-- Net interest margin was 2.78%, up from 2.51% in the March 2009
quarter, and 2.67% in the June 2008 quarter.
-- The average cost of deposits declined 44 basis points from the March
2009 quarter. Core deposits grew $19.1 million, or 1.6%.
-- Total ending assets fell $66.4 million, as the Company sought to
curtail asset growth and focus on preserving and enhancing its well-
capitalized balance sheet.
-- The Company grew its consolidated ratio of tangible capital to
tangible assets from 5.83% to 6.00% sequentially.
-- The allowance for loan losses increased by $1.6 million, as the
aggregate loan loss provision and other transfers into the allowance for
loan losses exceeded net charge-offs and other transfers out of the
allowance for loan losses.
-- Real estate loan originations were $111.4 million, above the $83.7
million level in the March 2009 quarter, while below the $341.0 million
level in the June 2008 quarter.
-- FDIC insurance premium expense increased $2.0 million from the
previous quarter, and $2.6 million from the prior year, largely as a result
of a special insurance assessment of $1.8 million in the June 2009 quarter.
-- Prepayment and other fee income increased to $354,000 compared to
$292,000 in the March 2009 quarter, while declining from $827,000 in the
June 2008 quarter.
Despite carrying an average of approximately $210 million of liquid cash
balances at a negative spread to funding costs, Dime's net interest margin
increased substantially during the quarter ended June 30, 2009. Dime
initially generated this liquidity pool during the 4th quarter of 2008 in
order to provide added flexibility in managing deposit flows in the face of
highly volatile credit markets. As these markets have begun to stabilize
recently, Dime can now focus on utilizing these funds to repay maturing
borrowings or replace potential deposit outflows during the second half of
the year.
Prepayment fees remained modest, reflecting continued moderation in the
pace of refinancing in the commercial mortgage market. While refinancing
activity picked up slightly in the June 2009 quarter, the Company does not
expect a near-term return to the more robust levels experienced in 2008.
NET INTEREST INCOME
Net interest income was $26.3 million during the June 2009 quarter, up $2.1
million from the March 2009 quarter. A decline of 44 basis points in the
average cost of deposits, coupled with an increase of 5 basis points in the
average yield on real estate loans, generated the increase in the linked
quarter net interest income. These same factors generated an increase of
27 basis points in the net interest margin from 2.51% during the three
months ended March 31, 2009 to 2.78% during the three months ended June 30,
2009. The significant increase in net interest margin occurred despite the
Company's decision to retain higher liquid cash balances at a negative
spread to funding costs.
Mr. Palagiano commented, "As I mentioned in the earnings release for the
first quarter of 2009, our business strategy shifted late in 2008 toward
capital preservation, resulting in the decision to curb asset growth during
2009. Deposit inflows that occurred in late 2008 and early 2009 as our
focus was shifting are being retained in highly liquid funds, which will
provide considerable flexibility in managing deposits and borrowings during
the remainder of 2009."
Federal Home Loan Bank of New York ("FHLBNY") capital stock income
increased $329,000 during the quarter ended June 30, 2009 compared to the
March 2009 quarter, also contributing to the growth in net interest margin
during the period. The Bank held an investment in FHLBNY capital stock
totaling $51.8 million at June 30, 2009, and earned an average yield on
this stock of 4.3% during the first six months of 2009.
Net interest income exceeded the June 2008 quarterly level by $3.2 million,
driven by growth of $325 million in average interest earning assets and an
increase in the net interest margin of 11 basis points from the quarter
ended June 30, 2008 to the quarter ended June 30, 2009. The growth in
average interest earning assets reflected the significant loan origination
volume and asset growth experienced by the Company in 2008, while the
increase in the net interest margin reflected a decline of 65 basis points
in the average cost of deposits during the June 2009 quarter compared to
the June 2008 quarter.
PROVISION/ALLOWANCE FOR LOAN LOSSES AND PROBLEM PORTFOLIO LOANS
Non-performing loans, which decreased from $13.1 million at March 31, 2009
to $12.9 million at June 30, 2009, were $6.9 million at June 30, 2008. As
a percentage of total loans, non-performing loans totaled 0.40% at both
June 30, 2009 and March 31, 2009, compared to 0.22% at June 30, 2008. In
addition, loans delinquent between 30 and 89 days decreased to $17.6
million as of June 30, 2009 from $19.4 million at March 31, 2009, and were
$2.1 million at June 30, 2008.
In response to increasing levels of both non-performing loans and loans
delinquent between 30 and 89 days at both June 30, 2009 and March 31, 2009
when compared to June 30, 2008, the Company provided $2.3 million to its
allowance for loan losses during the quarter ended June 30, 2009, and $2.6
million during the quarter ended March 31, 2009, compared to $310,000
during the quarter ended June 30, 2008.
Charge-offs recognized on problem loans totaled $528,000 during the June
2009 quarter, compared to $1.9 million in the March 2009 quarter and
$116,000 in the June 2008 quarter.
Mr. Palagiano stated, "Our objective remains to actively manage
non-performing loans, so as to avoid having them linger on the Company's
balance sheet."
At June 30, 2009, the allowance for loan losses was $20.0 million, or 155%
of non-performing loans.
NON-INTEREST INCOME
OTTI and Gain (Loss) on Sale of Investment Securities and Other Assets.
The Company early adopted Financial Accounting Standards Board Staff
Position Number FAS 115-2 and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments" as of January 1, 2009, recognizing the
effects of adoption during the March 2009 quarter.
During the quarter ended June 30, 2009, the pre-tax credit component of
OTTI charges totaled $886,000. At June 30, 2009, four of the Dime's eight
trust preferred securities were deemed to meet the criteria for OTTI. The
increase in the credit component of OTTI reflected additional payment
deferrals during the quarter within the collateral pool underlying certain
of Dime's eight trust preferred collateralized debt obligation securities.
During the June 2009 quarter, Dime failed to receive its contractual
interest payment on a trust preferred security with a recorded balance of
$1.2 million ($2.9 million excluding $1.7 million of unrealized losses
included in accumulated other comprehensive income). This security is now
classified as a non-performing asset, raising the percentage of
non-performing assets to total assets to 0.36% at the end of June 2009 from
0.33% at the end of March 2009. In addition, during the quarter ended June
30, 2009, Dime did not receive a small portion of the interest due on a
trust preferred security having a recorded balance of $148,000 ($332,000
excluding the $185,000 total non-credit component of OTTI). The remaining
six trust preferred securities, with a total cost basis of $12.6 million
net of credit-related OTTI, are current on all contractual obligations.
The five actively-managed equity mutual fund investments for which the
Company recognized OTTI charges during the March 2009 quarter all
experienced increases in their fair value during the June 2009 quarter, as
these mutual funds, which are closely correlated to the broad equity
indices, participated in the equity market rally during the June 2009
quarter. In accordance with the accounting standards governing OTTI, gains
on such equity funds cannot be recognized into income unless the Company
disposes of these funds.
During the quarter ended June 30, 2009, Dime sold a property held as other
real estate owned recognizing a pre-tax loss of $92,000 on the sale.
During the quarter ended March 31, 2009, Dime sold its entire $10 million
portfolio of municipal agency securities, recognizing a pre-tax gain of
$431,000 on the sale.
Mortgage Banking Income and Delinquent Loans Sold with Recourse to Fannie
Mae
During the June 2009 quarter, Dime sold an 80% participation in
approximately $124 million of multifamily loans from its portfolio to a
third-party financial institution other than Fannie Mae. The purpose of
the sale was to create liquidity on the balance sheet to fund future loans
and other operations. The loans were sold at par and without recourse.
This transaction settled on April 20, 2009 and Dime recognized a pre-tax
gain of approximately $635,000 ($0.01 per share after tax) on the sale,
which was reflected in core earnings for the June 2009 quarter. Dime
retained servicing on all of the loans. Dime sold $15.1 million of loans
to FNMA with recourse during the June 2008 quarter, recognizing a pre-tax
gain of $132,000 on the sales. Loan sales were negligible during the
quarter ended March 31, 2009. Gains on loan sales are included in the
mortgage banking income line item in the consolidated statements of
operations.
Mortgage banking income totaled $856,000 during the quarter ended June 30,
2009, reflecting the aforementioned $635,000 gain as well as approximately
$200,000 in servicing fee income. Mortgage banking losses totaled $1.2
million during the quarter ended March 31, 2009, reflecting a provision to
the reserve for losses on Fannie Mae serviced loans of $1.5 million, that
was partially offset by servicing fee income of $255,000. Mortgage banking
income was $30,000 during the June 2008 quarter reflecting approximately
$200,000 of servicing fee income, a provision to the reserve for losses on
Fannie Mae serviced loans of $300,000 and the aforementioned $132,000 of
net gains on loans sold.
Since the inception of the Fannie Mae program, Dime has sold approximately
$660 million of multifamily loans to Fannie Mae. This portfolio had an
outstanding principal balance of $477.7 million at June 30, 2009. During
the quarter ended June 30, 2009, Dime re-acquired five delinquent loans
from Fannie Mae with an aggregate outstanding principal balance of $14.9
million. Within this group, one loan totaling $13.2 million was assumed by
a new borrower shortly after being re-acquired by Dime in late April 2009
and has remained current since the assumption was consummated. The
remaining four re-acquired loans were included in Dime's $12.8 million
non-performing loan total at June 30, 2009. Dime may re-acquire problem
loans from Fannie Mae periodically in order to expedite their resolution
and control losses.
Within the Fannie Mae portfolio, loans delinquent 90 days or more declined
from $17.3 million at March 31, 2009 to $1.8 million at June 30, 2009.
This decline resulted primarily from the re-acquisition of the five loans
totaling $14.9 million during the period. At June 30, 2009, there were
additionally $17.2 million of loans delinquent between 30 and 89 days
within the pool of loans serviced for Fannie Mae, compared to $3.7 million
at March 31, 2009. At June 30, 2008, there were $4.2 million of loans
delinquent 90 days or more, and no other loans delinquent between 30 and 89
days within the pool of loans serviced for Fannie Mae.
Dime's aggregate support obligation (first loss position) for loans sold to
Fannie Mae was $21.9 million as of June 30, 2009, against which a liability
of $3.5 million was established at June 30, 2009. This liability
approximated 0.72% of the remaining principal balance of loans in the
Fannie Mae pool as of June 30, 2009. All additions to the liability for
support obligation are charged against mortgage banking (non-interest)
income.
Other Components of Non-Interest Income
Other components of non-interest income totaled $2.0 million during the
quarter ended June 30, 2009, relatively unchanged from the June 2008
quarter and up $248,000 from the March 2009 quarter as a result of the
assessment of annual loan inspection fees.
NON-INTEREST EXPENSE
Non-interest expense was $15.3 million during the quarter ended June 30,
2009, an increase of $1.7 million from the March 2009 quarter. This
increase reflected an increase of $2.0 million in FDIC insurance
assessments as a result of both a $1.8 million special assessment as well
as ongoing increases from a recapitalization program implemented by the
FDIC effective April 1, 2009. Occupancy and equipment costs declined
$204,000 primarily due to the absence of snow removal costs experienced in
the June 2009 quarter.
Compared to the June 2008 quarter, non-interest expense increased $3.1
million during the quarter ended June 30, 2009, due to increases of $2.6
million in FDIC insurance assessments and $729,000 in compensation and
benefits. The increase in compensation and benefits resulted primarily
from a $393,000 increase in employee pension plan expense and a
smaller-than-last-year offset to salaries of $435,000, reflecting lower
capitalized loan origination salary costs (and lower loan origination
levels). Other operating expenses declined $324,000 as a result of lower
third party professional expenses.
INCOME TAX EXPENSE
The Company's customary consolidated effective tax rate approximates 37%.
The impact of the OTTI charges on investment securities reduced the book
income tax rate below the customary consolidated rate for the quarter ended
June 30, 2009 to 35%. Similarly, the OTTI charges reduced the book income
tax rate for the March 2009 quarter to 26%. A non-recurring adjustment to
income tax expense of $590,000 associated with a reduction in reserves for
uncertain tax positions reduced the book income tax rate in the June 2008
quarter to 32%.
BALANCE SHEET
Total assets declined $66.4 million during the quarter ended June 30, 2009,
as the Company focused on capital preservation.
The decline in assets was experienced primarily in both real estate loans
(including loans held for sale) and mortgage backed securities, as Dime
sold an 80% participation in $124 million of portfolio loans in April 2009
and did not purchase any mortgage backed securities during the June 2009
quarter.
Total liabilities declined by $70.1 million during the most recent quarter,
primarily due to the outflow of $61.5 million in certificates of deposit.
In addition, escrow and other deposits declined $26.6 million as
semi-annual real estate tax payments made on behalf of borrowers were
funded during the quarter ended June 30, 2009.
Real Estate Lending and Loan Amortization
Real estate loan originations, which were $83.7 million during the March
2009 quarter, totaled $111.4 million during the quarter ended June 30,
2009. The average rate on real estate loan originations during the June
2009 quarter was 6.08%, compared to 6.21% during the quarter ended March
31, 2009 and 5.83% during the quarter ended June 30, 2008.
Real estate loan amortization during the June 2009 quarter approximated 10%
of the real estate loan portfolio on an annualized basis, slightly above
the March 2009 quarter, and below the 17% level experienced during the June
2008 quarter. This was slightly below management's forecast of prepayment
speeds disclosed at the commencement of the year.
Deposits
Deposits decreased $42.4 million from March 31, 2009 to June 30, 2009.
Certificates of deposit ("CDs") declined $61.5 million during the period,
as maturing promotional deposits gathered in late 2008 were not renewed.
Core deposits (i.e., non-CDs) rose $19.1 million, or 2%, during the three
months ended June 30, 2009. Within core deposits, checking accounts
increased $7.3 million, and passbook savings accounts increased $13.8
million during the most recent quarter.
During the first six months of 2009, there were far fewer bank competitors
offering premium deposit pricing, therefore, the spread between deposit
rates and Treasury rates narrowed across all maturities. Dime gained both
money market and checking accounts through its promotional marketing
efforts, notwithstanding a decline in Dime's offering rates. For example,
money market offering rates declined from 2.8% at January 1, 2009 to 1.6%
at June 30, 2009. Dime took the opportunity to compete for IRA plans
during the first six months of 2009. IRA deposits increased from $153.7
million at March 31, 2009 to $174.3 million at June 30, 2009. As compared
to non-IRA households, current Dime IRA households maintain 132% higher
average total deposit balances, 18% higher average checking balances, and
78% of these customers have been depositors at Dime for more than 5 years.
Promotional interest pricing at Dime has been suspended until the retail
deposit market normalizes. There are approximately $435 million of CDs
with a weighted average rate of 3.43% maturing during the third quarter of
2009, which will have a positive impact on net interest margin in the
second half of 2009, as the current one- and two-year offering rates on new
and renewing CDs are significantly lower. Dime is also maintaining a pool
of liquidity to fund potential outflows of deposits.
Average deposits per branch were $99.7 million at June 30, 2009, slightly
below the $101.5 million level at March 31, 2009, and up from $94.6 million
at June 30, 2008. Core deposits (deposits exclusive of CDs) comprised 54%
of total deposits at June 30, 2009, up from 52% at March 31, 2009 and down
from 56% at June 30, 2008. The loan-to-deposit ratio was 142% at June 30,
2009, compared to 141% at March 31, 2009 and 151% at June 30, 2008.
Stockholders' Equity
Stockholders' equity at June 30, 2009 totaled $283.5 million, or 7.13% of
total assets, compared to $279.7 million, or 6.92% of total assets, at
March 31, 2009.
After dividends, the Company's tangible stockholders' equity increased to
$235.3 million at June 30, 2009, compared to $232.4 million at March 31,
2009. The quarterly cash dividend declared on July 16, 2009 represented a
payout ratio of 61% of second quarter 2009 core earnings. At June 30,
2009, the consolidated tangible stockholders' equity ratio was 6.00% of
tangible assets and tangible book value per share was $6.84.
The Company has no TARP capital.
There were no stock repurchases during the quarter ended June 30, 2009. As
of June 30, 2009, the Company had an additional 1,124,549 shares remaining
eligible for repurchase under its twelfth stock repurchase program,
approved in June 2007.
For the quarter ended June 30, 2009, the reported returns on average
stockholders' equity and average tangible equity were 9.84% and 11.85%,
respectively. The core returns on average stockholders' equity and average
tangible equity were 10.60% and 12.77%, respectively. Core returns
primarily exclude OTTI charges. Finally, the core cash return on average
tangible stockholders' equity (the fundamental measure of new internally
generated capital) was 13.91%.
OUTLOOK
The average cost of deposits decreased to 2.04% during the June 2009
quarter from 2.48% during the March 2009 quarter, as the Company suspended
promotional rates in its deposit gathering campaigns in mid-January 2009,
and lowered its offering rates on both new certificates of deposit and most
of its core deposits. Indicative of the anticipated upward trend for net
interest margin for the next several quarters, the weighted average rate of
deposits at June 30, 2009 was down to 1.91%, lower than the 2.04% average
rate experienced in the June 2009 quarter. It is expected that deposits
raised in late 2008 using promotional rates will continue to either flow
out or reprice in a manner that will favorably impact the net interest
margin in the upcoming quarters.
There are approximately $114 million in portfolio mortgage loans with a
weighted average coupon of 5.66% scheduled to contractually reprice or
mature during the remainder of 2009. Today's rates for similar products
are in the range of 5.625% to 6.25%.
Amortization rates (including prepayments and loan refinancing activity),
which approximated 10% on an annualized basis during the second quarter of
2009, are expected to fall in the 7.5% to 12.5% range during the remainder
of 2009, reflecting ongoing loan refinancing activity as loans approach
their contractual repricing.
The recapitalization plans recently implemented by the FDIC are expected to
adversely impact earnings for the remainder of 2009. Dime incurred a
special assessment of $1.8 million during the June 2009 quarter and is
building in another $1.7 million special assessment in the September 2009
quarter to its published 3rd quarter estimate of earnings per share. The
FDIC has not yet confirmed whether or not this charge will be assessed.
At June 30, 2009, the loan commitment pipeline was approximately $136
million, skewed mainly toward multifamily residential properties, with an
approximate weighted average rate of 5.80%.
Operating expenses for the September 2009 quarter are expected to
approximate $15.7 million, including the special FDIC assessment mentioned
previously.
The quarterly provision for loan losses and credit costs built into the
current projection of earnings for the September 2009 quarter approximates
$3.0 million pre-tax. Based on the strength of declining funding costs,
earnings per diluted share are estimated to be in the range of $0.22 to
$0.24 for the September 2009 quarter.
ABOUT DIME COMMUNITY BANCSHARES
The Company (
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
June 30, March 31,
2009 December 31, 2009
(Unaudited) 2008 (Unaudited)
------------ ------------ ------------
ASSETS:
Cash and due from banks $ 229,638 $ 211,020 $ 199,318
Investment securities held to
maturity 8,695 10,861 9,406
Investment securities available
for sale 6,540 16,602 5,966
Mortgage-backed securities
available for sale 263,515 301,351 287,335
Federal funds sold and other
short-term investments - - 20,230
Real Estate Loans:
One-to-four family and
cooperative apartment 139,836 142,295 143,074
Multifamily and underlying
cooperative 2,218,671 2,242,542 2,170,922
Commercial real estate 834,000 848,208 827,875
Construction and land
acquisition 46,162 52,982 50,824
Unearned discounts and net
deferred loan fees 3,364 3,287 3,335
------------ ------------ ------------
Total real estate loans 3,242,033 3,289,314 3,196,030
------------ ------------ ------------
Other loans 3,262 2,191 1,942
Allowance for loan losses (19,991) (17,454) (18,351)
------------ ------------ ------------
Total loans, net 3,225,304 3,274,051 3,179,621
------------ ------------ ------------
Loans held for sale 667 - 100,377
Premises and fixed assets, net 29,986 30,426 30,144
Federal Home Loan Bank of New
York capital stock 51,833 53,435 50,735
Other real estate owned, net - 300 300
Goodwill 55,638 55,638 55,638
Other assets 102,583 101,914 101,688
------------ ------------ ------------
TOTAL ASSETS $ 3,974,399 $ 4,055,598 $ 4,040,758
============ ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Non-interest bearing checking $ 102,447 $ 90,710 $ 91,952
Interest Bearing Checking 112,039 112,687 115,277
Savings 293,763 270,321 279,956
Money Market 732,023 633,167 734,001
------------ ------------ ------------
Sub-total 1,240,272 1,106,885 $ 1,221,186
------------ ------------ ------------
Certificates of deposit 1,052,837 1,153,166 1,114,338
------------ ------------ ------------
Total Due to Depositors 2,293,109 2,260,051 2,335,524
------------ ------------ ------------
Escrow and other deposits 69,803 130,121 96,423
Securities sold under agreements
to repurchase 230,000 230,000 230,000
Federal Home Loan Bank of New
York advances 959,675 1,019,675 959,675
Subordinated Notes Sold 25,000 25,000 25,000
Trust Preferred Notes Payable 72,165 72,165 72,165
Other liabilities 41,152 41,622 42,249
------------ ------------ ------------
TOTAL LIABILITIES 3,690,904 3,778,634 3,761,036
------------ ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par,
125,000,000 shares authorized,
51,122,319 shares issued at both
June 30, 2009 and December 31,
2008, and 34,386,066 shares and
34,179,900 shares outstanding at
June 30, 2009 and December
31, 2008, respectively) 511 511 511
Additional paid-in capital 213,790 213,917 214,357
Retained earnings 299,635 297,848 297,350
Unallocated common stock of
Employee Stock Ownership Plan (3,817) (3,933) (3,875)
Unearned common stock of
Restricted Stock Awards (3,016) (1,790) (1,559)
Common stock held by the Benefit
Maintenance Plan (8,007) (8,007) (8,007)
Treasury stock (16,736,253 shares
and 16,942,419 shares at June
30, 2009 and December 31, 2008,
respectively) (207,884) (210,471) (210,471)
Accumulated other comprehensive
loss, net (7,717) (11,111) (8,584)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 283,495 276,964 279,722
------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,974,399 $ 4,055,598 $ 4,040,758
============ ============ ============
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except per share amounts)
For the Three Months Ended
----------------------------------
June 30, March 31, June 30,
2009 2009 2008
---------- ---------- ----------
Interest income:
Loans secured by real estate $ 47,662 $ 48,329 $ 44,147
Other loans 37 37 41
Mortgage-backed securities 2,969 3,280 3,370
Investment securities 194 245 364
Federal funds sold and other
short-term investments 858 503 1,346
---------- ---------- ----------
Total interest income 51,720 52,394 49,268
---------- ---------- ----------
Interest expense:
Deposits and escrow 11,718 14,212 14,452
Borrowed funds 13,713 14,042 11,706
---------- ---------- ----------
Total interest expense 25,431 28,254 26,158
---------- ---------- ----------
Net interest income 26,289 24,140 23,110
Provision for loan losses 2,252 2,640 310
---------- ---------- ----------
Net interest income after provision for
loan losses 24,037 21,500 22,800
---------- ---------- ----------
Non-interest income:
Service charges and other fees 879 864 1,146
Mortgage banking income (loss),
net 856 (1,169) 30
Impairment charge on securities
(1) (886) (5,040) -
(Loss) Gain on sale of other real
estate owned and other assets (92) 431 (129)
Other 1,101 868 813
---------- ---------- ----------
Total non-interest income
(loss) 1,858 (4,046) 1,860
---------- ---------- ----------
Non-interest expense:
Compensation and benefits 7,618 7,801 6,889
Occupancy and equipment 1,882 2,086 1,764
Other 5,825 3,721 3,605
---------- ---------- ----------
Total non-interest expense 15,325 13,608 12,258
---------- ---------- ----------
Income before taxes 10,570 3,846 12,402
Income tax expense 3,654 996 3,977
---------- ---------- ----------
Net Income $ 6,916 $ 2,850 $ 8,425
========== ========== ==========
Earnings per Share:
Basic $ 0.21 $ 0.09 $ 0.26
========== ========== ==========
Diluted $ 0.21 $ 0.09 $ 0.26
========== ========== ==========
Average common shares outstanding for
Diluted EPS 33,026,554 32,888,319 32,935,285
(1) Total other-than-temporary impairment on securities was $1,161 and
$6,102, during the three months ended June 30, 2009 and March 31, 2009,
respectively. The non-credit component of the impairment charge
recognized in accumulated other comprehensive loss was $275 and $1,062
during the three months ended June 30, 2009 and March 31, 2009,
respectively.
For the Six Months
Ended
----------------------
June 30, June 30,
2009 2008
---------- ----------
Interest income:
Loans secured by real estate $ 95,991 $ 87,213
Other loans 74 85
Mortgage-backed securities 6,249 5,586
Investment securities 439 1,072
Federal funds sold and
other short-term investments 1,361 3,542
---------- ----------
Total interest income 104,114 97,498
---------- ----------
Interest expense:
Deposits and escrow 25,930 32,420
Borrowed funds 27,755 22,737
---------- ----------
Total interest expense 53,685 55,157
---------- ----------
Net interest income 50,429 42,341
Provision for loan losses 4,892 370
---------- ----------
Net interest income after provision for loan losses 45,537 41,971
---------- ----------
Non-interest income:
Service charges and other fees 1,742 2,201
Mortgage banking income (loss), net (312) 316
Impairment charge on securities (1) (5,926) -
(Loss) Gain on sale of other real estate
owned and other assets 339 (129)
Other 1,969 1,639
---------- ----------
Total non-interest income (loss) (2,188) 4,027
---------- ----------
Non-interest expense:
Compensation and benefits 15,418 14,122
Occupancy and equipment 3,968 3,335
Other 9,547 7,081
---------- ----------
Total non-interest expense 28,933 24,538
---------- ----------
Income before taxes 14,416 21,460
Income tax expense 4,650 7,078
---------- ----------
Net Income $ 9,766 $ 14,382
========== ==========
Earnings per Share:
Basic $ 0.30 $ 0.44
========== ==========
Diluted $ 0.30 $ 0.44
========== ==========
Average common shares outstanding for Diluted EPS 32,956,106 32,773,631
(1) Total other-than-temporary impairment on securities was $1,161 and
$6,102, during the three months ended June 30, 2009 and March 31, 2009,
respectively. The non-credit component of the impairment charge
recognized in accumulated other comprehensive loss was $275 and $1,062
during the three months ended June 30, 2009 and March 31, 2009,
respectively.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
Unaudited Core Earnings and Core Cash Earnings Reconciliations
(Dollars In thousands except per share amounts)
Core 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 results of the
Company's ongoing operations during the period (exclusive of gains or
losses on sales of securities and other real estate owned and other
material non-recurring items).
Core cash earnings and related data are also "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
stockholders' equity is derived from stockholders' equity, with various
adjustment items that are based upon standards of the Company's primary
regulator, the Office of Thrift Supervision. Tangible stockholders'
equity generation is a significant financial measure since banks are
subject to regulatory requirements involving the maintenance of minimum
tangible capital levels. A reconciliation between GAAP stockholders'
equity (GAAP capital) and tangible stockholders' equity (regulatory
capital) can be found in the Company's Form 10-K for the year ended
December 31, 2008.
The following tables present a reconciliation of GAAP net income and both
core earnings and core cash earnings, as well as financial performance
ratios determined based upon core earnings and core cash earnings, for each
of the periods presented:
For the Three Months Ended
-------------------------------
June 30, March 31, June 30,
2009 2009 2008
--------- --------- ---------
Net income as reported $ 6,916 $ 2,850 $ 8,425
Loss on sale of other real estate owned 92 - 129
Impairment charge on equity mutual funds - 3,063 -
Credit related impairment charge on trust
preferred securities 886 1,977 -
Gain on sale of municipal agency
securities - (431) -
Non-recurring adjustment to income taxes - - (590)
Expense associated with prepayment of
FHLBNY advances - 185 -
Tax effect of adjustments and other
non-recurring tax items (442) (2,185) (58)
--------- --------- ---------
Core Earnings $ 7,452 $ 5,459 $ 7,906
--------- --------- ---------
Cash Earnings Additions:
Non-cash stock benefit plan expense 665 640 611
--------- --------- ---------
Core Cash Earnings $ 8,117 $ 6,099 $ 8,517
--------- --------- ---------
Performance Ratios (Based upon Core Cash
Earnings):
Core Cash EPS (Diluted) $ 0.25 $ 0.19 $ 0.26
Core Cash Return on Average Assets 0.81% 0.60% 0.93%
Core Cash Return on Average Tangible
Stockholders' Equity 13.91% 10.46% 15.40%
For the Six Months
Ended
--------------------
June 30, June 30,
2009 2008
--------- ---------
Net income as reported $ 9,766 $ 14,382
Loss on sale of other real estate owned 92 129
Impairment charge on equity mutual funds 3,063 -
Credit related impairment charge on trust
preferred securities 2,863 -
Gain on sale of municipal agency
securities (431) -
Non-recurring adjustment to income taxes - (590)
Expense associated with prepayment of
FHLBNY advances 185 -
Tax effect of adjustments and other
non-recurring tax items (2,627) (58)
--------- ---------
Core Earnings $ 12,911 $ 13,863
--------- ---------
Cash Earnings Additions:
Non-cash stock benefit plan expense 1,305 1,172
--------- ---------
Core Cash Earnings $ 14,216 $ 15,035
--------- ---------
Performance Ratios (Based upon Core Cash
Earnings):
Core Cash EPS (Diluted) $ 0.43 $ 0.46
Core Cash Return on Average Assets 0.71% 0.84%
Core Cash Return on Average Tangible
Stockholders' Equity 12.18% 13.74%
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
For the Three Months Ended
-----------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.21 $ 0.09 $ 0.26
Return on Average Assets 0.69% 0.28% 0.92%
Return on Average Stockholders'
Equity 9.84% 4.08% 12.44%
Return on Average Tangible
Stockholders' Equity 11.85% 4.89% 15.24%
Net Interest Spread 2.54% 2.21% 2.39%
Net Interest Margin 2.78% 2.51% 2.67%
Non-interest Expense to Average
Assets 1.53% 1.35% 1.34%
Efficiency Ratio 52.62% 55.09% 48.84%
Effective Tax Rate 34.57% 25.90% 32.07%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.23 $ 0.17 $ 0.24
Core Return on Average Assets 0.74% 0.54% 0.86%
Core Return on Average
Stockholders' Equity 10.60% 7.82% 11.67%
Core Return on Average Tangible
Stockholders' Equity 12.77% 9.36% 14.30%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.24 $ 8.18 $ 8.05
Tangible Book Value Per Share 6.84 6.80 6.63
Average Balance Data:
Average Assets $ 4,011,473 $ 4,039,762 $ 3,659,084
Average Interest Earning Assets 3,786,577 3,853,692 3,461,470
Average Stockholders' Equity 281,202 279,072 270,973
Average Tangible Stockholders'
Equity 233,376 233,200 221,171
Average Loans 3,238,424 3,311,006 3,006,571
Average Deposits 2,298,966 2,321,613 2,158,477
Asset Quality Summary:
Net charge-offs $ 528 $ 1,876 $ 116
Nonperforming Loans 12,878 13,123 6,852
Nonperforming Loans/Total Loans 0.40% 0.40% 0.22%
Nonperforming Assets 14,118 (1) 13,423 6,852
Nonperforming Assets/Total
Assets 0.36% 0.33% 0.18%
Allowance for Loan Loss/Total
Loans 0.62% 0.56% 0.49%
Allowance for Loan
Loss/Nonperforming Loans 155.23% 139.84% 224.55%
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.00% 5.83% 6.11%
Tangible Capital Ratio (Bank
Only) 7.63% 7.86% 7.83%
Leverage Capital Ratio (Bank
Only) 7.63% 7.86% 7.83%
Risk Based Capital Ratio (Bank
Only) 11.46% 11.83% 11.46%
For the Six Months Ended
----------------------------
June 30, June 30,
2009 2008
----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.30 $ 0.44
Return on Average Assets 0.49% 0.80%
Return on Average Stockholders'
Equity 6.97% 10.66%
Return on Average Tangible
Stockholders' Equity 8.37% 13.14%
Net Interest Spread 2.37% 2.20%
Net Interest Margin 2.64% 2.50%
Non-interest Expense to Average
Assets 1.44% 1.37%
Efficiency Ratio 53.75% 52.77%
Effective Tax Rate 32.26% 32.98%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.39 $ 0.42
Core Return on Average Assets 0.64% 0.77%
Core Return on Average
Stockholders' Equity 9.22% 10.28%
Core Return on Average Tangible
Stockholders' Equity 11.06% 12.67%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.24 $ 8.05
Tangible Book Value Per Share 6.84 6.63
Average Balance Data:
Average Assets $ 4,025,617 $ 3,585,904
Average Interest Earning Assets 3,820,135 3,390,797
Average Stockholders' Equity 280,137 269,743
Average Tangible Stockholders'
Equity 233,416 218,909
Average Loans 3,274,715 2,951,326
Average Deposits 2,310,290 2,155,754
Asset Quality Summary:
Net charge-offs $ 2,404 $ 260
Nonperforming Loans 12,878 6,852
Nonperforming Loans/Total Loans 0.40% 0.22%
Nonperforming Assets 14,118 (1) 6,852
Nonperforming Assets/Total
Assets 0.36% 0.18%
Allowance for Loan Loss/Total
Loans 0.62% 0.49%
Allowance for Loan
Loss/Nonperforming Loans 155.23% 224.55%
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.00% 6.11%
Tangible Capital Ratio (Bank
Only) 7.63% 7.83%
Leverage Capital Ratio (Bank
Only) 7.63% 7.83%
Risk Based Capital Ratio (Bank
Only) 11.46% 11.46%
(1) Amount comprised of total nonperforming loans plus the recorded balance
of $1.2 million on a pooled bank trust preferred security investment
for which the Bank has not received any contractual payments of
interest or principal since March 2009.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME
(Dollars In thousands)
For the Three Months Ended
----------------------------------
June 30, 2009
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,236,793 $ 47,662 5.89%
Other loans 1,631 37 9.07
Mortgage-backed securities 270,515 2,969 4.39
Investment securities 15,716 194 4.94
Other short-term investments 261,922 858 1.31
----------- ---------- ----------
Total interest earning assets 3,786,577 $ 51,720 5.46%
----------- ----------
Non-interest earning assets 224,896
-----------
Total assets $ 4,011,473
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 112,877 $ 256 0.91%
Money Market accounts 723,094 2,550 1.41
Savings accounts 288,944 307 0.43
Certificates of deposit 1,075,774 8,605 3.21
----------- ---------- ----------
Total interest bearing
deposits 2,200,689 11,718 2.14
Borrowed Funds 1,286,840 13,713 4.27
----------- ---------- ----------
Total interest-bearing
liabilities 3,487,529 $ 25,431 2.92%
----------- ---------- ----------
Non-interest bearing checking
accounts 98,277
Other non-interest-bearing
liabilities 144,465
-----------
Total liabilities 3,730,271
Stockholders' equity 281,202
-----------
Total liabilities and stockholders'
equity $ 4,011,473
===========
Net interest income $ 26,289
==========
Net interest spread 2.54%
==========
Net interest-earning assets $ 299,048
===========
Net interest margin 2.78%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.57%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,298,966 $ 11,718 2.04%
Interest earning assets (excluding
prepayment and other fees) 5.43%
For the Three Months Ended
----------------------------------
March 31, 2009
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,309,307 $ 48,329 5.84%
Other loans $ 1,699 37 8.71
Mortgage-backed securities $ 292,865 3,280 4.48
Investment securities $ 22,806 245 4.30
Other short-term investments $ 227,015 503 0.89
----------- ---------- ----------
Total interest earning assets $ 3,853,692 $ 52,394 5.44%
----------- ----------
Non-interest earning assets $ 186,070
-----------
Total assets $ 4,039,762
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 109,621 $ 407 1.51%
Money Market accounts $ 712,311 3,596 2.05
Savings accounts $ 272,893 353 0.52
Certificates of deposit $ 1,130,672 9,856 3.54
----------- ---------- ----------
Total interest bearing
deposits $ 2,225,497 14,212 2.59
Borrowed Funds $ 1,321,340 14,042 4.31
----------- ---------- ----------
Total interest-bearing
liabilities $ 3,546,837 $ 28,254 3.23%
----------- ---------- ----------
Non-interest bearing checking
accounts $ 96,116
Other non-interest-bearing
liabilities $ 117,737
-----------
Total liabilities $ 3,760,690
Stockholders' equity $ 279,072
-----------
Total liabilities and stockholders'
equity $ 4,039,762
===========
Net interest income $ 24,140
==========
Net interest spread 2.21%
==========
Net interest-earning assets $ 306,855
===========
Net interest margin 2.51%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.65%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,321,613 $ 14,212 2.48%
Interest earning assets (excluding
prepayment and other fees) 5.41%
For the Three Months Ended
----------------------------------
June 30, 2008
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,004,756 $ 44,147 5.88%
Other loans 1,815 41 9.04
Mortgage-backed securities 303,581 3,370 4.44
Investment securities 34,540 364 4.22
Other short-term investments 116,778 1,346 4.61
----------- ---------- ----------
Total interest earning assets 3,461,470 $ 49,268 5.69%
----------- ----------
Non-interest earning assets 197,614
-----------
Total assets $ 3,659,084
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 96,174 $ 580 2.42%
Money Market accounts $ 712,160 4,443 2.50
Savings accounts $ 278,782 399 0.57
Certificates of deposit $ 978,975 9,030 3.70
----------- ---------- ----------
Total interest bearing
deposits $ 2,066,091 14,452 2.81
Borrowed Funds $ 1,108,931 11,706 4.23
----------- ---------- ----------
Total interest-bearing
liabilities $ 3,175,022 $ 26,158 3.30%
----------- ----------
Non-interest bearing checking
accounts $ 92,386
Other non-interest-bearing
liabilities $ 120,703
-----------
Total liabilities $ 3,388,111
Stockholders' equity $ 270,973
-----------
Total liabilities and stockholders'
equity $ 3,659,084
===========
Net interest income $ 23,110
==========
Net interest spread 2.39%
==========
Net interest-earning assets $ 286,448
===========
Net interest margin 2.67%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 109.02%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,158,477 $ 14,452 2.69%
Interest earning assets (excluding
prepayment and other fees) 5.60%
Contact Information: Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279