Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2006 First Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2006 FIRST QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, reported first quarter 2006 earnings of $1,195,000, an increase of 28.4% over $931,000 reported for the first quarter 2005. Net interest income increased 22.1% during the first quarter of 2006 as compared to the first quarter of 2005. Earnings per share of $.78 were reported for the first quarter 2006, representing an increase of 30.0% from the same period of the prior year. The Board of Directors declared a cash dividend of $.26 per share, a 4.0% increase over dividends declared for the first quarter of 2005. Return on average stockholders’ equity and return on average assets were 15.02% and 1.35%, respectively, for the first quarter of 2006, an increase of 21.3% and 18.4% over first quarter 2005.

The Company continued to experience growth during the twelve months ended March 31, 2006 with total assets of $361,039,000, representing an increase of $29,067,000 or 8.8% during the period. Deposits increased $19,276,000 or 7.0% and loans increased $24,843,000 or 9.6% over the previous year balances.

Gary Beilman, President and Chief Executive Officer, commented, “I am pleased to present this report of operations for the first quarter of 2006. Net income is the highest ever recorded for the first quarter of the year. Credit quality ratios are excellent. Our allowance for loan loss to total loans is 1.47% and the allowance to non-performing loans is 671.7%. These ratios are strong evidence that the originations for, and administration of, our largest asset class are well managed. Additionally, we are in the initial stages of planning for the expansion of our Honesdale facility to accommodate the growth of our customer base. Deposits, loans, trust, and investment services have all experienced heightened levels of activity which warrants the need for additional drive-up banking, parking, offices, and conference rooms. We thank the community for their continued confidence and patronage.”

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 and trust and investment services. For more information on The Dime Bank, visit www.thedimebank.com

Source Dimeco, Inc. April 20, 2006

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

(in thousands, except per share)	For the three months ended March 31,
	2006		2005
Interest Income
Interest and fees on loans	$	4,871	$	3,711
Investment securities:
Taxable		521		404
Exempt from federal income tax		49		38
Other		16		22
Total interest income		5,457		4,175
Interest Expense
Deposits		1,700		1,142
Short-term borrowings		63		36
Other borrowed funds		176		115
Total interest expense		1,939		1,293
Net Interest Income		3,518		2,882
Provision for loan losses		215		220
Net Interest Income After Provision for Loan Losses		3,303		2,662
Noninterest Income
Services charges on deposit accounts		365		294
Other income		374		444
Total noninterest income		739		738
Noninterest Expense
Salaries and employee benefits		1,267		1,091
Net occupancy and equipment expense		331		339
Other expense		696		611
Total noninterest expense		2,294		2,041
Income before income taxes		1,748		1,359
Income taxes		553		428
NET INCOME	$	1,195	$	931
Earnings per Share - basic	$	0.78	$	0.60
Earnings per Share - diluted	$	0.76	$	0.58
Average shares outstanding - basic		1,522,967		1,549,187
Average shares outstanding - diluted		1,569,622		1,603,562

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

(in thousands)	2006			2005
March 31,
Assets
Cash and due from banks	$	8,438		$	5,808
Interest-bearing deposits in other banks		1,808			36
Federal funds sold		7,030			7,076
Total cash and cash equivalents		17,276			12,920
Mortgage loans held for sale		142			427
Investment securities available for sale		47,840			47,759
Investment securities held to maturity (market value of $205 and $213)		199			198
Loans (net of unearned income of $713 and $590)		283,905			259,062
Less allowance for loan losses		4,171			3,393
Net loans		279,734			255,669
Premises and equipment		5,913			6,092
Accrued interest receivable		1,363			1,151
Bank-owned life insurance		5,301			5,112
Other assets		3,271			2,644
TOTAL ASSETS	$	361,039		$	331,972
Liabilities
Deposits :
Noninterest-bearing	$	29,388		$	32,456
Interest-bearing		264,885			242,541
Total deposits		294,273			274,997
Short-term borrowings		15,380			13,573
Other borrowed funds		16,356			11,245
Accrued interest payable		924			636
Other liabilities		1,991			1,514
TOTAL LIABILITIES		328,924			301,965
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized; 1,553,494 and 1,549,269 shares issued		777			775
Capital surplus		4,455			4,380
Retained earnings		28,199			25,040
Accumulated other comprehensive income		(254	)		(188	)
Treasury stock, at cost (30,000 shares)		(1,062	)		—
TOTAL STOCKHOLDERS’ EQUITY		32,115			30,007
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	361,039		$	331,972

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

CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited)

(amounts in thousands, except per share)	2006			2005			% Increase (decrease)
Performance for the three months ended March 31,
Interest income	$	5,457		$	4,175		30.7	%
Interest expense	$	1,939		$	1,293		50.0	%
Net interest income	$	3,518		$	2,882		22.1	%
Net income	$	1,195		$	931		28.4	%
Shareholders’ Value (per share)
Net income - basic	$	0.78		$	0.60		30.0	%
Net income - diluted	$	0.76		$	0.58		31.0	%
Dividends	$	0.26		$	0.25		4.0	%
Book value	$	21.08		$	19.37		8.8	%
Market value	$	33.85		$	36.50		-7.3	%
Market value/book value ratio		160.6	%		188.4	%	-14.8	%
* Price/earnings multiple		10.9	×		15.2	×	-28.3	%
* Dividend yield		3.07	%		2.74	%	12.0	%
Financial Ratios
* Return on average assets		1.35	%		1.14	%	18.4	%
* Return on average equity		15.02	%		12.38	%	21.3	%
Shareholders’ equity/asset ratio		8.90	%		9.04	%	-1.6	%
Dividend payout ratio		33.33	%		41.67	%	-20.0	%
Nonperforming assets/total assets		0.17	%		0.16	%	6.3	%
Allowance for loan loss as a % of loans		1.47	%		1.31	%	12.2	%
* Net charge-offs/average loans		0.02	%		0.00	%	—
Allowance for loan loss/nonaccrual loans		2708.4	%		1098.1	%	146.6	%
Allowance for loan loss/non-performing loans		671.7	%		656.3	%	2.4	%
Financial Position at March 31,
Assets	$	361,039		$	331,972		8.8	%
Loans	$	283,905		$	259,062		9.6	%
Deposits	$	294,273		$	274,997		7.0	%
Stockholders’ equity	$	32,115		$	30,007		7.0	%

* annualized