Dimeco (DIMC) 8-K Results of Operations and Financial Condition

Exhibit 99

DIMECO, INC. ANNOUNCES EARNINGS AT SEPTEMBER 30, 2005

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, reported earnings for the nine months ended September 30, 2005 of $3,214,000, representing earnings per share of $2.08. Net interest income increased 13.2% during the first three quarters of 2005 versus the same period in 2004, reflecting an increase in both interest income and an interest expense.

The Company continued to experience growth with total assets increasing $28,355,000 or 8.8% to $349,909,000 from September 30, 2004 to September 30, 2005. During this time, deposits increased $21,929,000 or 8.1% while the loan portfolio continued its trend of double-digit increase, expanding by $34,276,000 or 13.6%.

Asset quality has improved as can be seen in the ratios of non-performing assets to total assets of .15% while net charge-offs to average loans remained at 0%. All ratios regarding allowance for loan loss show positive improvement, most noteworthy the allowance for loan loss to nonaccrual loans of 2,504.7% due to the decline of $1,020,000 in nonaccrual assets from September 30, 2004 to September 30, 2005.

Return on average stockholders’ equity and return on average assets were 14.04% and 1.26%, respectively, at September 30, 2005. Dividends declared year to date increased 8.7% over the same period last year to $.75 per share.

Gary C. Beilman, President and Chief Executive Officer, stated, “We have had many achievements so far this year, most noteworthy are growth in loans, deposits and total assets. The re-pricing of assets in the current interest rate environment has added significantly to the bottom line. Also of note is the improved quality of assets and increased recoveries of loans previously charged off. Finally, careful management of expenses at all levels has also proved beneficial. Although these are significant gains we also remain mindful of our challenges. Many financial institutions, ours included, are competing for deposit dollars which are the primary funding source for loans and investments. At The Dime Bank we maintain consistent pricing of interest rates.

As a local community bank, we use our deposit dollars to provide loans to local businesses and individuals. As always, we are thankful to our customers and shareholders for their confidence in us.”

The Dime Bank, a wholly owned subsidiary of Dimeco, Inc., serves 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 along with a Trust Department and an Investments and Financial Services Department. For more information on The Dime Bank, visit www.thedimebank.com

Source Dimeco, Inc. / October 24, 2005

Contact: Deborah Unflat, Marketing Officer

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

	For the three months ended September 30,				For the nine months ended September 30,
(in thousands, except per share)	2005		2004		2005		2004
Interest Income
Interest and fees on loans	$	4,472	$	3,564	$	12,315	$	10,110
Investment securities:
Taxable		428		420		1,265		1,286
Exempt from federal income tax		36		63		110		187
Other		35		4		109		19
Total interest income		4,971		4,051		13,799		11,602
Interest Expense
Deposits		1,368		976		3,753		2,927
Short-term borrowings		56		35		151		89
Other borrowed funds		140		99		375		175
Total interest expense		1,564		1,110		4,279		3,191
Net Interest Income		3,407		2,941		9,520		8,411
Provision for loan losses		182		261		575		1,126
Net Interest Income After Provision for Loan Losses		3,225		2,680		8,945		7,285
Noninterest Income
Services charges on deposit accounts		330		318		952		942
Other income		381		376		1,115		1,154
Total noninterest income		711		694		2,067		2,096
Noninterest Expense
Salaries and employee benefits		1,097		973		3,314		2,880
Net occupancy and equipment expense		326		292		983		845
Other expense		681		606		2,004		1,800
Total noninterest expense		2,104		1,871		6,301		5,525
Income before income taxes		1,832		1,503		4,711		3,856
Income taxes		588		465		1,497		1,184
NET INCOME	$	1,244	$	1,038	$	3,214	$	2,672
Earnings per Share - basic	$	0.80	$	0.67	$	2.08	$	1.74
Earnings per Share - diluted	$	0.78	$	0.65	$	2.01	$	1.67
Average shares outstanding - basic		1,548,204		1,538,727		1,546,833		1,534,681
Average shares outstanding - diluted		1,599,655		1,599,004		1,599,228		1,599,977

DIMECO, INC.

CONSOLIDATED BALANCE SHEET

(unaudited)

(in thousands)

September 30,	2005			2004
Assets
Cash and due from banks	$	6,136		$	7,563
Interest-bearing deposits in other banks		19			33
Federal funds sold		2,119			5,712
Total cash and cash equivalents		8,274			13,308
Mortgage loans held for sale		—			548
Investment securities available for sale		42,973			43,846
Investment securities held to maturity (market value of $209 and $220)		199			198
Loans (net of unearned income of $728 and $675)		286,788			252,512
Less allowance for loan losses		3,757			3,314
Net loans		283,031			249,198
Premises and equipment		6,135			5,159
Accrued interest receivable		1,192			1,210
Bank-owned life insurance		5,207			5,018
Other assets		2,898			3,069
TOTAL ASSETS	$	349,909		$	321,554
Liabilities
Deposits :
Noninterest-bearing	$	37,771		$	32,247
Interest-bearing		254,225			237,820
Total deposits		291,996			270,067
Short-term borrowings		11,204			10,915
Other borrowed funds		13,991			9,845
Accrued interest payable		658			513
Other liabilities		1,427			1,429
TOTAL LIABILITIES		319,276			292,769
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized; 1,552,670 and 1,541,494 shares issued		776			771
Capital surplus		4,445			4,174
Retained earnings		26,554			23,649
Accumulated other comprehensive income		(80	)		191
Treasury stock, at cost (30,000 shares)		(1,062	)		—
TOTAL STOCKHOLDERS’ EQUITY		30,633			28,785
TOTAL LIABILITES AND STOCKHOLDERS’ EQUITY	$	349,909		$	321,554

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

CONSOLIDATED FINANCIAL HIGHLIGHTS

(amounts in thousands, except per share)	2005			2004			% Increase (decrease)
Performance for the nine months ended September 30,
Interest income	$	13,799		$	11,602		18.9	%
Interest expense	$	4,279		$	3,191		34.1	%
Net interest income	$	9,520		$	8,411		13.2	%
Net income	$	3,214		$	2,672		20.3	%
Shareholders’ Value (per share)
Net income - basic	$	2.08		$	1.74		19.5	%
Net income - diluted	$	2.01		$	1.67		20.4	%
Dividends	$	0.75		$	0.69		8.7	%
Book value	$	20.12		$	18.67		7.8	%
Market value	$	35.30		$	35.50		-0.6	%
Market value/book value ratio		175.5	%		190.1	%	-7.7	%
* Price/earnings multiple		12.7	X		15.3	X	-17.0	%
* Dividend yield		2.83	%		2.59	%	9.3	%
Financial Ratios
* Return on average assets		1.26	%		1.16	%	8.6	%
* Return on average equity		14.04	%		12.64	%	11.1	%
Shareholders’ equity/asset ratio		8.75	%		8.95	%	-2.2	%
Dividend payout ratio		36.06	%		39.66	%	-9.1	%
Nonperforming assets/total assets		0.15	%		0.44	%	-65.9	%
Allowance for loan loss as a % of loans		1.31	%		1.31	%	0.0	%
* Net charge-offs/average loans		0.00	%		0.47	%	-100.0	%
Allowance for loan loss/nonaccrual loans		2504.7	%		283.3	%	784.1	%
Allowance for loan loss/non-performing loans		738.1	%		234.0	%	215.4	%
Financial Position at September 30,
Assets	$	349,909		$	321,554		8.8	%
Loans	$	286,788		$	252,512		13.6	%
Deposits	$	291,996		$	270,067		8.1	%
Stockholders’ equity	$	30,633		$	28,785		6.4	%

* annualized