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

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES SECOND QUARTER 2010 EARNINGS

Dimeco, Inc. (Nasdaq DIMC), parent company of The Dime Bank, reported 2010 second quarter earnings of $1,185,000, an increase of $124,000 or 11.7% over the previous year. Net interest income of $4,107,000 was 4.7% greater than that reported for the second quarter of 2009, and noninterest income for the quarter was $1,093,000, an increase of $62,000 or 6.0% greater than one year earlier. Noninterest expense was $3,259,000, a decline of $26,000 from that of the same period last year as cost containment efforts and reduced FDIC deposit premiums took effect.

Year to date net income for 2010 was $2,287,000 or 7.0% greater than the income earned for the first half of 2009. Net interest income as of June 30, 2010 of $8,074,000 increased $170,000 or 2.2% compared to that of the same period in 2009. Dimeco’s Board of Directors declared a dividend of $.36 per share for the second quarter, producing a handsome yield of 3.79% at the current market price.

The Company continued to grow, with total assets of $560,261,000 at June 30, 2010, an increase of $67,990,000 or 13.8% from one year earlier. During the period deposits grew by $68,977,000 or 17.5%, and loans expanded by $16,723,000 or 4.3%, over the same timeframe in 2009.

Gary C. Beilman, president and chief executive officer of The Dime Bank, commented, “In this economy we continue to work closely with depositors and borrowers alike. These efforts include finding the right deposit products for customers as well as providing guidance and counseling to our borrowers. Working closely with customers on both sides of the balance sheet will ultimately benefit all concerned”

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. July 21, 2010/ Contact: Deborah L. Unflat

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

(in thousands, except per share)	For the three months ended June 30,					For the six months ended June 30,
	2010			2009		2010			2009
Interest Income
Interest and fees on loans	$	5,450		$	5,617	$	10,931		$	11,196
Investment securities:
Taxable		376			280		672			651
Exempt from federal income tax		258			236		514			451
Other		24			2		36			3
Total interest income		6,108			6,135		12,153			12,301
Interest Expense
Deposits		1,707			1,876		3,503			3,806
Short-term borrowings		51			13		76			70
Other borrowed funds		243			323		500			521
Total interest expense		2,001			2,212		4,079			4,397
Net Interest Income		4,107			3,923		8,074			7,904
Provision for loan losses		330			272		580			640
Net Interest Income After Provision for Loan Losses		3,777			3,651		7,494			7,264
Noninterest Income
Service charges on deposit accounts		349			359		692			730
Mortgage loans held for sale gains, net		45			188		95			342
Investment securities losses		(6	)		—		(6	)		(27	)
Brokerage commissions		253			173		391			242
Earnings on bank-owned life insurance		104			100		210			199
Other income		348			211		672			444
Total noninterest income		1,093			1,031		2,054			1,930
Noninterest Expense
Salaries and employee benefits		1,720			1,585		3,394			3,177
Occupancy expense, net		272			260		577			566
Furniture and equipment expense		121			139		239			297
Professional fees		201			170		353			313
Data processing expense		168			191		355			307
FDIC insurance		184			390		361			527
Other expense		593			550		1,180			1,149
Total noninterest expense		3,259			3,285		6,459			6,336
Income before income taxes		1,611			1,397		3,089			2,858
Income taxes		426			336		802			720
NET INCOME	$	1,185		$	1,061	$	2,287		$	2,138
Earnings per Share - basic	$	0.74		$	0.68	$	1.44		$	1.37
Earnings per Share - diluted	$	0.74		$	0.67	$	1.44		$	1.35
Average shares outstanding - basic		1,596,768			1,558,028		1,585,996			1,558,298
Average shares outstanding - diluted		1,598,818			1,579,644		1,586,468			1,579,486

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (unaudited)

(in thousands)
June 30,	2010			2009
Assets
Cash and due from banks	$	6,519		$	7,756
Interest-bearing deposits in other banks		14,785			3,700
Federal funds sold		—			3,000
Total cash and cash equivalents		21,304			14,456
Mortgage loans held for sale		—			1,329
Investment securities available for sale		103,851			60,088
Loans (net of unearned income of $53 and $174)		407,790			391,067
Less allowance for loan losses		6,635			5,902
Net loans		401,155			385,165
Premises and equipment		10,637			11,185
Accrued interest receivable		1,909			1,739
Bank-owned life insurance		9,359			8,990
Other assets		12,046			9,319
TOTAL ASSETS	$	560,261		$	492,271
Liabilities
Deposits :
Noninterest-bearing	$	47,479		$	44,885
Interest-bearing		415,328			348,945
Total deposits		462,807			393,830
Short-term borrowings		22,850			20,960
Other borrowed funds		21,487			28,297
Accrued interest payable		960			952
Other liabilities		2,906			2,699
TOTAL LIABILITIES		511,010			446,738
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		43,455			41,176
Accumulated other comprehensive income		904			98
Treasury stock, at cost (54,100 shares)		(2,067	)		(2,067	)
TOTAL STOCKHOLDERS’ EQUITY		49,251			45,533
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	560,261		$	492,271

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 six months ended June 30,
Interest income	$	12,153		$	12,301		-1.2	%
Interest expense	$	4,079		$	4,397		-7.2	%
Net interest income	$	8,074		$	7,904		2.2	%
Net income	$	2,287		$	2,138		7.0	%
Shareholders’ Value (per share)
Net income - basic	$	1.44		$	1.37		5.1	%
Net income - diluted	$	1.44		$	1.35		6.7	%
Dividends	$	0.72		$	0.72		0.0	%
Book value	$	30.84		$	29.22		5.5	%
Market value	$	38.00		$	36.30		4.7	%
Market value/book value ratio		123.2	%		124.2	%	-0.8	%
*        Price/earnings multiple		13.2	X		13.3	X	-0.8	%
*        Dividend yield		3.79	%		3.97	%	-4.5	%
Financial Ratios
*        Return on average assets		0.83	%		0.90	%	-7.8	%
*        Return on average equity		9.44	%		9.43	%	0.1	%
Shareholders’ equity/asset ratio		8.79	%		9.25	%	-5.0	%
Dividend payout ratio		50.00	%		52.55	%	-4.9	%
Nonperforming assets/total assets		2.94	%		2.48	%	18.5	%
Allowance for loan loss as a % of loans		1.63	%		1.51	%	7.9	%
Net charge-offs/average loans		0.05	%		0.04	%	25.0	%
Allowance for loan loss/nonaccrual loans		57.5	%		75.5	%	-23.8	%
Allowance for loan loss/non-performing loans		43.3	%		57.8	%	-25.1	%
Financial Position at June 30,
Assets	$	560,261		$	492,271		13.8	%
Loans, net of unearned	$	407,790		$	391,067		4.3	%
Deposits	$	462,807		$	393,830		17.5	%
Stockholders’ equity	$	49,251		$	45,533		8.2	%

* annualized

July 2010

Dear Shareholder:

It is my pleasure to present the report of Dimeco, Inc. for the second quarter of 2010. Net income for the six months ended June 30, 2010 is up 7% over that of the same period last year. The success of these profitable operations continued to be shared with you, as the enclosed dividend was maintained at $.36 per share, producing a handsome yield of 3.79% at the current market price. In addition to increased profitability, we have experienced significant growth in all areas. When compared to a year earlier, deposits are up over 17%, loans have expanded by more than 4%, and our total assets, which are now at $560 million, have increased by almost 14%. Another accolade for your company came in the June 2010 issue of US Banker magazine where Dimeco was recognized as one of the top 200 community banks and thrifts in the United States, coming in at number 23!

The financial performance of your company is affected by local economic conditions and to a lesser extent the national economy. We realize that many local businesses and individuals continue to struggle. An improvement in our marketplace will come about when tourism, construction, and real estate activities increase and unemployment correspondingly decreases. Until this much anticipated shift takes place, we will continue to work closely with depositors and borrowers alike. These efforts include finding the right deposit products for customers as well as providing guidance and counseling for borrowers.

Most forecasts indicate a continuation of this low interest rate environment into the foreseeable future. As such, our asset/liability management efforts are concentrated on improving interest spread, the main component of our income. Additionally we continue our efforts with loan collections. Diminished work activities and cash flows have negatively impacted some of our borrowers and our staff is vigilantly pursuing those issues to bring delinquencies to an acceptable level. Working closely with customers on both sides of the balance sheet will ultimately benefit all concerned.

We thank you for your investment and your continued loyalty. We also encourage you to refer us to others for banking, trust, and investment services. As always, your questions and comments are welcome.

Sincerely,

Gary C. Beilman

President and Chief Executive Officer