Dime Financial Corporation - Third Quarter Results
Wallingford, Connecticut: Dime Financial Corporation ("DFC") (NASDAQ:
DIBK) announced net income of $3.2 million or $0.62 per share for the
quarter ended September 30, 1996 compared with net income of $2.1 million or
$0.42 per share for the quarter ended September 30, 1995. Net income for
the nine month period ended September 30, 1996 totalled $9.1 million or
$1.79 per share compared with net income of $3.4 million or $0.67 per share
for the nine month period ended September 30, 1995. In addition, the Board
of Directors announced a regular quarterly dividend payment of $0.08 per
share payable on November 20, 1996 to shareholders of record on November 5,
1996. The improvement in net income during the third quarter of 1996
compared with the third quarter of 1995 resulted primarily from a reduction
in the provision to the allowance for loan losses and a decrease in
operating expenses. The provision to the allowance for loan losses during
the third quarter of 1996 totalled $450,000 compared with $1.4 million
during the third quarter of 1995. The provision to the allowance for loan
losses for the nine months ended September 30, 1996 totalled $1.8 million
compared with $6.7 million for the nine months ended September 30, 1995.
Total operating expenses, exclusive of OREO operations, for the
quarter ended September 30, 1996 were $3.2 million compared with operating
expenses, exclusive of OREO operations, of $3.6 million from the year
earlier quarter ended September 30, 1995 representing a decline of $413,000
or 11%. Total operating expenses, exclusive of OREO operations, for the
nine months ended September 30, 1996 equalled $10.7 million compared with
operating expenses, exclusive of OREO operations, of $13.5 million for the
nine months ended September 30, 1995 representing a decline of $2.7 million
or nearly 20%. The decline in operating expenses during 1996 was primarily
the result of a restructure program, first implemented during the second
quarter of 1995, which significantly reduced the Company's workforce, along
with a reduction in the cost of FDIC insurance. Salaries and employee
benefits for the quarter ended September 30, 1996 totalled $1.6 million
compared with salaries and employee benefits of $1.8 million for the quarter
ended September 30, 1995, representing a decline of $168,000 or 9%. Salaries
and employee benefits for the nine month period ended September 30, 1996
totalled $5.0 million compared with $6.1 million for the first nine months
of 1995, representing a decrease of $1.0 million or 17%. The cost of FDIC
insurance also declined substantially and totalled only $500 for the quarter
ended September 30, 1996 compared with $52,000 for the quarter ended
September 30, 1995. The cost of FDIC insurance for the nine month period
ended September 30, 1996 totalled $79,000 compared with $808,000 for the
nine month period ended September 30, 1995, representing a decrease of
$729,000 or 90%. The drop in the cost of FDIC insurance was caused
primarily by a general reduction in the assessment rate charged and an
improvement in the risk rating of DFC's sole subsidiary, The Dime Savings
Bank of Wallingford ("Dime").
During 1996, the Company provided for only minimal income taxes as the
result of tax loss carry-forwards available to offset regular Federal and
State income taxes. During the first three quarters of 1995, the Company
recognized $2.0 million of a deferred tax benefit as the result of improved
earnings projections. No deferred tax benefit was recognized during the
first nine months of 1996. The allowance for loan losses at September 30,
1996 equalled $13.8 million and represented 227% of non-performing loans of
$6.1 million and 3.33% of total loans outstanding. The allowance for loan
losses at December 31, 1995 totalled $12.8 million and represented 166% of
non-performing loans of $7.7 million and 2.80% of total loans outstanding.
At September 30, 1995 the allowance for loan losses totalled $13.7 million
or 127% of non-performing loans of $10.8 million and 2.86% of total loans
outstanding. Non-performing loans totalled $6.1 million at September 30,
1996 representing a decrease of $1.6 million or 21% from December 31, 1995
and a decrease of $4.7 million or 44% from September 30, 1995. Other real
estate owned ("OREO") totalled $825,000 at September 30, 1996 compared with
OREO of $1.4 million at December 31, 1995 and $1.6 million at September 30,
1995. Total non-performing assets were $6.9 million at September 30, 1996
compared with $9.1 million at December 31, 1995 and $12.4 million at
September 30, 1995. Non-performing assets equalled 0.99% of total assets at
September 30, 1996 compared with 1.38% of total assets at December 31, 1995
and compared with 1.96% of total assets at September 30, 1995.
Net interest income totalled $6.3 million for the quarter ended
September 30, 1996 representing a net interest rate spread of 3.20% and a
net interest margin of 3.76% compared with net interest income of $6.3
million for the quarter ended September 30, 1995 which represented a net
interest rate spread of 3.61% and a net interest margin of 4.11%. The
decrease in the interest rate spread and margin was due to the combination
of a higher cost of deposits, a lower loan yield, and a greater volume of
investment securities as a percentage of assets, partially offset by an
increased yield on investment securities. Net interest income for the nine
month period ended September 30, 1996 totalled $19.6 million representing a
net interest rate spread of 3.40% and a net interest margin of 3.94%
compared with net interest income of $19.2 million for the nine months ended
September 30, 1995 which represented a net interest rate spread of 3.73% and
a net interest margin of 4.18%. Total assets were $691.8 million at
September 30, 1996 compared with total assets of $632.6 million at September
30, 1995, representing an increase of $59.3 million or 9%. Total deposits
were $569.1 million at September 30, 1996 compared with $520.7 million at
September 30, 1995, representing an increase of $48.3 million or 9%. Total
shareholders' equity was $59.4 million at September 30, 1996 representing an
equity to assets ratio of 8.59% compared with shareholders' equity of $48.7
million at September 30, 1995 which represented an equity to assets ratio of
7.69%. The Tier 1 regulatory capital ratio at September 30, 1996 for Dime
was 8.39% compared with a Tier 1 regulatory capital ratio of 7.20% at
September 30, 1995. The risk-based capital ratio of Dime at September 30,
1996 equalled 18.79% compared with a risk-based capital ratio of 14.74% at
September 30, 1995. These ratios are in excess of the regulatory minimums.
Dime Financial Corporation and Subsidiary
Consolidated Statements of Condition
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September 30, December 31, September 30,
(In thousands, except share data) 1996 1995 1995
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Assets
Cash and amounts due from banks $ 7,581 $ 11,172 $ 9,505
Interest bearing deposits 24 2,983 3,913
Federal funds sold 11,713 21,334 11,859
Investment securities available for sale (a) 18,412 8,138 12
Investment securities held to maturity (b) 90,634 47,898 58,820
Mortgage-backed securities available for sale (c) 137,798 95,190 9,879
Mortgage-backed securities held to maturity (d) --- --- 44,539
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 304,010 329,597 341,459
Residential real estate - non-owner occupied 23,396 27,699 29,013
Commercial real estate 35,726 43,658 52,190
Builders' and Land 811 1,501 1,928
Commercial loans 3,569 4,529 4,821
Consumer loans 45,246 49,459 50,785
Allowance for loan losses (13,761) (12,779) (13,722)
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Loans receivable, net 398,997 443,664 466,474
Premises and equipment, net 5,275 5,926 6,816
Accrued income receivable 5,195 4,451 4,745
Other real estate owned, net 825 1,415 1,649
Other assets 5,679 6,242 4,321
Excess of cost over fair value of net assets acquired 2,505 2,768 2,855
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Total assets $691,830 $658,373 $632,579
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Liabilities and Shareholders' equity
Liabilities:
Deposits $569,063 $543,344 $520,738
Federal Home Loan Bank of Boston advances 58,000 58,000 58,000
Other liabilities 5,350 5,361 5,189
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Total liabilities 632,413 606,705 583,927
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Shareholders' equity:
Preferred stock; no par value; authorized 1,000,000 shares;
none issued and outstanding --- --- ---
Common stock; $1.00 par value; authorized 9,000,000 shares;
issued 5,480,896 shares, 5,373,992 and 5,364,902, respectively. 5,481 5,374 5,365
Additional paid-in capital 52,209 51,117 50,992
Retained earnings (deficit) 5,793 (2,166) (4,842)
Net unrealized gain (loss) on available for sale securities (1,168) 241 35
Treasury stock --351,607 shares at cost (2,898) (2,898) (2,898)
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Total shareholders' equity 59,417 51,668 48,652
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Total liabilities and shareholders' equity $691,830 $658,373 $632,579
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<Fa> amortized cost: $18,362 at September 30, 1996; $8,155 at December 31, 1995; and $12 at September 30, 1995.
<Fb> market value: $89,101 at September 30, 1996; $48,245 at December 31, 1995; and $58,888 at September 30, 1995.
<Fc> amortized cost: $139,618 at September 30, 1996; $94,809 at December 31, 1995; and $9,826 at September 30, 1995.
<Fd> market value: $44,495 at September 30, 1995.
Condensed Consolidated Statements of Operations
Consolidated Statements of Operations
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Three Months Ended Nine Months Ended
(In thousands, except share data) 9/30/96 9/30/95 9/30/96 9/30/95
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Interest Income:
Interest and fees on loans $ 8,359 $ 9,943 $27,224 $30,186
Interest-bearing deposits 1 26 22 104
Federal funds sold 148 166 628 909
Interest and dividends on investments:
U.S. treasury securities 56 130 185 563
U.S. government agency obligations 1,429 680 3,599 1,505
REMIC/CMO's 713 493 2,333 708
Non-agency REMIC/CMO's 652 --- 1,141
Mortgage-backed securities 891 379 2,402 520
Asset-backed securities 268 --- 394 ---
Other bonds and notes 7 89 46 420
Equity securities --- --- --- 3
Dividends on Federal Home Loan Bank of Boston Stock 117 124 345 383
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Total Interest Income 12,641 12,030 38,319 35,301
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Interest Expense
Interest to depositors 5,364 4,687 15,691 12,926
Interest on Federal Home Loan Bank of Boston advances 983 1,054 3,015 3,132
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Total Interest Expense 6,347 5,741 18,706 16,058
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Net Interest Income 6,294 6,289 19,613 19,243
Provision for loan losses 450 1,400 1,750 6,700
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Net interest income after provision 5,844 4,889 17,863 12,543
Investment securities gains, net 32 64 203 298
Other operating income 552 528 1,543 1,586
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Income before other operating expenses 6,428 5,481 19,609 14,427
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Other Operating Expenses:
Salaries and employee benefits 1,628 1,796 5,036 6,071
Professional and other services 574 513 1,668 1,780
Bank occupancy and equipment expense 534 767 2,147 2,300
FDIC Assessment 1 52 79 808
Net (benefit) cost of operation of other real estate 67 (256) (223) (432)
Restructure expense, net --- --- 340 947
Other operating expenses 455 477 1,504 1,552
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Total Other Operating Expenses 3,259 3,349 10,551 13,026
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Income before income taxes 3,169 2,132 9,058 1,401
Income tax expense (benefit) 0 12 (10) (1,964)
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Net income $ 3,169 $2,120 $ 9,068 $ 3,365
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Weighted Average Common Shares (in thousands) 5,125 5,011 5,069 5,001
Earnings per share $0.62 $0.42 $1.79 $0.67
Selected Financial Highlights
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For the three months For the nine months
ended September 30, ended September 30,
(Dollars in thousands) 1996 1995 1996 1995
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Average yield on interest-earning assets 7.49% 7.81% 7.72% 7.69%
Average cost of funds 4.29% 4.20% 4.32% 3.96%
Net interest rate spread 3.20% 3.61% 3.40% 3.73%
Net yield on interest-earning assets 3.76% 4.11% 3.94% 4.18%
Net income $3,169 $2,120 $9,068 $3,365
Return on average assets 1.84% 1.34% 1.79% 0.71%
Return on average equity 22.11% 17.94% 22.13% 9.69%
Leverage capital ratio 8.41% 7.24% 8.41% 7.24%
Earnings per share $0.62 $0.42 $1.79 $0.67
Book value per share $11.58 $9.71 $11.58 $9.71
Dime Financial Corporation And Subsidiary
Selected Financial Data
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September 30, December 31, September 30,
(in thousands) 1996 1995 1995
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Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $2,691 $2,729 $ 3,617
Residential Real Estate - non-owner occupied 926 1,235 1,200
Commercial Real Estate 1,501 2,580 4,497
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Total Mortgage Loans 5,118 6,544 9,314
Commercial Loans 659 690 1,151
Consumer Loans 275 448 298
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Total Non-Performing Loans 6,052 7,682 10,763
Other Real Estate Owned 825 1,865 2,160
Less: Reserve for OREO Losses 0 450 511
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Total OREO, net 825 1,415 1,649
Total Non-Performing Assets $6,877 $9,097 $12,412
==================================
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September 30, December 31, September 30,
(in thousands) 1996 1995 1995
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Average Balance Information
For the quarters ended:
Interest earning assets:
Gross loans $417,390 $472,201 $486,867
Investment securities 246,184 136,976 114,708
Federal funds sold / interest bearing deposits 11,280 20,244 14,521
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Total interest earning assets 674,854 629,421 616,096
Total Assets $688,470 $644,264 $631,303
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Interest bearing liabilities:
Interest bearing deposits $528,520 $494,502 $483,916
Borrowings 58,000 58,000 58,000
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Total interest bearing liabilities 586,520 552,502 541,916
Total Liabilities 631,119 594,596 584,023
Shareholders' Equity 57,351 49,668 47,280
Total Liabilities & Shareholders' Equity $688,470 $644,264 $631,303
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Average Balance Information
For the nine and twelve months ended:
Interest earning assets:
Gross loans $433,468 $492,028 $498,719
Investment securities 211,933 100,642 88,499
Federal funds sold / interest bearing deposits 16,341 23,727 24,890
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Total interest earning assets 661,742 616,397 612,108
Total Assets $676,456 $633,938 $630,461
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Interest bearing liabilities:
Interest bearing deposits $519,950 $487,137 $484,655
Borrowings 58,000 58,060 58,080
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Total interest bearing liabilities 577,950 545,197 542,735
Total Liabilities 621,812 586,808 584,149
Shareholders' Equity 54,644 47,130 46,312
Total Liabilities & Shareholders' Equity $676,456 $633,938 $630,461
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