Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2004 Final Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2004 FINAL QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, released unaudited financial results for the year 2004. The Company continued to experience growth during the year ended December 31, 2004. Comparing 2004 to 2003, total assets increased $21,417,000 or 7.0% to $325,721,000 while loans grew $33,532,000 or 15.3% with a total of $253,141,000 at year end. Deposits increased $8,335,000 or 3.2% to $270,542,000 over the period. Stockholders equity increased 8.7% during the year, with a balance of $29,696,000. Return on average stockholders’ equity was 13.72% and return on average assets was 1.26% for 2004.

Dimeco’s earnings for 2004 were $3,906,000, representing an increase of 1.3% over the $3,854,000 reported for the year 2003. Net interest income increased 7.3% during the year 2004 versus the year 2003 from $10,622,000 to $11,396,000. In addition, dividends declared in 2004 increased 8.0% over last year, returning $.94 per share to our stockholders.

Gary C. Beilman, President and Chief Executive Officer, stated, “I am happy to report that when compared to the same period last year, Dimeco has grown in every major balance sheet category. Loans, deposits, total assets, and stockholder’s equity have all increased handsomely. The Dime Bank opened our fifth community banking office in Dingmans Ferry during December. This new office is being accepted with much enthusiasm, and we anticipate that this facility will contribute greatly to our growth as we expand our presence in Pike County. Our thanks go out to our stockholders and our customers for their continued support.”

Dimeco, Inc. is the holding company of The Dime Bank, serving Wayne and Pike counties in Pennsylvania and Sullivan County, New York. The Bank offers a full array of financial services ranging from traditional products to electronic banking and Trust and Investment Services. For more information on The Dime Bank, visit www.thedimebank.com

Source Dimeco, Inc./ January 20, 2005

Contact: Deb Unflat Petroski, Marketing Officer (570) 253-6511 ext 715

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

(in thousands, except per share)
	Three Months Ended December 31,				Year Ended December 31,
	2004		2003		2004		2003
Interest Income
Interest and fees on loans	$	3,736	$	3,227	$	13,847	$	12,864
Investment securities		432		573		1,906		2,426
Other		36		10		55		31
Total interest income		4,204		3,810		15,808		15,321
Interest Expense
Deposits		1,075		1,031		4,001		4,385
Short-term borrowings		39		24		129		112
Other borrowed funds		106		15		282		202
Total interest expense		1,220		1,070		4,412		4,699
Net Interest Income		2,984		2,740		11,396		10,622
Provision for loan losses		—		281		1,126		960
Net Interest Income After Provision for Loan Losses		2,984		2,459		10,270		9,662
Noninterest Income		838		815		2,933		2,695
Noninterest Expense
Salaries and employee benefits		1,050		943		3,930		3,524
Other expense		950		900		3,595		3,279
Total noninterest expense		2,000		1,843		7,525		6,803
Income before income taxes		1,822		1,431		5,678		5,554
Income taxes		588		442		1,772		1,700
NET INCOME	$	1,234	$	989	$	3,906	$	3,854
Earnings per Share - basic	$	0.80	$	0.64	$	2.54	$	2.54
Earnings per Share - diluted	$	0.78	$	0.62	$	2.46	$	2.45
Average shares outstanding - basic		1,545,940		1,521,423		1,537,511		1,515,017
Average shares outstanding - diluted		1,587,911		1,592,154		1,585,556		1,574,595

This statement has not been reviewed or confirmed for accuracy or relevance by the FDIC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

December 31,	2004		2003
(in thousands)
Assets
Cash and due from banks	$	4,139	$	7,493
Interest-bearing deposits in other banks		15		947
Federal funds sold		978		1,770
Total cash and cash equivalents		5,132		10,210
Mortgage loans held for sale (market value of $112 and $662)		112		654
Investment securities available for sale		55,662		64,357
Investment securities held to maturity (market value of $216 and $228)		198		197
Loans (net of unearned income of $623 and $741)		253,141		219,609
Less allowance for loan losses		3,172		3,014
Net loans		249,969		216,595
Premises and equipment		5,580		4,179
Bank-owned life insurance		5,065		4,861
Accrued interest receivable		1,106		1,295
Other assets		2,897		1,956
TOTAL ASSETS	$	325,721	$	304,304
Liabilities
Deposits :
Noninterest-bearing	$	30,380	$	29,523
Interest-bearing		240,162		232,684
Total deposits		270,542		262,207
Short-term borrowings		12,033		11,800
Other borrowed funds		11,349		1,000
Accrued interest payable		609		678
Other liabilities		1,492		1,311
TOTAL LIABILITIES		296,025		276,996
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized; 1,548,994 and 1,526,134 shares issued		774		763
Capital surplus		4,377		3,973
Retained earnings		24,496		22,038
Accumulated other comprehensive income		49		534
TOTAL STOCKHOLDERS’ EQUITY		29,696		27,308
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	325,721	$	304,304

This statement has not been reviewed or confirmed for accuracy or relevance by the FDIC.

CONSOLIDATED FINANCIAL HIGHLIGHTS

(amounts in thousands, except per share)
	2004			2003			% Increase (decrease)
Performance for the year ended December 31,
Interest income	$	15,808		$	15,321		3.2	%
Interest expense	$	4,412		$	4,699		-6.1	%
Net interest income	$	11,396		$	10,622		7.3	%
Net income	$	3,906		$	3,854		1.3	%
Shareholders’ Value (per share)
Net income - basic	$	2.54		$	2.54		0.0	%
Net income - diluted	$	2.46		$	2.45		0.4	%
Dividends	$	0.94		$	0.87		8.0	%
Book value	$	19.17		$	17.89		7.2	%
Market value	$	35.05		$	45.00		-22.1	%
Market value/book value ratio		182.8	%		251.5	%	-27.3	%
Price/earnings multiple		13.8	X		17.7	X	-22.0	%
Dividend yield		2.68	%		2.00	%	34.0	%
Financial Ratios
Return on average assets		1.26	%		1.34	%	-6.0	%
Return on average equity		13.72	%		14.79	%	-7.2	%
Shareholders’ equity/asset ratio		9.12	%		8.97	%	1.7	%
Dividend payout ratio		37.01	%		35.51	%	4.2	%
Nonperforming assets/total assets		0.17	%		0.84	%	-79.8	%
Allowance for loan loss as a % of loans		1.25	%		1.37	%	-8.8	%
Net charge-offs/average loans		0.41	%		0.37	%	10.8	%
Allowance for loan loss/nonaccrual loans		1215.33	%		127.46	%	853.5	%
Allowance for loan loss/non-performing loans		572.56	%		118.67	%	382.5	%
Financial Position at December 31,
Assets	$	325,721		$	304,304		7.0	%
Loans	$	253,141		$	219,609		15.3	%
Deposits	$	270,542		$	262,207		3.2	%
Stockholders’ equity	$	29,696		$	27,308		8.7	%