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