Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2005 Final Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2005 FINAL QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, released unaudited financial results for the year 2005. The Company continued to experience strong growth in all categories during the year ended December 31, 2005. Comparing 2005 to 2004, total assets increased $32,483,000 or 10.0% to $358,204,000 including increased loan balances of $30,421,000 or 12.0%, totaling $283,562,000 at year-end. This growth was partially funded by an increase of $24,314,000 or 9.0% in deposits over the period.

Stockholders’ equity increased 5.3% during the year, with a balance of $31,261,000 at December 31, 2005. Return on average stockholders’ equity was 14.53% representing a 5.9% increase from the prior year-end and return on average assets was 1.30% for 2005 representing a 3.2% increase.

Dimeco’s earnings for 2005 were $4,455,000, representing an increase of 14.1% over the $3,906,000 reported for the year 2004. Net interest income increased 14.8% during the year 2005 versus the year 2004 from $11,396,000 to $13,084,000. In addition, dividends declared of $1.01 per share in 2005 increased 7.5% over last year.

Gary C. Beilman, President and Chief Executive Officer, stated, “I am happy to report that this centennial year for The Dime Bank was an excellent year. When compared to the same period last year, Dimeco has grown in every major respect. Deposits, loans, and total assets have all increased handsomely. Equally important, net income is up over 14% from 2004 and our financial ratios are strong as well. Our company’s existence would not be possible without our loyal customers, dedicated staff and committed stockholders. We are extremely grateful to these three groups as we look forward to the next 100 years!”

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

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)	2005		2004		2005		2004
Interest Income
Interest and fees on loans	$	4,835	$	3,736	$	17,150	$	13,847
Investment securities:
Taxable		511		387		1,776		1,674
Exempt from federal income tax		41		45		151		232
Other		16		36		125		55
Total interest income		5,403		4,204		19,202		15,808
Interest Expense
Deposits		1,629		1,075		5,383		4,001
Short-term borrowings		56		39		207		129
Other borrowed funds		154		106		528		282
Total interest expense		1,839		1,220		6,118		4,412
Net Interest Income		3,564		2,984		13,084		11,396
Provision for loan losses		275		—		850		1,126
Net Interest Income After Provision for Loan Losses		3,289		2,984		12,234		10,270
Noninterest Income
Services charges on deposit accounts		346		309		1,298		1,250
Other income		388		529		1,503		1,683
Total noninterest income		734		838		2,801		2,933
Noninterest Expense
Salaries and employee benefits		1,206		1,050		4,520		3,930
Net occupancy and equipment expense		323		280		1,306		1,125
Other expense		668		670		2,672		2,470
Total noninterest expense		2,197		2,000		8,498		7,525
Income before income taxes		1,826		1,822		6,537		5,678
Income taxes		585		588		2,082		1,772
NET INCOME	$	1,241	$	1,234	$	4,455	$	3,906
Earnings per Share - basic	$	0.82	$	0.80	$	2.89	$	2.54
Earnings per Share - diluted	$	0.79	$	0.78	$	2.80	$	2.46
Average shares outstanding - basic		1,522,669		1,545,940		1,540,742		1,537,511
Average shares outstanding - diluted		1,571,481		1,587,911		1,592,067		1,585,583

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (unaudited)

(in thousands)
December 31,	2005			2004
Assets
Cash and due from banks	$	5,554		$	4,139
Interest-bearing deposits in other banks		33			15
Federal funds sold		2,890			978
Total cash and cash equivalents		8,477			5,132
Mortgage loans held for sale		211			112
Investment securities available for sale		54,129			55,662
Investment securities held to maturity (market value of $207 and $216)		199			198
Loans (net of unearned income of $734 and $623)		283,562			253,141
Less allowance for loan losses		3,973			3,172
Net loans		279,589			249,969
Premises and equipment		6,022			5,580
Accrued interest receivable		1,380			1,106
Bank-owned life insurance		5,254			5,065
Other assets		2,943			2,897
TOTAL ASSETS	$	358,204		$	325,721
Liabilities
Deposits :
Noninterest-bearing	$	36,619		$	30,380
Interest-bearing		258,237			240,162
Total deposits		294,856			270,542
Short-term borrowings		12,954			12,033
Other borrowed funds		16,548			11,349
Accrued interest payable		952			609
Other liabilities		1,634			1,492
TOTAL LIABILITIES		326,944			296,025
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized; 1,552,670 and 1,548,994 shares issued		776			774
Capital surplus		4,445			4,377
Retained earnings		27,400			24,496
Accumulated other comprehensive income		(299	)		49
Treasury stock, at cost (30,000 shares)		(1,062	)		—
TOTAL STOCKHOLDERS’ EQUITY		31,260			29,696
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	358,204		$	325,721

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

Dimeco, Inc.

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

(amounts in thousands, except per share)	2005			2004			% Increase (decrease)
Performance for the year ended December 31,
Interest income	$	19,202		$	15,808		21.5	%
Interest expense	$	6,118		$	4,412		38.7	%
Net interest income	$	13,084		$	11,396		14.8	%
Net income	$	4,455		$	3,906		14.1	%
Shareholders’ Value (per share)
Net income - basic	$	2.89		$	2.54		13.8	%
Net income - diluted	$	2.80		$	2.46		13.8	%
Dividends	$	1.01		$	0.94		7.4	%
Book value	$	20.53		$	19.17		7.1	%
Market value	$	33.75		$	35.05		-3.7	%
Market value/book value ratio		164.4	%		182.8	%	-10.1	%
Price/earnings multiple		11.7	X		13.8	X	-15.2	%
Dividend yield		2.99	%		2.68	%	11.6	%
Financial Ratios
Return on average assets		1.30	%		1.26	%	3.2	%
Return on average equity		14.53	%		13.72	%	5.9	%
Shareholders’ equity/asset ratio		8.73	%		9.12	%	-4.3	%
Dividend payout ratio		34.95	%		37.01	%	-5.6	%
Nonperforming assets/total assets		0.22	%		0.17	%	29.4	%
Allowance for loan loss as a % of loans		1.40	%		1.25	%	12.0	%
Net charge-offs/average loans		0.02	%		0.41	%	-95.1	%
Allowance for loan loss/nonaccrual loans		755.3	%		1215.3	%	-37.9	%
Allowance for loan loss/non-performing loans		493.5	%		572.6	%	-13.8	%
Financial Position at December 31,
Assets	$	358,204		$	325,721		10.0	%
Loans	$	283,562		$	253,141		12.0	%
Deposits	$	294,856		$	270,542		9.0	%
Stockholders’ equity	$	31,260		$	29,696		5.3	%