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