Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2011 Final Quarter Earnings

Exhibit 99

DIMECO, INC. ANNOUNCES 2011 FINAL QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, released unaudited financial results for the year 2011.

The Company continued solid, planned growth to end the year with $581,894,000 in total assets, an increase of $39,680,000 or 7.3% over balances one year earlier. Contributing to this growth was an increase in the loan portfolio of $22,185,000 or 5.2%, ending the year at $447,254,000. During 2011 deposits increased $29,550,000 or 6.5% to end the year at $484,284,000. Stockholders’ equity of $55,100,000 at December 31, 2011 represented an increase of 8.7% over a year earlier.

Net income for 2011 was $5,336,000, an increase of 3.4% over income reported for the year 2010. The most significant contributor to this growth was a decline in interest expense of $2,168,000, or 29.6% less than a year earlier due mainly to higher rate certificates of deposit maturing during the period. Net interest income for the year ended December 31, 2011 was $19,770,000, which was $2,450,000 or 14.1% greater than the previous year. Offsetting those increases in income, we recorded greater expenses in regard to the loan portfolio in 2011 over the previous year. Given current economic conditions, the Company increased the provision for loan loss expense in order to maintain the allowance for loan loss at calculated levels. This expense increased $1,125,000 in 2011 compared to the previous year. In addition, we recognized a decline in the market value of other real estate owned that required $725,000 in expense in 2011 which was unmatched in the previous year. At this level of income, the Company reported a return on average assets of .96% and a return on average equity of 10.04% for 2011. Earnings per share for the year ended 2011 were $3.34, an increase of 3.1% over earnings for 2010. Dividends remained solid, amounting to $1.44 per share in 2011, producing a dividend yield of 4.30%.

Gary C. Beilman, president and chief executive officer, stated “Despite the continuation of a sluggish national economy, 2011 was a year of steady progression for Dimeco, Inc. Loans, deposits, and total assets all grew over the same timeframe last year. The book value of Dimeco stock rose to $34.45 per share, an uptick of 8.6% over that of last year. Every day we listen to comments from our customers on both sides of the balance sheet. Depositors lament about the low interest rate environment, while borrowers comment about restricted cash flows and limited employment opportunities. In all cases, our staff continues to be proactive, giving suggestions and advice, and providing guidance wherever possible. We are confident that working together, we can continue to grow and prosper along with the communities in which we live.”

Dimeco, Inc. is the holding company of The Dime Bank, a full service financial institution serving Wayne and Pike counties in Pennsylvania and Sullivan County, New York. For more information on The Dime Bank, visit www.thedimebank.com.

Source: Dimeco, Inc. / January 20, 2012 / Deborah Unflat

DIMECO, INC.
CONSOLIDATED STATEMENT OF INCOME   (unaudited)
	For the three months ended December 31,						For the year ended December 31,
(in thousands, except per share)	2011			2010			2011			2010
Interest Income
Interest and fees on loans	$	5,754		$	5,697		$	22,435		$	22,221
Investment securities:
Taxable		329			294			1,266			1,336
Exempt from federal income tax		311			281			1,209			1,049
Other		4			5			12			34
Total interest income		6,398			6,277			24,922			24,640
Interest Expense
Deposits		992			1,249			4,213			6,215
Short-term borrowings		18			29			108			142
Other borrowed funds		192			226			831			963
Total interest expense		1,202			1,504			5,152			7,320
Net Interest Income		5,196			4,773			19,770			17,320
Provision for loan losses		875			650			2,875			1,750
Net Interest Income After Provision for  Loan Losses		4,321			4,123			16,895			15,570
Noninterest Income
Service charges on deposit accounts		234			297			1,022			1,292
Mortgage loans held for sale gains, net		83			183			306			354
Investment securities losses		(2	)		(31	)		(16	)		(13	)
Brokerage commissions		226			164			720			742
Earnings on bank-owned life insurance		111			105			439			423
Debit card fees		157			138			608			523
Other  income		221			143			826			773
Total noninterest income		1,030			999			3,905			4,094
Noninterest Expense
Salaries and employee benefits		1,609			1,620			6,981			6,667
Occupancy expense, net		290			275			1,143			1,117
Furniture and equipment expense		102			125			427			483
Professional fees		181			212			818			780
Data processing expense		173			186			703			713
FDIC insurance		127			177			565			742
Other expense		1,347			545			3,448			2,345
Total noninterest expense		3,829			3,140			14,085			12,847
Income before income taxes		1,522			1,982			6,715			6,817
Income taxes		304			385			1,379			1,658
NET INCOME	$	1,218		$	1,597		$	5,336		$	5,159
Earnings per Share - basic	$	0.76		$	1.00		$	3.34		$	3.24
Earnings per Share - diluted	$	0.76		$	1.00		$	3.31		$	3.24
Average shares outstanding - basic		1,624,106			1,598,218			1,611,171			1,592,038
Average shares outstanding - diluted		1,624,363			1,599,933			1,611,778			1,593,035

DIMECO, INC.
CONSOLIDATED BALANCE SHEET (unaudited)
(in thousands)		December 31, 2011			December 31, 2010
Assets
Cash and due from banks	$	5,348		$	5,831
Interest-bearing deposits in other banks		4,575			4,821
Total cash and cash equivalents		9,923			10,652
Investment securities available for sale		95,619			79,655
Loans (net of unearned income of $3 and $25)		447,254			425,069
Less allowance for loan losses		8,316			7,741
Net loans		438,938			417,328
Premises and equipment		9,997			10,572
Accrued interest receivable		1,805			1,888
Bank-owned life insurance		10,060			9,545
Other real estate owned		3,467			960
Prepaid FDIC insurance		1,093			1,615
Other assets		10,992			9,999
TOTAL ASSETS	$	581,894		$	542,214
Liabilities
Deposits :
Noninterest-bearing	$	52,217		$	43,067
Interest-bearing		432,067			411,667
Total deposits		484,284			454,734
Short-term borrowings		20,686			13,006
Other borrowed funds		17,618			19,552
Accrued interest payable		542			679
Other liabilities		3,664			3,564
TOTAL LIABILITIES		526,794			491,535
Stockholders' Equity
Common stock, $.50 par value; 5,000,000 shares authorized;
1,653,746 and 1,652,318 shares issued		827			826
Capital surplus		6,451			6,273
Retained earnings		48,193			45,177
Accumulated other comprehensive income		1,696			470
Treasury stock, at cost (54,100 shares)		(2,067	)		(2,067	)
TOTAL STOCKHOLDERS' EQUITY		55,100			50,679
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY	$	581,894		$	542,214

DIMECO, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)
(amounts in thousands, except per share)									% Increase
		2011				2010			(decrease)
Performance for the year ended December 31,
Interest income	$	24,922			$	24,640			1.1	%
Interest expense	$	5,152			$	7,320			-29.6	%
Net interest income	$	19,770			$	17,320			14.1	%
Net income	$	5,336			$	5,159			3.4	%
Shareholders' Value (per share)
Net income - basic	$	3.34			$	3.24			3.1	%
Net income - diluted	$	3.31			$	3.24			2.2	%
Dividends	$	1.44			$	1.44			—
Book value	$	34.45			$	31.71			8.6	%
Market value	$	33.50			$	36.10			-7.2	%
Market value/book value ratio		97.2	%			113.8	%		-14.6	%
Price/earnings multiple		10.0		X		11.1		X	-9.9	%
Dividend yield		4.30	%			3.99	%		7.8	%
Financial Ratios
Return on average assets		0.96	%			0.94	%		2.1	%
Return on average equity		10.04	%			10.43	%		-3.7	%
Shareholders' equity/asset ratio		9.47	%			9.35	%		1.3	%
Dividend payout ratio		43.11	%			44.44	%		-3.0	%
Nonperforming assets/total assets		4.00	%			3.47	%		15.3	%
Allowance for loan loss as a % of loans		1.86	%			1.82	%		2.2	%
Net charge-offs/average loans		0.53	%			0.06	%		783.3	%
Allowance for loan loss/nonaccrual loans		61.5	%			49.4	%		24.5	%
Allowance for loan loss/non-performing loans		42.0	%			43.5	%		-3.4	%
Financial Position at December 31,
Assets	$	581,894			$	542,214			7.3	%
Loans	$	447,254			$	425,069			5.2	%
Deposits	$	484,284			$	454,734			6.5	%
Stockholders' equity	$	55,100			$	50,679			8.7	%

January 2012

Dear Shareholders:

It is my pleasure to present this report of Dimeco, Inc. for the fourth quarter of 2011. As you read through this statement, you will see that in many ways, 2011 was a year of steady progression for your company. Loans, deposits, and total assets all grew over the same timeframe last year, with increases ranging from 5.2% to 7.3%. We ended the year with total assets of $582 million. From a revenue generation perspective, net income came in at $5.3 million, an expansion of 3.4% from the year earlier. For 2011, our return on average assets was .96% and our return on average equity was 10.04%. Given that we dealt with several troubled loans during the year, we are pleased with the overall results.

Despite the continuation of a sluggish national economy, our Board continued payment of quarterly dividends of $.36 per share which produced a dividend yield of 4.3%. As of the end of 2011 the book value of your Dimeco, Inc. stock rose to $34.45 per share, an uptick of 8.6% over that of last year. Finally, stockholders’ equity grew by 8.7% to end the year at slightly over $55 million. Each of these items speaks to the enhancement of your investment.

That is not to say, however, that our languishing economy is without challenges. Every day we listen to comments from our customers on both sides of the balance sheet. Depositors lament about the low interest rate environment, while borrowers comment about restricted cash flows and limited employment opportunities. In all cases, our staff continues to be proactive, giving suggestions and advice, and providing guidance wherever possible.

On the loan side especially, we continue our efforts to monitor our portfolio and to meet directly with borrowers, all in an effort to manage and control this important asset class. Our goal is to maintain delinquencies at reasonable levels, and reduce troubled credits as quickly as possible. The results of our efforts to maintain or improve credit quality will be reported to you in subsequent quarterly reports.

As we end one year, and begin another, it is a fitting time to thank all of you for your continued loyalty and support. We wish you happiness, health, and prosperity in 2012. We ask that you continue to refer others to our institution, both from banking and investment perspectives. As always, your comments and questions are welcome.

Sincerely,

/s/ Gary C. Beilman

Gary C. Beilman

President and Chief Executive Officer