Dimeco (DIMC) 8-K Results of Operations and Financial Condition

Exhibit 99

NEWS RELEASE

TO BUSINESS EDITOR

DIMECO, INC. ANNOUNCES EARNINGS AT SEPTEMBER 30, 2010

Dimeco, Inc. (Nasdaq “DIMC”), parent company of The Dime Bank, reported earnings for the nine months ended September 30, 2010 of $3,562,000, an increase of 10.5% over the same period in 2009. The main component of improved earnings came from net interest income of $12,570,000, which was 6.4% greater than the first nine months of 2009. Earnings per share were $2.24 on September 30, 2010 and dividends declared year-to-date were $1.08 per share. Return on average stockholders’ equity and return on average assets were 9.70% and .87%, respectively, for the third quarter of 2010.

The Company reported total assets of $548,054,000 at September 30, 2010, an increase of $33,783,000 or 6.6% over balances at September 30, 2009. During this time the loan portfolio grew $17,146,000 or 4.2% to $422,128,000 and deposits increased $38,572,000 or 9.2% to $459,673,000. The Company reported ratios of net loans charged off to average loans of .05% and allowance for loan loss to total loans of 1.69%. The nonperforming asset to total asset ratio was 2.18% and therefore the Company has become even more diligent in working with customers in order to reach the best outcome for the institution while considering the best interest of the borrower. By doing so, management believes these efforts will build profitable long term relationships.

President and Chief Executive Officer Gary C. Beilman stated, “It is with pleasure that I present this report on Dimeco, Inc. In addition to the positive numbers stated above, the continuation of our quarterly dividend at $.36 per share produces a yield of $4.13% for our shareholders.”

Beilman continued, “Due to the sluggish economy on both a national and local level, we have been prompted to take an even closer look at all aspects of our business and the relationships that we enjoy. We have changed our philosophy regarding deposits. Rather than taking all deposit prospects, we have, instead, refocused our pricing to reward those deposit customers who maintain full banking relationships with us. We thank our shareholders for their continued investment in Dimeco, and the community for their continued 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 along with an Investments and Financial Services Department. For more information on The Dime Bank, visit www.thedimebank.com

Source Dimeco, Inc. / October 20, 2010

Contact: Deborah Unflat, Vice President Marketing Officer

DIMECO, INC.

CONSOLIDATED STATEMENT OF INCOME (unaudited)

(in thousands, except per share)	For the three months ended September 30,					For the nine months ended September 30,
	2010		2009			2010		2009
Interest Income
Interest and fees on loans	$	5,593	$	5,617		$	16,524	$	16,813
Investment securities:
Taxable		370		263			1,042		914
Exempt from federal income tax		254		240			768		691
Other		16		3			52		6
Total interest income		6,233		6,123			18,386		18,424
Interest Expense
Deposits		1,463		1,887			4,966		5,693
Short-term borrowings		37		31			113		101
Other borrowed funds		237		290			737		811
Total interest expense		1,737		2,208			5,816		6,605
Net Interest Income		4,496		3,915			12,570		11,819
Provision for loan losses		520		260			1,100		900
Net Interest Income After Provision for Loan Losses		3,976		3,655			11,470		10,919
Noninterest Income
Service charges on deposit accounts		303		386			995		1,116
Mortgage loans held for sale gains, net		76		119			171		461
Investment securities gains (losses)		24		(22	)		18		(49	)
Brokerage commissions		187		121			578		363
Earnings on bank-owned life insurance		108		108			318		307
Other income		320		315			992		759
Total noninterest income		1,018		1,027			3,072		2,957
Noninterest Expense
Salaries and employee benefits		1,653		1,595			5,047		4,772
Occupancy expense, net		265		257			842		823
Furniture and equipment expense		119		150			358		447
Professional fees		215		138			568		451
Data processing expense		172		165			527		472
FDIC insurance		204		181			565		708
Other expense		620		705			1,800		1,854
Total noninterest expense		3,248		3,191			9,707		9,527
Income before income taxes		1,746		1,491			4,835		4,349
Income taxes		471		405			1,273		1,125
NET INCOME	$	1,275	$	1,086		$	3,562	$	3,224
Earnings per Share - basic	$	0.80	$	0.70		$	2.24	$	2.07
Earnings per Share - diluted	$	0.80	$	0.69		$	2.24	$	2.04
Average shares outstanding - basic		1,597,745		1,559,115			1,589,955		1,558,573
Average shares outstanding - diluted		1,599,302		1,582,631			1,590,703		1,579,926

DIMECO, INC.

CONSOLIDATED BALANCE SHEET (unaudited)

(in thousands)
	2010			2009
September 30,
Assets
Cash and due from banks	$	5,756		$	8,504
Interest-bearing deposits in other banks		12,106			1,938
Federal funds sold		—			3,000
Total cash and cash equivalents		17,862			13,442
Mortgage loans held for sale		170			1,667
Investment securities available for sale		81,007			70,595
Loans (net of unearned income of $37 and $135)		422,128			404,982
Less allowance for loan losses		7,152			6,084
Net loans		414,976			398,898
Premises and equipment		10,456			10,996
Accrued interest receivable		1,857			1,763
Bank-owned life insurance		9,451			9,082
Other assets		12,275			7,828
TOTAL ASSETS	$	548,054		$	514,271
Liabilities
Deposits :
Noninterest-bearing	$	48,964		$	42,500
Interest-bearing		410,709			378,601
Total deposits		459,673			421,101
Short-term borrowings		13,536			13,802
Other borrowed funds		20,022			27,852
Accrued interest payable		757			923
Other liabilities		3,779			3,914
TOTAL LIABILITIES		497,767			467,592
Stockholders’ Equity
Common stock, $.50 par value; 5,000,000 shares authorized; 1,652,318 and 1,613,878 shares issued		826			807
Capital surplus		6,184			5,553
Retained earnings		44,155			41,701
Accumulated other comprehensive income		1,189			685
Treasury stock, at cost (54,100 shares)		(2,067	)		(2,067	)
TOTAL STOCKHOLDERS’ EQUITY		50,287			46,679
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	548,054		$	514,271

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)
		2010			2009			% Increase (decrease)
	Performance for the nine months ended September 30,
	Interest income	$	18,386		$	18,424			-0.2	%
	Interest expense	$	5,816		$	6,605			-12.0	%
	Net interest income	$	12,570		$	11,819			6.4	%
	Net income	$	3,562		$	3,224			10.5	%
	Shareholders’ Value (per share)
	Net income - basic	$	2.24		$	2.07			8.2	%
	Net income - diluted	$	2.24		$	2.04			9.8	%
	Dividends	$	1.08		$	1.08			0.0	%
	Book value	$	31.46		$	29.93			5.1	%
	Market value	$	34.90		$	40.25			-13.3	%
	Market value/book value ratio		110.9	%		134.5	%		-17.6	%
*	Price/earnings multiple		11.7	X		14.6	X		-19.9	%
*	Dividend yield		4.13	%		3.58	%		15.4	%
	Financial Ratios
*	Return on average assets		0.87	%		0.90	%		-3.3	%
*	Return on average equity		9.70	%		9.43	%		2.9	%
	Shareholders’ equity/asset ratio		9.18	%		9.08	%		1.1	%
	Dividend payout ratio		48.21	%		52.17	%		-7.6	%
	Nonperforming assets/total assets		2.18	%		2.01	%		8.5	%
	Allowance for loan loss as a % of loans		1.69	%		1.50	%		12.7	%
	Net charge-offs/average loans		0.05	%		0.06	%		-16.7	%
	Allowance for loan loss/nonaccrual loans		72.5	%		79.5	%		-8.8	%
	Allowance for loan loss/non-performing loans		66.0	%		63.3	%		4.3	%
	Financial Position at September 30,
	Assets	$	548,054		$	514,271			6.6	%
	Loans, net of unearned	$	422,128		$	404,982			4.2	%
	Deposits	$	459,673		$	421,101			9.2	%
	Stockholders’ equity	$	50,287		$	46,679			7.7	%

* annualized

October 2010

Dear Shareholders:

It is with pleasure that I make this report of Dimeco, Inc. for the third quarter of 2010. Thankfully, because of numerous efforts, there is much good news to report. Deposits, loans, and total assets are all up nicely from a year earlier. So too is stockholders’ equity. Net income is up over 10% for the nine months of this year; our allowance for loan losses has been raised to 1.69%; and the continuation of our quarterly dividend at $.36 per share produces a yield of 4.13%. You will note these and other accomplishments as you review the entire report.

Our economy, both locally and nationally, continues to be stubbornly sluggish. We are living through very interesting times. Because of this, we have been prompted to take an even closer look at all aspects of our business and the relationships that we enjoy. During the second and third quarters of this year, and continuing into the future, we have changed our philosophy regarding deposits. Rather than taking all deposit prospects, we have, instead, refocused our pricing to reward those deposit customers who maintain full banking relationships with us.

Said simply, the best deposit rates and products are made available to those who have made us their total financial partner. Through these actions our overall deposit balances, especially certificates of deposit, have decreased slightly from our totals in June. By doing so, we have strengthened existing relationships and attracted new ones. A corresponding benefit for us is that our overall interest expense has decreased.

These economic times require additional management of the loan portfolio. With decreased commerce has come restricted cash flows for some of our clients, and correspondingly, increased collection activity and monitoring on our part. We continue to work diligently with our borrowers for their best interests as well as our own. Although these comments sound sober, our approach is to be as realistic as possible during these unprecedented times. Our goal is to position the Company well for what may be another year of economic stagnation.

Suffice it to say, we continue our efforts to produce the best possible results for you, especially during these challenging economic times. We thank you for your investment and your continued loyalty. Additionally, we encourage you to refer others to us for banking, trust, and investment services. As always, your comments and questions are welcome.

Sincerely,

/s/ Gary C. Beilman

Gary C. Beilman

President and Chief Executive Officer