News Column

Dime Community Bancshares, Inc. Reports Earnings

January 27, 2014

BROOKLYN, NY -- (Marketwired) -- 01/27/14 -- Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the "Company" or "Dime"), the parent company of The Dime Savings Bank of Williamsburgh (the "Bank"), today reported financial results for the quarter and fiscal year ended December 31, 2013 . Consolidated net income was $43.5 million , or $1.23 per diluted share, for the year ended December 31, 2013 , compared to $40.3 million , or $1.17 per diluted share, for the year ended December 31, 2012 . Consolidated net income for the quarter ended December 31, 2013 was $10.3 million , or $0.29 per diluted share, compared to $10.6 million , or $0.30 per diluted share, for the quarter ended September 30, 2013 , and $6.7 million , or $0.19 per diluted share, for the quarter ended December 31, 2012 . Excluding non-recurring items, net income would have been $12.8 million , or $0.37 per diluted share, during the three months ended December 31, 2012 , compared to $0.29 for the quarter ended December 31, 2013 . Vincent F. Palagiano , Chairman and Chief Executive Officer of Dime, commented, "The combination of low operating expenses and low credit costs enabled Dime to once again earn double digit returns, even in the face of tighter spreads. Return on average tangible (leverage) equity exceeded 11.9%, and return on average assets was 1.09% for the year." Management's Discussion of 2013 versus 2012 Results Net interest income was up $18.6 million , or 16.9% for the year ended December 31, 2013 compared to the year ended December 31, 2012 , reflecting a decline of $39.1 million in interest expense that exceeded a $20.5 million decline in interest income. Interest expense was abnormally high in 2012, driven by $28.8 million for the cost of an early extinguishment of high-costing wholesale borrowings. This was a partial balance sheet restructuring transaction of a non-recurring nature. Reported Net Interest Margin ("NIM") showed a year-over-year gain, rising to 3.39% for 2013, from 2.92% for 2012. However, after adjusting for certain items (prepayment fee income and prepayment penalty on early extinguishment of debt), the "core" NIM declined year-over-year, from 3.28% for 2012 to 3.03% for 2013. Further comparing 2013 to 2012, non-interest income, excluding gains or losses on trading securities and the disposal of assets, declined by $1.9 million (due primarily to a large reduction in the liability for losses on loans sold to Fannie Mae recognized during 2012); credit loss provisions declined by $3.5 million ; and operating expenses remained flat. Loan prepayment fee income (included in interest income) was $13.4 million in 2013, versus $14.6 million in 2012. There was another significant transaction of a non-recurring nature in December 2012 : a $13.7 million pre-tax gain on the sale of property. The net outcome of all of the above was a $3.2 million increase in Net Income, or a $0.06 increase in earnings per diluted share, on a year-over-year basis. Average common diluted shares outstanding were 35.3 million in 2013 versus 34.4 million in 2012, an increase of 2.7%. Total consolidated assets grew by 3.1% in 2013, fueled by growth in total real estate loans of 5.5%. Loan originations topped $1.0 billion for 2013, but the loan portfolio grew by only $193.7 million , evidence of the prepayment in the portfolio due to sustained low 5 and 10-year Treasury rates. Tangible (leverage) common equity grew by $38.8 million in 2013, or 11.2%, to $384.2 million , primarily through earnings, but supplemented with stock option exercises. As a result, the Tier 1 core leverage ratio (tangible common equity) grew to 9.7% at December 31, 2013 from 9.0% a year earlier. Management's Discussion of Quarterly Operating Results Net Interest Margin Net Interest Margin was 3.24% during the quarter ended December 31, 2013 compared to 3.35% during the September 2013 quarter. The "core" NIM, which excludes the effect of loan prepayment fee income, decreased from 2.98% during the September 2013 quarter to 2.90% during the December 2013 quarter, caused primarily by a reduction of 12 basis points in the average yield on real estate loans (also excluding the effects of loan prepayment fee income). A 1 basis point decline in the average cost of deposits helped to reduce the average cost of all interest bearing liabilities, as bank deposit rates (mainly short term) remained low in the Bank's market area. Declining loan yields resulted from the cumulative effect of portfolio prepayment and amortization activities during 2013 (in particular, the first six months of the year), as U.S. Treasury yields hovered at historically low levels. During the latter half of 2013, there was a slight uptick in 5 to 10-year Treasuries, which has not quite yet been reflected in the pricing on multifamily and commercial real estate loans. According to Mr. Palagiano , "Competition remained heavy among New York bank competitors for our typical loan product. As long as there are portfolios to be filled, pricing will continue to be favorable to borrowers." For Dime, pricing for prime, low loan-to-value multifamily property loans remains in the 3.5% to 4.0% range. Net Interest Income Net interest income was $30.8 million in the quarter ended December 31, 2013 , down $886,000 from $31.7 million reported in the September 2013 quarter, and up $22.2 million from $8.6 million reported in the December 2012 quarter. Prepayment fee income on loans totaled $3.2 million during the December 2013 quarter, compared to $3.4 million recognized in the September 2013 quarter and $3.7 million during the December 2012 quarter. During the three months ended December 31, 2012 , the Company recognized a $25.6 million pre-tax charge on the borrowing prepayment. Absent the impact of loan prepayment fee income and borrowing prepayment costs, net interest income was $27.6 million during the December 31, 2013 quarter, down $670,000 from the September 30, 2013 quarter and $2.8 million from the December 31, 2012 quarter. The decline in net interest income (excluding loan prepayment fee income) from the September 2013 quarter resulted primarily from a decline of 11 basis points in the average yield earned on the Company's interest earning assets, reflecting the ongoing loan refinancing activity. Provision/Allowance For Loan Losses The Company recognized a recapture of $56,000 to the allowance for loan losses and net charge-offs of $331,000 during the December 2013 quarter, resulting in a combined reduction of $387,000 in the allowance for loan losses from September 30, 2013 to December 31, 2013 . The $56,000 recapture to the allowance for loan losses recognized during the December 2013 quarter reflected the continued stability of the credit quality of the Bank's loan portfolio. As a result, the allowance for loan losses as a percentage of total loans stood at 0.54%, down slightly from 0.56% at the close of the prior quarter. Non-Interest Income Non-interest income was $1.8 million for the quarter ended December 31, 2013 , a reduction of $171,000 from the previous quarter, due primarily to lower fees collected on portfolio loans. Non-Interest Expense Non-interest expense was $15.5 million in the quarter ended December 31, 2013 , in line with both the previous quarter and the forecasted level of $15.5 million . Non-interest expense was 1.55% of average assets during the most recent quarter. The efficiency ratio approximated 47.5% during the same period. Income Tax Expense The effective tax rate approximated 40.1% during the most recent quarter, generally in line with the 40.0% forecasted level. Management's Discussion of the 4 th Quarter 2013 Balance Sheet Total assets were $4.03 billion at December 31, 2013 , up $12.8 million from September 30, 2013 . The total real estate loan portfolio grew by approximately $30.4 million , funded in part from cash on hand. $213.5 million of real estate loans closed during the quarter, compared to $289.6 million in the 3rd quarter of 2013. For comparative and trending purposes, loan originations in the 1st and 2nd quarters of 2013 were $325.0 million and $242.8 million , respectively. Deposits declined by $102.0 million during the most recent quarter, comprised mainly of repricing promotional single service households for which the Bank declined to compete. Federal Home Loan Bank of New York ("FHLBNY") advances increased by $137.5 million during the same quarter. Real Estate Loans Real estate loan originations were $213.5 million during the December 2013 quarter, at a weighted average interest rate of 3.80%. Of this amount, $61.3 million represented loan refinances from the existing portfolio. Also during the quarter, loan amortization and satisfactions, including the $61.3 million of refinances of existing loans, totaled $193.5 million , or 21.0% (annualized) of the quarterly average portfolio balance, at an average rate of 5.35%. Total loan commitments stood at $139.8 million at December 31, 2013 , with a weighted average rate of 3.77%. The average yield on the loan portfolio (excluding prepayment fee income) during the quarter ended December 31, 2013 was 4.16%, compared to 4.28% during the September 2013 quarter and 4.85% during the December 2012 quarter. Credit Summary Non-performing loans were $12.5 million , or 0.34% of total loans, at December 31, 2013 , up from $8.8 million , or 0.24% of total loans, at September 30, 2013 . This increase resulted primarily from the addition of one $4.4 million loan to non-accrual status. Accruing loans delinquent between 30 and 89 days decreased to $1.6 million , or approximately 0.04% of total loans, at December 31, 2013 , compared to $3.8 million , or 0.10% of total loans, at September 30, 2013 . At December 31, 2013 , non-performing assets represented 3.7% of the sum of tangible capital plus the allowance for loan losses (this statistic is otherwise known as the "Texas Ratio") (see table below). This number compares very favorably to both industry and regional averages. The remaining pool of loans serviced for Fannie Mae totaled $208.4 million as of December 31, 2013 , down from $216.1 million at September 30, 2013 . Within the pool of serviced loans previously sold to Fannie Mae with recourse exposure, total loans delinquent 30 days or more approximated $400,000 at both December 31, 2013 and September 30, 2013 . Due to both ongoing amortization and the near absence of problem loans within the Fannie Mae portfolio, the Company determined that its liability for the first loss position could be reduced by $60,000 , which was recognized during the quarter ended December 31, 2013 . Deposits and Borrowed Funds Retail deposits decreased $102.0 million from September 30, 2013 to December 31, 2013 , reflecting net outflows of $79.1 million in money market deposits and $24.2 million in certificates of deposit ("CDs") during the period. The Bank did not implement any significant promotional deposit activities during the December 2013 quarter, and enacted slight reductions in rates that resulted in a reduction of 1 basis point in the average cost of deposits during the December 2013 quarter. The Bank also closed its Sunnyside branch during the December 2013 quarter, relocating the deposits to its nearby Long Island City branch location. At December 31, 2013 , bank-wide average deposit balances approximated $100.3 million per branch. The Bank transacted $226.0 million of new fixed-rate FHLBNY borrowings during the quarter ended December 31, 2013 , of which $88.5 million were utilized to replace borrowings that matured during the period. Of the $226.0 million of new borrowings, $126.0 million had a weighted average maturity of 3.7 years and a weighted average cost of 1.15%, providing an offset to the fixed rate loan portfolio, and an element of NIM protection should funding rates rise during the term. The remaining balance of new advances, approximately $100 million , were short-term in nature, and had a weighted average maturity of 1 month and a weighted average cost of 0.39%. Management expects to replace the short-term borrowings with both permanent longer-term advances and deposits in the upcoming quarter. The Bank intends to continue the use of longer-term FHLBNY advances to supplement deposit funding when deemed appropriate. Capital The Company's consolidated Tier 1 core leverage ratio (tangible common equity) grew during the most recent quarter as a result of both increased retained earnings and stock option exercise activity. Consolidated tangible capital was 9.67% of tangible assets at December 31, 2013 , an increase of 16 basis points from September 30, 2013 . The Bank's tangible (leverage) capital ratio was 9.52% at December 31, 2013 , down from 10.24% at September 30, 2013 , due to both asset growth and aggregate dividends of $37.3 million paid to the Company during the December 2013 quarter. The Bank's Total Risk-Based Capital Ratio was 13.36% at December 31, 2013 , compared to 14.07% at September 30, 2013 . Reported diluted EPS exceeded the quarterly cash dividend rate per share by 107% during the December 2013 quarter, equating to a 48% payout ratio. Additions to capital from earnings and stock option exercises during the most recent quarterly period caused tangible book value per share to increase $0.17 sequentially during the most recent quarter, to $10.47 at December 31, 2013 . OUTLOOK FOR THE YEAR 2014 AND THE QUARTER ENDING MARCH 31, 2014 At December 31, 2013 , Dime had outstanding loan commitments totaling $139.8 million , all of which are likely to close during the quarter ending March 31, 2014 , at an average interest rate approximating 3.77%. For the year ending December 31, 2014 , balance sheet growth is targeted to approximate 8.0 - 10.0%, subject to change to reflect market conditions. Loan prepayments and amortization are currently projected to run in the 15% - 20% range throughout the year. On the liability side, deposit funding costs are expected to remain near current historically low levels through the first quarter of 2014. The Bank has $115.8 million of CDs maturing at an average cost of 0.86% during the quarter ending March 31, 2014 . Offering rates on 12-month term CDs currently approximate 50 basis points. The Company has $100 million in short-term borrowings due to mature during the quarter ending March 31, 2014 . In the coming quarter, management expects to utilize a combination of FHLBNY advances and retail deposits to fund growth. Advances are anticipated to be of longer duration (3 to 5 year fixed terms) to provide a closer duration match to new loans and a hedge against future higher interest rates. The Bank anticipates launching promotional deposit campaigns throughout the first quarter of 2014, the success of which will determine the direction and degree of change in the cost of deposits, with a slight upward bias in the March 2014 quarter, and fully reflected in the June 2014 quarter. Loan loss provisioning will likely continue to be a function of loan portfolio growth, incurred and anticipated losses, and the overall credit quality of the loan portfolio. Absent any unforeseen items, non-interest expense is expected to approximate $15.5 million during the March 2014 quarter. The Company projects that the consolidated effective tax rate will approximate 41.0% in the March 2014 quarter. ABOUT DIME COMMUNITY BANCSHARES, INC. The Company (NASDAQ: DCOM) had $4.03 billion in consolidated assets as of December 31, 2013 , and is the parent company of the Bank. The Bank was founded in 1864, is headquartered in Brooklyn, New York , and currently has twenty-five branches located throughout Brooklyn , Queens , the Bronx and Nassau County, New York . More information on the Company and Dime can be found on the Dime's Internet website at www.dime.com . This News Release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of Dime; changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company's business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands except share amounts) December 31, September 30, December 31, 2013 2013 2012 ------------ ------------- ------------ ASSETS: Cash and due from banks $ 45,777 $ 65,713 $ 79,076 Investment securities held to maturity 5,341 5,622 5,927 Investment securities available for sale 18,649 18,468 32,950 Trading securities 6,822 5,262 4,874 Mortgage-backed securities available for sale 31,543 34,226 49,021 Real Estate Loans: One-to-four family and cooperative apartment 73,956 78,504 91,876 Multifamily and loans underlying cooperatives (1) 2,917,380 2,859,729 2,670,973 Commercial real estate (1) 700,606 723,312 735,224 Construction and land acquisition 268 299 476 Unearned discounts and net deferred loan fees 5,170 5,095 4,836 ------------ ------------- ------------ Total real estate loans 3,697,380 3,666,939 3,503,385 ------------ ------------- ------------ Other loans 2,139 2,109 2,423 Allowance for loan losses (20,153) (20,540) (20,550) ------------ ------------- ------------ Total loans, net 3,679,366 3,648,508 3,485,258 ------------ ------------- ------------ Loans held for sale - - 560 Premises and fixed assets, net 29,701 29,850 30,518 Federal Home Loan Bank of New York capital stock 48,051 41,863 45,011 Goodwill 55,638 55,638 55,638 Other Real Estate Owned 18 - - Other assets 107,185 110,175 116,566 ------------ ------------- ------------ TOTAL ASSETS $ 4,028,091 $ 4,015,325 $ 3,905,399 ============ ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Non-interest bearing checking $ 174,457 $ 170,250 $ 159,144 Interest Bearing Checking 87,301 87,995 95,159 Savings 376,900 379,113 371,792 Money Market 1,040,079 1,119,212 961,359 ------------ ------------- ------------ Sub-total 1,678,737 1,756,570 1,587,454 ------------ ------------- ------------ Certificates of deposit 828,409 852,594 891,975 ------------ ------------- ------------ Total Due to Depositors 2,507,146 2,609,164 2,479,429 ------------ ------------- ------------ Escrow and other deposits 69,404 98,160 82,753 Federal Home Loan Bank of New York advances 910,000 772,500 842,500 Trust Preferred Notes Payable 70,680 70,680 70,680 Other liabilities 35,698 42,076 38,463 ------------ ------------- ------------ TOTAL LIABILITIES 3,592,928 3,592,580 3,513,825 ------------ ------------- ------------ STOCKHOLDERS' EQUITY: Common stock ( $0.01 par, 125,000,000 shares authorized, 52,854,483 shares, 52,692,461 shares and 52,021,149 shares issued at December 31, 2013 , September 30, 2013 and December 31, 2012 , respectively, and 36,712,951 shares, 36,548,503 shares, and 35,714,269 shares outstanding at December 31, 2013 , September 30, 2013 and December 31, 2012, respectively) 528 526 520 Additional paid-in capital 251,910 250,105 239,041 Retained earnings 402,986 397,664 379,166 Unallocated common stock of Employee Stock Ownership Plan (2,776) (2,834) (3,007) Unearned Restricted Stock Award common stock (3,193) (3,693) (3,122) Common stock held by the Benefit Maintenance Plan (9,013) (9,013) (8,800) Treasury stock (16,141,532 shares, 16,143,958 shares and 16,306,880 shares at December 31, 2013 , September 30, 2013 and December 31, 2012, respectively) (200,520) (200,550) (202,584) Accumulated other comprehensive loss, net of deferred taxes (4,759) (9,460) (9,640) ------------ ------------- ------------ TOTAL STOCKHOLDERS' EQUITY 435,163 422,745 391,574 ------------ ------------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,028,091 $ 4,015,325 $ 3,905,399 ============ ============= ============ (1) While the loans within both of these categories are often considered "commercial real estate" in nature, multifamily and loans underlying cooperatives are here reported separately from commercial real estate loans in order to emphasize the residential nature of the collateral underlying a significant component of the total loan portfolio. DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars In thousands except share and per share amounts) For the Three Months Ended ----------------------------------------- December 31, September 30, December 31, 2013 2013 2012 ------------ ------------- ------------ Interest income: Loans secured by real estate $ 41,303 $ 42,451 $ 45,414 Other loans 26 25 28 Mortgage-backed securities 290 310 569 Investment securities 188 84 220 Federal funds sold and other short-term investments 422 416 518 ------------ ------------- ------------ Total interest income 42,229 43,286 46,749 ------------ ------------- ------------ Interest expense: Deposits and escrow 4,687 4,908 5,330 Borrowed funds 6,775 6,725 32,868 ------------ ------------- ------------ Total interest expense 11,462 11,633 38,198 ------------ ------------- ------------ Net interest income 30,767 31,653 8,551 Provision for loan losses (56) 240 63 ------------ ------------- ------------ Net interest income after provision for loan losses 30,823 31,413 8,488 ------------ ------------- ------------ Non-interest income: Service charges and other fees 905 1,015 605 Mortgage banking income, net 123 76 293 Other than temporary impairment ("OTTI") charge on securities (1) - - - Gain (loss) on sale of securities and other assets - (21) 14,704 Gain (loss) on trading securities 78 104 (23) Other 731 834 919 ------------ ------------- ------------ Total non-interest income 1,837 2,008 16,498 ------------ ------------- ------------ Non-interest expense: Compensation and benefits 9,578 9,466 9,012 Occupancy and equipment 2,716 2,697 2,621 Federal deposit insurance premiums 480 515 500 Other 2,687 2,897 2,584 ------------ ------------- ------------ Total non-interest expense 15,461 15,575 14,717 ------------ ------------- ------------ Income before taxes 17,199 17,846 10,269 Income tax expense 6,891 7,215 3,534 ------------ ------------- ------------ Net Income $ 10,308 $ 10,631 $ 6,735 ============ ============= ============ Earnings per Share ("EPS"): Basic $ 0.29 $ 0.30 $ 0.19 ============ ============= ============ Diluted $ 0.29 $ 0.30 $ 0.19 ============ ============= ============ Average common shares outstanding for Diluted EPS 35,717,449 35,527,503 34,594,167 (1) Total OTTI charges on securities are summarized as follows for the periods presented: Credit component (shown above) $ - $ - $ - Non-credit component not included in earnings - - - ------------ ------------- ------------ Total OTTI charges $ - $ - $ - ------------ ------------- ------------ For the Year Ended --------------------------- December 31, December 31, 2013 2012 ------------ ------------- Interest income: Loans secured by real estate $ 171,594 $ 189,149 Other loans 101 104 Mortgage-backed securities 1,413 3,025 Investment securities 503 1,263 Federal funds sold and other short-term investments 1,845 2,413 ------------ ------------- Total interest income 175,456 195,954 ------------ ------------- Interest expense: Deposits and escrow 19,927 21,779 Borrowed funds 27,042 64,333 ------------ ------------- Total interest expense 46,969 86,112 ------------ ------------- Net interest income 128,487 109,842 Provision for loan losses 369 3,921 ------------ ------------- Net interest income after provision for loan losses 128,118 105,921 ------------ ------------- Non-interest income: Service charges and other fees 3,459 3,445 Mortgage banking income, net 473 1,768 Other than temporary impairment ("OTTI") charge on securities (1) - (181) Gain (loss) on sale of securities and other assets 89 14,748 Gain (loss) on trading securities 265 113 Other 3,177 3,956 ------------ ------------- Total non-interest income 7,463 23,849 ------------ ------------- Non-interest expense: Compensation and benefits 38,293 37,647 Occupancy and equipment 10,451 10,052 Federal deposit insurance premiums 1,951 2,057 Other 11,997 12,816 ------------ ------------- Total non-interest expense 62,692 62,572 ------------ ------------- Income before taxes 72,889 67,198 Income tax expense 29,341 26,890 ------------ ------------- Net Income $ 43,548 $ 40,308 ============ ============= Earnings per Share ("EPS"): Basic $ 1.23 $ 1.18 ============ ============= Diluted $ 1.23 $ 1.17 ============ ============= Average common shares outstanding for Diluted EPS 35,306,272 34,364,453 (1) Total OTTI charges on securities are summarized as follows for the periods presented: Credit component (shown above) $ - $ 181 Non-credit component not included in earnings - 6 ------------ ------------- Total OTTI charges $ - $ 187 ------------ ------------- DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SELECTED FINANCIAL HIGHLIGHTS (Dollars In thousands except per share amounts) For the Three Months Ended ----------------------------------------- December 31, September 30, December 31, 2013 2013 2012 ------------ ------------- ------------ Reconciliation of Reported and Adjusted Earnings (1): Net Income $ 10,308 $ 10,631 $ 6,735 Add: After-tax expense associated with the prepayment of borrowings - - 14,032 Add: After-tax charge for OTTI on securities - - - Less: After tax gain on sale of real estate - - (7,529) Less: After tax gain on sale of equity mutual funds - - (487) ------------ ------------- ------------ Adjusted net income $ 10,308 $ 10,631 $ 12,751 ============ ============= ============ Performance Ratios (Based upon Reported Earnings): Reported EPS (Diluted) $ 0.29 $ 0.30 $ 0.19 Return on Average Assets 1.03% 1.07% 0.69% Return on Average Stockholders' Equity 9.62% 10.19% 7.06% Return on Average Tangible Stockholders' Equity 10.84% 11.49% 7.97% Net Interest Spread 3.04% 3.17% 0.29% Net Interest Margin 3.24% 3.35% 0.93% Non-interest Expense to Average Assets 1.55% 1.56% 1.51% Efficiency Ratio 47.53% 46.38% 141.95% Effective Tax Rate 40.07% 40.43% 34.41% Performance Ratios (Based upon "Adjusted Net Income" as calculated above): EPS (Diluted) $ 0.29 $ 0.30 $ 0.37 Return on Average Assets 1.03% 1.07% 1.31% Return on Average Stockholders' Equity 9.62% 10.19% 13.37% Return on Average Tangible Stockholders' Equity 10.84% 11.49% 15.09% Net Interest Spread 3.04% 3.17% 3.09% Net Interest Margin 3.24% 3.35% 3.30% Non-interest Expense to Average Assets 1.55% 1.56% 1.51% Efficiency Ratio 47.53% 46.38% 40.94% Effective Tax Rate 40.07% 40.43% 39.96% Book Value and Tangible Book Value Per Share: Stated Book Value Per Share $ 11.85 $ 11.57 $ 10.96 Tangible Book Value Per Share 10.47 10.30 9.67 Average Balance Data: Average Assets $ 3,997,842 $ 3,980,840 $ 3,890,420 Average Interest Earning Assets 3,803,406 3,782,043 3,686,130 Average Stockholders' Equity 428,396 417,459 381,368 Average Tangible Stockholders' Equity 380,417 369,982 337,961 Average Loans 3,667,231 3,646,845 3,443,136 Average Deposits 2,547,115 2,623,840 2,459,385 Asset Quality Summary: Net charge-offs $ 331 $ 202 $ 207 Non-performing Loans (excluding loans held for sale) 12,549 8,838 8,888 Non-performing Loans/ Total Loans 0.34% 0.24% 0.25% Nonperforming Assets (2) $ 13,465 $ 9,735 $ 10,340 Nonperforming Assets/Total Assets 0.33% 0.24% 0.26% Allowance for Loan Loss/Total Loans 0.54% 0.56% 0.59% Allowance for Loan Loss/Non- performing Loans 160.59% 232.41% 231.21% Loans Delinquent 30 to 89 Days at period end $ 1,603 $ 3,763 $ 7,171 Consolidated Tangible Stockholders' Equity to Tangible Assets at period end 9.67% 9.51% 8.97% Regulatory Capital Ratios (Bank Only): Tier One Core Leverage Ratio (Tangible Common Equity) 9.52% 10.24% 9.98% Tier One Risk Based Capital Ratio 12.64% 13.35% 12.95% Total Risk Based Capital Ratio 13.36% 14.07% 13.67% For the Year Ended --------------------------- December 31, December 31, 2013 2012 ------------ ------------- Reconciliation of Reported and Adjusted Earnings (1): Net Income $ 43,548 $ 40,308 Add: After-tax expense associated with the prepayment of borrowings - 14,032 Add: After-tax charge for OTTI on securities - 99 Less: After tax gain on sale of real estate properties - (7,529) Less: After tax gain on sale of equity mutual funds - (511) ------------ ------------- Adjusted net income $ 43,548 $ 46,399 ============ ============= Performance Ratios (Based upon Reported Earnings): Reported EPS (Diluted) $ 1.23 $ 1.17 Return on Average Assets 1.09% 1.02% Return on Average Stockholders' Equity 10.58% 10.73% Return on Average Tangible Stockholders' Equity 11.93% 12.24% Net Interest Spread 3.19% 2.58% Net Interest Margin 3.39% 2.92% Non-interest Expense to Average Assets 1.57% 1.59% Efficiency Ratio 46.23% 52.58% Effective Tax Rate 40.25% 40.02% Performance Ratios (Based upon "Adjusted Net Income" as calculated above): EPS (Diluted) $ 1.23 $ 1.35 Return on Average Assets 1.09% 1.18% Return on Average Stockholders' Equity 10.58% 12.36% Return on Average Tangible Stockholders' Equity 11.93% 14.09% Net Interest Spread 3.19% 3.06% Net Interest Margin 3.39% 3.28% Non-interest Expense to Average Assets 1.57% 1.59% Efficiency Ratio 46.23% 42.34% Effective Tax Rate 40.25% 40.74% Book Value and Tangible Book Value Per Share: Stated Book Value Per Share $ 11.85 $ 10.96 Tangible Book Value Per Share 10.47 9.67 Average Balance Data: Average Assets $ 3,983,310 $ 3,947,043 Average Interest Earning Assets 3,787,188 3,762,007 Average Stockholders' Equity 411,763 375,511 Average Tangible Stockholders' Equity 365,101 329,282 Average Loans 3,606,039 3,402,838 Average Deposits 2,589,485 2,397,586 Asset Quality Summary: Net charge-offs (recoveries) $ 766 $ 3,707 Non-performing Loans (excluding loans held for sale) 12,549 8,888 Non-performing Loans/ Total Loans 0.34% 0.25% Nonperforming Assets (2) $ 13,465 $ 10,340 Nonperforming Assets/Total Assets 0.33% 0.26% Allowance for Loan Loss/Total Loans 0.54% 0.59% Allowance for Loan Loss/Non- performing Loans 160.59% 231.21% Loans Delinquent 30 to 89 Days at period end $ 1,603 $ 7,171 Consolidated Tangible Stockholders' Equity to Tangible Assets at period end 9.67% 8.97% Regulatory Capital Ratios (Bank Only): Tier One Core Leverage Ratio (Tangible Common Equity) 9.52% 9.98% Tier One Risk Based Capital Ratio 12.64% 12.95% Total Risk Based Capital Ratio 13.36% 13.67% (1) Adjusted earnings is a "non-GAAP" measure. A reconciliation from the comparable GAAP measure is provided herein. (2) Amount comprised of total non-accrual loans (including loans held for sale) and the recorded balance of pooled bank trust preferred security investments for which the Bank had not received any contractual payments of interest or principal in over 90 days. DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME (Dollars In thousands) For the Three Months Ended ------------------------------------- December 31, 2013 ------------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- ----------- Assets: Interest-earning assets: Real estate loans $ 3,665,008 $ 41,303 4.51% Other loans 2,223 26 4.68 Mortgage-backed securities 31,631 290 3.67 Investment securities 29,048 188 2.59 Other short-term investments 75,496 422 2.24 ------------ ----------- ----------- Total interest earning assets 3,803,406 $ 42,229 4.44% ------------ ----------- Non-interest earning assets 194,436 ------------ Total assets $ 3,997,842 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking accounts $ 89,293 $ 47 0.21% Money Market accounts 1,063,748 1,343 0.50 Savings accounts 376,965 47 0.05 Certificates of deposit 842,099 3,250 1.53 ------------ ----------- ----------- Total interest bearing deposits 2,372,105 4,687 0.78 Borrowed Funds 867,438 6,775 3.10 ------------ ----------- ----------- Total interest-bearing liabilities 3,239,543 $ 11,462 1.40% ------------ ----------- Non-interest bearing checking accounts 175,010 Other non-interest-bearing liabilities 154,893 ------------ Total liabilities 3,569,446 Stockholders' equity 428,396 ------------ Total liabilities and stockholders' equity $ 3,997,842 ============ Net interest income $ 30,767 =========== Net interest spread 3.04% =========== Net interest-earning assets $ 563,863 ============ Net interest margin 3.24% =========== Ratio of interest-earning assets to interest-bearing liabilities 117.41% =========== Deposits (including non-interest bearing checking accounts) $ 2,547,115 $ 4,687 0.73% SUPPLEMENTAL INFORMATION Loan prepayment and late payment fee income $ 3,216 ------------ ----------- ----------- Borrowing prepayment costs - ------------ ----------- ----------- Real estate loans (excluding prepayment and late payment fees) 4.16% ------------ ----------- ----------- Interest earning assets (excluding prepayment and late payment fees) 4.10% ------------ ----------- ----------- Borrowings (excluding prepayment costs) $ 867,438 $ 6,775 3.10% ------------ ----------- ----------- Interest bearing liabilities (excluding borrowing prepayment costs) 1.40% ------------ ----------- ----------- Net Interest income (excluding loan prepayment and late payment fees and borrowing prepayment costs) $ 27,551 ------------ ----------- ----------- Net Interest margin (excluding loan prepayment and late payment fees and borrowing prepayment costs) 2.90% ------------ ----------- ----------- For the Three Months Ended ------------------------------------- September 30, 2013 ------------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- ----------- Assets: Interest-earning assets: Real estate loans $ 3,644,557 $ 42,451 4.66% Other loans 2,288 25 4.37 Mortgage-backed securities 35,219 310 3.52 Investment securities 29,122 84 1.15 Other short-term investments 70,857 416 2.35 ------------ ----------- ----------- Total interest earning assets 3,782,043 $ 43,286 4.58% ------------ ----------- Non-interest earning assets 198,797 ------------ Total assets $ 3,980,840 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking accounts $ 88,471 $ 49 0.22% Money Market accounts 1,122,644 1,413 0.50 Savings accounts 380,088 48 0.05 Certificates of deposit 862,792 3,398 1.56 ------------ ----------- ----------- Total interest bearing deposits 2,453,995 4,908 0.79 Borrowed Funds 810,191 6,725 3.29 ------------ ----------- ----------- Total interest-bearing liabilities 3,264,186 $ 11,633 1.41% ------------ ----------- Non-interest bearing checking accounts 169,845 Other non-interest-bearing liabilities 129,350 ------------ Total liabilities 3,563,381 Stockholders' equity 417,459 ------------ Total liabilities and stockholders' equity $ 3,980,840 ============ Net interest income $ 31,653 =========== Net interest spread 3.17% =========== Net interest-earning assets $ 517,857 ============ Net interest margin 3.35% =========== Ratio of interest-earning assets to interest-bearing liabilities 115.86% =========== Deposits (including non-interest bearing checking accounts) $ 2,623,840 $ 4,908 0.74% SUPPLEMENTAL INFORMATION Loan prepayment and late payment fee income $ 3,467 ------------ ----------- ----------- Borrowing prepayment costs - ------------ ----------- ----------- Real estate loans (excluding prepayment and late payment fees) 4.28% ------------ ----------- ----------- Interest earning assets (excluding prepayment and late payment fees) 4.21% ------------ ----------- ----------- Borrowings (excluding prepayment costs) $ 810,191 $ 6,725 3.29% ------------ ----------- ----------- Interest bearing liabilities (excluding borrowing prepayment costs) 1.41% ------------ ----------- ----------- Net Interest income (excluding loan prepayment and late payment fees and borrowing prepayment costs) $ 28,186 ------------ ----------- ----------- Net Interest margin (excluding loan prepayment and late payment fees and borrowing prepayment costs) 2.98% ------------ ----------- ----------- For the Three Months Ended ------------------------------------- December 31, 2012 ------------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- ----------- Assets: Interest-earning assets: Real estate loans $ 3,440,784 $ 45,414 5.28% Other loans 2,352 28 4.76 Mortgage-backed securities 60,129 569 3.79 Investment securities 48,089 220 1.83 Other short-term investments 134,776 518 1.54 ------------ ----------- ----------- Total interest earning assets 3,686,130 $ 46,749 5.07% ------------ ----------- Non-interest earning assets 204,290 ------------ Total assets $ 3,890,420 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking accounts $ 94,870 $ 96 0.40% Money Market accounts 929,856 1,296 0.55 Savings accounts 369,796 138 0.15 Certificates of deposit 910,335 3,800 1.66 ------------ ----------- ----------- Total interest bearing deposits 2,304,857 5,330 0.92 Borrowed Funds 876,604 32,868 14.92 ------------ ----------- ----------- Total interest-bearing liabilities 3,181,461 $ 38,198 4.78% ------------ ----------- Non-interest bearing checking accounts 154,528 Other non-interest-bearing liabilities 173,063 ------------ Total liabilities 3,509,052 Stockholders' equity 381,368 ------------ Total liabilities and stockholders' equity $ 3,890,420 ============ Net interest income $ 8,551 =========== Net interest spread 0.29% =========== Net interest-earning assets $ 504,669 ============ Net interest margin 0.93% =========== Ratio of interest-earning assets to interest-bearing liabilities 115.86% =========== Deposits (including non-interest bearing checking accounts) $ 2,459,385 $ 5,330 0.86% SUPPLEMENTAL INFORMATION Loan prepayment and late payment fee income $ 3,708 ------------ ----------- ----------- Borrowing prepayment costs $ 25,582 ------------ ----------- ----------- Real estate loans (excluding prepayment and late payment fees) 4.85% ------------ ----------- ----------- Interest earning assets (excluding prepayment and late payment fees) 4.67% ------------ ----------- ----------- Borrowings (excluding prepayment costs) $ 867,438 $ 7,286 3.31% ------------ ----------- ----------- Interest bearing liabilities (excluding borrowing prepayment costs) 1.58% ------------ ----------- ----------- Net Interest income (excluding loan prepayment and late payment fees and borrowing prepayment costs) $ 30,425 ------------ ----------- ----------- Net Interest margin (excluding loan prepayment and late payment fees and borrowing prepayment costs) 3.30% ------------ ----------- ----------- DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES UNAUDITED SCHEDULE OF NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS (Dollars In thousands) At At At December 31, September 30, December 31, Non-Performing Loans 2013 2013 2012 ------------ ------------- ------------ One- to four-family and cooperative apartment $ 1,242 $ 1,136 $ 938 Multifamily residential and mixed use residential real estate (1)(2) 1,197 1,993 507 Mixed use commercial real estate (2) 4,400 - 1,170 Commercial real estate 5,707 5,707 6,265 Construction - - - Other 3 2 8 ------------ ------------- ------------ Total Non-Performing Loans (3) $ 12,549 $ 8,838 $ 8,888 ------------ ------------- ------------ Other Non-Performing Assets Other real estate owned 18 - - Pooled bank trust preferred securities (4) 898 897 892 Non-performing loans held for sale: - Mixed use commercial real estate - - - Multifamily residential and mixed use residential real estate - - 560 ------------ ------------- ------------ Total Non-Performing Assets $ 13,465 $ 9,735 $ 10,340 ------------ ------------- ------------ Troubled Debt Restructurings ("TDRs") not included in non-performing loans (3) One- to four-family and cooperative apartment 934 938 948 Multifamily residential and mixed use residential real estate (1)(2) 1,148 1,899 1,953 Mixed use commercial real estate (2) - 711 729 Commercial real estate 16,538 29,570 41,228 ------------ ------------- Total Performing TDRs $ 18,620 $ 33,118 $ 44,858 ------------ ------------- ------------ (1) Includes loans underlying cooperatives. (2) While the loans within these categories are often considered "commercial real estate" in nature, they are classified separately in the table above to provide further emphasis of the discrete composition of their underlying real estate collateral. (3) Total non-performing loans include some loans that were modified in a manner that met the criteria for a TDR. These non-accruing TDRs, which totaled $5,707 at December 31, 2013 , $5,707 at September 30, 2013 and $6,265 at December 31, 2012 , are included in the non-performing loan table, but excluded from the TDR amount shown above. (4) These assets were deemed non-performing since the Company had, as of the dates indicated, not received any payments of principal or interest on them for a period of at least 90 days. PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES At At At December 31, September 30, December 31, 2013 2013 2012 ------------ ------------- ------------ Total Non-Performing Assets $ 13,465 $ 9,735 $ 10,340 Loans 90 days or more past due on accrual status (5) 1,031 1,398 190 ------------ ------------- ------------ TOTAL PROBLEM ASSETS $ 14,496 $ 11,133 $ 10,530 ------------ ------------- ------------ Tier One Capital - The Dime Savings Bank of Williamsburgh $ 376,717 $ 404,022 $ 383,042 Allowance for loan losses 20,153 20,540 20,550 ------------ ------------- ------------ TANGIBLE CAPITAL PLUS RESERVES $ 396,870 $ 424,562 $ 403,592 ------------ ------------- ------------ PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES 3.7% 2.6% 2.6% (5) These loans were, as of the respective dates indicated, expected to be either satisfied, made current or re-financed within the following twelve months, and were not expected to result in any loss of contractual principal or interest. These loans are not included in non-performing loans. Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279 Source: Dime Community Bancshares, Inc.


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