EXHIBIT 99
DIME COMMUNITY BANCSHARES REPORTS FOURTH QUARTER
AND FULL YEAR 2005 EARNINGS
Diluted Earnings Per Share of 25 Cents for the Fourth Quarter and $1.02 for the 2005 Year
Brooklyn, NY - January 27, 2006 - 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 $9.0 million, or 25 cents per diluted share, for the quarter ended December 31, 2005, compared to $10.2 million, or 29 cents per diluted share, for the quarter ended December 31, 2004 and $9.1 million, or 26 cents per diluted share, for the quarter ended September 30, 2005.
For the year ended December 31, 2005, net income was $36.2 million, or $1.02 per diluted share, compared to $46.2 million, or $1.28 per diluted share for the year ended December 31, 2004. The Company incurred a one-time after tax loss of $3.0 million related to the sale of $276 million of investment and mortgage-backed securities during the quarter ended June 30, 2005. This loss reduced diluted earnings per share by 9 cents during the year ended December 31, 2005.
Operating earnings (excluding gains or losses on the sale of securities) were $39.2 million, or $1.10 per diluted share, for the year ended December 31, 2005, compared to $45.9 million, or $1.27 per diluted share, for the year ended December 31, 2004. Operating earnings were substantially the same as reported earnings during the quarters ended December 31, 2005, September 30, 2005 and December 31, 2004.
Fiscal Year Highlights
| § | Total assets declined by $251.0 million (7.4%); total deposits declined by $295.3 million. |
| § | Net interest margin declined only 23 basis points from the fourth quarter of 2004 to the fourth quarter of 2005. |
| § | Real estate loan originations totaled $574.2 million, with an average interest rate of 5.77%. |
| § | Commercial real estate loans grew 36%, and the total loan portfolio grew at an annualized rate of 4.4%. |
| § | Loans sold in the secondary market totaled $89.0 million, with an average term to repricing of 13.7 years. |
| § | The Company repurchased 801,384 shares into treasury during the year. |
| § | Tangible equity grew by 4.4% to $239.2 million, while the tangible equity ratio continued to climb throughout the year, reaching 7.78% at year-end. |
Fourth Quarter Trends
| § | Net interest margin was 2.70%, one basis point lower sequentially, excluding $632,000 of additional interest income recorded during the December 2005 quarter. |
| § | Real estate loan originations totaled $144.0 million at an average rate of 5.98% compared to $136.0 million at an average interest rate of 5.84% during the third quarter. |
| § | Loans in the pipeline approximated $103.8 million at quarter-end, including commitments for sale to Fannie Mae of $30.8 million. |
| § | The annualized loan amortization rate declined from 15% to approximately 12% sequentially. |
| § | Quarterly non-interest expense decreased 4% sequentially and 6% year-over-year. |
Vincent F. Palagiano, Chairman and Chief Executive Officer, commented, "The year 2005 was marked by continued tightening of short-term interest rates by the Federal Open Market Committee and a flattened yield curve. These events caused us to carefully monitor our overall deposit funding costs, and to adopt strategies that ultimately resulted in a net decline in both deposits and assets during the year. Despite this challenging environment, we were still able to generate a return on equity of 12.7%, and a core cash return on average tangible equity of 17.4% during 2005."
Mr. Palagiano continued, "Our discipline in pricing deposits helped the cost of our deposits significantly lag the upward movement in short-term interest rates during the year. In fact, comparing the fourth quarters of 2005 and 2004, despite an increase of 200 basis points in short-term interest rates and a flattened yield curve, our average deposit cost increased only 57 basis points. This significantly reduced the level of net interest margin compression experienced during the year."
"Fourth quarter diluted earnings per share were in line with, if not even a little ahead of, our expectations."
Mr. Palagiano concluded, "As the new fiscal year begins, we continue to expect market pressures on both the asset and liability sides of our balance sheet," noted Mr. Palagiano. "We will continue to remain focused on generating returns that are consistent with the long-term financial health of the Company, as the 2005 results demonstrate."
FINANCIAL RESULTS
For the quarter ended December 31, 2005, the Company’s pre-tax income was $14.1 million, compared to $16.4 million in the same quarter of the previous year. The $2.3 million decrease was primarily due to a decline of $2.8 million in net interest income.
Average earning assets declined by $239 million year-over-year. The net interest margin contracted 23 basis points from 2.93% during the December 2004 quarter to 2.70% (as adjusted for items discussed below) during the December 2005 quarter.
On a linked quarter basis, the Company’s pre-tax income decreased $129,000 from $14.2 million in the September 2005 quarter, to $14.1 million during the quarter ended December 31, 2005, primarily due to a decline in non-interest income of $492,000. During the quarter ended December 31, 2005, the Company recorded additional interest income of $499,000 related to the disposition of two problem loans and $133,000 of additional interest income related to annual distributions from an equity fund investment. These items (the "Additional Interest Income Items") combined to add $632,000 of interest income during the quarter ended December 31, 2005. Net interest margin, excluding the Additional Interest Income Items, declined 1 basis point, to 2.70%, during the December 2005 quarter, from 2.71% in the September 2005 quarter. The decline was tempered by an increase in the average yield on interest earning assets of 8 basis points (excluding the Additional Interest Income Items), reflecting both an increase in yield on the Company's securities portfolio, which continued to remain liquid, along with the movement of a greater percentage of the total interest earning assets into real estate loans, the Company's highest yielding asset. Excluding the $499,000 of additional interest income, the yield on real estate loans was 5.60% during the quarter ended December 31, 2005.
The yields on newly originated real estate loans continued to increase, averaging 5.98% during the final quarter of 2005, up from 5.55% during the fourth quarter of 2004 and 5.84% during the third quarter of 2005. Higher yielding commercial real estate loans increased 27.5% on an annualized basis during the most recent quarter on $36.7 million of originations. This, combined with a reduction in the levels of both lower-yielding securities and higher cost promotional deposits, led to a virtually stable net interest margin on a linked quarter basis.
Average deposits per branch approximated $96 million at December 31, 2005, lower than the $111 million average at December 31, 2004 and the $101 million average at September 30, 2005. The loan-to-deposit ratio was 136% at December 31, 2005, compared to 113% at December 31, 2004 and 128% at September 30, 2005. Core deposits comprised 49% of total deposits at December 31, 2005, compared to 57% at December 31, 2004 and 49% at September 30, 2005. These were managed deposit outflows, as management focused on net interest margin preservation above asset growth.
Newly-originated real estate loans with 5-year or 7-year terms to repricing are often "short funded" with retail deposits. Management believes that unnecessary elements of interest rate risk, and risk to future profitability, are added to the balance sheet by aggressively pursuing loan growth during periods in which short-term interest rates are rising faster than long-term interest rates. The 2005 year was such a period. Since balance sheet growth was constrained, the Bank did not aggressively compete for promotional deposits. As a result, promotional rate accounts declined from 29% to 23% of total deposits since December 2004, accounting for nearly two thirds of the decline in deposits during 2005.
Because of their higher interest rates, the decline in the proportion of promotional accounts helped minimize the rise in the overall cost of deposits. While short-term interest rates increased 200 basis points during 2005, the average cost of the Bank's deposits rose only by 57 basis points, from 1.63% during the quarter ended December 31, 2004 to 2.20%, during the quarter ended December 31, 2005.
During 2005, the Bank maintained strict pricing discipline on its promotional and non-promotional money market accounts. As a result, a component of money market deposits migrated into certificates of deposit ("CDs"), as rates on CD accounts became more favorable, causing the erosion in the core deposit ratio.
Non-interest income, excluding gains or losses on the sale of assets, totaled $3.2 million during the quarter ended December 31, 2005, compared to $3.3 million in the quarter ended December 31, 2004 and $3.8 million in the quarter ended September 30, 2005. The variances resulted primarily from prepayment fee income, which totaled $786,000 in the quarter ended December 31, 2005, $1.1 million in the quarter ended December 31, 2004 and $1.3 million in the quarter ended September 30, 2005.
The Company recorded net gains of $353,000 on the sale of $23.3 million in loans to Fannie Mae during the quarter ended December 31, 2005, $357,000 on the sale of $23.6 million in loans to Fannie Mae during the quarter ended December 31, 2004 and $284,000 on the sale of $25.5 million in loans to Fannie Mae during the quarter ended September 30, 2005. The majority of the loans sold during each of these periods were sold upon origination.
There were no gains or losses recorded on sales of securities during the quarters ended December 31, 2005, September 30, 2005 or December 31, 2004.
Non-interest expense totaled $10.3 million during the quarter ended December 31, 2005, a decrease of $685,000, or 6%, from the prior year quarter, and a decrease of $421,000, or 4%, sequentially. The decrease of $685,000 reflected both a decline of $358,000 in data processing systems expense coupled with the cessation of quarterly charges related to the amortization of a core deposit premium charged in connection with an earlier acquisition. The decline in data processing systems expense during the period resulted from additional expenses that were incurred during the fourth quarter of 2004 related to the data systems conversion completed in November 2004. The decrease of $421,000 in non-interest expense on a linked quarter basis reflected a decrease of $208,000 in marketing expenses resulting from reduced promotional mailings during the December 2005 quarter, and a decline of $134,000 in data processing systems costs.
The Company’s efficiency ratio for the quarter ended December 31, 2005 was 42.6%, compared to 40.6% in the year ago quarter and 43.5% in the quarter ended September 30, 2005.
The effective tax rate was 36.2% for the quarter ended December 31, 2005, 35.9% for the quarter ended September 30, 2005 and 37.5% for the quarter ended December 31, 2004. The effective tax rate is expected to approximate 36.0% for the full year ending December 31, 2006.
The Company continued to grow equity during 2005. The Company’s tangible capital ratio reached 7.78% at December 31, 2005, and tangible book value per share was $6.47, an increase of 5.0% since December 31, 2004. During the same period, the Company repurchased 801,384 shares, or 2.2%, of common stock outstanding at December 31, 2004. The quarterly cash dividend declared on January 19, 2006, represents a payout ratio of 56% of fourth quarter 2005 earnings.
REAL ESTATE LENDING AND CREDIT QUALITY
Real estate loan originations totaled $144.0 million during the quarter ended December 31, 2005, of which $36.7 million, or 25%, represented commercial real estate. The average rate on total loan originations during the quarter was 5.98%, compared to 5.55% in the quarter ended December 31, 2004 and 5.84% during the quarter ended September 30, 2005. Commercial real estate represented 22% of the gross loan portfolio at December 31, 2005, compared with 17% as of December 31, 2004. The commercial real estate portfolio grew at a 36.0% rate, year-over-year. Real estate loan prepayment and amortization during the December 2005 quarter approximated 12% of the loan portfolio on an annualized basis, compared to 11% during the December 2004 quarter and 15% during the September 2005 quarter. The average interest rate on real estate loan prepayment and amortization during the most recent quarter was 6.36%.
For the 2005 year, total real estate loan originations, including commercial real estate, were $574.2 million, with an average rate of 5.77%. The real estate loan prepayment and amortization rate was 14% for the 2005 year, and the average interest rate on the real estate loan prepayment and amortization was 6.31%.
At December 31, 2005, the multifamily and mixed use loan commitment pipeline approximated $103.8 million, including loan commitments intended for sale to Fannie Mae of $30.8 million. The average rate on the commitment pipeline was 6.16%.
The Bank continued its solid credit quality performance during the most recent quarter. Non-performing loans were $958,000 at December 31, 2005, representing 0.03% of total assets.
STOCKHOLDERS' EQUITY AND SHARE REPURCHASE PROGRAM
The Company’s total stockholders’ equity at December 31, 2005 was $291.7 million, or 9.33% of total assets, compared to $281.7 million, or 8.34% of total assets at December 31, 2004. Tangible stockholders’ equity was $239.2 million at quarter end, equal to 7.78% of tangible assets, compared to $229.0 million, or 6.88% of tangible assets, at December 31, 2004.
During the quarter ended December 31, 2005, the return on average stockholders’ equity was 12.38%, the return on average tangible equity was 15.13% and the cash return on average tangible equity (which management considers the best measurement of the Company’s internal capital generation) was 15.57%.
During the 2005 year, the Company repurchased 801,384 shares of its common stock into treasury, of which 179,800 were purchased during the quarter ended December 31, 2005. As of December 31, 2005, the Company had an additional 616,172 shares remaining eligible for repurchase under its tenth stock repurchase program, approved in May 2004. On December 15, 2005, the Board of Directors approved the Company's eleventh stock repurchase program, which authorizes the purchase, at the discretion of management, of an additional 1,847,977 shares.
“The Company continues to be a buyer of its own shares,” stated Mr. Palagiano, “and has both the cash and capital to be opportunistic in the acquisition of additional shares.”
OUTLOOK
As management has stated previously, as the Federal Reserve moves closer to a point that it considers Fed Funds rate to be "neutral," and new loan yields provide a reasonable spread over funding costs, the Company will be more inclined to accelerate balance sheet growth. Although short-term interest rates continue to rise, the spread between loan yields and marginal funding costs has not increased to our satisfaction.
The Company has taken significant actions to facilitate future growth, such as bolstering liquidity and increasing capital. While the rise in intermediate bond yields since June 2005 has provided some benefit to our new loan originations, the current interest rate environment continues to remain an impediment for rapid, large-scale growth. As a result, management will continue to weigh its options and act in a manner it deems most prudent for the long-term benefit of the Company and its shareholders.
At present, the overall yield on the Company's interest-earning assets is rising, despite the lagging movement of yields on real estate loans compared to general market rates. The average yield on interest earning assets (excluding the Additional Interest Income Items) rose on a linked quarter basis, from 5.30% to 5.37%. While the average portfolio yield on real estate loans declined slightly during the most recent quarter, it is expected to increase slowly over the next few quarters.
The Company utilized the funds generated from its liquidation of securities in May 2005 primarily to fund liquidity needs during the last six months of 2005 and avoid competing aggressively for new deposits while short-term interest rates were rising. Deposit costs are expected to continue to rise. Although the Company's deposit costs lagged the increase in short-term interest rates during 2005, it came at the loss of $295 million of deposit funds during the period. The Company expects to stabilize, if not yet grow, deposit balances during the next several quarters, which is likely to cause deposit costs to increase.
At 12% in the quarter ended December 31, 2005, prepayment and amortization rates continued to be within the range anticipated by management, and are expected to remain at or below that level in the first quarter of 2006. There is adequate liquidity to satisfy projected loan originations based on the current and projected pipeline; and operating expenses are expected to remain approximately $10.5 million in the first quarter of 2006. Share repurchases are expected to be in line with recent practices, however, the Company is poised to be opportunistic in the purchase of its own shares should conditions warrant. Based on this outlook, the Company now expects first quarter 2006 earnings per share will be in the range of $0.21 to $0.23.
CONFERENCE CALL
Management will conduct a conference call at 10:00 A.M. Eastern Time, on Friday, January 27, 2006, to discuss the Company's operating performance for the quarterly period and fiscal year ended December 31, 2005. The conference call will be available via the Internet by accessing either of the following Web addresses: www.dimedirect.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.
ABOUT DIME COMMUNITY BANCSHARES
Dime Community Bancshares, Inc., a unitary thrift holding company, is the parent company of The Dime Savings Bank of Williamsburgh, founded in 1864, and headquartered in Brooklyn, New York. With $3.13 billion in assets as of December 31, 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) |
| | December 31, | | |
| | 2005 | | December 31, |
| | (Unaudited) | | 2004 |
ASSETS: | | | |
| Cash and due from banks | $ 40,199 | | $ 26,581 |
| Investment securities held to maturity | 455 | | 585 |
| Investment securities available for sale | 44,832 | | 54,840 |
| Mortgage-backed securities held to maturity | - | | 465 |
| Mortgage-backed securities available for sale | 193,453 | | 519,420 |
| Federal funds sold and other short-term assets | 60,014 | | 103,291 |
Real estate Loans: | | | |
| One-to-four family and cooperative apartment | 145,754 | | 138,125 |
| Multifamily and underlying cooperative | 1,873,940 | | 1,916,118 |
| Commercial real estate | 576,561 | | 424,060 |
| Construction and land acquisition | 12,098 | | 15,558 |
| Unearned discounts and net deferred loan fees | 501 | | (463) |
| Total real estate loans | 2,608,854 | | 2,493,398 |
| Other loans | 2,341 | | 2,916 |
| Allowance for loan losses | (15,785) | | (15,543) |
Total loans, net | 2,595,410 | | 2,480,771 |
| Loans held for sale | 900 | | 5,491 |
| Premises and fixed assets, net | 16,527 | | 16,652 |
| Federal Home Loan Bank of New York capital stock | 29,917 | | 25,325 |
| Goodwill | 55,638 | | 55,638 |
| Other assets | 88,881 | | 88,207 |
TOTAL ASSETS | $ 3,126,226 | | $ 3,377,266 |
LIABILITIES AND STOCKHOLDERS' EQUITY: | | | |
Deposits: | | | |
| Checking, NOW and Super NOW | $135,698 | | $138,402 |
| Savings | 335,527 | | 362,656 |
| Money Market | 464,962 | | 749,040 |
| Sub-total | 936,187 | | 1,250,098 |
| Certificates of deposit | 978,585 | | 959,951 |
Total Due to depositors | 1,914,772 | | 2,210,049 |
| Escrow and other deposits | 47,518 | | 48,284 |
| Securities sold under agreements to repurchase | 205,455 | | 205,584 |
| Federal Home Loan Bank of New York advances | 531,500 | | 506,500 |
| Subordinated Notes Sold | 25,000 | | 25,000 |
| Trust Preferred Notes Payable | 72,165 | | 72,165 |
| Other liabilities | 38,102 | | 27,963 |
TOTAL LIABILITIES | 2,834,512 | | 3,095,545 |
STOCKHOLDERS' EQUITY: | | | |
| Common stock ($0.01 par, 125,000,000 shares authorized, 50,633,881 shares and 50,111,988 | | | |
| shares issued at December 31, 2005 and December 31, 2004, respectively, and 36,956,907 shares | | | |
| and 37,165,740 shares outstanding at December 31, 2005 and December 31, 2004, respectively) | 506 | | 501 |
| Additional paid-in capital | 204,083 | | 198,183 |
| Retained earnings | 274,579 | | 258,237 |
| Unallocated common stock of Employee Stock Ownership Plan | (4,627) | | (4,749) |
| Unearned common stock of Recognition and Retention Plan | (2,979) | | (2,612) |
| Common stock held by the Benefit Maintenance Plan | (7,941) | | (7,348) |
Treasury stock (13,676,974 shares and 12,946,248 shares at December 31, 2005 | | | |
| and December 31, 2004, respectively) | (168,579) | | (157,263) |
| Accumulated other comprehensive loss, net | (3,328) | | (3,228) |
TOTAL STOCKHOLDERS' EQUITY | 291,714 | | 281,721 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $3,126,226 | | $3,377,266 |
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES |
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
(Dollars In thousands except per share amounts) |
| | | | | | | | | |
| | For the Three Months Ended | | For the Twelve Months Ended |
| | December 31, | | September 30, | | December 31, | | December 31, | December 31, |
| | 2005 | | 2005 | | 2004 | | 2005 | 2004 |
| | | | | | | | | |
Interest income: | | | | | | | | |
| Loans secured by real estate | $36,831 | | $36,079 | | $35,193 | | $142,943 | $138,720 |
| Other loans | 36 | | 25 | | 47 | | 196 | 235 |
| Mortgage-backed securities | 1,929 | | 2,010 | | 4,792 | | 11,699 | 21,091 |
| Investment securities | 640 | | 601 | | 643 | | 2,602 | 1,745 |
| Other | 1,684 | | 2,230 | | 778 | | 6,755 | 1,830 |
Total interest income | 41,120 | | 40,945 | | 41,453 | | 164,195 | 163,621 |
Interest expense: | | | | | | | | |
| Deposits and escrow | 10,802 | | 10,690 | | 9,139 | | 41,058 | 37,873 |
| Borrowed funds | 9,327 | | 9,306 | | 8,512 | | 36,283 | 29,903 |
Total interest expense | 20,129 | | 19,996 | | 17,651 | | 77,341 | 67,776 |
Net interest income | 20,991 | | 20,949 | | 23,802 | | 86,854 | 95,845 |
Provision for loan losses | 160 | | 60 | | 100 | | 340 | 280 |
Net interest income after | | | | | | | | |
provision for loan losses | 20,831 | | 20,889 | | 23,702 | | 86,514 | 95,565 |
| | | | | | | | | |
Non-interest income: | | | | | | | | |
| Service charges and other fees | 1,484 | | 1,561 | | 1,375 | | 5,967 | 6,296 |
| Net gain (loss) on sales and | | | | | | | | |
| redemptions of assets | 353 | | 284 | | 357 | | (4,252) | 713 |
| Prepayment fee income | 786 | | 1,315 | | 1,067 | | 5,024 | 9,797 |
| Other | 923 | | 878 | | 867 | | 3,929 | 3,707 |
Total non-interest income | 3,546 | | 4,038 | | 3,666 | | 10,668 | 20,513 |
Non-interest expense: | | | | | | | | |
| Compensation and benefits | 5,659 | | 6,059 | | 5,883 | | 22,949 | 23,453 |
| Occupancy and equipment | 1,391 | | 1,389 | | 1,293 | | 5,393 | 5,213 |
| Core deposit intangible amortization | - | | - | | 206 | | 48 | 825 |
| Other | 3,265 | | 3,288 | | 3,618 | | 12,352 | 12,916 |
Total non-interest expense | 10,315 | | 10,736 | | 11,000 | | 40,742 | 42,407 |
| | | | | | | | | |
Income before taxes | 14,062 | | 14,191 | | 16,368 | | 56,440 | 73,671 |
Income tax expense | 5,083 | | 5,089 | | 6,138 | | 20,230 | 27,449 |
| | | | | | | | | |
Net Income | $8,979 | | $9,102 | | $10,230 | | $36,210 | $46,222 |
| | | | | | | | | |
Earnings per Share: | | | | | | | | |
Basic | $0.26 | | $0.26 | | $0.29 | | $1.03 | $1.31 |
Diluted | $0.25 | | $0.26 | | $0.29 | | $1.02 | $1.28 |
| | | | | | | | | |
Average common shares | | | | | | | | |
outstanding for Diluted EPS | 35,303,451 | | 35,553,132 | | 35,861,646 | | 35,560,446 | 36,212,000 |
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
Core Earnings and Core Cash Earnings Reconciliations
(Dollars In thousands except per share amounts)
Core earnings and related data are "Non-GAAP Disclosures." These disclosures present information which management considers useful to the readers of this report since they present a measure of the results of the Company's ongoing operations (exclusive of significant non-recurring items such as gains or losses on sales of investment or mortgage-backed securities) during the period.
In addition, Core cash earnings and related data are also "Non-GAAP Disclosures." These disclosures present information which management considers useful to the readers of this report since they present a measure of the tangible equity generated from operations during each period presented. Tangible equity 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 earnings and core cash earnings, for each of the periods presented:
| | For the Three Months Ended | | For the Twelve Months Ended |
| | December 31, | | September 30, | | December 31, | | December 31, | | December 31, |
| | 2005 | | 2005 | | 2004 | | 2005 | | 2004 |
| | | | | | | | | | |
Net income as reported | $ 8,979 | | $ 9,102 | | $ 10,230 | | $ 36,210 | | $ 46,222 |
| Pre-tax net loss (gain) on sale of securities | - | | - | | - | | 5,176 | | (377) |
| Tax effect of adjustments | - | | - | | - | | (2,143) | | 44 |
Core Earnings | $ 8,979 | | $ 9,102 | | $ 10,230 | | $ 39,243 | | $ 45,889 |
Cash Earnings Additions : | | | | | | | | | |
| Core Deposit Intangible Amortization | - | | - | | 206 | | 48 | | 825 |
| Non-cash stock benefit plan expense | 260 | | 359 | | 453 | | 1,314 | | 2,583 |
Core Cash Earnings | $ 9,239 | | $ 9,461 | | $ 10,889 | | $ 40,605 | | $ 49,297 |
| | | | | | | | | | |
Performance Ratios (Based upon Core Cash Earnings): | | | | | | | | | |
| Core Cash EPS (Diluted) | $ 0.26 | | $ 0.27 | | $ 0.30 | | $ 1.14 | | $ 1.36 |
| Core Cash Return on Average Assets | 1.17% | | 1.17% | | 1.27% | | 1.24% | | 1.47% |
| Core Cash Return on Average Tangible Stockholders' Equity | 15.57% | | 16.13% | | 19.09% | | 17.40% | | 22.14% |
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES |
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS |
(Dollars In thousands except per share amounts) |
| | | | | | | | | | |
| | For the Three Months Ended | | For the Twelve Months Ended |
| | December 31, | | September 30, | | December 31, | | December 31, | | December 31, |
| | 2005 | | 2005 | | 2004 | | 2005 | | 2004 |
| | | | | | | | | | |
Performance Ratios (Based upon Reported Earnings): | | | | | | | | | |
| Reported EPS (Diluted) | $0.25 | | $0.26 | | $0.29 | | $1.02 | | $1.28 |
| Return on Average Assets | 1.13% | | 1.12% | | 1.20% | | 1.11% | | 1.38% |
| Return on Average Stockholders' Equity | 12.38% | | 12.62% | | 14.56% | | 12.65% | | 16.76% |
| Return on Average Tangible Stockholders' Equity | 15.13% | | 15.52% | | 17.94% | | 15.51% | | 20.76% |
| Net Interest Spread | 2.46% | (1) | 2.44% | | 2.71% | | 2.48% | | 2.77% |
| Net Interest Margin | 2.79% | (1) | 2.71% | | 2.93% | | 2.78% | | 3.00% |
| Non-interest Expense to Average Assets | 1.30% | | 1.32% | | 1.29% | | 1.24% | | 1.27% |
| Efficiency Ratio | 42.65% | | 43.46% | | 40.57% | | 40.03% | | 36.67% |
| Effective Tax Rate | 36.15% | | 35.86% | | 37.50% | | 35.84% | | 37.26% |
| | | | | | | | | | |
Performance Ratios (Based upon Core Earnings): | | | | | | | | | |
| Core EPS (Diluted) | $ 0.25 | | $ 0.26 | | $ 0.29 | | $ 1.10 | | $ 1.27 |
| Core Return on Average Assets | 1.13% | | 1.12% | | 1.20% | | 1.20% | | 1.37% |
| Core Return on Average Stockholders' Equity | 12.38% | | 12.62% | | 14.56% | | 13.71% | | 16.64% |
| Core Return on Average Tangible Stockholders' Equity | 15.13% | | 15.52% | | 17.94% | | 16.81% | | 20.61% |
| | | | | | | | | | |
| | | | | | | | | | |
Book Value and Tangible Book Value Per Share: | | | | | | | | | |
| Stated Book Value Per Share | $ 7.89 | | $ 7.82 | | $ 7.58 | | $ 7.89 | | $ 7.58 |
| Tangible Book Value Per Share | 6.47 | | 6.39 | | 6.16 | | 6.47 | | 6.16 |
| | | | | | | | | | |
Average Balance Data: | | | | | | | | | |
| Average Assets | $ 3,166,725 | | $ 3,247,216 | | $ 3,417,550 | | $ 3,276,547 | | $ 3,352,192 |
| Average Interest Earning Assets | 3,011,695 | | 3,090,823 | | 3,250,859 | | 3,125,782 | | 3,192,612 |
| Average Stockholders' Equity | 290,077 | | 288,431 | | 281,073 | | 286,162 | | 275,793 |
| Average Tangible Stockholders' Equity | 237,426 | | 234,560 | | 228,126 | | 233,404 | | 222,625 |
| Average Loans | 2,598,204 | | 2,560,963 | | 2,493,365 | | 2,535,574 | | 2,397,187 |
| Average Deposits | 1,949,438 | | 2,056,864 | | 2,226,096 | | 2,080,695 | | 2,249,390 |
| | | | | | | | | | |
Asset Quality Summary: | | | | | | | | | |
| Net charge-offs (recoveries) | $ 61 | | ($ 2) | | $ 59 | | $ 45 | | $ 132 |
| Nonperforming Loans | 958 | | 4,608 | | 1,459 | | 958 | | 1,459 |
| Nonperforming Loans/ Total Loans | 0.04% | | 0.18% | | 0.06% | | 0.04% | | 0.06% |
| Nonperforming Assets/Total Assets | 0.03% | | 0.14% | | 0.04% | | 0.03% | | 0.04% |
| Allowance for Loan Loss/Total Loans | 0.60% | | 0.60% | | 0.62% | | 0.60% | | 0.62% |
| Allowance for Loan Loss/Nonperforming Loans | 1647.70% | | 335.55% | | 1065.32% | | 1647.70% | | 1065.32% |
| | | | | | | | | | |
Regulatory Capital Ratios: | | | | | | | | | |
| Consolidated Tangible Equity to Tangible Assets at period end | 7.78% | | 7.44% | | 6.88% | | 7.78% | | 6.88% |
| Tangible Capital Ratio (Bank Only) | 9.84% | | 9.20% | | 7.88% | | 9.84% | | 7.88% |
| Leverage Capital Ratio (Bank Only) | 9.84% | | 9.20% | | 7.88% | | 9.84% | | 7.88% |
| Risk -Based Capital Ratio (Bank Only) | 14.30% | | 13.84% | | 12.83% | | 14.30% | | 12.83% |
(1) Excluding $632,000 of non-recurring interest income that was recorded during the period, the net interest spread was 2.38% and the net interest margin was 2.70% during the three
months ended December 31, 2005.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES |
ANALYSIS OF NET INTEREST INCOME |
(Dollars In thousands) |
| | | | |
| | For the Three Months Ended |
| | | December 31, 2005 | |
| | | | Average |
| | Average | | Yield/ |
| | Balance | Interest | Cost |
| | (Dollars In Thousands) |
| Assets: | | | |
| Interest-earning assets: | | | |
| Real Estate Loans | $2,595,998 | $36,831 | 5.68% |
| Other loans | 2,206 | 36 | 6.53 |
| Mortgage-backed securities | 204,259 | 1,929 | 3.78 |
| Investment securities | 49,363 | 640 | 5.19 |
| Other short-term investments | 159,869 | 1,684 | 4.21 |
| Total interest earning assets | 3,011,695 | $41,120 | 5.46% |
| Non-interest earning assets | 155,030 | | |
| Total assets | $3,166,725 | | |
| | | | |
| Liabilities and Stockholders' Equity: | | | |
| Interest-bearing liabilities: | | | |
| NOW, Super Now accounts | $38,899 | $98 | 1.00% |
| Money Market accounts | 481,385 | 1,902 | 1.57 |
| Savings accounts | 338,698 | 474 | 0.56 |
| Certificates of deposit | 995,793 | 8,328 | 3.32 |
| Total interest bearing deposits | 1,854,775 | 10,802 | 2.31 |
| Borrowed Funds | 808,429 | 9,327 | 4.58 |
| Total interest-bearing liabilities | 2,663,204 | 20,129 | 3.00% |
| Checking accounts | 94,663 | | |
| Other non-interest-bearing liabilities | 118,781 | | |
| Total liabilities | 2,876,648 | | |
| Stockholders' equity | 290,077 | | |
| Total liabilities and stockholders' equity | $3,166,725 | | |
| Net interest income | | $20,991 | |
| Net interest spread (1) | | | 2.46% |
| Net interest-earning assets | $348,491 | | |
| Net interest margin (1) | | | 2.79% |
| Ratio of interest-earning assets | | | |
| to interest-bearing liabilities | | | 113.09% |
| | | | |
| Average deposits (including non-interest | | | |
| bearing checking accounts) | $ 1,949,438 | $ 10,802 | 2.20% |
(1) Excluding $632,000 of Additional Interest Income Items, the yield on real estate loans was 5.60%, the net interest spread was 2.38% and the net interest margin was 2.70% during the
three months ended December 31, 2005.
| | For the Three Months Ended |
| | | September 30, 2005 | |
| | | | Average |
| | Average | | Yield/ |
| | Balance | Interest | Cost |
| | (Dollars In Thousands) |
| Assets: | | | |
| Interest-earning assets: | | | |
| Real Estate Loans | $2,558,690 | $36,079 | 5.64% |
| Other loans | 2,273 | 25 | 4.40 |
| Mortgage-backed securities | 218,204 | 2,010 | 3.68 |
| Investment securities | 65,259 | 601 | 3.68 |
| Other short-term investments | 246,397 | 2,230 | 3.62 |
| Total interest earning assets | 3,090,823 | $40,945 | 5.30% |
| Non-interest earning assets | 156,393 | | |
| Total assets | $3,247,216 | | |
| | | | |
| Liabilities and Stockholders' Equity: | | | |
| Interest-bearing liabilities: | | | |
| NOW, Super Now accounts | $39,728 | $100 | 1.00% |
| Money Market accounts | 570,067 | 2,284 | 1.59 |
| Savings accounts | 349,384 | 486 | 0.55 |
| Certificates of deposit | 1,003,995 | 7,820 | 3.09 |
| Total interest bearing deposits | 1,963,174 | 10,690 | 2.16 |
| Borrowed Funds | 809,185 | 9,306 | 4.56 |
| Total interest-bearing liabilities | 2,772,359 | 19,996 | 2.86% |
| Checking accounts | 93,690 | | |
| Other non-interest-bearing liabilities | 92,736 | | |
| Total liabilities | 2,958,785 | | |
| Stockholders' equity | 288,431 | | |
| Total liabilities and stockholders' equity | $3,247,216 | | |
| Net interest income | | $20,949 | |
| Net interest spread | | | 2.44% |
| Net interest-earning assets | $318,464 | | |
| Net interest margin | | | 2.71% |
| Ratio of interest-earning assets | | | |
| to interest-bearing liabilities | | | 111.49% |
| | | | |
| Average deposits (including non-interest | | | |
| bearing checking accounts) | $ 2,056,864 | $ 10,690 | 2.06% |
| | For the Three Months Ended |
| | | December 31, 2004 | |
| | | | Average |
| | Average | | Yield/ |
| | Balance | Interest | Cost |
| | (Dollars In Thousands) |
| Assets: | | | |
| Interest-earning assets: | | | |
| Real Estate Loans | $2,490,166 | $35,193 | 5.65% |
| Other loans | 3,199 | 47 | 5.88 |
| Mortgage-backed securities | 550,525 | 4,792 | 3.48 |
| Investment securities | 56,173 | 643 | 4.58 |
| Other short-term investments | 150,796 | 778 | 2.06 |
| Total interest earning assets | 3,250,859 | $41,453 | 5.10% |
| Non-interest earning assets | 166,691 | | |
| Total assets | $3,417,550 | | |
| | | | |
| Liabilities and Stockholders' Equity: | | | |
| Interest-bearing liabilities: | | | |
| NOW, Super Now accounts | $44,092 | $99 | 0.89% |
| Money Market accounts | 791,133 | 2,893 | 1.45 |
| Savings accounts | 363,969 | 440 | 0.48 |
| Certificates of deposit | 933,990 | 5,707 | 2.43 |
| Total interest bearing deposits | 2,133,184 | 9,139 | 1.70 |
| Borrowed Funds | 809,282 | 8,512 | 4.18 |
| Total interest-bearing liabilities | 2,942,466 | 17,651 | 2.39% |
| Checking accounts | 92,912 | | |
| Other non-interest-bearing liabilities | 101,099 | | |
| Total liabilities | 3,136,477 | | |
| Stockholders' equity | 281,073 | | |
| Total liabilities and stockholders' equity | $3,417,550 | | |
| Net interest income | | $23,802 | |
| Net interest spread | | | 2.71% |
| Net interest-earning assets | $308,393 | | |
| Net interest margin | | | 2.93% |
| Ratio of interest-earning assets | | | |
| to interest-bearing liabilities | | | 110.48% |
| | | | |
| Average deposits (including non-interest | | | |
| bearing checking accounts) | $ 2,226,096 | $ 9,139 | 1.63% |
Contact: | Kenneth Ceonzo |
| | Director of Investor Relations |
| | 718-782-6200 extension 8279 |
