Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2009 Final Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2009 FINAL QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, released unaudited financial results for the year 2009. The Company continued solid, steady growth to end the year with $530,657,000 in total assets, an increase of $58,179,000 or 12.3% over balances one year earlier. This increase was mainly funded by greater deposits, which grew by $61,127,000, or 16.0% during the year, bringing total deposits to $443,116,000 at December 31, 2009. Growth in the loan portfolio was $29,805,000 or 7.8%, ending the year at $410,012,000. We achieved growth through the opening of the Lake Region office in December 2008 and strong performance by all of our branches throughout the year.

Net income for 2009 was $4,402,000. The Company reported a return on average assets of .90% and a return on average equity of 9.58%. Gary C. Beilman, president and chief executive officer, stated “National industry performance analysis of net income for the first three quarters of 2009, the latest peer comparison available, placed us in the top third for banks our size. This income was achieved in spite of recessionary issues faced by the nation in 2009. The Company was challenged in 2009 with an increase in nonaccrual loans, narrowing interest rate spreads and a 279% increase in premiums paid to the FDIC. Net charge-offs to average loans were .12% at December 31, 2009 and the allowance for loan loss as a percentage of loans remained strong at 1.53%.

Beilman continued, “Our growth speaks well not only for the valuable service that we provide, but also for the underlying strength in our market area. We are confident that working together, we can continue to grow and prosper along with the communities in which we live. While doing so, our hope is that the recovery of our national and local economy accelerates.”

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 21, 2010 / Deborah Unflat

January 2010

Dear Shareholder:

It is my pleasure to present the report of Dimeco, Inc. for the fourth quarter of 2009. We have a number of positives to report during what continues to be a tough economy. National industry performance analysis for the first three quarters of 2009 placed us in the top third based on net income for banks our size. For the year 2009 we posted a very respectable net income figure of $4.4 million, albeit down $2 million from 2008. However, we see this performance largely to be a product of current economic conditions. This year we have seen the effects of the recession in that we have four large commercial loans on non-accrual status, we experienced a narrowing of interest spread, and we incurred an increase in our FDIC insurance assessment of over $640,000. All banks paid greater assessments in 2009 in order to stabilize the insurance fund and our hope is that the FDIC’s fund is now at an adequate level and will not require any further increases. We are proactively addressing the loans and interest spread.

I am thrilled to also report continuation of outstanding balance sheet growth. The loan portfolio is up almost 8%; deposits have grown by 16%; and our total assets increased by more than 12%. These numbers show that we are building for a solid future by doing the right things for our customers.

For you, our shareholders, we have continued to enhance your investment. While many other banks have cut or discontinued their dividends, we maintained payment of ours. For 2009 our return to you was 9% greater than in 2008, and produced a dividend yield of 4.36%! Furthermore, during the year stockholders’ equity increased by 6%. In times like these we think it is paramount to reward you for your confidence and loyalty.

We are confident that working together, we can continue to grow and prosper. While doing so, our hope is that the recovery of our national and local economy accelerates. In the meantime, we ask that you continue to make referrals of your company, both for investment purposes and for all banking needs. As always, I welcome your comments and questions and thank you for your continued patronage.

Sincerely,

Gary C. Beilman

President and Chief Executive Officer

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

(in thousands, except per share)	For the three months ended December 31,					For the year ended December 31,
	2009			2008		2009		2008
Interest Income
Interest and fees on loans	$	5,553		$	6,090	22,366		$	25,442
Investment securities:
Taxable		280			599	1,194			2,036
Exempt from federal income tax		247			173	938			608
Other		13			17	19			89
Total interest income		6,093			6,879	24,517			28,175
Interest Expense
Deposits		1,838			2,208	7,531			9,503
Short-term borrowings		21			30	122			237
Other borrowed funds		286			273	1,097			925
Total interest expense		2,145			2,511	8,750			10,665
Net Interest Income		3,948			4,368	15,767			17,510
Provision for loan losses		400			370	1,300			950
Net Interest Income After Provision for Loan Losses		3,548			3,998	14,467			16,560
Noninterest Income
Service charges on deposit accounts		381			415	1,497			1,662
Investment securities losses		(93	)		—	(142	)		(28	)
Other income		713			529	2,603			2,130
Total noninterest income		1,001			944	3,958			3,764
Noninterest Expense
Salaries and employee benefits		1,531			1,688	6,303			6,396
Net occupancy and equipment expense		387			383	1,657			1,392
FDIC insurance assessment		164			62	872			230
Other expense		862			767	3,639			3,159
Total noninterest expense		2,944			2,900	12,471			11,177
Income before income taxes		1,605			2,042	5,954			9,147
Income taxes		427			601	1,552			2,746
NET INCOME	$	1,178		$	1,441	4,402		$	6,401
Earnings per Share - basic	$	0.75		$	0.93	2.82		$	4.17
Earnings per Share - diluted	$	0.75		$	0.91	2.79		$	4.05
Average shares outstanding - basic		1,559,778			1,558,393	1,558,877			1,536,158
Average shares outstanding - diluted		1,580,263			1,585,589	1,580,002			1,580,270

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

(in thousands)
December 31,	2009			2008
Assets
Cash and due from banks	$	3,991		$	3,625
Interest-bearing deposits in other banks		14,296			368
Federal funds sold		3,000			—
Total cash and cash equivalents		21,287			3,993
Investment securities available for sale		73,628			65,600
Loans (net of unearned income of $101 and $272)		410,012			380,207
Less allowance for loan losses		6,253			5,416
Net loans		403,759			374,791
Premises and equipment		10,965			10,880
Accrued interest receivable		1,842			2,050
Bank-owned life insurance		9,175			8,535
Other assets		10,001			6,629
TOTAL ASSETS	$	530,657		$	472,478
Liabilities
Deposits :
Noninterest-bearing	$	39,687		$	37,626
Interest-bearing		403,429			344,363
Total deposits		443,116			381,989
Short-term borrowings		10,974			16,671
Other borrowed funds		24,402			24,298
Accrued interest payable		1,080			1,158
Other liabilities		3,968			3,894
TOTAL LIABILITIES		483,540			428,010
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized;
1,613,878 and 1,611,828 shares issued		807			806
Capital surplus		5,552			5,516
Retained earnings		42,318			40,160
Accumulated other comprehensive income		507			18
Treasury stock, at cost (54,100 and 53,100 shares)		(2,067	)		(2,032	)
TOTAL STOCKHOLDERS’ EQUITY		47,117			44,468
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	530,657		$	472,478

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)	2009			2008			% Increase (decrease)
Performance for the year ended December 31,
Interest income	$	24,517		$	28,175		-13.0	%
Interest expense	$	8,750		$	10,665		-18.0	%
Net interest income	$	15,767		$	17,510		-10.0	%
Net income	$	4,402		$	6,401		-31.2	%
Shareholders’ Value (per share)
Net income - basic	$	2.82		$	4.17		-32.4	%
Net income - diluted	$	2.79		$	4.05		-31.1	%
Dividends	$	1.44		$	1.32		9.1	%
Book value	$	30.21		$	28.53		5.9	%
Market value	$	33.00		$	38.00		-13.2	%
Market value/book value ratio		109.2	%		133.2	%	-18.0	%
Price/earnings multiple		11.7	X		9.1	X	28.6	%
Dividend yield		4.36	%		3.47	%	25.6	%
Financial Ratios
Return on average assets		0.90	%		1.43	%	-37.1	%
Return on average equity		9.58	%		15.28	%	-37.3	%
Shareholders' equity/asset ratio		8.88	%		9.41	%	-5.6	%
Dividend payout ratio		51.06	%		31.65	%	61.3	%
Nonperforming assets/total assets		1.90	%		1.81	%	5.0	%
Allowance for loan loss as a        % of loans		1.53	%		1.42	%	7.7	%
Net charge-offs/average loans		0.12	%		0.26	%	-53.8	%
Allowance for loan loss/nonaccrual loans		83.1	%		1392.1	%	-94.0	%
Allowance for loan loss/non-performing loans		64.6	%		86.6	%	-25.4	%
Financial Position at December 31,
Assets	$	530,657		$	472,478		12.3	%
Loans	$	410,012		$	380,207		7.8	%
Deposits	$	443,116		$	381,989		16.0	%
Stockholders’ equity	$	47,117		$	44,468		6.0	%