 31, 2006 and December 31,
 2005, respectively)                                 (179,011)    (168,579)
Accumulated other comprehensive loss, net              (7,100)      (3,328)
                                                  -----------  -----------
TOTAL STOCKHOLDERS' EQUITY                            290,631      291,714
                                                  -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $ 3,173,377  $ 3,126,226
                                                  ===========  ===========




             DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
              UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollars In thousands except per share amounts)


                                         For the Three Months  Ended
                                    December 31, September 30, December 31,
                                    ------------ -----------  ------------
                                        2006         2006         2005
                                    ------------ -----------  ------------

Interest income:
   Loans secured by real estate     $     38,705 $    39,122  $     37,765
   Other loans                                49          47            40
   Mortgage-backed securities              1,586       1,666         1,929
   Investment securities                     872         454           640
   Other                                   1,921       1,384         1,684
                                    ------------ -----------  ------------
      Total interest  income              43,133      42,673  $     42,058
                                    ------------ -----------  ------------
Interest expense:
   Deposits  and escrow                   16,590      15,019        10,802
   Borrowed funds                          9,071       8,948         9,327
                                    ------------ -----------  ------------
      Total interest expense              25,661      23,967        20,129
                                    ------------ -----------  ------------
         Net interest income              17,472      18,706        21,929
Provision for loan losses                     60          60           160
                                    ------------ -----------  ------------
Net interest income after
 provision for loan losses                17,412      18,646        21,769
                                    ------------ -----------  ------------

Non-interest income:
   Service charges and other fees          1,525       1,507         1,484
   Net gain (loss) on sales and
    redemptions of assets                     84         779           353
   Other                                     793         849           771
                                    ------------ -----------  ------------
      Total non-interest income            2,402       3,135         2,608
                                    ------------ -----------  ------------
Non-interest expense:
   Compensation and benefits               5,753       6,006         5,659
   Occupancy and equipment                 1,466       1,504         1,391
   Core deposit intangible
    amortization                               -           -             -
   Other                                   3,161       3,110         3,265
                                    ------------ -----------  ------------
      Total non-interest expense          10,380      10,620        10,315
                                    ------------ -----------  ------------

      Income before taxes                  9,434      11,161        14,062
Income tax expense                         3,469       4,002         5,083
                                    ------------ -----------  ------------

Net Income                          $      5,965 $     7,159  $      8,979
                                    ============ ===========  ============

Earnings per Share:
   Basic                            $       0.17 $      0.21  $       0.26
                                    ============ ===========  ============
   Diluted                          $       0.17 $      0.20  $       0.25
                                    ============ ===========  ============

Average common shares outstanding
 for Diluted EPS                      34,873,327  35,028,903    35,303,451


                                       For the Year Ended
                                    December 31, December 31,
                                    ------------ -----------
                                        2006        2005
                                    ------------ -----------
Interest income:
   Loans secured by real estate     $    155,510 $   148,442
   Other loans                               190         214
   Mortgage-backed securities              6,850      11,699
   Investment securities                   2,277       2,602
   Other                                   5,983       6,755
                                    ------------ -----------
      Total interest  income             170,810     169,712
                                    ------------ -----------
Interest expense:
   Deposits  and escrow                   56,659      41,058
   Borrowed funds                         36,681      36,283
                                    ------------ -----------
      Total interest expense              93,340      77,341
                                    ------------ -----------
         Net interest income              77,470      92,371
Provision for loan losses                    240         340
                                    ------------ -----------
Net interest income after
 provision for loan losses                77,230      92,031
                                    ------------ -----------

Non-interest income:
   Service charges and other fees          5,985       5,967
   Net gain (loss) on sales and
    redemptions of assets                  3,057      (4,252)
   Other                                   3,348       3,436
                                    ------------ -----------
      Total non-interest income           12,390       5,151
                                    ------------ -----------
Non-interest expense:
   Compensation and benefits              23,432      22,949
   Occupancy and equipment                 5,762       5,393
   Core deposit intangible
    amortization                               -          48
   Other                                  12,782      12,352
                                    ------------ -----------
      Total non-interest expense          41,976      40,742
                                    ------------ -----------

      Income before taxes                 47,644      56,440
Income tax expense                        17,052      20,230
                                    ------------ -----------

Net Income                          $     30,592 $    36,210
                                    ============ ===========
Earnings per Share:
   Basic                            $       0.88 $      1.03
                                    ============ ===========
   Diluted                          $       0.87 $      1.02
                                    ============ ===========

Average common shares outstanding
 for Diluted EPS                      35,118,128  35,560,446




             DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
           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 (exclusive of significant non-recurring items
such as gains or losses on sales of investment or mortgage-backed
securities) during the period.

   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
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 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 and tangible equity can be found in the
Company's  audited  financial statements for the year  ended  December  31,
2005.

   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 31, September 30, December 31,
                                         2006         2006         2005
                                     -----------  -----------  -----------

Net income as reported               $     5,965  $     7,159  $     8,979
Pre-tax net (gain) loss on sale of
 securities and other assets                                             -
Pre-tax income from borrowings
 restructuring                                 -         (764)           -
Tax effect of adjustments                      -          271            -
                                     -----------  -----------  -----------
Core Earnings                        $     5,965  $     6,666  $     8,979
                                     -----------  -----------  -----------
Cash Earnings Additions :
Core Deposit Intangible Amortization           -            -            -
Non-cash stock benefit plan expense          183          342          260
                                     -----------  -----------  -----------
Core Cash Earnings                   $     6,148  $     7,008  $     9,239
                                     -----------  -----------  -----------
Performance Ratios (Based upon Core
 Cash Earnings):
Core Cash EPS (Diluted)              $      0.18  $      0.20  $      0.26
Core Cash Return on Average Assets          0.78%        0.90%        1.17%
Core Cash Return on Average Tangible
 Stockholders' Equity                      10.13%       11.55%       15.57%


                                        For the Year Ended
                                     ------------------------
                                    December 31,  December 31,
                                         2006         2005
                                     -----------  -----------

Net income as reported               $    30,592  $    36,210
Pre-tax net (gain) loss on sale of
 securities and other assets              (1,542)       5,176
Pre-tax income from borrowings
 restructuring                              (807)           -
Tax effect of adjustments                    839       (2,143)
                                     -----------  -----------
Core Earnings                        $    29,082  $    39,243
                                     -----------  -----------
Cash Earnings Additions :
Core Deposit Intangible Amortization           -           48
Non-cash stock benefit plan expense        1,250        1,314
                                     -----------  -----------
Core Cash Earnings                   $    30,332  $    40,605
                                     -----------  -----------
Performance Ratios (Based upon Core
 Cash Earnings):
Core Cash EPS (Diluted)              $      0.86  $      1.14
Core Cash Return on Average Assets          0.97%        1.24%
Core Cash Return on Average Tangible
 Stockholders' Equity                      12.57%       17.40%




             DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                  UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
              (Dollars In thousands except per share amounts)

                                         For the Three Months Ended
                                  ----------------------------------------
                                  December 31,  September 30, December 31,
                                       2006          2006          2005
                                  ------------  ------------  ------------
Performance Ratios (Based upon
 Reported Earnings):
Reported EPS (Diluted)            $       0.17  $       0.20  $       0.25
Return on Average Assets                  0.76%         0.92%         1.13%
Return on Average Stockholders'
 Equity                                   8.11%         9.73%        12.38%
Return on Average Tangible
 Stockholders' Equity                     9.83%        11.80%        15.13%
Net Interest Spread                       1.91%         2.16%         2.59%
Net Interest Margin                       2.34%         2.53%         2.91%
Non-interest Expense to Average
 Assets                                   1.32%         1.37%         1.30%
Efficiency Ratio                         52.45%        50.42%        42.65%
Effective Tax Rate                       36.77%        35.86%        36.15%

Performance Ratios (Based upon
 Core Earnings):
Core EPS (Diluted)                $       0.17  $       0.19  $       0.25
Core Return on Average Assets             0.76%         0.86%         1.13%
Core Return on Average
 Stockholders' Equity                     8.11%         9.06%        12.38%
Core Return on Average Tangible
 Stockholders' Equity                     9.83%        10.99%        15.13%

Book Value and Tangible Book
 Value Per Share:
Stated Book Value Per Share       $       7.97  $       8.07  $       7.89
Tangible Book Value Per Share             6.63          6.64          6.47

Average Balance Data:
Average Assets                    $  3,145,446  $  3,107,482  $  3,166,725
Average Interest Earning Assets      2,992,771     2,960,468     3,011,695
Average Stockholders' Equity           294,385       294,305       290,077
Average Tangible Stockholders'
 Equity                                242,652       242,658       237,426
Average Loans                        2,662,497     2,656,014     2,598,204
Average Deposits                     1,963,369     1,920,061     1,949,438

Asset Quality Summary:
Net charge-offs (recoveries)      $          8  $          0  $         61
Nonperforming Loans                      3,606         2,889           958
Nonperforming Loans/ Total Loans          0.13%         0.11%         0.04%
Nonperforming Assets/Total Assets         0.11%         0.09%         0.03%
Allowance for Loan Loss/Total
 Loans                                    0.57%         0.60%         0.60%
Allowance for Loan
 Loss/Nonperforming Loans               430.23%       552.30%      1647.70%

Regulatory Capital Ratios:
Consolidated Tangible Equity to
 Tangible Assets at period end            7.74%         7.88%         7.78%
Tangible Capital Ratio (Bank
 Only)                                    9.05%         9.64%         9.84%
Leverage Capital Ratio (Bank
 Only)                                    9.05%         9.64%         9.84%
Risk Based Capital Ratio (Bank
 Only)                                   12.61%        13.61%        14.30%


                                      For the Year Ended
                                  December 31,  December 31,
                                       2006          2005
                                  ------------  ------------

Performance Ratios (Based upon
 Reported Earnings):
Reported EPS (Diluted)            $       0.87  $       1.02
Return on Average Assets                  0.98%         1.11%
Return on Average Stockholders'
 Equity                                  10.43%        12.65%
Return on Average Tangible
 Stockholders' Equity                    12.68%        15.51%
Net Interest Spread                       2.19%         2.66%
Net Interest Margin                       2.60%         2.96%
Non-interest Expense to Average
 Assets                                   1.34%         1.24%
Efficiency Ratio                         48.36%        40.03%
Effective Tax Rate                       35.79%        35.84%

Performance Ratios (Based upon
 Core Earnings):
Core EPS (Diluted)                $       0.83  $       1.10
Core Return on Average Assets             0.93%         1.20%
Core Return on Average
 Stockholders' Equity                     9.92%        13.71%
Core Return on Average Tangible
 Stockholders' Equity                    12.05%        16.81%

Book Value and Tangible Book
 Value Per Share:
Stated Book Value Per Share       $       7.97  $       7.89
Tangible Book Value Per Share             6.63          6.47
Average Balance Data:
Average Assets                    $  3,126,640  $  3,276,547
Average Interest Earning Assets      2,978,147     3,125,782
Average Stockholders' Equity           293,199       286,162
Average Tangible Stockholders'
 Equity                                241,301       233,404
Average Loans                        2,651,601     2,535,574
Average Deposits                     1,931,561     2,080,695

Asset Quality Summary:
Net charge-offs (recoveries)      $         27  $         45
Nonperforming Loans                      3,606           958
Nonperforming Loans/ Total Loans          0.13%         0.04%
Nonperforming Assets/Total Assets         0.11%         0.03%
Allowance for Loan Loss/Total
 Loans                                    0.57%         0.60%
Allowance for Loan
 Loss/Nonperforming Loans               430.23%      1647.70%

Regulatory Capital Ratios:
Consolidated Tangible Equity to
 Tangible Assets at period end            7.74%         7.78%
Tangible Capital Ratio (Bank
 Only)                                    9.05%         9.84%
Leverage Capital Ratio (Bank
 Only)                                    9.05%         9.84%
Risk Based Capital Ratio (Bank
 Only)                                   12.61%        14.30%




             DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                 AVERAGE BALANCES AND NET INTEREST INCOME
                          (Dollars In thousands)

                                        For the Three Months Ended
                                      --------------------------------
                                             December 31, 2006
                                      -------------------------------
                                                             Average
                                       Average                Yield/
                                       Balance    Interest     Cost
                                      ---------- ---------- ---------
                                          (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans                $ 2,660,517 $   38,705      5.82%
    Other loans                            1,980         49      9.90
    Mortgage-backed securities           163,072      1,586      3.89
    Investment securities                 29,678        872     11.75
    Other short-term investments         137,524      1,921      5.59
                                      ---------- ---------- ---------
      Total interest earning assets    2,992,771 $   43,133      5.76%
                                      ---------- ----------
  Non-interest earning assets            152,675
                                      ----------
Total assets                          $3,145,446
                                      ==========

Liabilities and Stockholders' Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts           $   34,069 $       92      1.07%
    Money Market accounts                491,946      4,152      3.35
    Savings accounts                     301,348        442      0.58
    Certificates of deposit            1,042,809     11,904      4.53
                                      ---------- ---------- ---------
          Total interest bearing
           deposits                    1,870,172     16,590      3.52
    Borrowed Funds                       771,152      9,071      4.67
                                      ---------- ---------- ---------
      Total interest-bearing
       liabilities                     2,641,324     25,661      3.85%
                                      ---------- ----------
  Checking accounts                       93,197
  Other non-interest-bearing
   liabilities                           116,540
                                      ----------
      Total liabilities                2,851,061
  Stockholders' equity                   294,385
                                      ----------
Total liabilities and stockholders'
 equity                               $3,145,446
                                      ==========
Net interest income                              $   17,472
                                                 ==========
Net interest spread (1)                                          1.91%
                                                            =========
Net interest-earning assets           $  351,447
                                      ==========
Net interest margin (1)                                          2.34%
                                                            =========
Ratio of interest-earning assets  to
 interest-bearing liabilities                                  113.31%
                                                            =========

Average deposits (including
 non-interest bearing checking
 accounts)                            $1,963,369 $   16,590      3.35%


                                        For the Three Months Ended
                                            September 30, 2006
                                      -------------------------------
                                                             Average
                                        Average               Yield/
                                        Balance   Interest     Cost
                                      ---------- ---------- ---------

                                            (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans                 $2,654,055 $   39,122      5.90%
    Other loans                            1,959         47      9.60
    Mortgage-backed securities           172,116      1,666      3.87
    Investment securities                 31,406        454      5.78
    Other short-term investments         100,932      1,384      5.48
                                      ---------- ---------- ---------
      Total interest earning assets    2,960,468 $   42,673      5.77%
                                      ---------- ----------
  Non-interest earning assets            147,014
                                      ----------
Total assets                          $3,107,482
                                      ==========

Liabilities and Stockholders' Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts           $   33,814 $       85      1.00%
    Money Market accounts                455,629      3,228      2.81
    Savings accounts                     312,891        493      0.63
    Certificates of deposit            1,023,738     11,213      4.35
                                      ---------- ---------- ---------
          Total interest bearing
           deposits                    1,826,072     15,019      3.26
    Borrowed Funds                       808,278      8,948      4.39
                                      ---------- ---------- ---------
      Total interest-bearing
       liabilities                     2,634,350     23,967      3.61%
                                      ---------- ----------
  Checking accounts                       93,989
  Other non-interest-bearing
   liabilities                            84,838
                                      ----------
      Total liabilities                2,813,177
  Stockholders' equity                   294,305
                                      ----------
Total liabilities and stockholders'
 equity                               $3,107,482
                                      ==========
Net interest income                              $   18,706
                                                 ==========
Net interest spread (1)                                          2.16%
                                                            =========
Net interest-earning assets           $  326,118
                                      ==========
Net interest margin (1)                                          2.53%
                                                            =========
Ratio of interest-earning assets  to
 interest-bearing liabilities                                  112.38%
                                                            =========

Average deposits (including
 non-interest bearing checking
 accounts)                            $1,920,061 $   15,019      3.10%


                                        For the Three Months Ended
                                              December 31, 2005
                                      -------------------------------
                                                             Average
                                         Average              Yield/
                                         Balance   Interest    Cost
                                      ---------- ---------- ---------
                                            (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans                 $2,595,998 $   37,765      5.82%
    Other loans                            2,206         40      7.25
    Mortgage-backed securities           204,259      1,929      3.78
    Investment securities                 49,363        640      5.19
    Other short-term investments         159,869      1,684      4.21
                                      ---------- ---------- ---------
      Total interest earning assets    3,011,695 $   42,058      5.59%
                                      ---------- ----------
  Non-interest earning assets            155,030
                                      ----------

Total assets                          $3,166,725
                                      ==========

Liabilities and Stockholders' Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts           $   38,899 $       98      1.00%
    Money Market accounts                481,385      1,902      1.57
    Savings accounts                     338,698        474      0.56
    Certificates of deposit              995,793      8,328      3.32
                                      ---------- ---------- ---------
          Total interest bearing
           deposits                    1,854,775     10,802      2.31
    Borrowed Funds                       808,429      9,327      4.58
                                      ---------- ---------- ---------
      Total interest-bearing
       liabilities                     2,663,204     20,129      3.00%
                                      ---------- ----------
  Checking accounts                       94,663
  Other non-interest-bearing
   liabilities                           118,781
                                      ----------
      Total liabilities                2,876,648
  Stockholders' equity                   290,077
                                      ----------
Total liabilities and stockholders'
 equity                               $3,166,725
                                      ==========
Net interest income                              $   21,929
                                                 ==========
Net interest spread (1)                                          2.59%
                                                            =========
Net interest-earning assets           $  348,491
                                      ==========
Net interest margin (1)                                          2.91%
                                                            =========
Ratio of interest-earning assets  to
 interest-bearing liabilities                                  113.09%
                                                            =========

Average deposits (including
 non-interest bearing checking
 accounts)                            $1,949,438 $   10,802      2.20%

Contact Information

  • Contact:
    Kenneth Ceonzo
    Director of Investor Relations
    718-782-6200 extension 8279