UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
Commission file number 0-27782
DIME COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3297463
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
209 HAVEMEYER STREET, BROOKLYN, NEW YORK 11211
(Address of principal executive offices) (Zip Code)
(718) 782-6200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all the reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) YES X NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING, JANUARY 31, 2000
$.01 Par Value 12,454,088
-2-
PAGE
Item 1. Financial Statements
Consolidated Statements of Condition at December 31, 1999
(Unaudited) and June 30, 1999 3
Consolidated Statements of Operations for the Three Months
and Six Months Ended December 31, 1999 and 1998 (Unaudited) 4
Consolidated Statements of Changes in Stockholders' Equity
for the Six Months Ended December 31, 1999 (Unaudited) 5
Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 1999 and 1998 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-25
Item 3 Quantitative and Qualitative Disclosure About Market Risk 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Changes in Securities and Use of Proceeds 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 28
Exhibits
EXPLANATORY NOTE: This Form 10-Q contains certain "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, and
may be identified by the use of such words as "believe," "expect," anticipate,"
"should," "planned," "estimated" and "potential". Examples of forward looking
statements include, but are not limited to, estimates with respect to the
financial condition, results of operations and business of the Company that are
subject to various factors which could cause actual results to differ
materially from these estimates. These factors include: changes in general,
economic and market conditions, and legislative and regulatory conditions, or
the development of an adverse interest rate environment that adversely affects
the interest rate spread or other income anticipated from the Company's
operations and investments.
As used in this Form 10-Q, "we" and "us" and "our" refer to Dime Community
Bancshares, Inc. and/or its consolidated subsidiaries, depending on the
context.
-3-
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
AT DECEMBER 31,
1999 AT JUNE 30,
(UNAUDITED) 1999
------------------- ---------------
ASSETS:
Cash and due from banks $27,832 $17,801
Investment securities held to maturity (estimated market value of $21,588
and $31,768 at December 31, 1999 and June 30, 1999, respectively) 21,677 31,698
Investment securities available for sale:
Bonds and notes (amortized cost of $112,127 and $133,523 at December 31,
1999 and June 30, 1999, respectively) 108,950 131,490
Marketable equity securities (historical cost of $14,814 and $14,162 at
December 31, 1999 and June 30, 1999, respectively) 15,353 15,142
Mortgage backed securities held to maturity (estimated market value of
$18,071 and $23,192 at December 31, 1999 and June 30, 1999, respectively) 17,976 22,820
Mortgage backed securities available for sale (amortized cost of $446,786
and $507,486 at December 31, 1999 and June 30, 1999, respectively) 438,785 502,847
Federal funds sold 49,339 11,011
Loans:
Real estate 1,571,562 1,375,510
Other loans 7,541 7,831
Less: Allowance for loan losses (14,689) (15,081)
------------------- ---------------
Total loans, net 1,564,414 1,368,260
------------------- ---------------
Premises and fixed assets 14,917 14,975
Federal Home Loan Bank of New York Capital Stock 41,476 28,281
Other real estate owned, net 1,180 866
Goodwill 62,562 64,871
Other assets 41,933 37,553
------------------- ---------------
TOTAL ASSETS $2,406,394 $2,247,615
=================== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to depositors $1,204,781 $1,247,061
Escrow and other deposits 16,880 36,577
Securities sold under agreements to repurchase 418,170 481,660
Federal Home Loan Bank of New York advances 535,000 250,000
Other liabilities 20,215 20,622
------------------- ---------------
TOTAL LIABILITIES 2,195,046 2,035,920
------------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock ($0.01 par, 9,000,000 shares authorized,
none outstanding at December 31, 1999 and June 30, 1999) - -
Common stock ($0.01 par, 45,000,000 shares authorized, 14,583,400 shares
issued at December 31, 1999 and June 30, 1999, respectively, and
12,454,088 shares and 12,775,588 shares outstanding at December 31,
1999 and June 30, 1999, respectively) 145 145
ADDITIONAL PAID-IN CAPITAL 149,672 148,865
RETAINED EARNINGS (SUBSTANTIALLY RESTRICTED) 126,261 119,100
ACCUMULATED OTHER COMPREHENSIVE LOSS (5,744) (3,323)
UNALLOCATED COMMON STOCK OF EMPLOYEE STOCK OWNERSHIP PLAN (7,434) (8,016)
UNEARNED COMMON STOCK OF RECOGNITION AND RETENTION PLAN (5,076) (6,040)
COMMON STOCK HELD BY BENEFIT MAINTENANCE PLAN (1,790) (831)
TREASURY STOCK, AT COST (2,129,312 SHARES AND 1,807,812 SHARES AT DECEMBER
31, 1999 AND JUNE 30, 1999, RESPECTIVELY) (44,686) (38,205)
------------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 211,348 211,695
------------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,406,394 $2,247,615
=================== ===============
See notes to consolidated financial statements
-4-
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
1999 1998 1999 1998
-------- -------- -------- ----------
INTEREST INCOME:
Loans secured by real estate $29,093 $20,886 $56,096 $40,815
OTHER LOANS 161 126 310 253
INVESTMENT SECURITIES 2,559 2,458 5,144 4,857
MORTGAGE-BACKED SECURITIES 7,610 7,208 15,709 14,060
FEDERAL FUNDS SOLD 1,783 397 2,002 673
-------- -------- -------- --------
TOTAL INTEREST INCOME 41,206 31,075 79,261 60,658
-------- -------- -------- --------
INTEREST EXPENSE:
Deposits and escrow 11,130 10,462 22,354 21,342
Borrowed funds 14,039 8,127 24,864 14,230
-------- -------- -------- --------
TOTAL INTEREST EXPENSE 25,169 18,589 47,218 35,572
NET INTEREST INCOME 16,037 12,486 32,043 25,086
PROVISION FOR LOAN LOSSES 60 60 120 120
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 15,977 12,426 31,923 24,966
-------- -------- -------- --------
NON-INTEREST INCOME:
Service charges and other fees 1,163 618 2,139 1,161
Net gain (loss) on sales and redemptions of
securities and other assets (145) 510 (14) 754
Net gain (loss) on sales of loans - 9 (8) 27
Other 1,171 1,270 2,729 1,719
-------- -------- -------- --------
TOTAL NON-INTEREST INCOME 2,189 2,407 4,846 3,661
-------- -------- -------- --------
NON-INTEREST EXPENSE:
Salaries and employee benefits 3,532 3,002 6,956 5,798
ESOP and RRP compensation expense 1,059 1,159 2,189 2,290
Occupancy and equipment 945 662 1,883 1,222
Federal deposit insurance premiums 118 85 233 174
Data processing costs 408 310 840 621
Provision (credit) for losses on Other real estate
owned - - - (2)
Goodwill amortization 1,154 602 2,308 1,203
Other 1,793 1,254 3,486 2,460
-------- -------- -------- --------
TOTAL NON-INTEREST EXPENSE 9,009 7,074 17,895 13,766
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 9,157 7,759 18,874 14,861
INCOME TAX EXPENSE 3,741 3,074 7,898 6,193
-------- -------- -------- --------
NET INCOME $5,416 $4,685 $10,976 $8,668
======== ======== ======== ========
EARNINGS PER SHARE:
BASIC $0.47 $0.46 $0.95 $0.83
======== ======== ======== ========
DILUTED $0.45 $0.42 $0.90 $0.77
======== ======== ======== ========
STATEMENT OF COMPREHENSIVE INCOME:
Net Income $5,416 $4,685 $10,976 $8,668
Reclassification adjustment for securities sold,
net 738 267 (674) 341
Change in unrealized gain (loss) on securities
available for sale, net of deferred taxes (2,271) (2,367) (2,421) (1,250)
-------- -------- -------- --------
Total comprehensive income $3,883 $2,585 $7,881 $7,759
======== ======== ======== ========
See notes to consolidated financial statements
-5-
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(IN THOUSANDS)
FOR THE SIX
MONTHS ENDED
DECEMBER 31, 1999
---------------------------
COMMON STOCK (PAR VALUE $0.01):
Balance at beginning of period $145
---------------------------
Balance at end of period 145
---------------------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period 148,865
Tax benefit of RRP shares 164
Amortization of excess fair value over cost - ESOP stock 643
---------------------------
Balance at end of period 149,672
---------------------------
RETAINED EARNINGS:
Balance at beginning of period 119,100
Net income for the period 10,976
Cash dividends declared and paid (3,815)
---------------------------
Balance at end of period 126,261
---------------------------
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET:
Balance at beginning of period (3,323)
Change in unrealized loss on securities available for sale
during the period, net of deferred taxes (2,421)
---------------------------
Balance at end of period (5,744)
---------------------------
EMPLOYEE STOCK OWNERSHIP PLAN:
Balance at beginning of period (8,016)
Amortization of earned portion of ESOP stock 582
---------------------------
Balance at end of period (7,434)
---------------------------
RECOGNITION AND RETENTION PLAN:
Balance at beginning of period (6,040)
Amortization of earned portion of RRP stock 964
---------------------------
Balance at end of period (5,076)
---------------------------
BENEFIT MAINTENANCE PLAN:
Balance at beginning of period (831)
Common stock acquired by BMP (959)
---------------------------
Balance at end of period (1,790)
---------------------------
TREASURY STOCK:
Balance at beginning of period (38,205)
Purchase of 321,500 shares, at cost (6,481)
---------------------------
Balance at end of period (44,686)
---------------------------
See notes to consolidated financial statements
-6-
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS
ENDED DECEMBER 31,
1999 1998
-------------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES: (In THOUSANDS)
Net Income $10,976 $8,668
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net loss (gain) on investment and mortgage backed securities sold 1,249 (546)
Net gain on investment and mortgage backed securities called - (86)
Net gain on sale of other assets (12) -
Net gain on sale of loans held for sale 8 (27)
Net depreciation and amortization 417 723
ESOP and RRP compensation expense 2,189 2,290
Provision for loan losses 120 120
Goodwill amortization 2,308 1,203
Decrease in loans held for sale - 299
Increase in other assets and other real estate owned (2,164) (316)
Decrease in receivable for securities sold - 18,008
Increase in payable for securities purchased - (12,062)
Increase (Decrease) in accrued postretirment benefit obligation and other liabilities (407) 6,121
-------------------- --------------------
Net cash provided by operating activities 14,684 24,395
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in Federal funds sold (38,328) (20,421)
Proceeds from maturities of investment securities held to maturity 45 1,290
Proceeds from maturities of investment securities available for sale 130,422 5,479
Proceeds from calls of investment securities held to maturity 10,000 35,160
Proceeds from calls of investment securities available for sale 2,400 2,000
Proceeds from sales of investment securities available for sale 21,772 9,873
Proceeds from sales of mortgage backed securities available for sale 27,526 -
Purchases of investment securities available for sale (133,703) (47,684)
Purchases of mortgage backed securities available for sale (9,799) (127,931)
Principal collected on mortgage backed securities held to maturity 4,844 13,451
Principal collected on mortgage backed securities available for sale 41,684 59,985
Net increase in loans (196,274) (142,036)
Purchases of fixed assets (489) (365)
Purchase of Federal Home Loan Bank stock (13,195) (11,089)
-------------------- --------------------
Net cash used in investing activities (153,095) (222,288)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in due to depositors (42,280) (14,350)
Net (decrease) increase in escrow and other deposits (19,697) 15,498
Proceeds from Federal Home Loan Bank of New York Advances 285,000 123,995
(Decrease) increase in securities sold under agreements to repurchase (63,490) 95,453
Cash dividends paid (3,815) (2,418)
Exercise of stock options and tax benefits of stock options and RRP 164 770
Purchase of common stock by Benefit Maintenance Plan and RRP (959) (1,072)
Purchase of treasury stock (6,481) (15,894)
------------------- ----------------
Net cash provided by financing activities 148,442 201,982
------------------- ----------------
DECREASE IN CASH AND DUE FROM BANKS 10,031 4,089
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD 17,801 16,266
------------------- ----------------
CASH AND DUE FROM BANKS, END OF PERIOD $27,832 $20,355
=================== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes 12,654 3,923
=================== ================
Cash paid for interest 44,227 34,769
=================== ================
Transfer of loans to Other real estate owned 412 48
=================== ================
Change in unrealized gain (loss) on available for sale securities, net of deferred
taxes (2,421) (1,250)
=================== ================
See notes to consolidated financial statements
-7-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
1. NATURE OF OPERATIONS
Dime Community Bancshares, Inc. is a Delaware corporation organized in
December, 1995 at the direction of the Board of Directors of The Dime Savings
Bank of Williamsburgh (referred to as the Bank), a federally chartered savings
bank, for the purpose of acquiring all of the capital stock of the Bank issued
in the Bank's conversion from a federal mutual savings bank to a federal stock
savings bank on June 26, 1996.
The Bank has been, and intends to continue to be, a community-oriented
financial institution providing financial services and loans for housing within
its market areas. We maintain our headquarters in the Williamsburgh section of
the borough of Brooklyn. As of December 31, 1999, the Bank has seventeen
additional offices located in the boroughs of Brooklyn, Queens, and the Bronx,
and in Nassau County.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In our opinion, the accompanying unaudited consolidated financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the Company's financial condition as of
December 31, 1999, the results of operations for the three-month and six-month
periods ended December 31, 1999 and 1998, cash flows for the six months ended
December 31, 1999 and 1998, and changes in stockholders' equity for the six
months ended December 31, 1999. The results of operations for the three-month
and six-month periods ended December 31, 1999, are not necessarily indicative
of the results of operations for the remainder of the year. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles (referred
to as GAAP) have been omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. Areas in the accompanying financial statements where estimates
are significant include the allowance for loans losses and the carrying value
of other real estate.
These consolidated financial statements should be read in conjunction with our
audited consolidated financial statements as of and for the year ended June 30,
1999 and notes thereto.
3. TREASURY STOCK
During the six months ended December 31, 1999, we repurchased 321,500 shares of
our common stock into treasury. The average price of the treasury shares
acquired was $20.16 per share, and all shares have been recorded at the
acquisition cost.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Dime Community Bancshares, Inc. (referred to as DCB or the Company) is a
Delaware corporation and parent corporation of The Dime Savings Bank of
Williamsburgh (referred to as DSBW or the Bank), a federally chartered stock
savings bank. The Company was organized in December, 1995 at the direction of
the Board of Directors of the Bank for the purpose of acquiring all of the
capital stock of the Bank issued in the conversion of the Bank from a federal
mutual savings bank to a federal stock savings bank.
-9-
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
------------------------------- ------------------------------
1999 <F1> 1998 <F1> 1999 <F1> 1998<F1>
--------- --------- --------- -------
PERFORMANCE AND OTHER SELECTED RATIOS:
Return on Average Assets 0.88% 1.05% 0.93% 1.01%
Return on Average Stockholders' Equity 10.21% 10.58% 10.36% 9.65%
Core Return on Average Stockholders' Equity 10.18% 9.61% 9.95% 8.96%
Average Interest Rate Spread <F2> 2.49% 2.42% 2.58% 2.54%
Net Interest Margin <F2> 2.79% 2.92% 2.90% 3.04%
Non-interest Expense to Average Assets <F3> 1.25% 1.45% 1.29% 1.46%
Efficiency Ratio <F3> 41.64% 45.03% 41.11% 44.92%
Effective Tax Rate <F4> 40.85% 39.62% 41.85% 41.67%
Tangible Equity to Total Tangible Assets 6.41% 8.48% 6.41% 8.48%
Loans/Earning Assets 69.48% 61.89% 69.48% 61.89%
Loans/Deposits 131.07% 106.62% 131.07% 106.62%
CASH EARNINGS DATA:
Cash Earnings $7,837 $6,446 $15,886 $12,161
Cash Return on Average Assets 1.28% 1.45% 1.35% 1.42%
Cash Return on Average Stockholders' Equity 14.77% 14.55% 14.99% 13.53%
Core Cash Return on Average Stockholders' Equity 14.74% 13.59% 14.58% 12.84%
Cash Non-interest Expense to Average Assets <F5> 1.08% 1.19% 1.10% 1.20%
Cash Efficiency Ratio <F5> 35.87% 36.96% 35.18% 36.73%
PER SHARE DATA:
Reported EPS (Diluted) $0.45 $0.42 $0.90 $0.77
Core EPS (Diluted) 0.45 0.38 0.87 0.75
Cash EPS (Diluted) 0.65 0.58 1.31 1.08
Core Cash EPS (Diluted) 0.65 0.54 1.27 1.02
Stated Book Value 16.97 15.42 16.97 15.42
Tangible Book Value 12.07 13.31 12.07 13.31
BALANCE SHEET AVERAGES:
Average Loans 1,541,466 1,054,953 1,482,239 1,021,666
Average Assets 2,451,779 1,780,701 2,357,743 1,718,490
Average Earning Assets 2,296,632 1,709,344 2,212,355 1,648,776
Average Deposits 1,220,728 1,023,689 1,228,892 1,027,024
Average Equity 212,205 177,184 211,919 179,728
Average Tangible Equity 149,292 151,842 147,860 153,584
ASSET QUALITY SUMMARY:
Net charge-offs $464 $5 $512 $149
Nonperforming Loans 2,967 1,327 2,967 1,327
Nonperforming Assets/Total Assets 0.17% 0.10% 0.17% 0.10%
Allowance for Loan Loss/Total Loans 0.93% 1.10% 0.93% 1.10%
Allowance for Loan Loss/Nonperforming Loans 495.08% 907.76% 495.08% 907.76%
<FN>
<F1>Core earnings for all periods exclude gains and losses on sales of assets, and
other significant non-recurring income or expense items. Cash earnings
for all periods exclude non-cash expenses related to goodwill and core
deposit intangible amortization and compensation expense related to stock
benefit plans.
<F2>Interest expense for the three months and six months ended December 31,
1998 include $618,000 of prepayment penalties on borrowings. Excluding
these penalties, the net interest rate spread and net interest margin would
have been 2.58% and 3.07%, respectively, for the three months ended
December 31, 1998 and 2.63% and 3.12%, respectively for the six months
ended December 31, 1998.
<F3> In calculating these ratios, non-interest expense excludes goodwill
amortization. The actual efficiency ratio and ratio of non-interest
expense to average assets were 49.04% and 1.47%, respectively, for the
three months ended December 31, 1999, 49.21% and 1.59%, respectively, for
the three months ended December 31, 1998, 48.48% and 1.52%, respectively,
for the six months ended December 31, 1999, and 49.22% and 1.60%,
respectively, for the six months ended December 31, 1998.
<F4>Excluding non-recurring New York State and New York City deferred income
tax recoveries, the effective tax rate was 42.8% and 42.5%, respectively,
during the three months and six months ended December 31, 1998.
<F5>In calculating these ratios, non-interest expense excludes non-cash
expenses related to goodwill and core deposit intangible amortization and
amortization costs related to stock benefit plans.
-10-
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of funds are deposits, proceeds from principal and
interest payments on loans, mortgage-backed securities and investments,
borrowings, and, to a lesser extent, proceeds from the sale of fixed-rate
mortgage loans to the secondary mortgage market. While maturities and scheduled
amortization of loans and investments are a predictable source of funds,
deposit flows, mortgage prepayments and mortgage loan sales are influenced by
interest rates, economic conditions and competition.
Our primary investing activities are the origination of multi-family and
single-family mortgage loans, and the purchase of mortgage-backed and other
securities. During the six months ended December 30, 1999, our loan
originations totaled $296.7 million compared to $258.9 million for the six
months ended December 31, 1998. Purchases of mortgage-backed and other
securities totaled $143.5 million for the six months ended December 31, 1999
compared to $175.6 million for the three months ended December 31, 1998. The
decline in security purchases resulted from a reduction in securities acquired
in conjunction with the Bank's capital leverage strategy during the six months
ended December 31, 1999, which can be attributed to a reduction in the
potential interest rate spread to be earned on capital leverage transactions
during this period resulting from increased interest rates on borrowed funds.
Funding for loan originations and security purchases was obtained primarily
from principal repayments on loans and mortgage-backed securities, maturities
of investment securities, and borrowings by means of repurchase agreements and
Federal Home Loan Bank of New York (referred to as the FHLBNY) advances.
Principal repayments on real estate loans and mortgage-backed securities
totaled $150.3 million during the six months ended December 31, 1999, compared
to $193.7 million for the six months ended December 31, 1998. Maturities and
calls of investment securities totaled $142.9 million during the six months
ended December 31, 1999, and $43.9 million during the six months ended December
31, 1998. The increased purchase of short-term investments during the six
months ended December 31, 1999, resulted in an overall increase in securities
maturities compared to the prior year. Loan sales, which totaled $1.2 million
during the six months ended December 31, 1999 and $2.9 million during the six
months ended December 31, 1998, provided some additional cash flows. During
the quarter ended December 31, 1999, we received proceeds of $21.4 million on
sales of investment securities and $27.5 million on sales of mortgage-backed
securities. These sales were utilized primarily to generate additional
liquidity due to concerns surrounding the Year 2000.
Deposits decreased $42.3 million during the six months ended December 31,
1999, compared to a decrease of $14.4 million during the six months ended
December 31, 1998. The decrease in deposits during the six months ended
December 31, 1999, primarily reflects the sale of $19.0 million of deposits
formerly housed at our Gates Avenue, Brooklyn branch in November, 1999. The
deposit decline during the six months ended December 31, 1999 also reflects
runoff of maturing higher cost certificates of deposits gathered during deposit
rate promotions which occurred and ended during the fiscal year ended June 30,
1998. Deposit flows are affected by the level of interest rates, the interest
rates and products offered by local competitors, and other factors.
Certificates of deposit which are scheduled to mature in one year or less from
December 31, 1999 totaled $429.2 million. Based upon our current pricing
strategy and deposit retention experience, management believes that a portion
of such deposits will remain with us. Net borrowings increased $221.5 million
during the six months ended December 31, 1999, and was comprised of an increase
of $285.0 million in FHLBNY advances, which were partially offset by a decline
of $63.5 million in securities sold under agreement to repurchase (referred to
as Repo) agreements.
Stockholders' equity decreased $347,000 during the six months ended December
31, 1999. This decrease resulted primarily from repurchases of common stock
into treasury of $6.5 million, cash dividends paid of $3.8 million during the
period and an increase in the accumulated other comprehensive loss of $2.4
million related to the decline in market value of investment and mortgage
backed securities available for sale. Offsetting these decreases, was net
income of $11.0 million and stock benefit plan amortization of $2.2 million
during the six months ended December 31, 1999.
-11-
On October 14, 1999, we declared a cash dividend of $0.17 per common share
to all shareholders of record on October 29, 1999. This dividend was paid on
November 9, 1999. On January 20, 2000, we declared a cash dividend of $0.17 per
common share to all shareholders of record on January 25, 2000. This dividend
was paid on February 9, 2000.
The Bank is required to maintain a minimum average daily balance of liquid
assets as a percentage of net withdrawable deposit accounts plus short-term
borrowings by the Office of Thrift Supervision (referred to as the OTS)
regulations. The minimum required liquidity ratio is currently 4.0%. At
December 31, 1999, the Bank's liquidity ratio was 17.1%. At December 31, 1999,
the actual ratio was significantly higher than the minimum required ratio due
primarily to an increase in short-term securities (comprised of federal funds
sold and commercial paper investments) attributable to concerns with possible
increased deposit outflows resulting from concerns over the Year 2000. The
levels of the Bank's short-term liquid assets are dependent on the Bank's
operating, financing and investing activities during any given period.
We monitor our liquidity position on a daily basis. Excess short-term
liquidity is invested in overnight federal funds sales and various money market
investments. In the event that we should require funds beyond our ability to
generate them internally, additional sources of funds are available through the
use of our $706.5 million borrowing limit at the FHLBNY. At December 31, 1999,
we had $535.0 million in short- and medium-term advances outstanding at the
FHLBNY, and a remaining borrowing limit of $171.5 million.
The Bank is subject to minimum capital regulatory requirements imposed by
the OTS, which requirements are, as a general matter, based on the amount and
composition of an institution's assets. At December 31, 1999, the Bank was in
compliance with all applicable regulatory capital requirements. Tangible
capital totaled $129.8 million, or 5.66% of total tangible assets, compared to
a 1.50% regulatory requirement; leverage capital, at 5.66% of adjusted assets,
exceeded the 3.0% regulatory minimum, and total risk-based capital, at 10.73%
of risk weighted assets, exceeded the 8.0% regulatory minimum. In addition, at
December 31, 1999, the Bank was considered "well-capitalized" for all
regulatory purposes.
ASSET QUALITY
Non-performing loans (loans past due 90 days or more as to principal or
interest) totaled $3.0 million at December 31, 1999, virtually flat compared to
June 30, 1999. In addition, the Bank had 18 loans totaling $1.4 million
delinquent 60-89 days at December 31, 1999, as compared to 23 such delinquent
loans totaling $819,000 at June 30, 1999. The majority of the non-performing
loans and loans delinquent 60-89 are represented by FHA/VA mortgage and
consumer loans which possess small outstanding balances.
Under Generally Accepted Accounting Priciples (referred to as GAAP), we are
required to account for certain loan modifications or restructurings as
''troubled-debt restructurings.'' In general, our modification or restructuring
as a result of economic or legal issues associated with the borrower's
financial difficulties constitutes a troubled-debt restructuring when we grant
a concession to the borrower that we would not otherwise consider. We had one
loan classified as a troubled-debt restructuring at December 31, 1999, totaling
$700,000, compared to two such loans totaling $1.3 million at June 30, 1999.
The one troubled-debt restructuring as of December 31, 1999, is performing in
accordance with its restructured terms. During the six months ended December
31, 1999, one troubled-debt restructuring with an outstanding principal balance
of $590,000, was paid-in-full.
Under GAAP, we established guidelines for determining and measuring
impairment in loans. For loans determined to be impaired, if the carrying
balance of the loan, including all accrued interest, exceeds the estimate of
fair value, a reserve is established. The recorded investment in loans deemed
impaired was approximately $1.1 million as of December 31, 1999, compared to
$1.6 million at June 30, 1999, and the
-12-
average balance of impaired loans was
$1.3 million for the six months ended December 31, 1999 compared to $2.5
million for the six months ended December 31, 1998. The impaired portion of
these loans is represented by specific reserves totaling $25,000 allocated
within the allowance for loan losses at December 31, 1999. At December 31,
1999, reserves have been provided on all impaired loans. Generally, we
consider non-performing loans to be impaired loans. At December 31, 1999,
approximately $1.8 million of one-to-four family, cooperative apartment and
consumer loans on nonaccrual status are not deemed impaired. Each of these
loans has an outstanding balances less than $227,000, and are considered a
homogeneous loan pool which are not required to be evaluated for impairment.
During the six months ended December 31, 1999, we did not incur any charge-offs
related to loans deemed impaired, as all of the charge-offs recorded during
this period have related to one- to four-family, cooperative apartment or
consumer loans which are deemed as homogeneous loan pools under GAAP. A
significant portion of these charge-offs relate to one- to four-family loans
acquired from FIBC.
The balance of other real estate owned (referred to as OREO) was $1.2
million, consisting of 11 properties, at December 31, 1999 compared to
$866,000, consisting of 9 properties, at June 30, 1999. During the six months
ended December 31, 1999, one multi-family loan approximating $315,000 and two
cooperative unit apartment loans totaling approximately $97,000 were
transferred to OREO. Offsetting these additions, were OREO disposals of $98,000
in one-to four-family residential properties during the six months ended
December 31, 1999. The allowance for losses on OREO was $149,000 at December
31, 1999.
The following table sets forth information regarding our non-performing
loans, non-performing assets, impaired loans and troubled-debt restructurings
at the dates indicated.
-13-
AT DECEMBER 31, AT JUNE 30,
1999 1999
------------------- ---------------
(Dollars In Thousands)
NON-PERFORMING LOANS:
One- to four-family $1,668 $1,577
Multi-family and underlying cooperative 1,149 1,248
Non-residential - -
Cooperative apartment 69 133
Other loans 81 43
------------------ ---------------
TOTAL NON-PERFORMING LOANS 2,967 3,001
TOTAL OREO 1,180 866
------------------ ---------------
TOTAL NON-PERFORMING ASSETS $4,147 $3,867
================== ===============
TROUBLED-DEBT RESTRUCTURINGS $700 $1,290
TOTAL NON-PERFORMING ASSETS AND TROUBLED-DEBT
RESTRUCTURINGS 4,847 5,157
IMPAIRED LOANS 1,149 1,563
TOTAL NON-PERFORMING LOANS TO TOTAL LOANS 0.19% 0.22%
TOTAL IMPAIRED LOANS TO TOTAL LOANS 0.07 0.11
TOTAL NON-PERFORMING ASSETS TO TOTAL ASSETS 0.17 0.17
TOTAL NON-PERFORMING ASSETS AND TROUBLED-DEBT
RESTRUCTURINGS TO TOTAL ASSETS 0.20 0.23
Comparison of Financial Condition at December 31, 1999 and June 30, 1999
ASSETS. Our assets totaled $2.41 billion at December 31, 1999, an increase
of $158.9 million from total assets of $2.25 billion at June 30, 1999. The
growth in assets was experienced primarily in real estate loans which increased
$196.1 million since June 30, 1999. The increase in real estate loans resulted
primarily from originations of $296.7 million during the six months ended
December 31, 1999, of which $284.8 million were multi-family and underlying
cooperative loans.
Offsetting the increase in real estate loans was an aggregate decline of
$86.6 million in investment and mortgage-backed securities available for sale,
of which $64.1 million was experienced in mortgage-backed securities available-
for-sale. The decline in available for sale securities reflects both the sale
of $22.2 million of investment securities and $28.4 million of mortgage-backed
securities available for sale during the six months ended December 31, 1999.
These sales were utilized in order to generate additional liquidity resulting
from concerns with possible increased deposit outflows attributable to concerns
over the Year 2000. See "Liquidity and Capital Resources." Additionally, the
decline in mortgage-backed securities available for sale reflects the reduced
level of purchase activity for such securities during the six months
-14-
ended December 31, 1999, as we reduced our capital leverage transaction level
during this period. See "Capital Leverage Strategy."
LIABILITIES. Deposits decreased $42.3 million to $1.20 billion at December
31, 1999 from $1.25 billion at June 30, 1999 due to both the sale of $19.0
million in deposits formerly housed at our Gates Avenue, Brooklyn branch in
November, 1999, and the cessation of a deposit rate promotion that we
maintained from July, 1997 to June, 1998. FHLBNY advances increased $285.0
million during the quarter, and these funds were utilized primarily to replace
deposit outflows and fund loan originations. Repos declined $63.5 million
during the six months ended December 31, 1999, due to our decreased capital
leverage activity during the period.
STOCKHOLDERS' EQUITY. Stockholders' equity decreased $347,000 during the six
months ended December 31, 1999. This decrease resulted primarily from
repurchases of common stock into treasury of $6.5 million, cash dividends paid
of $3.8 million during the period and an increase in the accumulated other
comprehensive loss of $2.4 million related to the decline in market value of
investment and mortgage backed securities available for sale. Offsetting these
decreases, was net income of $11.0 million and stock benefit plan amortization
of $2.2 million during the six months ended December 31, 1999.
CAPITAL LEVERAGE STRATEGY. As a result of the initial public offering in
June, 1996, our capital level significantly exceeded all regulatory
requirements. A portion of the "excess" capital generated by the initial
public offering has been deployed through the use of a capital leverage
strategy whereby we invest in high quality mortgage-backed securities (referred
to as leverage assets) funded by short term borrowings from various third party
lenders under securities sold under agreement to repurchase transactions. The
capital leverage strategy generates additional earnings for us by virtue of a
positive interest rate spread between the yield on the leverage assets and the
cost of the borrowings. Since the average term to maturity of the leverage
assets exceeds that of the borrowings used to fund their purchase, the net
interest income earned on the leverage strategy would be expected to decline in
a rising interest rate environment. See "Market Risk." To date, the capital
leverage strategy has been undertaken in accordance with limits established by
our Board of Directors, aimed at enhancing profitability under moderate levels
of interest rate exposure. During the six months ended December 31, 1999, we
undertook little new activity related to the capital leverage strategy due to
both unfavorable interest rate spreads on new transactions available during
this period, and the reduced need to leverage the Bank's capital, as its
overall capital percentage continues to decline. As a result of the reduced
activity in the capital leverage strategy during the three months ended
December 31, 1999, our balance of mortgage-backed securities available for sale
declined $64.1 million during this period as sales and paydowns on these
securities exceeded new purchases.
COMPARISON OF THE OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31,
1999 AND 1998
GENERAL. Net income increased $731,000, to $5.4 million for the three months
ended December 31, 1999, compared to $4.7 million for the three months ended
December 31, 1998. The increase in net income resulted from increases of $3.6
million in net interest income, which was offset, in part, by a decrease of
$218,000 in non-interest income, and increases of $1.9 million in non-interest
expense and $667,000 in income tax expense, respectively.
NET INTEREST INCOME. The discussion of net interest income for the three
months ended December 31, 1999 and 1998, presented below, should be read in
conjunction with the following table, which sets forth certain information
relating to our consolidated statements of operations for the three months
ended December 31, 1999 and 1998, and reflects the average yield on assets and
average cost of liabilities for the periods indicated. Such yields and costs
are derived by dividing income or expense by the average balance of assets or
liabilities, respectively, for the periods shown. Average balances are derived
from average daily balances. The yields and costs include fees which are
considered adjustments to yields.
-15-
FOR THE THREE MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1999 1998
--------------------------------------------------------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------- --------- --------- --------- -------- --------
(DOLLARS IN THOUSANDS)
Assets:
Interest-earning assets:
Real Estate Loans <F1> $1,533,984 $29,093 7.59% $1,049,096 $20,886 7.96%
Other loans 7,482 161 8.61 5,857 126 8.61
MORTGAGE-BACKED SECURITIES <F2> 472,838 7,610 6.44 464,429 7,208 6.21
INVESTMENT SECURITIES <F2> 150,379 2,559 6.30 156,189 2,458 6.29
FEDERAL FUNDS SOLD 131,949 1,783 5.41 33,773 397 4.70
----------- --------- --------- --------
TOTAL INTEREST-EARNING ASSETS 2,296,632 $41,206 7.18% 1,709,344 $31,075 7.27%
----------- ========= --------- ========
NON-INTEREST EARNING ASSETS 155,147 71,357
----------- ---------
TOTAL ASSETS $2,451,779 $1,780,701
=========== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
INTEREST-BEARING LIABILITIES:
NOW, SUPER NOW AND
MONEY MARKET ACCOUNTS $110,313 $967 3.48% $49,879 $297 2.36%
SAVINGS ACCOUNTS 393,292 2,022 2.04 341,004 1,812 2.11
CERTIFICATES OF DEPOSIT 644,213 8,141 5.01 596,877 8,353 5.55
BORROWED FUNDS <F3> 981,257 14,039 5.68 533,426 8,127 6.04
----------- --------- --------- --------
TOTAL INTEREST-BEARING
LIABILITIES 2,129,075 $25,169 4.69% 1,521,186 $18,589 4.85%
----------- ========= --------- ========
CHECKING ACCOUNTS 72,910 41,019
OTHER NON-INTEREST-BEARING
LIABILITIES 37,589 41,312
----------- ---------
TOTAL LIABILITIES 2,239,574 1,603,517
STOCKHOLDERS' EQUITY 212,205 177,184
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,451,779 $1,780,701
=========== =========
NET INTEREST INCOME/ INTEREST RATE
SPREAD<F4> $16,037 2.49% $12,486 2.42%
========= ========
NET INTEREST-EARNING ASSETS/NET
INTEREST MARGIN <F5> $167,557 2.79% $188,158 2.92%
=========== =========
RATIO OF INTEREST-EARNING ASSETS
TO INTEREST-BEARING LIABILITIES 107.87% 112.37%
<FN>
<F1>In computing the average balance of loans, non-accrual loans have been
included.
<F2>Includes securities classified "held to maturity" and "available for sale."
<F3>In calculating the average cost of borrowed funds for the three months
ended December 31, 1998, a non-recurring prepayment penalty of $618,000 is
included in interest expense. Excluding the effect of this prepayment
penalty, the average cost of borrowings would have been 5.58% for the three
months ended December 31, 1998.
<F4>Net interest rate spread represents the difference between the average rate
on interest-earning assets and the average cost of interest-bearing
liabilities.
<F5>Net interest margin represents net interest income as a percentage of
average interest-earning assets.
-16-
RATE/VOLUME ANALYSIS
THREE MONTHS ENDED
DECEMBER 31, 1999
COMPARED TO
THREE MONTHS ENDED
DECEMBER 31, 1998
INCREASE/ (DECREASE)
DUE TO
VOLUME RATE TOTAL
-------------- ------------ ------------
Interest-earning assets: (DOLLARS IN THOUSANDS)
Real Estate Loans $9,415 $(1,208) $8,207
Other loans 35 - 35
Mortgage-backed securities 133 269 402
Investment securities 3 98 101
Federal funds sold 1,240 146 1,386
-------------- ------------ ------------
Total $10,826 $(695) $10,131
============== ============ ============
Interest-bearing liabilities:
NOW, Super Now and money market accounts $444 $226 $670
Savings accounts 274 (64) 210
Certificates of deposit 631 (843) (212)
Borrowed funds 6,610 (698) 5,912
-------------- ------------ ------------
Total 7,959 (1,379) 6,580
-------------- ------------ ------------
Net change in net interest income $2,867 $684 $3,551
============== ============ ============
Net interest income for the three months ended December 31, 1999
increased $3.6 million to $16.1 million from $12.5 million during the
three months ended December 31, 1998. The increase was attributable
primarily to an increase of $587.3 million in average interest-earning
assets, coupled with an increase of 7 basis points in average interest
spread. Despite the increase in interest rate spread, the net interest
margin declined 13 basis points from 2.92% for the three months ended
December 31, 1998 to 2.79% for the three months ended December 31,
1999.
The increase in interest rate spread resulted primarily from a 16
basis point reduction in the average cost of interest bearing
liabilities, resulting primarily from reduced rates on certificates of
deposit, due to the cessation of interest rate promotions on
certificate accounts offered during the fiscal year ended June 30,
1998. In addition, the increase in interest rate spread reflects the
shift in the overall percentage of interest earning assets from
investment and mortgage-backed securities into real estate loans.
Despite their recent declines in average yield, real estate loans still
earn a higher average yield than either investment or mortgage-backed
securities. The narrowing of the interest rate margin reflects the
reduction from 112.37% to 107.87% in the ratio of interest earning
assets to interest bearing liabilities, resulting from a reduced
percentage of non-interest bearing liabilities and stockholders equity
to total liabilities and stockholders equity. The narrowing interest
rate margin also reflects, in part, our continued capital leverage
strategy activities over the past twelve months, as the interest rate
differential between assets and underlying liabilities under the
capital leverage strategy are significantly less than the interest rate
differential between our other interest-earning assets and interest-
bearing liabilities.
-17-
INTEREST INCOME. Interest income for the three months ended
December 31, 1999, was $41.2 million, an increase of $10.1 million from
$31.1 million during the three months ended December 31, 1998. The
increase in interest income was primarily attributable to increased
interest income on real estate loans of $8.2 million and on short-term
investments (commercial paper and federal funds sold) of $1.4 million.
The increase in interest income on real estate loans was attributable
primarily to an increase of $484.9 million in the average balance of
real estate loans, resulting from both $512.4 million of real estate
loans originated during the twelve-month period ended December 31,
1999, and $192.3 million of real estate loans acquired in connection
with the acquisition of Financial Bancorp, Inc., and its wholly-owned
subsidiary, Financial Federal Savings Bank, referred to as the FIBC
acquisition. The FIBC acquisition was completed on January 21, 1999.
The increase in interest income on short-term securities (comprised of
federal funds sold and commercial paper investments) was also
attributable primarily to an increase in the average balance of $98.2
million, resulting from securities purchased during the three months
ended December 31, 1999, in order to maintain added liquidity related
to concerns with possible increased deposit outflows resulting from
consumer concerns over the Year 2000. The average yield on short-term
investments increased 71 basis points due to recent general increases
in short-term interest rates. Overall, the yield on interest-earning
assets decreased 9 basis points from 7.27% during the three months
ended December 31, 1998 to 7.18% during the three months ended December
31, 1999. The decline was attributable primarily to a decrease of 37
basis points in the average yield on real estate loans resulting
primarily from continued competition in the real estate lending market
and the continued flat yield curve environment during much of the past
twelve months. While overall interest rates recently have increased,
their effect upon the overall yield on real estate loans was minimal
during the quarter ended December 31, 1999, since real estate loans, on
average, have a longer term to repricing than our other interest-
earning assets. The effects of these increases in rates will be
recognized in upcoming quarters. The increase in interest rates was
reflected in the average yield of mortgage-backed securities and short-
term investments, whose average yield increased by 23 basis points and
71 basis points respectively.
INTEREST EXPENSE. Interest expense increased $6.6 million, to $25.2
million during the three months ended December 31, 1999, from $18.6
million during the three months ended December 31, 1998. This increase
resulted primarily from increased interest expense of $5.9 million on
borrowed funds, which resulted from an increase in the average balance
of $447.8 million during the three months ended December 31, 1999
compared to the three months ended December 31, 1998. The increase in
the average balance of borrowed funds resulted from $66.1 million of
borrowed funds added during the twelve-month period ended December 31,
1999, under the capital leverage strategy, and growth of $307.5 million
in FHLBNY advances during the period January 1, 1999 to December 31,
1999. The FHLBNY advances are generally medium-term interest-bearing
liabilities, which are utilized to fund loan originations and replace
deposit outflows. The average cost of interest-bearing liabilities
decreased 16 basis points to 4.69% during the three months ended
December 31, 1999, from 4.85% during the three months ended December
31, 1998, reflecting the decline in the average cost of certificates of
deposit and borrowed funds of 54 basis points and 36 basis points,
respectively. The decline in the average cost of borrowed funds
resulted from a non-recurring charge of $618,000 recorded in borrowing
expense during the quarter ended December 31, 1998 related to
prepayment of certain borrowings. Excluding this charge, the average
cost of borrowings would have increased by 10 basis points from the
quarter ended December 31, 1998, due to recent increases in general
interest rates, and a shift in borrowings towards FHLBNY advances,
which possess longer periods to maturity than Repo borrowings. The
reduction in the average cost of certificates of deposit resulted from
the cessation of deposit rate promotions that we maintained from July
1997 to June 1998. While the decline in the average cost of
certificates of deposits and borrowed funds helped reduce the average
cost of interest-bearing liabilities during the three months ended
December 31, 1999, their respective average balance increases of $47.3
million and $447.8 million offset, in part, that decrease.
PROVISION FOR LOAN LOSSES. The provision for loan losses was
$60,000 during both the three months ended December 31, 1999 and 1998,
reflecting the continued stability of non-performing loans and charge-
offs. The allowance for loan losses declined $404,000 during the three
months ended December 31,
-18-
1999, as net charge-offs of $464,000 exceeded
the provision of $60,000 during the period. Of the total net charge-
offs during the quarter ended December 31, 1999, $454,000 related to a
loan pool participation investment acquired from FIBC. Upon
consummating the FIBC acquisition, we provided reserves within its
overall loan loss allowance to cover this potential loss on the loan
pool investment. After attempting to recover this portion of the total
investment, we recently determined that it would not be collectible and
should be charged-off. No additional significant delinquencies related
to the loan pool investment were noted prior to the consummation of the
FIBC acquisition, nor have any additional potential losses been noted
on this investment since we assumed its ownership.
NON-INTEREST INCOME. Non-interest income decreased $218,000 to $2.2
million during the three months ended December 31, 1999, from $2.4
million during the three months ended December 31, 1998. The decline
resulted primarily from sales of investment and mortgage-backed
securities, which resulted in a net loss of $145,000 during the quarter
ended December 31, 1999, compared to a net gain of $510,000 during the
quarter ended December 31, 1998. See "Liquidity and Capital
Resources." Service charges and fees increased $545,000 due primarily
to increased service fees and charges on deposits of $355,000,
resulting primarily from adjustments in our deposit fee and service
charges and the addition of the five branches acquired from FIBC.
Other income decreased $99,000 due to a decline in prepayment penalty
income resulting from recent interest rate increases. This decline was
partially offset by increased income from FHLBNY capital stock of
$342,000, due to an increase in the balance of FHLBNY capital stock
from $21.8 million at December 31, 1998 to $41.5 million at December
31, 1999. The increase in the average balance of FHLBNY capital stock
resulted from our increased borrowings with the FHLBNY during this
period.
NON-INTEREST EXPENSE. Non-interest expense increased $1.9 million,
from $7.1 million during the three months ended December 31, 1998, to
$9.0 million during the three months ended December 31, 1999. The
increase in non-interest expense reflects increases of $530,000 related
to salaries and benefits expense, $283,000 related to occupancy and
equipment expense, $98,000 related to data processing costs, $552,000
related to goodwill amortization, and $539,000 related to other
expenses.
A significant portion of the increase in salaries and benefits, and
occupancy and equipment expenses resulted from the addition of new
employees, property and equipment in the FIBC acquisition. The
remaining salary and benefit expense increase reflects base salary and
staff increases over the past twelve months.
Increased data processing costs of $98,000 resulted from additional
systems activity related to growth in both loan activity due to
originations over the past twelve months and deposit activity related
to the acquisition of the five branches from FIBC.
The increase in goodwill expense of $552,000 resulted from
additional goodwill of $44.2 million due to the FIBC acquisition. The
increase in other expenses resulted primarily from $206,000 in core
deposit premium amortization added in the FIBC acquisition, increased
supplies, postage and telephone expenses associated with operations of
the branches acquired from FIBC, and increased advertising expenses
associated with recent customer promotions.
INCOME TAX EXPENSE. Income tax expense increased $667,000, or 22%, during
the quarter ended December 31, 1999 compared to the quarter ended December 31,
1998, due primarily to the increase of $1.4 million, or 18%, in pre-tax income
during the same period. Our effective tax rate increased slightly from 39.7%
to 40.9% during this period due to a non-recurring income tax recovery of
$350,000 recorded during the quarter ended December 31, 1998. Excluding this
recovery, the effective tax rate would have been 44.1% during the quarter
ended December 31, 1998. The decline in effective tax rate from 44.1% to
40.9% in the most recent quarter reflects additional tax benefits associated
with activities of subsidiary companies.
-19-
COMPARISON OF THE OPERATING RESULTS FOR THE SIX MONTHS ENDED DECEMBER
31, 1999 AND 1998
GENERAL. Net income increased $2.3 million, to $11.0 million for the
six months ended December 31, 1999, compared to $8.7 million for the
six months ended December 31, 1998. The increase in net income
resulted from increases of $7.0 million in net interest income and $1.2
million in non-interest income, which increases were partially offset
by increases of $4.1 million in non-interest expense and $1.7 million
in income tax expense.
NET INTEREST INCOME. The discussion of net interest income for the
six months ended December 31, 1999 and 1998, presented below, should be
read in conjunction with the following table, which sets forth certain
information relating to our consolidated statements of operations for
the six months ended December 30, 1999 and 1998, and reflects the
average yield on assets and average cost of liabilities for the periods
indicated. Such yields and costs are derived by dividing income or
expense by the average balance of assets or liabilities, respectively,
for the periods shown. Average balances are derived from average daily
balances. The yields and costs include fees which are considered
adjustments to yields.
-20-
FOR THE SIX MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1999 1998
--------------------------------------------------------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------- --------- --------- --------- -------- --------
(DOLLARS IN THOUSANDS)
Assets:
Interest-earning assets:
Real Estate Loans <F1> $1,474,700 $56,096 7.61% $1,015,970 $40,815 8.03%
Other loans 7,539 310 8.22 5,696 253 8.88
MORTGAGE-BACKED SECURITIES <F2> 494,109 15,709 6.36 442,282 14,060 6.36
INVESTMENT SECURITIES <F2> 161,317 5,144 6.22 157,567 4,857 6.16
FEDERAL FUNDS SOLD 74,690 2,002 5.36 27,261 673 4.94
----------- --------- --------- --------
TOTAL INTEREST-EARNING ASSETS 2,212,355 $79,261 7.17% 1,684,776 $60,658 7.36%
----------- ========= --------- ========
NON-INTEREST EARNING ASSETS 145,388 69,714
----------- ---------
TOTAL ASSETS $2,357,743 $1,718,490
=========== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY:
INTEREST-BEARING LIABILITIES:
NOW, SUPER NOW AND
MONEY MARKET ACCOUNTS $96,877 $1,557 3.19% $49,840 $589 2.34%
SAVINGS ACCOUNTS 400,814 4,120 2.04 341,860 3,758 2.18
CERTIFICATES OF DEPOSIT 660,060 16,677 5.01 600,753 16,995 5.61
BORROWED FUNDS <F3> 884,918 24,864 5.57 472,598 14,230 5.97
----------- --------- --------- --------
TOTAL INTEREST-BEARING
LIABILITIES 2,042,669 $47,218 4.59% 1,465,051 $35,572 4.82%
----------- ========= --------- ========
CHECKING ACCOUNTS 71,141 39,428
OTHER NON-INTEREST-BEARING
LIABILITIES 32,014 34,282
----------- ---------
TOTAL LIABILITIES 2,145,824 1,538,761
STOCKHOLDERS' EQUITY 211,919 179,728
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,357,743 $1,718,489
=========== =========
NET INTEREST INCOME/ INTEREST RATE
SPREAD<F4> $32,043 2.58% $25,086 2.54%
========= ========
NET INTEREST-EARNING ASSETS/NET
INTEREST MARGIN <F5> $169,686 2.90% $183,725 3.04%
=========== =========
RATIO OF INTEREST-EARNING ASSETS
TO INTEREST-BEARING LIABILITIES 108.31% 112.54%
<FN>
<F1>In computing the average balance of loans, non-accrual loans have been
included.
<F2>Includes securities classified as "held to maturity" and "available for
sale."
<F3>In calculating the average cost of borrowed funds for the six months ended
December 31, 1998, a non-recurring prepayment penalty of $618,000 is
included in interest expense. Excluding the effect of this prepayment
penalty, the average cost of borrowings would have been 5.84% for the six
months ended December 31, 1998.
<F4>Net interest rate spread represents the difference between the average
rate on interest-earning assets and the average cost of interest-bearing
liabilities.
<F5>Net interest margin represents net interest income as a percentage of
average interest-earning assets.
-21-
RATE/VOLUME ANALYSIS
SIX MONTHS ENDED
DECEMBER 31, 1999
COMPARED TO
SIX MONTHS ENDED
DECEMBER 31, 1998
INCREASE/ (DECREASE)
DUE TO
VOLUME RATE TOTAL
-------------- ------------ -------------
Interest-earning assets: (DOLLARS IN THOUSANDS)
Real Estate Loans $17,922 $(2,641) $15,281
Other loans 79 (22) 57
Mortgage-backed securities 1,648 1 1,649
Investment securities 178 109 287
Federal funds sold 1,221 108 1,329
-------------- ------------ -------------
Total $21,048 $(2,445) $18,603
============== ============ =============
Interest-bearing liabilities:
NOW, Super Now and money market accounts $655 $313 $968
Savings accounts 626 (264) 362
Certificates of deposit 1,589 (1,907) (318)
Borrowed funds 12,001 (1,367) 10,634
-------------- ------------ -------------
Total 14,871 (3,225) 11,646
-------------- ------------ -------------
Net change in net interest income $6,177 $780 $6,957
============== ============ =============
Net interest income for the six months ended December 31,
1999 increased $7.0 million to $32.1 million from $25.1 million
during the six months ended December 31, 1998. The increase was
attributable primarily to an increase of $563.6 million in
average interest-earning assets, coupled with an increase of 4
basis points in average interest rate spread. Despite the
increase in interest rate spread, the net interest margin
declined 15 basis points from 3.04% for the six months ended
December 31, 1998 to 2.90% for the six months ended December 31,
1999.
The increase in interest rate spread resulted primarily from
a 23 basis point reduction in the average cost of interest
bearing liabilities, resulting primarily from reduced rates on
certificates of deposit, due to the cessation of interest rate
promotions on certificate accounts offered during the fiscal
year ended June 30, 1998. In addition, the increase in interest
rate spread reflects the shift in the overall percentage of
interest earning assets from investment and mortgage-backed
securities into real estate loans. Despite their recent
declines in average yield, real estate loans still earn a higher
average yield than either investment or mortgage-backed
securities. The narrowing of the interest rate margin reflects
the reduction from 112.54% to 108.31% in the ratio of interest
earning assets to interest bearing liabilities, resulting from a
reduced percentage of non-interest bearing liabilities and
stockholders equity to total liabilities and stockholders
equity. The narrowing interest rate margin also reflects, in
part, our continued capital leverage strategy activities over
the past twelve months, as the interest rate differential
between assets and underlying liabilities under the capital
leverage strategy are significantly less than the interest rate
differential between our other interest-earning assets and
interest-bearing liabilities.
-22-
INTEREST INCOME. Interest income for the six months ended
December 31, 1999, was $79.3 million, an increase of $18.6
million from $60.7 million during the six months ended December
31, 1998. The increase in interest income was primarily
attributable to increased interest income on real estate loans
of $15.3 million, short-term investments (commercial paper and
federal funds sold) of $1.3 million, and mortgage-backed
securities of $1.6 million. The increase in interest income on
real estate loans was attributable primarily to an increase of
$458.7 million in the average balance of real estate loans,
resulting from both $512.4 million of real estate loans
originated during the twelve-month period ended December 31,
1999, and $192.3 million of real estate loans acquired in
connection with the FIBC acquisition. The FIBC acquisition was
completed on January 21, 1999. The increase in interest income
on short-term securities (comprised of federal funds sold and
commercial paper investments) was also attributable primarily to
an increase in the average balance of $47.4 million resulting
securities purchased during the six months ended December 31,
1999, in order to maintain added liquidity related to concerns
over the Year 2000. The average yield on short-term investments
increased 42 basis points due to recent general increases in
short-term interest rates. The increase in income on mortgage-
backed securities resulted from an increase in average balance
of $51.8 million in mortgage-backed securities, resulting from
the purchase of $145.5 million of mortgage-backed securities
during the period January 1, 1999 to December 31, 1999,virtually
all of which were purchased under our capital leverage strategy.
Overall, the yield on interest-earning assets decreased 19 basis
points from 7.36% during the six months ended December 31, 1998
to 7.17% during the six months ended December 31, 1999. The
decline was attributable primarily to a decrease of 42 basis
points in the average yield on real estate loans resulting
primarily from continued competition in the real estate lending
market and the continued flat yield curve environment during
much of the past twelve months. While overall interest rates
recently have increased, their effect upon the overall yield on
real estate loans was minimal during the six months ended
December 31, 1999, since real estate loans, on average, have a
longer term to repricing than our other interest-earning assets.
The effects of these increases in rates will be recognized in
upcoming quarters. The increase in interest rates was reflected
in the average yield of investment securities and short-term
investments, whose average yield increased by 6 basis points and
42 basis points, respectively.
INTEREST EXPENSE. Interest expense increased $11.6 million,
to $47.2 million during the six months ended December 31, 1999,
from $35.6 million during the six months ended December 31,
1998. This increase resulted primarily from increased interest
expense of $10.6 million on borrowed funds, which resulted from
an increase in the average balance of $412.3 million during the
six months ended December 31, 1999 compared to the six months
ended December 31, 1998. The increase in the average balance of
borrowed funds resulted from $66.1 million of borrowed funds
added during the twelve-month period ended December 31, 1999,
under the capital leverage strategy, and growth of $307.5
million in FHLBNY advances during the period January 1, 1999 to
December 31, 1999. The FHLBNY advances are generally medium-
term interest-bearing liabilities, which are utilized to fund
loan originations and replace deposit outflows. The average
cost of interest-bearing liabilities decreased 23 basis points
to 4.59% during the six months ended December 31, 1999, from
4.82% during the six months ended December 31, 1998, reflecting
the decline in the average cost of certificates of deposit and
borrowed funds of 60 basis points and 40 basis points,
respectively. The decline in the average cost of borrowed funds
resulted from a non-recurring charge of $618,000 recorded in
borrowing expense during the quarter ended December 31, 1998
related to prepayment of certain borrowings. Excluding this
charge, the average cost of borrowings would have decreased by
14 basis points from the six months ended December 31, 1998, due
to declines in general interest rates during the period January
1, 1999 to March 31, 1999. The reduction in the average cost of
certificates of deposit resulted from the cessation of deposit
rate promotions that we maintained from July 1997 to June 1998.
While the decline in the average cost of certificates of
deposits and borrowed funds helped reduce the average cost of
interest-bearing liabilities during the six months ended
December 31, 1999, their respective average balance increases of
$59.3 million and $412.3 million offset, in part, that decrease.
-23-
PROVISION FOR LOAN LOSSES. The provision for loan losses
was $120,000 during both the six months ended December 31, 1999
and 1998, reflecting the continued stability of non-performing
loans and charge-offs. The allowance for loan losses declined
$392,000 during the six months ended December 31, 1999, as net
charge-offs of $512,000 exceeded the provision of $60,000 during
the period. Of the total net charge-offs during the six months
ended December 31, 1999, $454,000 related to a loan pool
participation investment acquired from FIBC. Upon consummating
the FIBC acquisition, the Company provided reserves within our
overall loan loss allowance to cover this potential loss on the
loan pool investment. After attempting to recover this portion
of the total investment, we recently determined that it would
not be collectible and should be charged-off. No additional
significant delinquencies related to the loan pool investment
were noted prior to the consummation of the FIBC acquisition,
nor have any additional potential losses been noted on this
investment since we assumed its ownership.
NON-INTEREST INCOME. Non-interest income increased $1.2
million to $4.9 million during the six months ended December 31,
1999, from $3.7 million during the six months ended December 31,
1998. Service charges and fees increased $1.2 million due
primarily to increased service fees and charges on deposits of
$675,000, resulting primarily from adjustments in our deposit
fees and service charges and the addition of the five branches
acquired from FIBC. Other income increased $1.0 million due to
an increase in prepayment penalty income of $191,000 related to
high prepayment activity during the September, 1999 quarter, and
increased income from FHLBNY capital stock of $666,000, due to
an increase in the balance of FHLBNY capital stock from $21.8
million at December 31, 1998 to $41.5 million at December 31,
1999. The increase in the average balance of FHLBNY capital
stock resulted from our increased borrowings with the FHLBNY
during this period.
Offsetting these increases was a decline in the net gain or
loss on sales of investment and mortgage-backed securities,
which resulted in a net loss of $14,000 during the six months
ended December 31, 1999, compared to a net gain of $754,000
during the six months ended December 31, 1998. The sales
transactions related to securities during the six months ended
December 31, 1998, which resulted in a gain, related to
disposals of equity investments which we felt were at attractive
sales values. The sales transactions involving securities
during the six months ended December 31, 1999, which resulted in
a loss, were made in order to generate additional liquidity
related to possible increased deposit outflows resulting from
consumer concerns over the Year 2000. See "Liquidity and
Capital Resources." The significant loss on the sale of
securities during the six months ended December 31, 1999, was
offset by a gain on the sale of deposits formerly housed at our
Gates Avenue, Brooklyn branch.
NON-INTEREST EXPENSE. Non-interest expense increased $4.1
million, from $13.8 million during the six months ended December
31, 1998, to $17.9 million during the six months ended December
31, 1999. The increase in non-interest expense reflects
increases of $1.2 million related to salaries and benefits
expense, $661,000 related to occupancy and equipment expense,
$219,000 related to data processing costs, $1.1 million related
to goodwill amortization, and $1.0 million related to other
expenses.
A significant portion of the increase in salaries and
benefits and occupancy and equipment expenses resulted from the
addition of new employees, property and equipment in the FIBC
acquisition. The remaining salary and benefit expense increase
reflects base salary and staff increases over the past twelve
months. The remaining increase in occupancy and equipment
expense reflects non-recurring real estate tax refunds of
$144,000 on branch properties which were recorded as a reduction
of occupancy and equipment expense during the quarter ended
September 30, 1998.
Increased data processing costs of $661,000 resulted from
additional systems activity related to growth in both loan
activity due to originations over the past twelve months and
deposit activity related to the acquisition of the five branches
from FIBC.
-24-
The increase in goodwill expense of $1.1 million resulted
from additional goodwill of $44.2 million due to the FIBC
acquisition. The increase in other expenses resulted primarily
from $412,000 in core deposit premium amortization added in the
FIBC acquisition, increased supplies, postage and telephone
expenses associated with operations of the branches acquired
from FIBC, and increased advertising expenses associated with
recent customer promotions.
INCOME TAX EXPENSE. Income tax expense increased $1.7 million, or
28%, during the six months ended December 31, 1999 compared to the six
months ended December 31, 1998, due primarily to the increase of $4.0
million, or 27%, in pre-tax income during the same period. Our
effective tax rate remained relatively constant during this period, as
a non-recurring income tax recovery of $350,000 recorded during the
six months ended December 31, 1998, was offset by additional tax
benefits realized during the six months ended December 31, 1999,
associated with activities of subsidiary companies.
THE YEAR 2000 COMPUTER ISSUE
Over the past several quarters, we had reported, on a regular
basis, concerns related to the "Year 2000 Computer Issue,"
which centered upon the inability of computer systems to
recognize the change into the year 2000. We did not experience
any significant interruptions in any computer operations related
to the Year 2000 Computer Concern. Our loan and deposit
functions were not effected by the change into the year 2000.
We estimate that total costs related to the Year 2000 Computer
Concern, from inception to date, did not exceed $100,000, and we
do not anticipate any additional costs to be incurred related to
this matter. Additionally, we did not encounter any significant
delays in loan payments from our borrowers due to difficulties
they may have encountered as a result of Year 2000 Computer
Concern.
IMPACT OF ENACTMENT OF THE GRAMM-LEACH-BLILEY ACT
On November 12, 1999, President Clinton signed the Gramm-
Leach Bliley Act, which among other things, establishes a
comprehensive framework to permit affiliations among commercial
banks, insurance companies and securities firms. Generally, the
new law (i) repeals the historical restrictions and eliminates
many federal and state law barriers to affiliations among banks
and securities firms, insurance companies and other financial
service providers, (ii) provides a uniform framework for the
activities of banks, savings institutions and their holding
companies, (iii) broadens the activities that may be conducted
by subsidiaries of national banks and state banks, (iv) provides
an enhanced framework for protecting the privacy of information
gathered by financial institutions regarding their customers and
consumers, (v) adopts a number of provisions related to the
capitalization, membership, corporate governance and other
measures designed to modernize the Federal Home Loan Bank
System, (vi) requires public disclosure of certain agreements
relating to funds expended in connection with an institution's
compliance with the Community Retirement Act, (vii) addresses a
variety of other legal and regulatory issues affecting both day-
to-day operations and long-term activities of financial
institutions, including the functional regulation of bank
securities and insurance activities.
The Act also restricts the powers of new unitary savings and
loan association holding companies. Unitary savings and loan
holding companies that are "grandfathered," I.E., unitary
savings and loan holding companies in existence or with
applications filed with the OTS on or before May 4, 1999, such
as the Company, retain their authority under the prior law. All
other unitary savings and loan holding companies are limited to
financially related activities permissible for bank holding
companies, as defined under the Act. The Act also prohibits
non-financial companies from acquiring grandfathered unitary
savings and loan association holding companies.
The Act also requires financial institutions to disclose, on
ATM machines, any non-customer fees and to disclose to their
customers upon the issuance of an ATM card any fees that may be
imposed by the
-25-
institutions on ATM users. For older ATMs, financial institutions
will have until December 31, 2004 to provide such notices.
Bank holding companies are permitted to engage in a wider
variety of financial activities than permitted under the prior
law, particularly with respect to insurance and securities
activities. In addition, in a change from the prior law, bank
holding companies are in a position to be owned, controlled or
acquired by any company engaged in financially related
activities.
The OTS has recently proposed regulations implementing the
privacy protection provisions of the Act. The proposed
regulations would require each financial institution to adopt
procedures to protect customers' and consumers' "nonpublic
personal information" by November 13, 2000. We would be
required to disclose our privacy policy, including identifying
with whom we share "nonpublic personal information," to
customers at the time of establishing the customer relationship
and annually thereafter. In addition, we would be required to
provide our customers with the ability to "opt-out" of having us
share their personal information with unaffiliated third
parties. We currently have a privacy protection policy in place
and intend to review and amend that policy, if necessary, for
compliance with the regulations when they are adopted in final
form.
The Act also provides for the ability of each state to enact
legislation that is more protective of consumers' personal
information. Currently, there are a number of privacy bills
pending in the New York Assembly. No action has been taken on
any of these bills, and we cannot predict what impact, if any,
these bills would have.
We do not believe that the new law will have a material
adverse affect upon our operations in the near term. However,
to the extent the new law permits banks, securities firms and
insurance companies to affiliate, the financial services
industry may experience further consolidation. This could
result in a growing number of larger financial institutions that
offer a wider variety of financial services than we currently
offer and that can aggressively compete in the markets we
currently serve.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
Quantitative and qualitative disclosure about market risk is
presented at June 30, 1999 in Exhibit 13.1 to our Annual Report
on Form 10-K, filed with the Securities and Exchange Commission
on September 28, 1999. There have been no material changes in
our market risk at December 31, 1999 compared to June 30, 1999.
The following is an update of the discussion provided therein:
GENERAL. Our largest component of market risk continues to be
interest rate risk. Virtually all of this risk continues to
reside at the Bank level. The Bank still is not subject to
foreign currency exchange or commodity price risk. At December
31, 1999, we owned no trading assets, nor did we utilize hedging
transactions such as interest rate swaps and caps.
ASSETS, DEPOSIT LIABILITIES AND WHOLESALE FUNDS. There has
been no material change in the composition of assets, deposit
liabilities or wholesale funds from June 30, 1999 to December
31, 1999.
GAP ANALYSIS. The one-year and five-year cumulative interest
sensitivity gap as a percentage of total assets still fall
within 2% of their levels at June 30, 1999 utilizing the same
assumptions as at June 30, 1999.
INTEREST RATE RISK COMPLIANCE. We continue to monitor the
impact of interest rate volatility upon net interest income and
net portfolio value in the same manner as at June 30, 1999.
There have been no changes in our board approved limits of
acceptable variance in net interest income and net portfolio value
-26-
at December 31, 1999 compared to June 30, 1999, and the
projected changes continue to fall within the board approved
limits at all levels of potential interest rate volatility.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are involved in various legal actions arising in the ordinary
course of its business which, in the aggregate, involve amounts
which are believed to be immaterial to our financial condition
and results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(l) Our Annual Meeting of Shareholders was held on November
10, 1999.
(m) Not applicable.
(c) The following is a summary of the matters voted upon at
the meeting and the votes obtained:
VOTES VOTES BROKER
DESCRIPTION VOTES FOR AGAINST ABSTENTIONS WITHHELD NON-VOTES
1) Election of the following
individuals as Director for a
term of six years:
Vincent F. Palagiano 9,416,006 -0- -0- 247,717 -0-
George L. Clark, Jr. 9,333,845 -0- -0- 329,878 -0-
Steven D. Cohn 9,332,945 -0- -0- 330,778 -0-
John J. Flynn 9,416,606 -0- -0- 247,117 -0-
2) Approval of the Dime
Community Bancshares, Inc.
Annual Incentive Plan 8,912,663 705,241 45,819 -0- -0-
3) Ratification of the
appointment of Deloitte &
Touche LLP to act as
independent auditors for the
Company for the fiscal year
ended June 30, 2000 9,610,724 41,289 11,710 -0- -0-
(d) Not applicable.
-27-
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(n) EXHIBITS
Exhibit 11. Statement Re: Computation of Per Share
Earnings
Exhibit 27. Financial Data Schedule (included only
with EDGAR filing).
(B) REPORTS ON FORM 8-K
None.
-28-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dime Community Bancshares, Inc.
Dated: February 11, 2000 By: /s/ VINCENT F. PALAGIANO
-------------------------------
Vincent F. Palagiano
Chairman of the Board and
Chief Executive Officer
Dated: February 11, 2000 By: /s/ KENNETH J. MAHON
-------------------------------
Kenneth J. Mahon
Executive Vice President and
Chief Financial Officer