SOURCE: Dime Community Bancshares, Inc.

July 21, 2005 08:16 ET

Dime Community Bancshares Reports Second Quarter 2005 Earnings

Operating Earnings per Share 29 Cents Before Charge for Securities Portfolio Sale Loan Portfolio Rises by 3% Sequentially

BROOKLYN, NY -- (MARKET WIRE) -- July 21, 2005 -- 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 $7.3 million, or 20 cents per diluted share, for the quarter ended June 30, 2005, compared to $12.4 million, or 34 cents per diluted share, for the quarter ended June 30, 2004, and $10.9 million, or 30 cents per diluted share, for the quarter ended March 31, 2005.

On May 18, 2005, the Company announced an asset restructuring, incurring a one-time after tax loss of $3.0 million related to the sale of $276 million of investment and mortgage-backed securities. The securities sold had an average yield of 3.62% and an average estimated duration of 2.4 years. This loss reduced diluted earnings per share by 9 cents in the current quarter. The cash received has been reinvested in overnight funds and other short-term investments as a hedge against further increases in short term interest rates.

Operating earnings, which excludes gains or losses on the sale of securities, were $10.3 million, or 29 cents per diluted share, for the quarter ended June 30, 2005, compared to $12.4 million, or 34 cents per diluted share, for the quarter ended June 30, 2004, and $10.9 million, or 30 cents per diluted share, for the quarter ended March 31, 2005.

Other Second Quarter Highlights

--  Real estate loan originations totaled $179.2 million, with an average
    interest rate of 5.74%.
--  The loan portfolio grew at a 12% annualized rate.
--  Loan sales to Fannie Mae totaled $15.7 million.
--  The annualized loan amortization rate decreased slightly to 14% from
    15% sequentially.
--  Total assets declined by 2.9% sequentially.
--  Net interest margin was 2.75%, twelve basis points lower sequentially.
--  Non-interest expenses increased 2% sequentially while decreasing 6%
    year-over-year.
--  The Company repurchased 197,100 shares into treasury during the
    quarter.
    
"Several items contributed to the better than expected operating results in the second quarter," said Vincent F. Palagiano, Chairman and Chief Executive Officer. "These included higher than planned prepayment fee income, a higher than expected yield on assets, and a lower than expected cost of deposits. In addition, the sale of almost half of our investment and mortgage-backed securities portfolio during the quarter provides us with the liquidity to fund future loan originations at significantly higher yields. This transaction also improved the Company's interest rate risk profile."

Mr. Palagiano further noted, "We are also very close to signing the lease for a new branch in Nassau County, within our existing footprint on the south shore of Long Island, a proven demographic area for our deposit gathering model. The opening of this branch is being undertaken as we look ahead to a more favorable operating environment."

FINANCIAL RESULTS

For the quarter ended June 30, 2005, the Company's pre-tax income, excluding the $5.2 million pre-tax loss on the sale of investment and mortgage-backed securities, was $16.2 million, compared to $20.0 million in the same quarter of the previous year. This $3.8 million decrease was primarily due to decreases of $1.9 million in net interest income and $2.5 million in non-interest income, partially offset by a decrease of $619,000 in non-interest expense. Average earning assets declined by $100 million year-over-year and the net interest margin contracted 15 basis points from 2.90% during the June 2004 quarter to 2.75% during the June 2005 quarter. The decline in non-interest income reflected a decline of $2.5 million in prepayment fees. The decrease of $619,000 in non-interest expense was due mainly to lower expenses in various Company benefits plans and to the cessation of quarterly charges related to the amortization of a core deposit premium paid on an earlier acquisition.

On a linked quarter basis, the Company's pre-tax income, excluding the $5.2 million pre-tax loss on the sale of investment and mortgage-backed securities, decreased $1.0 million from $17.2 million in the March 2005 quarter, to $16.2 million in the June 2005 quarter primarily due to a decline in net interest income of $1.0 million during the period. Net interest margin declined 12 basis points to 2.75% during the June 2005 quarter from 2.87% in the March 2005 quarter. The decline was tempered by an increase in the average yield on interest earning assets of 5 basis points, a sign that asset yields have stabilized The average yield on real estate loans, the largest component of interest earning assets, expanded by 2 basis points sequentially to 5.64%.

Average deposits per branch approximated $104 million at June 30, 2005, lower than the $117 million average at June 30, 2004, and the $108 million average at March 31, 2005. The loan-to-deposit ratio was 122% at June 30, 2005, compared to 104% at June 30, 2004, and 114% at March 31, 2005. Core deposits comprised 53% of total deposits at June 30, 2005, compared to 58% at June 30, 2004, and 56% at March 31, 2005. Not unexpectedly, a component of traditional CD money which resided in core deposits while interest rates were historically low, is now migrating back to CD's, especially in the current competitive deposit rate environment.

Over the past twelve months, while balance sheet growth has been restrained, the Bank did not aggressively compete for deposits. Promotional rate accounts declined as a percentage of total deposits from 31.5% to 24.6%, as of June 30, 2004 and 2005, respectively, accounting for most of the 11% decline in deposits over that period. This change in proportion has helped minimize overall net interest margin contraction because the cost of deposits component has risen only modestly, by 17 basis points, from 1.75% to 1.92%, during the quarters ended June 30, 2004 and June 30, 2005, respectively.

Non-interest income, excluding gains or losses on the sale of assets, totaled $4.1 million during the quarter ended June 30, 2005, compared to $6.5 million in the quarter ended June 30, 2004, and $3.9 million in the quarter ended March 31, 2005. The variances resulted primarily from prepayment fee income, which totaled $1.3 million in the quarter ended June 30, 2005, $3.8 million in the quarter ended June 30, 2004, and $1.6 million in the quarter ended March 31, 2005.

The Company recorded a net gain of $152,000 on the sale of $15.7 million in loans to Fannie Mae during the quarter ended June 30, 2005. The Company recorded net gains of $207,000 on the sale of $26.8 million in loans to Fannie Mae during the quarter ended June 30, 2004, and $135,000 on the sale of $24.4 million in loans to Fannie Mae during the quarter ended March 31, 2005. Retail banking fee income and loan administration fee income increased $129,000 and $214,000, respectively, during the most recent quarter, contributing to the sequential quarterly increase in non-interest income.

As mentioned previously, the Company recorded a pre-tax loss of $5.2 million on the sale of $276 million of investment and mortgage-backed securities. There were no gains or losses recorded on sales of securities during the quarters ended June 30, 2004 and March 31, 2005.

Non-interest expense totaled $9.9 million during the quarter ended June 30, 2005, a decrease of $619,000, or 6%, from the prior year quarter, and an increase of $175,000, or 2%, sequentially. During the June 2005 quarter compared to the June 2004 quarter, cost savings of $492,000 were realized from adjustments made to various benefit plans. In addition, the core deposit premium associated with deposits acquired as a result of a 1999 acquisition became fully amortized as of January 2005, reducing non-interest expense by $206,000 during the June 30, 2005, quarter. The linked quarter increase in expense is a result of additional Sarbanes-Oxley related expenses of $168,000. At the beginning of the fiscal year, the Company budgeted for an increase in on-going audit costs due mainly to the increased audit cost of complying with Sarbanes-Oxley, however, the $130,000 incurred in June was a one-time charge related to the 2004 audit engagement.

The Company's efficiency ratio for the quarter ended June 30, 2005, was 38.2% as compared to 34.7% in the year ago quarter and 36.3% in the quarter ended March 31, 2005.

The effective tax rate was 33.9% for the quarter ended June 30, 2005, and 36.8% for the quarter ended March 31, 2005. The decline from the previous quarter resulted from the tax impact of the loss recorded from the sale of investment and mortgage-backed securities during the quarter. The effective tax rate is expected to approximate 36.0% for the full year ending December 31, 2005.

Mr. Palagiano concluded, "We are pleased with the progress we've made so far in navigating through this stage of the business cycle. Despite the market pressures on both the asset and liability sides of our balance sheet, we are pleased with our results and our strong financial position. The Company's returns on equity continue to remain firmly in the double digits, even as equity continues to grow. We remain confident in our ability to achieve future growth as we expand our business into such other closely related areas as commercial real estate and small mixed-use lending. Under all conditions, we remain intent on protecting the long term financial health and integrity of the institution that we have built."

The Company's tangible capital ratio has now reached 7.2%, and tangible book value per share is $6.28, an increase of 5.7% since June 30, 2004. During the same period, the Company has repurchased nearly one million shares, or 2.6%, of common stock outstanding since June 30, 2004. The dividend payout ratio last quarter was 46%.

REAL ESTATE LENDING AND CREDIT QUALITY

Real estate loan originations totaled $179.2 million during the quarter ended June 30, 2005, of which $49.5 million, or 28%, represented pure commercial real estate. The average rate on total loan originations during the quarter was 5.74%, compared to 4.80% in the quarter ended June 30, 2004, and 5.49% realized during the quarter ended March 31, 2005. Pure commercial real estate now represents 12.3% of the gross loan portfolio, compared with 9.7% as of June 30, 2004. Real estate loan prepayment and amortization during the June 2005 quarter approximated 14% of the loan portfolio on an annualized basis, compared to 35% during the June 2004 quarter and 15% during the March 2005 quarter.

For the first six months of 2005 total real estate loan originations were $294.3 million with an average rate of 5.64%. The real estate loan prepayment and amortization rate was 15% for the first six months of the year.

At June 30, 2005, the multifamily and mixed use loan commitment pipeline approximated $111.9 million, including loan commitments intended for sale to Fannie Mae of $20.2 million. The average rate on the commitment pipeline is 5.86%.

The Bank continued its solid credit quality performance during the most recent quarter. Non-performing loans were $5.0 million at June 30, 2005, representing 0.15% of total assets. Since June 30, 2005, the Company has resolved several of these loans without incurring any loss.

STOCKHOLDERS EQUITY & SHARE REPURCHASE PROGRAM

The Company's total stockholders' equity at June 30, 2005, was $287.5 million, or 8.78% of total assets, compared to $269.5 million, or 7.77% of total assets at June 30, 2004. Tangible stockholders' equity was $233.2 million at quarter end, equal to 7.24% of tangible assets, compared to $221.7 million, or 6.47% of tangible assets at June 30, 2004.

Excluding the loss recorded on the sale of securities during the second quarter of 2005, the return on average stockholders' equity was 14.4%, the return on tangible equity was 17.7% and the cash return on average tangible equity (which management considers the best measurement of the Company's internal capital generation), was 18.3%.

During the June 2005 quarter, the Company repurchased 197,100 shares of its common stock into treasury. As of June 30, 2005, the Company had an additional 1.0 million shares remaining eligible for repurchase under its tenth stock repurchase program, approved in May 2004.

OUTLOOK

At this point in the cycle, the Company is optimistic that yields on the asset side of its balance sheet are beginning to rise. The average yield on interest earning assets rose on a linked quarter basis, from 5.11% to 5.16%. The average yield on real estate loans rose by 2 basis points during the quarter from 5.62% to 5.64%. The average yield on new loans originated during the quarter was 5.74%, above the current portfolio rate. The average yield on loans in the pipeline is 5.86%, also above the current portfolio rate. Furthermore, as a result of the aforementioned securities portfolio restructuring, the Company has over $225 million of short-term investments, equaling approximately 7% of earning assets, tied closely to overnight rates. However, because asset yields are not yet rising as far or as fast as liability costs, further net interest margin contraction is expected over the near term.

Management's expectation is that the Federal Reserve will continue to raise the Fed Funds rate at a measured pace, as it has consistently announced. As the Federal Reserve moves closer to a point that it considers Fed Funds to be 'neutral,' and new loan yields provide a reasonable spread, the Company will be more inclined to accelerate balance sheet growth.

At 14%, prepayment and amortization rates continue to be within the range previously discussed by management and are expected to remain near that level for the balance of the year. While there is potential to increase interest income by converting balance sheet liquidity to loans, there appears to be enough current liquidity to meet existing loan origination needs for the coming quarter. Under these assumptions, the Company now expects third quarter earnings per share will be in the range of $0.24 - $0.26 cents.

CONFERENCE CALL

Management will conduct a conference call at 11:30 A.M. Eastern Time, on Thursday, July 21, 2005, to discuss the Company's operating performance for the quarterly period ended June 30, 2005.

The conference call will also be available via the Internet by accessing the following Web address: www.dsbwdirect.com or www.vcall.com. Web users should go to the site at least fifteen minutes prior to the call to register, download and install any necessary audio software. The webcast will be available until August 21, 2005.

ABOUT DIME COMMUNITY BANCSHARES

Dime Community Bancshares, Inc., a unitary thrift holding company, is the parent company of The Dime Savings Bank of Williamsburgh, Brooklyn, New York, founded in 1864. With $3.27 billion in assets as of June 30, 2005, the Bank has twenty 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)

                                                June 30,
                                                 2005          December 31,
                                              (Unaudited)          2004
                                               ---------         ---------

ASSETS:
Cash and due from banks                        $29,276             $26,581
Investment securities
 held to maturity                                  520                 585
Investment securities
 available for sale                             70,379              54,840
Mortgage-backed securities
 held to maturity                                    -                 465
Mortgage-backed securities
 available for sale                            226,736             519,420
Federal funds sold and
 other short-term assets                       225,852             103,291
Real estate Loans:
   One-to-four family and
    cooperative apartment                      140,255             138,125
   Multi-family and underlying
    cooperative                              1,890,886           1,916,118
   Commercial real estate                      502,968             424,060
   Construction and land
    acquisition                                 13,184              15,558
   Unearned discounts and
    net deferred loan fees                         (16)               (463)
                                             ---------           ---------
   Total real estate loans                   2,547,277           2,493,398
                                             ---------           ---------
   Other loans                                   2,596               2,916
   Allowance for loan losses                   (15,534)            (15,543)
                                             ---------           ---------
Total loans, net                             2,534,339           2,480,771
                                             ---------           ---------
Loans held for sale                              3,433               5,491
Premises and fixed assets, net                  16,526              16,652
Federal Home Loan Bank
 of New York capital stock                      25,325              25,325
Goodwill                                        55,638              55,638
Other assets                                    85,434              88,207
                                             ---------           ---------
TOTAL ASSETS                               $ 3,273,458         $ 3,377,266
                                             =========           =========

LIABILITIES AND STOCKHOLDERS'
 EQUITY:
Deposits:
Checking and NOW                              $134,854            $138,402
Savings                                        353,396             362,656
Money Market                                   618,603             749,040
                                             ---------           ---------
    Sub-total                                1,106,853           1,250,098
                                             ---------           ---------
Certificates of deposit                        978,489             959,951
                                             ---------           ---------
Total Due to depositors                      2,085,342           2,210,049
                                             ---------           ---------
Escrow and other deposits                       56,736              48,284
Securities sold under
 agreements to repurchase                      205,520             205,584
Federal Home Loan Bank
 of New York advances                          506,500             506,500
Subordinated Notes Sold                         25,000              25,000
Trust Preferred Notes Payable                   72,165              72,165
Other liabilities                               34,668              27,963
                                             ---------           ---------
TOTAL LIABILITIES                            2,985,931           3,095,545
                                             ---------           ---------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par,
 125,000,000 shares authorized,
 50,400,844 shares and
 50,111,988 shares issued
 at June 30, 2005 and
 December 31, 2004, respectively,
 and 37,143,454 shares and
 37,165,740 shares outstanding at
 June 30, 2005 and December 31, 2004,
 respectively)                                     503                 501
Additional paid-in capital                     200,207             198,183
Retained earnings                              266,419             258,237
Unallocated common stock
 of Employee Stock Ownership Plan               (4,702)             (4,749)
Unearned common stock of
 Recognition and Retention Plan                 (3,094)             (2,612)
Common stock held by the
 Benefit Maintenance Plan                       (7,941)             (7,348)
Treasury stock (13,257,390
 shares and 12,946,248 shares
 at June 30, 2005 and
 December 31, 2004, respectively)             (162,348)           (157,263)
Accumulated other
 comprehensive loss, net                        (1,517)             (3,228)
                                             ---------           ---------
TOTAL STOCKHOLDERS' EQUITY                     287,527             281,721
                                             ---------           ---------
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                       $3,273,458          $3,377,266
                                             =========           =========


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

                                        For the Three Months  Ended
                                     June 30,     March 31,    June 30,
                                       2005         2005         2004
                                    ----------   ----------   ----------

Interest income:
  Loans secured by real estate      $   35,261   $   34,848   $   34,450
  Other loans                               27           32           60
  Mortgage-backed securities             3,270        4,490        6,146
  Investment securities                    755          606          375
  Other                                  1,887          954          386
                                    ----------   ----------   ----------
    Total interest  income              41,200       40,930       41,417
                                    ----------   ----------   ----------
Interest expense:
  Deposits  and escrow                  10,185        9,381       10,242
  Borrowed funds                         9,077        8,573        7,301
                                    ----------   ----------   ----------
    Total interest expense              19,262       17,954       17,543
                                    ----------   ----------   ----------
      Net interest income               21,938       22,976       23,874
Provision for loan losses                   60           60           60
                                    ----------   ----------   ----------
Net interest income after
 provision for loan losses              21,878       22,916       23,814
                                    ----------   ----------   ----------

Non-interest income:
  Service charges and other fees         1,514        1,408        1,742
  Net (loss) gain on sales and
   redemptions of assets                (5,024)         135          207
  Prepayment fee income                  1,338        1,585        3,835
  Other                                  1,202          926          948
                                    ----------   ----------   ----------
    Total non-interest income             (970)       4,054        6,732
                                    ----------   ----------   ----------
Non-interest expense:
  Compensation and benefits              5,625        5,607        6,178
  Occupancy and equipment                1,277        1,336        1,253
  Core deposit intangible
   amortization                              -           48          206
  Other                                  3,031        2,767        2,915
                                    ----------   ----------   ----------
    Total non-interest expense           9,933        9,758       10,552
                                    ----------   ----------   ----------

    Income before taxes                 10,975       17,212       19,994
Income tax expense                       3,717        6,341        7,588
                                    ----------   ----------   ----------

Net Income                          $    7,258   $   10,871   $   12,406
                                    ==========   ==========   ==========

Earnings per Share:
  Basic                             $     0.21   $     0.31   $     0.35
                                    ==========   ==========   ==========
  Diluted                           $     0.20   $     0.30   $     0.34
                                    ==========   ==========   ==========

Average common shares outstanding
 for Diluted EPS                    35,644,728   35,757,992   36,135,121


                                   For the Six Months Ended
                                     June 30,     June 30,
                                       2005         2004
                                    ----------   ----------

Interest income:
  Loans secured by real estate      $   70,109   $   68,065
  Other loans                               59          123
  Mortgage-backed securities             7,760       10,858
  Investment securities                  1,361          687
  Other                                  2,841          729
                                    ----------   ----------
    Total interest  income              82,130       80,462
                                    ----------   ----------
Interest expense:
  Deposits  and escrow                  19,566       19,246
  Borrowed funds                        17,650       13,226
                                    ----------   ----------
    Total interest expense              37,216       32,472
                                    ----------   ----------
      Net interest income               44,914       47,990
Provision for loan losses                  120          120
                                    ----------   ----------
Net interest income after
 provision for loan losses              44,794       47,870
                                    ----------   ----------

Non-interest income:
  Service charges and other fees         2,922        3,302
  Net (loss) gain on sales
   and redemptions of assets            (4,889)         783
  Prepayment fee income                  2,923        6,378
  Other                                  2,128        1,886
                                    ----------   ----------
    Total non-interest income            3,084       12,349
                                    ----------   ----------
Non-interest expense:
  Compensation and benefits             11,232       11,895
  Occupancy and equipment                2,614        2,515
  Core deposit intangible
   amortization                             48          412
  Other                                  5,797        6,095
                                    ----------   ----------
    Total non-interest expense          19,691       20,917
                                    ----------   ----------

    Income before taxes                 28,187       39,302
Income tax expense                      10,058       14,556
                                    ----------   ----------

Net Income                          $   18,129   $   24,746
                                    ==========   ==========

Earnings per Share:
  Basic                             $     0.52   $     0.70
                                    ==========   ==========
  Diluted                           $     0.51   $     0.68
                                    ==========   ==========

Average common shares outstanding
 for Diluted EPS                    35,697,973   36,498,106


      DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
    Core Earnings and Core Cash Earnings Reconciliations:
         (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.

In addition, 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 generation is a significant
financial measure since banks are subject to regulatory requirements
involving the maintenance of minimum tangible capital levels.

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 cash earnings, for each of the periods
presented:

                                         For the Three Months Ended
                                     June 30,     March 31,     June 30,
                                       2005         2005          2004
                                     -------       -------       -------

Net income as reported               $ 7,258       $10,871       $12,406
Pre-tax net loss (gain) on
 sale of securities                    5,176             -             -
Tax effect of adjustments            ( 2,143)            -             -
                                     -------       -------       -------
Core Earnings                        $10,291       $10,871       $12,406
                                     -------       -------       -------
Cash Earnings Additions :
Core Deposit Intangible
 Amortization                              -            48           206
Non-cash stock benefit
 plan expense                            352           343           685
                                     -------       -------       -------
Core Cash Earnings                   $10,643       $11,262       $13,297
                                     -------       -------       -------

Performance Ratios (Based
 upon Core Cash Earnings):
Core Cash EPS (Diluted)                 0.30          0.31          0.37
Core Cash Return on
 Average Assets                         1.28%         1.34%         1.54%
Core Cash Return on Average
 Tangible Stockholders' Equity         18.29%        19.63%        24.48%


                                   For the Six Months Ended
                                     June 30,     June 30,
                                       2005         2004
                                     -------       -------

Net income as reported               $18,129       $24,746
Pre-tax net loss (gain)
 on sale of securities                 5,176          (516)
Tax effect of adjustments             (2,143)          103
                                     -------       -------
Core Earnings                        $21,162       $24,333
                                     -------       -------
Cash Earnings Additions:
Core Deposit Intangible
 Amortization                             48           412
Non-cash stock benefit
 plan expense                            695         1,479
                                     -------       -------
Core Cash Earnings                   $21,905       $26,224
                                     -------       -------

Performance Ratios (Based upon
 Core Cash Earnings):
Core Cash EPS (Diluted)                 0.61          0.72
Core Cash Return on Average
 Assets                                 1.31%         1.60%
Core Cash Return on Average
 Tangible Stockholders' Equity         18.98%        24.25%


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

                                         For the Three Months Ended
                                         ---------------------------
                                     June 30,      March 31,     June 30,
                                       2005          2005          2004
                                       ----          ----          ----
Performance Ratios
 (Based upon Reported Earnings):
Reported EPS (Diluted)            $     0.20    $     0.30    $      0.34
Return on Average Assets                0.87%         1.30%         1.44%
Return on Average
 Stockholders' Equity                  10.18%        15.47%        18.42%
Return on Average Tangible
 Stockholders' Equity                  12.47%        18.95%        22.84%
Net Interest Spread                     2.45%         2.59%         2.66%
Net Interest Margin                     2.75%         2.87%         2.90%
Non-interest Expense to
 Average Assets                         1.19%         1.16%         1.22%
Efficiency Ratio                       38.22%        36.28%        34.71%
Effective Tax Rate                     33.87%        36.84%        37.95%

Performance Ratios (Based
 upon Core Earnings):
Core EPS (Diluted)                   $  0.29       $  0.30       $  0.34
Core Return on Average
 Assets                                 1.23%         1.30%         1.44%
Core Return on Average
 Stockholders' Equity                  14.44%        15.47%        18.42%
Core Return on Average
 Tangible Stockholders'
 Equity                                17.69%        18.95%        22.84%

Book Value and Tangible Book
 Value Per Share:
Stated Book Value Per Share          $  7.74       $  7.60       $  7.22
Tangible Book Value Per Share           6.28          6.27          5.94

Average Balance Data:
Average Assets                    $3,335,107    $3,357,138    $3,448,906
Average Interest Earning Assets    3,195,935     3,204,674     3,295,823
Average Stockholders' Equity         285,103       281,038       269,337
Average Tangible
 Stockholders' Equity                232,728       229,509       217,315
Average Loans                      2,501,574     2,481,554     2,351,624
Average Deposits                   2,132,556     2,183,923     2,349,850

Asset Quality Summary:
Net charge-offs (recoveries)           ($ 14)         ($ 1)   $       37
Nonperforming Loans                    5,025         2,712         1,413
Nonperforming Loans/ Total Loans        0.20%         0.11%         0.06%
Nonperforming Assets/Total Assets       0.15%         0.08%         0.04%
Allowance for Loan Loss/Total Loans     0.61%         0.61%         0.60%
Allowance for Loan
 Loss/Nonperforming Loans             309.13%       561.68%      1028.66%

Regulatory Capital Ratios:
Consolidated Tangible Equity
 to Tangible Assets at period end       7.24%         7.01%         6.47%
Tangible Capital Ratio (Bank Only)      8.72%         8.23%         7.30%
Leverage Capital Ratio (Bank Only)      8.72%         8.23%         7.30%
Risk-Based Capital Ratio (Bank Only)   13.38%        13.13%        14.46%


                                                   For the Six Months Ended
                                                   ------------------------
                                                    June 30,      June 30,
                                                     2005           2004
                                                     ----           ----
Performance Ratios
 (Based upon Reported Earnings):
Reported EPS (Diluted)                          $     0.51    $     0.68
Return on Average Assets                              1.08%         1.51%
Return on Average Stockholders' Equity               12.81%        18.07%
Return on Average Tangible Stockholders' Equity      15.71%        22.53%
Net Interest Spread                                   2.52%         2.84%
Net Interest Margin                                   2.81%         3.08%
Non-interest Expense to Average Assets                1.18%         1.28%
Efficiency Ratio                                     37.23%        35.12%
Effective Tax Rate                                   35.68%        37.04%

Performance Ratios (Based
 upon Core Earnings):
Core EPS (Diluted)                                 $  0.59       $  0.67
Core Return on Average Assets                         1.26%         1.49%
Core Return on Average
 Stockholders' Equity                                14.95%        17.76%
Core Return on Average Tangible
 Stockholders' Equity                                18.33%        22.16%

Book Value and Tangible Book Value Per Share:
Stated Book Value Per Share                        $  7.74       $  7.22
Tangible Book Value Per Share                         6.28          5.94

Average Balance Data:
Average Assets                                  $3,346,123    $3,271,553
Average Interest Earning Assets                  3,200,304     3,113,490
Average Stockholders' Equity                       283,071       273,961
Average Tangible Stockholders' Equity              230,843       219,649
Average Loans                                    2,491,565     2,285,007
Average Deposits                                 2,158,240     2,247,246

Asset Quality Summary:
Net charge-offs (recoveries)                         ($ 15)   $       67
Nonperforming Loans                                  5,025         1,413
Nonperforming Loans/ Total Loans                      0.20%         0.06%
Nonperforming Assets/Total Assets                     0.15%         0.04%
Allowance for Loan Loss/Total Loans                   0.61%         0.60%
Allowance for Loan Loss/Nonperforming Loans         309.13%      1028.66%

Regulatory Capital Ratios:
Consolidated Tangible Equity to Tangible
 Assets at period end                                 7.24%         6.47%
Tangible Capital Ratio (Bank Only)                    8.72%         7.30%
Leverage Capital Ratio (Bank Only)                    8.72%         7.30%
Risk -Based Capital Ratio (Bank Only)                13.38%        14.46%


           DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                    ANALYSIS OF NET INTEREST INCOME

                                        For the Three Months Ended
                                               June 30, 2005
                                                               Average
                                     Average                    Yield/
                                     Balance      Interest       Cost
                                    ----------   ----------   ----------
                                          (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans               $2,499,139   $   35,261         5.64%
    Other loans                          2,436           27         4.43
    Mortgage-backed securities         369,470        3,270         3.54
    Investment securities               90,384          755         3.34
    Other short-term investments       234,506        1,887         3.22
                                    ----------   ----------   ----------
      Total interest earning
       assets                        3,195,935   $   41,200         5.16%
                                    ----------   ----------
  Non-interest earning assets          139,172
                                    ----------
Total assets                        $3,335,107
                                    ==========

Liabilities and Stockholders'
 Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts         $   40,801   $      103         1.01%
    Money Market accounts              670,907        2,869         1.72
    Savings accounts                   358,382          493         0.55
    Certificates of deposit            966,386        6,720         2.79
                                    ----------   ----------   ----------
        Total interest
         bearing deposits            2,036,476       10,185         2.01
    Borrowed Funds                     809,248        9,077         4.50
                                    ----------   ----------   ----------
      Total interest-bearing
       liabilities                   2,845,724       19,262         2.71%
                                    ----------   ----------
  Checking accounts                     96,080
  Other non-interest-bearing
   liabilities                         108,200
                                    ----------
      Total liabilities              3,050,004
  Stockholders' equity                 285,103
                                    ----------
Total liabilities and
 stockholders' equity               $3,335,107
                                    ==========
Net interest income                              $   21,938
                                                 ==========
Net interest spread                                                 2.45%
                                                              ==========
Net interest-earning assets         $  350,211
                                    ==========
Net interest margin                                                 2.75%
                                                              ==========
Ratio of interest-earning assets
 to interest-bearing liabilities                                  112.31%
                                                              ==========


                                        For the Three Months Ended
                                              March 31, 2005
                                                               Average
                                     Average                    Yield/
                                     Balance      Interest       Cost
                                    ----------   ----------   ----------
                                          (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans               $2,478,992   $   34,848         5.62%
    Other loans                          2,562           32         5.00
    Mortgage-backed securities         504,077        4,490         3.56
    Investment securities               68,252          606         3.55
    Other short-term investments       150,791          954         2.53
                                    ----------   ----------   ----------
      Total interest earning
       assets                        3,204,674   $   40,930         5.11%
                                    ----------   ----------
  Non-interest earning assets          152,464
                                    ----------
Total assets                        $3,357,138
                                    ==========

Liabilities and Stockholders'
 Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts         $   43,071   $      108         1.02%
    Money Market accounts              724,333        2,717         1.52
    Savings accounts                   360,842          491         0.55
    Certificates of deposit            961,947        6,065         2.56
                                    ----------   ----------   ----------
        Total interest
         bearing deposits            2,090,193        9,381         1.82
    Borrowed Funds                     804,339        8,573         4.32
                                    ----------   ----------   ----------
      Total interest-bearing
       liabilities                   2,894,532       17,954         2.52%
                                    ----------   ----------
  Checking accounts                     93,730
  Other non-interest-bearing
   liabilities                          87,838
                                    ----------
      Total liabilities              3,076,100
  Stockholders' equity                 281,038
                                    ----------
Total liabilities and
 stockholders' equity               $3,357,138
                                    ==========
Net interest income                              $   22,976
                                                 ==========
Net interest spread                                                 2.59%
                                                              ==========
Net interest-earning assets         $  310,142
                                    ==========
Net interest margin                                                 2.87%
                                                              ==========
Ratio of interest-earning assets
 to interest-bearing liabilities                                  110.71%
                                                              ==========

                                        For the Three Months Ended
                                               June 30, 2004
                                                               Average
                                     Average                    Yield/
                                     Balance      Interest       Cost
                                    ----------   ----------   ----------
                                          (Dollars In Thousands)
Assets:
  Interest-earning assets:
    Real Estate Loans               $2,348,236   $   34,450         5.87%
    Other loans                          3,388           60         7.08
    Mortgage-backed securities         750,157        6,146         3.28
    Investment securities               45,188          375         3.32
    Other short-term investments       148,854          386         1.04
                                    ----------   ----------   ----------
      Total interest earning
       assets                        3,295,823   $   41,417         5.03%
                                    ----------   ----------
  Non-interest earning assets          153,083
                                    ----------
Total assets                        $3,448,906
                                    ==========

Liabilities and Stockholders'
 Equity:
  Interest-bearing liabilities:
    NOW, Super Now accounts         $   41,128   $      105         1.02%
    Money Market accounts              844,621        3,177         1.51
    Savings accounts                   371,427          500         0.54
    Certificates of deposit            998,037        6,460         2.60
                                    ----------   ----------   ----------
        Total interest
         bearing deposits            2,255,213       10,242         1.82
    Borrowed Funds                     718,812        7,301         4.07
                                    ----------   ----------   ----------
      Total interest-bearing
       liabilities                   2,974,025       17,543         2.37%
                                    ----------   ----------
  Checking accounts                     94,637
  Other non-interest-bearing
   liabilities                         110,907
                                    ----------
      Total liabilities              3,179,569
  Stockholders' equity                 269,337
                                    ----------
Total liabilities and
 stockholders' equity               $3,448,906
                                    ==========
Net interest income                              $   23,874
                                                 ==========
Net interest spread                                                 2.66%
                                                              ==========
Net interest-earning assets         $  321,798
                                    ==========
Net interest margin                                                 2.90%
                                                              ==========
Ratio of interest-earning assets
 to interest-bearing liabilities                                  110.82%
                                                              ==========

Contact Information

  • Contact:

    Kenneth J. Mahon
    Exec. VP and Chief Financial Officer
    718-782-6200 extension 8265

    Stephanie Prince
    Director of Corporate Marketing
    718-782-6200 extension 8250