Dime Financial P.O. Box 700
Corporation Wallingford, CT 06492
(203) 269-8881
Dime Financial Corporation - First Quarter Results
Dime Financial Corporation ("DFC") (NASDAQ: DIBK) announced net income of
$3.8 million or $0.71 per share on a fully diluted basis for the quarter ended
March 31, 1997 compared with net income of $2.9 million or $0.56 per share on a
fully diluted basis for the quarter ended March 31, 1996. In addition, the
Board of Directors announced an increase in the quarterly dividend payment from
$0.09 per share to $0.10 per share payable on May 23, 1997 to shareholders of
record on May 9, 1997. The change in net income from the prior year was
primarily the result of a reduced provision to the allowance for loan losses,
improvement in net interest income and reduced operating expenses, partially
offset by a decrease in gains recognized on the sale of investment securities.
The provision to the allowance for loan losses totalled $50,000 for the quarter
ended March 31, 1997 compared with a provision of $700,000 for the quarter
ended March 31, 1996. The change in the provision from 1996 reflects a
reduction in non-performing loans and total loans outstanding as well as
improvement in the coverage ratios of the allowance for loan losses to
outstanding loans and to non-performing loans.
Net interest income, the key component of the Company's earnings,
totalled $6.7 million for the quarter ended March 31, 1997 representing a net
interest spread of 2.92% and a net interest margin of 3.46% compared with net
interest income of $6.4 million for the quarter ended March 31, 1996
representing a net interest spread of 3.41% and a net interest margin of 3.95%.
The increase in net interest income was primarily the result of a larger volume
of interest-earning assets partially offset by a decrease in the net interest
rate spread and net interest margin. The decrease in the net interest rate
spread and net interest margin was due primarily to the combination of a higher
cost of deposits, a lower loan yield, and a greater volume of interest-earning
cash, on average, as a percentage of assets.
Total operating expenses, excluding the net cost of operations of other
real estate owned ("OREO operations"), equalled $3.3 million for the quarter
ended March 31, 1997 compared with operating expenses of $3.7 million for the
quarter ended March 31, 1996. OREO operations equalled a net expense of $51,000
for the first quarter of 1997 compared with a net gain of $154,000 for the
first quarter of 1996. The reduction in operating expenses from the prior year
quarter was primarily the result of a reduction in salary and employee benefit
costs due to reduced staffing levels and a reduction in occupancy and equipment
expenses due to the outsourcing of data processing operations.
Total assets were $814.4 million at March 31, 1997 compared with total
assets of $671.4 million at March 31, 1996, representing an increase of $143.0
million or 21%. In addition to the increase in total assets, the composition of
the Company's balance sheet continued to change with an increase in the
investment securities portfolio and a decrease in total loans outstanding. At
March 31, 1997, investment securities rose 94% to $367.5 million compared with
$189.7 million at March 31, 1996. The investment securities portfolio at March
31, 1997 consisted entirely of instruments issued by the U.S. Treasury, U.S.
government agencies, U.S. government-sponsored agencies, or AAA rated
non-agencies. Total loans, net of the allowance for loan losses, equalled
$380.1 million at March 31, 1997 compared with $430.0 million at March 31,
1996, a decrease of nearly 12%. The reduction in loans was primarily the result
of continued low loan demand.
The first quarter of 1997 was marked by continued significant growth in
the Company's deposit base. Increased marketing efforts were undertaken in
order to maximize deposit flows during the Individual Retirement Account
("IRA") season in addition to offering competitive rates on non-IRA deposit
accounts. Total deposits rose during the first quarter of 1997 to $687.1
million at March 31, 1997 an increase of $61.1 million or 10% over December 31,
1996 and an increase of $132.4 million or 24% over March 31, 1996.
Non-performing loans equalled $2.7 million at March 31, 1997 representing a
decrease of $3.3 million or 55% from March 31, 1996. Other real estate owned
("OREO") increased and totalled $916,000 at March 31, 1997 compared with OREO
of $608,000 at March 31, 1996. Total non-performing assets were $3.6 million at
March 31, 1997 compared with $6.6 million at March 31, 1996. Non-performing
assets equalled 0.44% of total assets at March 31, 1997 compared with 0.99% of
total assets at March 31, 1996. The allowance for loan losses at March 31, 1997
totalled $12.7 million and equalled 3.23% of total loans outstanding compared
with $13.2 million at March 31, 1996 representing 2.98% of total loans
outstanding.
Earnings per share is reported on a primary and fully diluted basis.
These calculations include the effects of common stock equivalents. Potential
dilution from unexercised stock options exceeded the 3% materiality test at
March 31, 1997. Accordingly, unexercised stock options are considered common
stock equivalents. The prior year comparison has been restated to reflect this
calculation. Average common shares outstanding during the quarter ended March
31, 1997 totalled 5,134,714 compared with 5,023,206 for the quarter ended March
31, 1996. Average common shares including common stock equivalents during the
first quarter of 1997 equalled 5,308,807 compared with 5,100,913 during the
first quarter of 1996.
Total shareholders' equity was $63.8 million at March 31, 1997 compared with
shareholders' equity of $53.4 million at March 31, 1996. The Tier 1 regulatory
capital ratio at March 31, 1997 for Dime was 8.31% compared with a Tier 1
regulatory capital ratio of 7.71% at March 31, 1996. The risk-based capital
ratio of Dime at March 31, 1997 equalled 19.92% compared with a risk-based
capital ratio of 17.22% at March 31, 1996. These ratios are in excess of the
regulatory minimums. Book value per share equalled $12.41 at March 31, 1997
compared with $10.63 at March 31, 1996.
Dime Financial Corporation and Subsidiary
Consolidated Statements of Condition
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March 31, December 31, March 31,
(In thousands, except share data) 1997 1996 1996
--------- ------------ ---------
Assets
Cash and amounts due from banks $ 9,824 $ 10,430 $ 12,148
Interest bearing deposits 63 149 293
Federal funds sold 27,615 21,296 12,546
Investment securities available for sale (a) 24,806 26,233 4,018
Investment securities held to maturity (b) 133,279 120,257 64,861
Mortgage-backed securities available for sale (c) 209,370 158,728 120,843
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 281,902 287,654 320,387
Residential real estate - non-owner occupied 30,665 31,365 26,359
Commercial real estate 32,897 33,448 42,356
Builders' and Land 578 447 1,684
Commercial loans 3,414 3,075 4,223
Consumer loans 43,298 44,233 48,166
Allowance for loan losses (12,693) (12,929) (13,204)
---------------------------------------
Loans receivable, net 380,061 387,293 429,971
Premises and equipment, net 4,916 5,095 5,946
Accrued income receivable 6,353 5,214 5,011
Other real estate owned, net 916 1,210 608
Other assets 7,705 5,788 5,309
Excess of cost over fair value of net assets acquired 2,331 2,418 2,680
---------------------------------------
Total assets $ 814,431 $ 751,303 $ 671,426
=======================================
Liabilities and Shareholders' equity
Liabilities:
Deposits $ 687,149 $ 626,098 $ 554,715
Federal Home Loan Bank of Boston advances 58,000 58,000 58,000
Other liabilities 5,528 4,594 5,312
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Total liabilities 750,677 688,692 618,027
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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 5,487,494 shares, 5,480,896 and
5,375,592, respectively; outstanding 5,138,887 shares,
5,129,289 and 5,023,985, respectively 5,487 5,481 5,375
Additional paid-in capital 52,283 52,209 51,133
Retained earnings 12,099 8,788 342
Net unrealized loss on available for sale securities (3,217) (969) (553)
Treasury stock --351,607 shares at cost (2,898) (2,898) (2,898)
---------------------------------------
Total shareholders' equity 63,754 62,611 53,399
---------------------------------------
Total liabilities and shareholders' equity $ 814,431 $ 751,303 $ 671,426
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<FN>
<F1> (a) amortized cost: $25,266 at March 31, 1997; $26,304 at December 31, 1996;
and $4,023 at March 31, 1996.
<F2> (b) market value: $130,820 at March 31, 1997; $119,238 at December 31, 1996;
and $64,187 at March 31, 1996.
<F3> (c) amortized cost: $213,784 at March 31, 1997; $160,124 at December 31, 1996;
and $121,676 at March 31, 1996.
</FN>
Dime Financial Corporation and Subsidiary
Consolidated Statements of Operations
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Three months ended March 31,
(In thousands, except share data) 1997 1996
-------- --------
Interest Income:
Interest and fees on loans $ 8,055 $ 9,508
Interest-bearing deposits 1 12
Federal funds sold 309 210
Interest and dividends on investments:
U.S. treasury securities 57 62
U.S. government agency obligations 2,325 992
REMIC/CMO's 1,321 833
Non-agency REMIC/CMO's 1,134 68
Mortgage-backed securities 635 751
Asset-backed securities 248 --
Other bonds and notes -- 39
Dividends on Federal Home Loan Bank of Boston Stock 114 113
----------------------
Total Interest Income 14,199 12,588
----------------------
Interest Expense
Interest to depositors 6,551 5,132
Interest on Federal Home Loan Bank of Boston advances 962 1,042
----------------------
Total Interest Expense 7,513 6,174
----------------------
Net Interest Income 6,686 6,414
Provision for loan losses 50 700
----------------------
Net interest income after provision 6,636 5,714
Investment securities gains, net 11 159
Other operating income 515 506
----------------------
Income before other operating expenses 7,162 6,379
----------------------
Other Operating Expenses:
Salaries and employee benefits 1,649 1,765
Professional and other services 583 516
Bank occupancy and equipment expense 465 674
FDIC Assessment 18 38
Net (benefit) cost of operation of other real estate 51 (154)
Restructure expense, net -- 158
Other operating expenses 622 531
----------------------
Total Other Operating Expenses 3,388 3,528
----------------------
Income before income taxes 3,774 2,851
Income tax expense (benefit) -- (8)
----------------------
Net income $ 3,774 $ 2,859
======================
Primary Earnings per Share $ 0.71 $ 0.56
Weighted Average Common Shares and Common Stock
Equivalents outstanding 5,309 5,097
Fully Diluted Earnings per Share $ 0.71 $ 0.56
Weighted Average Common Shares and Common Stock
Equivalents outstanding 5,309 5,101
Selected Financial Highlights
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Three months ended March 31,
(Dollars in thousands) 1997 1996
-------- --------
Average yield on interest-earning assets 7.47% 7.79%
Average cost of funds 4.55% 4.38%
Net interest rate spread 2.92% 3.41%
Net interest margin 3.46% 3.95%
Net income $ 3,776 $ 2,859
Return on average assets 1.94% 1.73%
Return on average equity 23.84% 21.80%
Leverage capital ratio 8.33% 7.72%
Fully diluted earnings per share $ 0.71 $ 0.56
Book value per share $ 12.41 $ 10.63
Dime Financial Corporation and Subsidiary
Selected Financial Data
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March 31, December 31, March 31,
(in thousands) 1997 1996 1996
--------- ------------ ---------
Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $ 955 $ 862 $ 2,316
Residential Real Estate - non-owner occupied 476 510 1,376
Commercial Real Estate 865 788 1,536
--------------------------------------
Total Mortgage Loans 2,296 2,160 5,228
Commercial Loans 229 303 373
Consumer Loans 172 107 409
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Total Non-Performing Loans 2,697 2,570 6,010
Other Real Estate Owned 916 1,210 868
Less: Reserve for OREO Losses -- -- 260
--------------------------------------
Total OREO, net 916 1,210 608
Total Non-Performing Assets $ 3,613 $ 3,780 $ 6,618
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- ----------------------------------------------------------------------------------------------
March 31, December 31, March 31,
(in thousands) 1997 1996 1996
--------- ------------ ---------
Average Balance Information For the quarters ended:
Interest earning assets:
Gross loans $ 396,407 $ 407,780 $ 450,462
Investment securities 339,921 271,856 179,356
Federal funds sold / interest bearing deposits 23,566 22,982 16,348
--------------------------------------
Total interest earning assets 759,894 702,618 646,166
Total Assets $ 776,981 $ 716,892 $ 662,414
======================================
Interest bearing liabilities:
Interest bearing deposits $ 610,510 $ 552,925 $ 509,063
Borrowings 58,000 58,000 58,000
--------------------------------------
Total interest bearing liabilities 668,510 610,925 567,063
Total Liabilities 713,677 655,992 609,961
Shareholders' Equity 63,304 60,900 52,453
Total Liabilities & Shareholders' Equity $ 776,981 $ 716,892 $ 662,414
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