EX-99.1 CHARTER 2 exhibit991.htm EXHIBIT 99.1 - ERANINGS RELEASE ISSUED APRIL 26, 2005 Exhibit 99.1 - Eranings Release Issued April 26, 2005
Exhibit 99.1




Contact:      Kenneth J. Mahon
                    Exec. VP and Chief Financial Officer
                    718-782-6200 extension 8265

Stephanie Prince
Director of Corporate Marketing
718-782-6200 extension 8250

    
DIME COMMUNITY BANCSHARES REPORTS FIRST QUARTER 2005 EARNINGS
 

Brooklyn, NY - April 26, 2005 - Dime Community Bancshares, Inc. (NASDAQ: DCOM, the "Company"), the parent company of The Dime Savings Bank of Williamsburgh (the "Bank"), today reported net income of $10.9 million, or 30 cents per diluted share, for the quarter ended March 31, 2005, compared to $12.3 million, or 33 cents per diluted share, for the quarter ended March 31, 2004 and $10.2 million, or 29 cents per diluted share, for the quarter ended December 31, 2004.

Earnings, excluding income from prepayment fees on loans and gains or losses on the sale of assets, were $9.9 million, or 28 cents per diluted share, for the quarter ended March 31, 2005, compared to $10.4 million, or 28 cents per diluted share, for the quarter ended March 31, 2004 and $9.6 million, or 27 cents per diluted share, for the quarter ended December 31, 2004.

First Quarter Highlights
 
§  
Real estate loan originations totaled $115.0 million, with an average interest rate of 5.49%.
 
§  
Loan sales to Fannie Mae totaled $24.4 million.
 
§  
The annualized loan amortization rate increased to 15% from 11% sequentially.
 
§  
Total assets declined by 0.8% annualized.
 
§  
Net interest margin was 2.87%, six basis points lower sequentially.
 
§  
Non-interest expenses declined 6% year-over-year and 11% sequentially.
 
§  
The Company repurchased 184,700 shares into treasury during the quarter.
 
“The first quarter was highlighted by higher than expected prepayment fee income that brought reported earnings one penny above the range we had estimated at the beginning of the quarter," said Vincent F. Palagiano, Chairman and Chief Executive Officer. "During the quarter, we began to see the lagging effect of the tightening of monetary policy by the Federal Open Market Committee upon our average cost of funds and net interest margin. We are pleased with the overall performance of our deposit funding costs, which, despite increasing 11 basis points during the quarter, continue to significantly lag the overall movement in interest rates over the past nine months."

Mr. Palagiano further noted, “We are currently actively exploring expansion of our branch network. Branch development is being considered in anticipation of resuming a strategy to grow our earning assets as interest rates approach more normalized ranges, allowing the Bank to more fully leverage its strong capital base.”

FINANCIAL RESULTS 

For the quarter ended March 31, 2005, the Company’s pre-tax income was $17.2 million, compared to $19.3 million in the same quarter of the previous year. This $2.1 million decrease was primarily due to decreases of $1.1 million in net interest income and $1.6 million in non-interest income, which was partially offset by a decrease of $607,000 in non-interest expense. Average earning assets grew by $274 million year-over-year, however, net interest income declined due to a 42 basis point contraction in net interest margin from 3.29% at March 31, 2004 to 2.87% at March 31, 2005. The decline in non-interest income reflected a decline of $958,000 in prepayment fees and the absence of any gains on the sale of securities this quarter ($516,000 of gains were recorded during the quarter ended March 31, 2004). The decrease of $607,000 in non-interest expense was due mainly to lower expenses in the ESOP and executive benefits plans, and in core computer service costs.

On a linked quarter basis, the Company’s pre-tax income increased $844,000 from $16.4 million in the December 2004 quarter, to $17.2 million in the March 2005 quarter. A decrease of $826,000 in net interest income was offset by a $518,000 increase in prepayment fee income ($1.6 million earned in prepayment fee income this quarter) combined with a reduction of $1.2 million in non-interest expense. Various cost savings activities implemented over the past several quarters, including a reduction in certain supplemental executive benefit plans, freezing the Board of Directors’ retirement plan, and a reduction in core processing costs, contributed to the reduction in non-interest expense.

Net interest margin declined 6 basis points to 2.87% during the March 2005 quarter from 2.93% in the December 2004 quarter. The decline was due to an increase of 13 basis points in the average cost on interest bearing liabilities (primarily the cost of deposits) combined with a decrease in the yield on real estate loans of 3 basis points to 5.62%. However, since loans in the Bank’s pipeline as of March 31, 2005 had an average rate of 5.55%, we expect a slowdown in the rate of decline in the yield on mortgage assets.

Average deposits per branch approximated $108 million at March 31, 2005, lower than the $114 million average at March 31, 2004 and the $111 million average at December 31, 2004. The loan-to-deposit ratio was 114% at March 31, 2005, compared to 101% at March 31, 2004 and 113% at December 31, 2004. Core deposits comprised 56% of total deposits at March 31, 2005, compared to 57% at both March 31, 2004 and December 31, 2004.

Over the past nine months, management has elected not to grow deposits due to the Company’s reluctance to add loans at the then prevailing unsustainably low loan rates.

Non-interest income, excluding gains or losses on the sale of assets, totaled $3.9 million during the quarter ended March 31, 2005, compared to $5.0 million in the quarter ended March 31, 2004 and $3.3 million in the quarter ended December 31, 2004. The variances resulted primarily from prepayment fee income, which totaled $1.6 million in the quarter ended March 31, 2005, $2.5 million in the quarter ended March 31, 2004 and $1.1 million in the quarter ended December 31, 2004.

The Company recorded a net gain of $135,000 on the sale of $24.4 million in loans to Fannie Mae during the quarter ended March 31, 2005. The Company recorded net gains of $357,000 on the sale of $23.6 million in loans to Fannie Mae during the quarter ended December 31, 2004 and $60,000 on the sale of $5.6 million in loans to Fannie Mae during the quarter ended March 31, 2004.

There were no gains or losses recorded on sales of securities during the quarters ended March 31, 2005 and December 31, 2004. The Company recorded gains of $516,000 on the sale of securities during the quarter ended March 31, 2004.

Non-interest expense totaled $9.8 million during the quarter ended March 31, 2005, a decrease of $607,000, or 6%, from the prior year quarter, and a decline of $1.2 million, or 11%, sequentially. During the quarter ended December 31, 2004, the Company incurred a non-recurring charge of $640,000 that resulted from the data system conversion completed in November 2004. In the quarter ended March 31, 2005, cost savings of $236,000 were realized from adjustments made to various benefit plans. In addition, the core deposit premium associated with the deposits acquired as a result of a 1999 acquisition became fully amortized as of January 2005, reducing non-interest expense by $158,000 during the March 31, 2005 quarter. Finally, cost savings realized from the recent data system conversion also contributed to the reduced level of non-interest expense during the March 2005 quarter.

The effective tax rate was 36.8% for the quarter ended March 31, 2005. The effective tax rate is expected to approximate 36.0% during the year ending December 31, 2005.

Mr. Palagiano concluded, “As can be seen from our loan commitment rates and the growing volume of our loan pipeline, we believe that we are nearing the point in the interest rate cycle where it is prudent to begin to grow assets once again, while continuing to closely manage our interest rate exposure on both the asset and liability sides of our balance sheet. In addition, we believe that the continued building of our capital base will best position the Company for any future market scenario.”

REAL ESTATE LENDING AND CREDIT QUALITY
 
Real estate loan originations totaled $115.0 million during the quarter ended March 31, 2005. The average rate on these originations was 5.49%, modestly lower than the 5.55% realized during the quarter ended December 31, 2004. Real estate loan prepayment and amortization during the March 2005 quarter approximated 15% of the loan portfolio on an annualized basis, compared to 26% during the March 2004 quarter and 11% during the December 2004 quarter.

At March 31, 2005, the multifamily and mixed use loan commitment pipeline approximated $160.5 million, at an average rate of 5.55%, of which $17.3 million is intended for sale to Fannie Mae.

The Bank maintained its long record of outstanding credit quality during the most recent quarter. Non-performing loans were $2.7 million at March 31, 2005, representing 0.08% of total assets.

STOCKHOLDERS EQUITY & SHARE REPURCHASE PROGRAM
 
The Company’s total stockholders’ equity at March 31, 2005 was $282.8 million, or 8.39% of total assets, compared to $275.8 million, or 8.18% of total assets at March 31, 2004. Tangible stockholders’ equity was $233.0 million at quarter end, equal to 7.01% of tangible assets, compared to $217.8 million, or 6.57% of tangible assets at March 31, 2004.
 
The return on average stockholders’ equity was 15.47% during the first quarter of 2005 and the return on tangible equity was 18.95%. The cash return on average tangible equity, which management considers the best measurement of the Company’s internal capital generation, was 19.63%.
 
During the March 2005 quarter, the Company repurchased 184,700 shares of its common stock into treasury. As of March 31, 2005, the Company had an additional 1.2 million shares remaining eligible for repurchase under its tenth stock repurchase program, approved in May 2004.
 
OUTLOOK
 
While first quarter results were better than expected, we continue to believe that lower loan originations, a lower prepayment speed, and lower prepayment fee income will characterize the full year of 2005, when compared to 2004. In 2004, $1.01 billion of loans were originated, prepayment speed equaled 24%, and prepayment fee income totaled $9.8 million. In the first quarter of 2005, prepayment speed equaled 15%, and prepayment fee income totaled $1.6 million. The Company believes that these may well be high-water marks for 2005. As noted, deposit costs have begun to trend upward as well, which will further pressure the cost of funds as the year progresses. We believe that the net result of these factors will result in moderate contraction of the Company’s net interest margin in the second quarter and as such, the Company now expects second quarter earnings per share will be in a range of $0.26 to $0.28 cents.


CONFERENCE CALL

Management will conduct a conference call at 10:00 A.M. Eastern Time, on Wednesday, April 27, 2005, to discuss the Company’s operating performance for the quarterly period ended March 31, 2005.

The conference call will also be available via the Internet by accessing the following Web address: www.dsbwdirect.com or www.vcall.com. Web users should go to the site at least fifteen minutes prior to the call to register, download and install any necessary audio software. The webcast will be available until May 27, 2005.

ABOUT DIME COMMUNITY BANCSHARES
 
Dime Community Bancshares, Inc., a unitary thrift holding company, is the parent company of The Dime Savings Bank of Williamsburgh, Brooklyn, New York, founded in 1864. With $3.37 billion in assets as of March 31, 2005, the Bank has twenty branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and Bank can be found on the Bank's Internet website at www.dimedirect.com.

Statements made herein that are forward looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995 are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those related to overall business conditions and market interest rates, particularly in the markets in which the Company operates, fiscal and monetary policy, changes in regulations affecting financial institutions and other risks and uncertainties discussed in the Company's Securities and Exchange Commission filings. The Company disclaims any obligation to publicly announce future events or developments which may affect the forward-looking statements herein.
 
-tables to follow -


DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)

 
March 31,
    
 
2005
  
December 31,
ASSETS:
(Unaudited)
  
2004
Cash and due from banks
$25,575
 
$26,581
Investment securities held to maturity
585
 
585
Investment securities available for sale
92,568
 
54,840
Mortgage-backed securities held to maturity
415
 
465
Mortgage-backed securities available for sale
482,395
 
519,420
Federal funds sold and other short-term assets
117,507
 
103,291
Real estate Loans:
      
One-to-four family and cooperative apartment
132,169
 
138,125
Multi-family and underlying cooperative
1,892,421
 
1,916,118
Commercial real estate
440,094
 
424,060
Construction and land acquisition
10,538
 
15,558
Unearned discounts and net deferred loan fees
(328)
  
(463)
Total real estate loans
2,474,894
 
2,493,398
Other loans
2,650
 
2,916
Allowance for loan losses
(15,230)
  
(15,543)
Total loans, net
2,462,314
 
2,480,771
Loans held for sale
1,290
 
5,491
Premises and fixed assets, net
16,648
 
16,652
Federal Home Loan Bank of New York capital stock
25,325
 
25,325
Goodwill
55,638
 
55,638
Other assets
90,132
 
88,207
TOTAL ASSETS
$3,370,392
 
$3,377,266
LIABILITIES AND STOCKHOLDERS' EQUITY:
      
Deposits:
      
Checking and NOW
$136,302
 
$138,402
Savings
359,104
 
362,656
Money Market
725,067
 
749,040
Sub-total
1,220,473
 
1,250,098
Certificates of deposit
947,500
 
959,951
Total Due to depositors
2,167,973
 
2,210,049
Escrow and other deposits
78,546
 
48,284
Securities sold under agreements to repurchase
205,584
 
205,584
Federal Home Loan Bank of New York advances
506,500
 
506,500
Subordinated Notes Sold
25,000
 
25,000
Trust Preferred Notes Payable
72,165
 
72,165
Other liabilities
31,854
 
27,963
TOTAL LIABILITIES
3,087,622
 
3,095,545
STOCKHOLDERS' EQUITY:
      
Common stock ($0.01 par, 125,000,000 shares authorized,
      
   50,289,996 shares and 50,111,988 shares issued at
      
   March 31, 2005 and December 31, 2004, respectively,
     
   and 37,190,852 shares and 37,165,740 shares outstanding
      
   at March 31, 2005 and December 31, 2004, respectively)
503
 
501
Additional paid-in capital
199,269
 
198,183
Retained earnings
264,140
 
258,237
Unallocated common stock of Employee Stock Ownership Plan
(4,726)
  
(4,749)
Unearned common stock of Recognition and Retention Plan
(3,071)
  
(2,612)
Common stock held by the Benefit Maintenance Plan
(7,348)
  
(7,348)
Treasury stock (13,099,144 shares and 12,946,248 shares
     
   at March 31, 2005 and December 31, 2004, respectively)
(159,839)
  
(157,263)
Accumulated other comprehensive loss income, net
(6,158)
  
(3,228)
TOTAL STOCKHOLDERS' EQUITY
282,770
 
281,721
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$3,370,392
 
$3,377,266


 

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands except per share amounts)

 
For the Three Months Ended
 
March 31,
  
December 31,
  
March 31,
 
2005
  
2004
  
2004
Interest income:
          
Loans secured by real estate
$34,848
 
$35,193
 
$33,615
Other loans
32
 
47
 
63
Mortgage-backed securities
4,490
 
4,792
 
4,712
Investment securities
606
 
643
 
312
Other
954
 
778
 
343
Total interest income
40,930
 
41,453
 
39,045
Interest expense:
          
Deposits and escrow
9,381
 
9,139
 
9,004
Borrowed funds
8,573
 
8,512
 
5,925
Total interest expense
17,954
 
17,651
 
14,929
Net interest income
22,976
 
23,802
 
24,116
Provision for loan losses
60
 
100
 
60
Net interest income after
         
provision for loan losses
22,916
 
23,702
 
24,056
Non-interest income:
          
Service charges and other fees
1,408
 
1,375
 
1,560
Net gain on sales and
          
redemptions of assets
135
 
357
 
576
Prepayment fee income
1,585
 
1,067
 
2,543
Other
926
 
867
 
938
Total non-interest income
4,054
 
3,666
 
5,617
Non-interest expense:
          
Compensation and benefits
5,607
 
5,883
 
5,716
Occupancy and equipment
1,336
 
1,293
 
1,263
Core deposit intangible amortization
48
 
206
 
206
Other
2,767
 
3,618
 
3,180
Total non-interest expense
9,758
 
11,000
 
10,365
Income before taxes
17,212
 
16,368
 
19,308
Income tax expense
6,341
 
6,138
 
6,968
Net Income
$10,871
 
$10,230
 
$12,340
Earnings per Share:
          
Basic
$0.31
 
$0.29
 
$0.35
Diluted
$0.30
 
$0.29
 
$0.33
Average common shares
         
outstanding for Diluted EPS
35,757,992
 
35,861,646
 
36,863,260


 


DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands except per share amounts)

 
For the Three Months Ended
 
March 31,
  
December 31,
  
March 31,
 
2005
  
2004
  
2004
           
Performance and Other Selected Ratios:
          
Return on Average Assets
1.30%
  
1.20%
  
1.60%
Return on Average Stockholders' Equity
15.47%
  
14.56%
  
17.72%
Return on Average Tangible Stockholders' Equity
18.95%
  
17.94%
  
22.28%
Net Interest Spread
2.59%
  
2.71%
  
3.05%
Net Interest Margin
2.87%
  
2.93%
  
3.29%
Non-interest Expense to Average Assets
1.16%
  
1.29%
  
1.34%
Efficiency Ratio
36.28%
  
40.57%
  
35.55%
Effective Tax Rate
36.84%
  
37.50%
  
36.09%
Tangible Equity to Tangible Assets at period end
7.01%
  
6.88%
  
6.57%
           
Per Share Data:
          
Reported EPS (Diluted)
$0.30
 
$0.29
 
$0.33
Stated Book Value
7.60
 
7.58
 
7.37
Tangible Book Value
6.27
 
6.16
 
5.82
           
Average Balance Data:
          
Average Assets
$ 3,357,138
 
$ 3,417,550
 
$ 3,094,199
Average Interest Earning Assets
3,204,674
 
3,250,859
 
2,931,156
Average Stockholders' Equity
281,038
 
281,073
 
278,585
Average Tangible Stockholders' Equity
229,509
 
228,126
 
221,521
Average Loans
2,481,554
 
2,493,365
 
2,218,390
Average Deposits
2,183,923
 
2,226,096
 
2,144,642
           
Asset Quality Summary:
          
Net charge-offs (recoveries)
($ 1)
  
$ 59
 
$ 30
Nonperforming Loans
2,712
 
1,459
 
1,381
Nonperforming Loans/ Total Loans
0.11%
  
0.06%
  
0.06%
Nonperforming Assets/Total Assets
0.08%
  
0.04%
  
0.04%
Allowance for Loan Loss/Total Loans
0.61%
  
0.62%
  
0.66%
Allowance for Loan Loss/Nonperforming Loans
561.68%
  
1065.32%
  
1085.59%
           
Regulatory Capital Ratios (Bank Only):
          
Tangible Capital Ratio
8.23%
  
7.88%
  
7.16%
Leverage Capital Ratio
8.23%
  
7.88%
  
7.16%
Risk -Based Capital Ratio
13.13%
  
12.83%
  
14.40%
           
Non-GAAP Disclosures - Cash Earnings Reconciliation and Ratios (1):
    
Net Income
$10,871
 
$10,230
 
$12,340
Additions to Net Income:
          
Core Deposit Intangible Amortization
48
 
206
 
206
Non-cash stock benefit plan expense
343
 
453
 
795
Cash Earnings
$11,262
 
$10,889
 
$13,341
           
Cash EPS (Diluted)
0.31
 
0.30
 
0.36
Cash Return on Average Assets
1.34%
  
1.27%
  
1.72%
Cash Return on Average Tangible Stockholders' Equity
19.63%
  
19.09%
  
24.09%

(1) Cash earnings and related data are "Non-GAAP Disclosures." These disclosures present information which management considers useful to the readers of this report since they present a measure of the tangible equity generated from operations during each period presented. Tangible equity generation is a significant financial measure since banks are subject to regulatory requirements involving the maintenance of minimum tangible capital levels.

 

DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME

 
For the Three Months Ended
 
 
March 31, 2005
 
  
 
December 31, 2004
 
  
 
March 31, 2004
 
     
Average
      
Average
      
Average
 
Average
  
Yield/
  
Average
  
Yield/
  
Average
  
Yield/
 
Balance
Interest
Cost
  
Balance
Interest
Cost
  
Balance
Interest
Cost
 
(Dollars In Thousands)
Assets:
                      
Interest-earning assets:
                      
Real Estate Loans
$2,478,992
$34,848
5.62%
  
$2,490,166
$35,193
5.65%
  
$2,214,940
$33,615
6.07%
Other loans
2,562
32
5.00   
 
3,199
47
5.88   
 
3,450
63
7.30   
Mortgage-backed securities
504,077
4,490
3.56   
 
550,525
4,792
3.48   
 
543,070
4,712
3.47   
Investment securities
68,252
606
3.55   
 
56,173
643
4.58   
 
37,715
312
3.31   
Other short-term investments
150,791
954
2.53   
 
150,796
778
2.06   
 
131,981
343
1.04   
Total interest earning assets
3,204,674
$40,930
5.11%
  
3,250,859
$41,453
5.10%
  
2,931,156
$39,045
5.33%
Non-interest earning assets
152,464
      
166,691
      
163,043
    
Total assets
$3,357,138
     
$3,417,550
     
$3,094,199
   
                       
Liabilities and Stockholders' Equity:
                      
Interest-bearing liabilities:
                      
NOW, Super Now accounts
$43,071
$80
0.75%
  
$44,092
$99
0.89%
  
$36,919
$88
0.96%
Money Market accounts
724,333
2,745
1.54   
 
791,133
2,893
1.45   
 
763,185
2,691
1.42   
Savings accounts
360,842
491
0.55   
 
363,969
440
0.48   
 
367,196
494
0.54   
Certificates of deposit
961,947
6,065
2.56   
 
933,990
5,707
2.43   
 
884,235
5,731
2.61   
Borrowed Funds
804,339
8,573
4.32   
 
809,282
8,512
4.18   
 
578,296
5,925
4.12   
Total interest-bearing liabilities
2,894,532
$17,954
2.52%
  
2,942,466
$17,651
2.39%
  
2,629,831
$14,929
2.28%
Checking accounts
93,730
      
92,912
      
93,107
    
Other non-interest-bearing liabilities
87,838
      
101,099
      
92,676
    
Total liabilities
3,076,100
      
3,136,477
      
2,815,614
    
Stockholders' equity
281,038
      
281,073
      
278,585
    
Total liabilities and stockholders' equity
$3,357,138
     
$3,417,550
     
$3,094,199
   
Net interest income
  
$22,976
     
$23,802
     
$24,116
 
Net interest spread
    
2.59%
      
2.71%
      
3.05%
Net interest-earning assets
$310,142
     
$308,393
     
$301,325
   
Net interest margin
    
2.87%
      
2.93%
      
3.29%
Ratio of interest-earning assets
                      
to interest-bearing liabilities
    
110.71%
      
110.48%
      
111.46%