Dimeco (DIMC) 8-K Dimeco, Inc. Announces 2010 First Quarter Earnings

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES 2010 FIRST QUARTER EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, continued to grow with total assets of $553,246,000 at March 31, 2010, an increase of $81,081,000 or 17.2% from one year earlier. This growth was attained mainly from an increase of $79,094,000 or 20.9% in total deposits, which ended the period with a balance of $457,362,000.

The Company reported 2010 first quarter earnings of $1,102,000, which equated to earnings per share of $.70. The most significant contributor to earnings was net interest income of $3,967,000, a slight decline from the previous year, while noninterest income of $961,000 was 6.9% greater than a year earlier. Total noninterest expense increased $149,000 or 4.9% as a result of a combination of items including hiring new staff to handle the growth of the Company, along with an increase in FDIC insurance premiums and costs associated with outsourcing data processing. Return on average stockholders’ equity was 9.21% and the return on average assets was .82% for the first quarter of 2010. In March 2010, the Board of Directors declared a cash dividend of $.36 per share which produced a dividend yield of 4.19%.

Ratios representing asset quality improved with the allowance for loan loss equal to 1.59% of total loans at March 31, 2010. At this level, the allowance was 84.0% of nonaccrual loan. Net charge-offs to average loans remained low at .01% for the first quarter of 2010, a decline of 50% from one year earlier.

Gary C. Beilman, president and chief executive officer of The Dime Bank, commented, “It is with pleasure that I share this report. Net income increased during the first quarter compared to that of the same period last year due to cost containment efforts and due diligence in product pricing. In addition, we continue to pay close attention to asset quality during these challenging economic times. It is with great satisfaction that I note that non-performing loans have been drastically reduced with net charge-offs remaining extremely low. Efforts to improve loan quality include heightened levels of activity in all aspects of lending origination, administration and collection. Stockholders’ equity is up almost 8% and our market value has grown by 5%.”

Beilman continued, “We can only think that the haven we offer as a community bank, together with our attention to quality service, are serving us well during these historic times. Although the remaining severity of the recession is unknown, we believe that we are currently well positioned and that we stand ready for all that is yet to come. We thank our customers, staff, community and shareholders for their continued investment and loyalty.”

The Dime Bank, a wholly owned subsidiary of Dimeco, Inc., serves Wayne County and Pike County in Pennsylvania and Sullivan County in 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, 2010/ Contact: Deborah L. Unflat

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

(in thousands, except per share)	For the three months ended March 31,
	2010		2009
Interest Income
Interest and fees on loans	$	5,481	$	5,579
Investment securities:
Taxable		296		371
Exempt from federal income tax		256		215
Other		12		1
Total interest income		6,045		6,166
Interest Expense
Deposits		1,796		1,930
Short-term borrowings		25		57
Other borrowed funds		257		198
Total interest expense		2,078		2,185
Net Interest Income		3,967		3,981
Provision for loan losses		250		368
Net Interest Income After Provision for Loan Losses		3,717		3,613
Noninterest Income
Service charges on deposit accounts		343		371
Mortgage loans held for sale gains, net		50		154
Investment securities losses		—		(27	)
Brokerage commissions		138		69
Earnings on bank-owned life insurance		106		99
Other income		324		233
Total noninterest income		961		899
Noninterest Expense
Salaries and employee benefits		1,674		1,592
Occupancy expense, net		305		306
Furniture and equipment expense		118		158
Professional fees		152		143
Data processing expense		187		116
FDIC insurance		177		136
Other expense		587		600
Total noninterest expense		3,200		3,051
Income before income taxes		1,478		1,461
Income taxes		376		384
NET INCOME	$	1,102	$	1,077
Earnings per Share - basic	$	0.70	$	0.69
Earnings per Share - diluted	$	0.70	$	0.68
Average shares outstanding - basic		1,575,103		1,558,570
Average shares outstanding - diluted		1,575,150		1,579,418

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (UNAUDITED)

(in thousands)
March 31,	2010			2009
Assets
Cash and due from banks	$	4,839		$	5,575
Interest-bearing deposits in other banks		14,635			349
Federal funds sold		3,000			—
Total cash and cash equivalents		22,474			5,924
Mortgage loans held for sale		—			1,545
Investment securities available for sale		95,369			51,598
Loans (net of unearned income of $74 and $222)		407,670			387,317
Less allowance for loan losses		6,467			5,719
Net loans		401,203			381,598
Premises and equipment		10,781			11,287
Accrued interest receivable		1,806			1,732
Bank-owned life insurance		9,267			8,899
Other real estate owned		1,073			1,955
Prepaid FDIC insurance		2,144			—
Other assets		9,129			7,627
TOTAL ASSETS	$	553,246		$	472,165
Liabilities
Deposits :
Noninterest-bearing		43,458			38,657
Interest-bearing		413,904			339,611
Total deposits		457,362			378,268
Short-term borrowings		17,584			21,910
Other borrowed funds		21,947			22,881
Accrued interest payable		1,031			1,188
Other liabilities		6,910			3,058
TOTAL LIABILITIES		504,834			427,305
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized;
1,650,868 and 1,612,128 shares issued		825			806
Capital surplus		6,134			5,520
Retained earnings		42,845			40,676
Accumulated other comprehensive income (loss)		675			(75	)
Treasury stock, at cost (54,100 shares)		(2,067	)		(2,067	)
TOTAL STOCKHOLDERS’ EQUITY		48,412			44,860
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	553,246		$	472,165

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)	2010			2009			% Increase (decrease)
Performance for the three months ended March 31,
Interest income	$	6,045		$	6,166		-2.0	%
Interest expense	$	2,078		$	2,185		-4.9	%
Net interest income	$	3,967		$	3,981		-0.4	%
Net income	$	1,102		$	1,077		2.3	%
Shareholders’ Value (per share)
Net income - basic	$	0.70		$	0.69		1.5	%
Net income - diluted	$	0.70		$	0.68		2.9	%
Dividends	$	0.36		$	0.36		—
Book value	$	30.32		$	28.79		5.3	%
Market value	$	34.40		$	32.75		5.0	%
Market value/book value ratio		113.5	%		113.8	%	-0.3	%
*        Price/earnings multiple		12.3	X		11.9	X	3.4	%
*        Dividend yield		4.19	%		4.40	%	-4.8	%
Financial Ratios
*        Return on average assets		0.82	%		0.92	%	-10.9	%
*        Return on average equity		9.21	%		9.36	%	-1.6	%
Shareholders’ equity/asset ratio		8.75	%		9.50	%	-7.9	%
Dividend payout ratio		51.43	%		52.17	%	-1.4	%
Nonperforming assets/total assets		1.82	%		2.54	%	-28.4	%
Allowance for loan loss as a % of loans		1.59	%		1.48	%	7.4	%
Net charge-offs/average loans		0.01	%		0.02	%	-50.0	%
Allowance for loan loss/nonaccrual loans		84.0	%		71.6	%	17.3	%
Allowance for loan loss/non-performing loans		72.3	%		57.4	%	26.0	%
Financial Position at March 31,
Assets	$	553,246		$	472,165		17.2	%
Loans	$	407,670		$	387,317		5.3	%
Deposits	$	457,362		$	378,268		20.9	%
Stockholders’ equity	$	48,412		$	44,860		7.9	%

* annualized

April 2010

Dear Shareholder:

It is with pleasure that I make the first quarterly report of 2010 for Dimeco, Inc. This report contains several pieces of good information. To begin, net income has increased during the first quarter compared to that of the same period last year. Although national interest rates remain unchanged, our cost containment efforts and due diligence in pricing on both sides of the balance sheet have produced a 2.3% increase in net revenue.

In addition to monitoring costs and spread, as I have mentioned in previous quarterly reports, we have continued to pay close attention to asset quality during these challenging economic times. These efforts include heightened levels of activity in all aspects of lending origination, administration, and collection. It is with great satisfaction that I note that non-performing loans have been drastically reduced, net charge-offs remain extremely low, and our allowance for loan loss is at a very healthy level of 1.59%. Although the remaining severity of this recession is unknown, we believe that we are currently well positioned.

A solid report is also evident from the shareholder perspective. Stockholders’ equity is up almost 8%, market value has grown by 5%, and the dividend yield is over 4%. All of this speaks well of the enhancement of your investment.

A positive trend comes by way of the growth that we continue to experience. Compared to this time last year, loans have increased by 5%, deposits are up almost 21%, and total assets have expanded by 17%. We can only think that the haven we offer as a community bank, together with our attention to quality service, are serving us well during these historic times.

We are hopeful that the preliminary signs of an economic recovery are a boding of more robust times, locally and nationally. For all that is to come, we stand ready. We thank you for your investment and we welcome your questions and comments. Additionally, we look forward to your referrals for stock ownership as well as banking, trust, and investment business.

Sincerely,

Gary C. Beilman

President and Chief Executive Officer