-- Net interest margin was 2.77%, up from 2.67% in the June 2008 quarter
and 2.28% in the September 2007 quarter.
-- Average cost of deposits decreased to 2.51% compared to 2.69% in the
June 2008 quarter and 3.52% in the September 2007 quarter.
-- Assets increased by 9% annualized fueled by continued strong
origination levels.
-- Real estate loan originations were $352.5 million at an average rate
of 5.86%, compared to $341.0 million at an average rate of 5.83% during the
quarter ended June 30, 2008 and $164.9 million at an average rate of 6.56%
during the quarter ended September 30, 2007.
-- The annualized loan amortization rate was 21%, compared to 17% during
the previous quarter.
-- Prepayment and other fees were $1.2 million, compared to $828,000 in
the June 2008 quarter and $752,000 in the September 2007 quarter.
-- The Company increased its quarterly loan loss provision to $596,000,
reflecting the increased volume of loan originations.
-- The Bank recorded a $1.7 million provision to mortgage banking income
related to expected losses on loans sold to Fannie Mae with recourse.
-- The Company grew tangible capital by $4.5 million, continuing to
strengthen its capital position.
-- The loan pipeline was $164.7 million at September 30, 2008.
-- Late in the quarter, the Bank sold approximately $100 million of
participations in loans at par to a third party institution, recording a
mortgage servicing gain of $662,000 on the sale. The Bank retained full
servicing of these loans, all of which were sold without recourse.
Regarding the $100 million of loan participation sales, according to Mr.
Palagiano, "This was a sale of multifamily loans to a third-party financial
institution other than Fannie Mae. We have experienced a robust loan
origination market in 2008. The Bank would like to continue to participate
in the market for new loans without the necessity of leveraging capital in
this environment to levels at which we would become uncomfortable. We also
look forward to continuing the sale of loans to Fannie Mae for as long as
terms remain mutually beneficial."
BALANCE SHEET
Total assets grew in the third quarter by approximately $86.6 million,
representing an annualized rate of 9%. The loan portfolio rose by $59.6
million, and cash and due from banks increased by $55.3 million. Federal
funds sold and other short-term investments declined by $17.3 million.
During the September 30, 2008 quarter, the Bank elected to transfer eight
pooled bank trust preferred securities from its available for sale
portfolio to its held to maturity portfolio. The Bank has never sought to
actively trade in pooled trust preferred securities. When purchased, these
securities were designated as available for sale in order to provide
management the greatest investment flexibility (consistent with its
protocol for all purchased investment and mortgage-backed securities).
Given the lack of an orderly market for these securities, management
determined that a formal election to hold these securities to maturity was
the most prudent course of action. At the point of transfer, a pre-tax
loss of $8.4 million, or 42% of their amortized cost basis had previously
been recognized in connection with these securities, as a component of
accumulated other comprehensive loss within the Company's consolidated
stockholders' equity (net of income tax benefit). Since inception, all
payments of principal and interest have been made on these securities in
accordance with their contractual terms, and the Company currently expects
this to continue. As a result, the Company has not recognized any
impairment on these securities in its consolidated statements of
operations. Assuming all contractual payments of principal and interest
are made as anticipated, the other comprehensive loss associated with these
securities will be reduced (thus increasing stockholders' equity) on a
pro-rata basis throughout their remaining life, which currently
approximates 25 years.
On the liability side, Federal Home Loan Bank of New York advances grew
$90.0 million during the September 2008 quarter, with maturities ranging
from six months to two years. When borrowed, the advances were priced more
favorably than Certificates of Deposit ("CDs") of similar terms to
maturity. Commencing in September 2008, the Bank initiated a deposit
campaign that resulted in a $16.9 million net increase in total deposits
during the September 2008 quarter.
OPERATING RESULTS
The Company's pre-tax income was $13.4 million for the quarter ended
September 30, 2008, compared to $12.4 million in the linked-quarter June
2008, and $8.7 million during the same quarter last year, September 2007.
The linked-quarter increase of $948,000 resulted from higher net interest
income of $2.1 million that was partially offset by an increased provision
for loan losses of $286,000, lower non-interest income of $183,000, and
increased non-interest expense of $655,000.
Looking at the components of net interest income during the linked-quarter,
the Company earned $3.2 million more in total interest income on growth of
$213.4 million in the average balance of the real estate loan portfolio
coupled with a slight increase in the average yield. The Company earned
$1.2 million in prepayment and other fee income during the September 2008
quarter compared to $827,000 during the June 2008 quarter.
The Company incurred $1.2 million more in total interest expense in the
September 2008 quarter than the June 2008 quarter. This increase resulted
from an additional $2.7 million of interest expense on borrowings that
resulted from an increase of $279.4 million in their average balance during
the September 2008 quarter compared to the June 2008 quarter. Offsetting
this increase was a decline of $1.5 million in expense on interest bearing
deposits, reflecting a decline of $109.0 million in their average balance
coupled with a decline of 18 basis points in their average cost compared to
the June 2008 quarter.
For the quarter ended September 30, 2008, non-interest income was $183,000
below the linked-quarter of June 2008. This decline resulted primarily
from a reduction of $754,000 in mortgage banking income, that was partially
offset by an increase of $360,000 in service charges and other fees (due
primarily to an additional $300,000 of mortgage servicing fees that are
typically billed and collected in the third quarter of each year). In
addition, during the quarter ended June 30, 2008 the Company's non-interest
income was reduced by $129,000 due to a loss on the sale of two other real
estate owned properties. There were no sales of securities or other real
estate owned during the quarter ended September 30, 2008.
The $754,000 decline in mortgage banking income reflected a provision of
$1.7 million, up from $300,000 during the quarter ended June 30, 2008, to
increase the book reserve for anticipated losses on loans sold to Fannie
Mae with recourse, which was partially offset by an increase of $670,000 in
the gain on loan sales.
From the inception of the Fannie Mae program through September 2008, the
Bank sold approximately $660 million of multifamily loans to Fannie Mae.
As of September 30, 2008, there were four non-performing loans totaling
$8.9 million in the pool serviced for Fannie Mae, three of which were with
one common borrower, an increase of one loan with an outstanding principal
balance of $4.7 million from the level at June 30, 2008. Excluding these
two problem borrowers, delinquencies within the pool of loans serviced by
the Bank for Fannie Mae remain immaterial. These loans are not included in
the Bank's $6.4 million of non-performing loans, as the $6.4 million
reflects only portfolio loans owned by Dime. There is an active market for
these properties, however the timing of their ultimate resolution is still
uncertain.
In September 2008, the Bank sold an 80% participation interest in $124
million of multifamily loans that it owned to a reputable and financially
stable community savings bank operating within its marketplace. The loans
were sold at par and without recourse, and the Bank recognized a mortgage
servicing gain of $662,000 on the sale (as a component of mortgage banking
income), as it retained servicing on all of the loans.
Total non-interest ("operating") expense for the quarter ended September
30, 2008 was $12.9 million, up $655,000 from the previous quarter,
reflecting increased salaries and benefits and deposit insurance expenses,
which were offset by a decline in professional fees. Operating expenses in
the December 2008 quarter are expected to approximate $12.8 million.
Comparing the current quarter to the same quarter last year, for the three
months ended September 30, 2008, the Company's pre-tax income was $13.4
million, compared to $8.7 million during the quarter ended September 30,
2007. The $4.6 million quarter-over-quarter increase was primarily the net
result of three items: higher net interest income of $7.8 million,
partially offset by lower non-interest income of $1.5 million plus higher
non-interest expense of $1.2 million and a higher loan loss provision of
$536,000.
Examining the components of net interest income quarter-over-quarter, the
Company earned $7.6 million more in total interest income on significantly
larger loan and investment portfolios. The average yield on the total loan
portfolio was 5.93% during the September 2008 quarter compared to 5.95%
during the September 2007 quarter. The Company earned $1.2 million in
prepayment and other fee income during the quarter ended September 2008
compared to $752,000 during the September 2007 quarter. The combined
average yield on investments and mortgage-backed securities rose by 8 basis
points during the comparative period due to a significant amount of
higher-yielding mortgage-backed securities purchased during 2008.
Interest expense declined by $197,000 during the September 2008 quarter
compared to the September 2007 quarter, despite an increase of $589.4
million in the average balance of interest bearing liabilities, as the
average cost of interest bearing liabilities declined from 3.96% in the
September 2007 quarter to 3.25% in the September 2008 quarter, due to a 105
basis point decrease in the average cost of interest bearing deposits and a
62 basis point decline in the average cost of borrowings during the
comparative period.
For the quarter ended September 30, 2008, non-interest income was $1.5
million below the quarter ended September 30, 2007. The decline resulted
primarily from a decrease of $993,000 in mortgage banking income,
reflecting a provision of $1.7 million to the book reserve for losses on
loans sold to Fannie Mae with recourse, that was partially offset by an
increase of $723,000 in the net gain on loan sales. The remaining decline
resulted primarily from the $546,000 non-recurring income related to a BOLI
benefit payment recorded in the September 2007 quarter.
Finally for the quarter ended September 30, 2008, non-interest expense was
$1.2 million higher than the same quarter last year. Salary and benefit
expense was the largest component of the variance, and included both
ongoing salary increases and an increase of $203,000 related to stock
benefit expenses, reflecting expenses associated with equity awards granted
in July 2008 along with higher ESOP expense resulting from an increase in
the Company's stock price. Occupancy and equipment expense also increased
by $249,000 due to increased rental costs and added costs related to two
new retail branch offices (one of which is scheduled to open during the
fourth quarter of 2008). Deposit insurance costs increased $294,000 due to
a re-capitalization program instituted by the FDIC in 2006 that resulted in
increased insurance premiums for all insured institutions. Under this
program, the Bank's insurance costs increased commencing in the most recent
quarter.
REAL ESTATE LENDING, LOAN SALES AND CREDIT QUALITY
Real estate loan originations totaled $352.5 million during the quarter
ended September 30, 2008. The average rate on real estate loan
originations during the quarter was 5.86%, compared to 6.56% during the
quarter ended September 30, 2007 and 5.83% during the quarter ended June
30, 2008.
Real estate loan amortization during the September 2008 quarter
approximated 21% of the real estate loan portfolio on an annualized basis,
compared to 11% during the September 2007 quarter and 17% during the June
2008 quarter. This was consistent with management's forecast of prepayment
speeds disclosed at the commencement of the year.
The Company completed loan sales of $126.1 million, for a gain of $802,000,
during the September 2008 quarter. This compares with gains of $132,000
and $79,000 on loan sales of $15.1 million and $10.1 million during the
quarters ended June 30, 2008 and September 30, 2007, respectively. Gains
on loan sales are included in the mortgage banking income line item in the
consolidated statements of operations.
Non-performing assets were $6.4 million at September 30, 2008, representing
only 0.17% of total assets. During the quarter ended September 30, 2008,
the Bank removed two loans totaling $1.0 million from foreclosure status,
and added five loans approximating $632,000 to non-performing status. In
addition during the quarter ended September 30, 2008, the Bank recorded net
recoveries of $26,000 on problem loans that were satisfied during the
quarter.
In determining the timing and amount of any future loan loss provisions,
management's quarterly evaluation of the loan loss reserves considers not
only the growth and performance of the current loan portfolio, but also
general credit conditions and volume of new business. The loan loss
provision was increased to $596,000 during the quarter ended September 30,
2008, from $310,000 during the quarter ended June 30, 2008 and $60,000
during the quarter ended September 30, 2007. This increase reflected
estimates of losses proportional to the significant growth in the real
estate loan portfolio (including commitments to fund loans in the December
2008 quarter) that occurred during the quarter ended September 30, 2008.
The allowance for portfolio loan losses (excluding the allowance for
commitments) stood at 0.52% of total loans and 257.0% of non-performing
loans at September 30, 2008.
Total portfolio credit costs (i.e., net charge-offs plus the loss on sale
of other real estate owned), associated with the bank-owned portfolio,
which were $244,000 during the quarter ended June 30, 2008, were negligible
during the quarter ended September 30, 2008, and $7,000 during the quarter
ended September 30, 2007.
INCOME TAX EXPENSE
The effective tax rate was 37.4% during the quarter ended September 30,
2008, and is expected to approximate 37% for the year ending December 31,
2008. During the quarter ended June 30, 2008, the Company recorded a
non-recurring reduction of $590,000 in its reserves for uncertain tax
positions in accordance with Financial Accounting Standards Board
Interpretation No. 48, which lowered its income tax expense during the
period. Excluding this item, the Company's effective tax rate was 36.8%
during the June 2008 quarter.
DEPOSITS
Deposits increased $16.9 million from June 30, 2008 to September 30, 2008.
CDs increased by $127.6 million, and were partially offset by a decline of
$110.7 million in core (non-certificate) deposits. Within core deposits,
money market accounts decreased $84.9 million, as the Bank re-positioned
its primary promotional deposit from money markets to CDs with maturities
of one year or less.
The average deposit cost declined 18 basis points, from 2.69% during the
quarter ended June 30, 2008 to 2.51% during the quarter ended September 30,
2008.
During the quarter ended September 30, 2008, the Bank commenced a deposit
gathering campaign offering a highly competitive 6 or 12 month CD, coupled
with the requirement that the customer establish and retain an active,
minimum balance "Prime Dime" checking account. While initially resulting
in higher deposit costs during the campaign period, the Bank's long-term
goal is to establish a more cost effective and stable component of deposit
funding and build core retail customer relationships.
In April 2008, Dime opened its 22nd branch, in the Borough Park community
of Brooklyn, New York, utilizing the "Prime Dime" campaign described above.
At September 30, 2008, the branch had $67.9 million of deposits at an
average cost of 3.59%. Dime anticipates opening its 23rd branch by the end
of 2008, located on Montague Street in Brooklyn Heights, New York.
Average deposits per branch approximated $95 million at September 30, 2008,
relatively unchanged from June 30, 2008. Core deposits comprised 50% of
total deposits at September 30, 2008, down from 56% at June 30, 2008 and
51% at September 30, 2007, due to the growth of CDs. The loan-to-deposit
ratio was 152% at September 30, 2008, compared to 137% at September 30,
2007 and 151% at June 30, 2008.
STOCKHOLDERS' EQUITY AND SHARE REPURCHASE PROGRAM
After outlays for dividends paid to shareholders, the Company's tangible
stockholders' equity increased to $230.6 million at September 30, 2008,
compared to $226.0 million at June 30, 2008. The quarterly cash dividend
paid in August 2008 represented a payout ratio of 56.0% of third quarter
2008 earnings. At September 30, 2008, the consolidated tangible
stockholders' equity ratio was 6.08% of tangible assets and the tangible
book value per share was $6.75.
The Company's reported total stockholders' equity at September 30, 2008 was
$276.1 million, or 7.21% of total assets, compared to $274.3 million, or
7.33% of total assets, at June 30, 2008.
Loan demand remains strong, and is more than sufficient to satisfy the
Bank's goals in the upcoming quarters. Additional loan sales, either whole
loans or participations, remain an option. In light of current economic
conditions, management chose to retain capital during the past two
quarters. This strategy is subject to modification based on changing
conditions. As of September 30, 2008, 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 September 30, 2008, the return on average
stockholders' equity was 12.20%, the return on average tangible equity was
14.69%, and the cash return on average tangible equity was 15.95%.
OUTLOOK
Mr. Palagiano stated, "Due to our desire to shift the focus of our funding
from borrowings to retail deposits, and since growing the deposit base is
always more expensive than simply retaining existing deposits, the net
interest margin may level off in the fourth quarter, absent any decreases
in deposit pricing stemming from any future Fed rate cuts. The competition
for retail deposits has thus far not reflected the most recent Fed rate
cuts, and it is unclear what impact, if any, these cuts will have. Core
earnings per share are expected to remain stable in the fourth quarter, as
asset growth achieved during the first nine months of 2008 coupled with the
favorable repricing of real estate loans should be offset by increased
funding costs."
The average cost of deposits decreased from 2.69% during the June 2008
quarter to 2.51% during the September 2008 quarter, as the Company realized
the full effects of reductions in short-term rates resulting from Fed rate
cuts during the first two quarters of 2008. However, as mentioned
previously, recent deposit promotions offered by the Bank are expected to
result in increased deposit costs during the December 2008 quarter.
Offsetting the anticipated increase in funding costs, are approximately
$103 million in portfolio mortgage loans with a weighted average coupon of
5.10% that are scheduled to contractually reprice or mature during the
remainder of 2008. During the year ending December 31, 2009, an additional
$310 million in mortgage loans with a weighted average coupon of 5.45% are
scheduled to reprice. Today's rates for similar products are in the range
of 5.875% to 6.25%.
Amortization rates (including prepayments and loan refinancing activity),
which approximated 21% annualized during the third quarter of 2008, are
expected to remain in the 20% to 25% range during the fourth quarter of
2008, due primarily to ongoing loan refinancing activity as loans approach
their contractual repricing. Prepayment fees generally decline as loans
move closer to contractual repricing.
At September 30, 2008, the real estate loan commitment pipeline
approximated $164.7 million, including $8.3 million of commitments on loans
intended for sale. The real estate loan pipeline intended for portfolio
retention had a weighted average interest rate approximating 6.03% at
September 30, 2008.
Asset growth will likely slow compared to the previous two quarters, as the
Company expects to focus primarily on retaining loans that are approaching
their contractual interest rate repricing, and rebalancing the funding mix
between deposits and borrowings.
Management has not currently observed a material increase in residential
vacancy rates or a significant exit from the purchase market by experienced
multifamily owners. Although the significant property price increases of
the past several years appear to have ceased, current property values in
the Bank's marketplace continue to show greater stability than the national
average. However, the Company is cognizant that it may become prudent to
increase credit related provisions, as the economy and real estate
marketplace remain challenged.
Operating expenses for the December 2008 quarter are expected to
approximate the $12.8 million level experienced during the September 2008
quarter. The Company has sufficient capital to repurchase its common stock
if conditions warrant. The Company currently expects fourth quarter 2008
earnings per diluted share to be in the range of $0.23 to $0.25.
ABOUT DIME COMMUNITY BANCSHARES
The Company (
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
September 30, June 30,
2008 December 31, 2008
(Unaudited) 2007 (Unaudited)
------------ ------------ ------------
ASSETS:
Cash and due from banks $ 78,159 $ 101,708 $ 22,872
Investment securities held to
maturity 11,513 80 -
Investment securities available
for sale 16,059 34,095 33,480
Mortgage-backed securities
available for sale 309,094 162,764 319,516
Federal funds sold and other
short-term investments - 128,014 17,327
Real Estate Loans:
One-to-four family and
cooperative apartment 150,414 145,592 148,570
Multifamily and underlying
cooperative 2,187,981 1,949,025 2,151,071
Commercial real estate 803,020 728,129 778,572
Construction and land
acquisition 46,788 49,387 48,036
Unearned discounts and net
deferred loan fees 3,138 1,833 2,883
------------ ------------ ------------
Total real estate loans 3,191,341 2,873,966 3,129,132
------------ ------------ ------------
Other loans 2,133 2,169 3,531
Allowance for loan losses (16,549) (15,387) (15,386)
------------ ------------ ------------
Total loans, net 3,176,925 2,860,748 3,117,277
------------ ------------ ------------
Loans held for sale 736 890 2,140
Premises and fixed assets, net 25,883 23,878 26,055
Federal Home Loan Bank of New
York capital stock 52,985 39,029 50,510
Goodwill 55,638 55,638 55,638
Other assets 101,644 94,331 97,189
------------ ------------ ------------
TOTAL ASSETS $ 3,828,636 $ 3,501,175 $ 3,742,004
============ ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Non-interest bearing checking $ 89,744 $ 88,398 $ 91,603
Interest Bearing Checking 101,381 61,687 114,716
Savings 271,062 274,067 281,654
Money Market 595,551 678,759 680,446
------------ ------------ ------------
Sub-total $ 1,057,738 $ 1,102,911 $ 1,168,419
------------ ------------ ------------
Certificates of deposit 1,040,039 1,077,087 912,473
------------ ------------ ------------
Total Due to Depositors 2,097,777 2,179,998 2,080,892
------------ ------------ ------------
Escrow and other deposits 80,110 52,209 69,832
Securities sold under agreements
to repurchase 230,000 155,080 265,000
Federal Home Loan Bank of New
York advances 1,009,675 706,500 919,675
Subordinated Notes Sold 25,000 25,000 25,000
Trust Preferred Notes Payable 72,165 72,165 72,165
Other liabilities 37,807 41,371 35,188
------------ ------------ ------------
TOTAL LIABILITIES 3,552,534 3,232,323 3,467,752
------------ ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par,
125,000,000 shares authorized,
51,121,694 shares, 51,120,569
shares and 50,906,278 shares
issued at September 30, 2008,
June 30, 2008 and December 31,
2007, respectively, and 34,179,275
shares, 34,085,193 shares and
33,909,902 shares outstanding
at September 30, 2008, June 30,
2008 and December 31, 2007,
respectively) 511 509 511
Additional paid-in capital 213,335 208,369 212,359
Retained earnings 297,146 288,112 293,371
Unallocated common stock of
Employee Stock Ownership Plan (3,990) (4,164) (4,048)
Unearned common stock of
Restricted Stock Awards (2,014) (634) (648)
Common stock held by the Benefit
Maintenance Plan (8,007) (7,941) (8,007)
Treasury stock (16,942,419
shares, 17,035,376 shares and
16,996,376 shares at September
30, 2008, June 30, 2008 and
December 31, 2007, respectively) (210,471) (211,121) (211,626)
Accumulated other comprehensive
loss, net (10,408) (4,278) (7,660)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 276,102 268,852 274,252
------------ ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,828,636 $ 3,501,175 $ 3,742,004
============ ============ ============
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except per share amounts)
For the Three Months Ended
----------------------------------------
September 30, June 30, September 30,
2008 2008 2007
------------ ------------ -------------
Interest income:
Loans secured by real estate $ 47,734 $ 44,147 $ 41,420
Other loans 41 41 45
Mortgage-backed securities 3,610 3,370 1,588
Investment securities 340 364 374
Federal funds sold and other
short-term investments 783 1,346 1,474
------------ ------------ -------------
Total interest income 52,508 49,268 44,901
------------ ------------ -------------
Interest expense:
Deposits and escrow 12,927 14,452 18,919
Borrowed funds 14,399 11,706 8,604
------------ ------------ -------------
Total interest expense 27,326 26,158 27,523
------------ ------------ -------------
Net interest income 25,182 23,110 17,378
Provision for loan losses 596 310 60
------------ ------------ -------------
Net interest income after
provision for loan losses 24,586 22,800 17,318
------------ ------------ -------------
Non-interest income:
Service charges and other fees 1,500 1,140 1,419
Mortgage banking (loss) income,
net (724) 30 269
Loss on sale of other real
estate owned and other assets - (129)
Other 901 819 1,443
------------ ------------ -------------
Total non-interest income 1,677 1,860 3,131
------------ ------------ -------------
Non-interest expense:
Compensation and benefits 7,491 6,889 6,667
Occupancy and equipment 1,815 1,764 1,566
Other 3,607 3,605 3,484
------------ ------------ -------------
Total non-interest expense 12,913 12,258 11,717
------------ ------------ -------------
Income before taxes 13,350 12,402 8,732
Income tax expense 4,997 3,977 3,188
------------ ------------ -------------
Net Income $ 8,353 $ 8,425 $ 5,544
============ ============ =============
Earnings per Share:
Basic $ 0.26 $ 0.26 $ 0.17
============ ============ =============
Diluted $ 0.25 $ 0.26 $ 0.17
============ ============ =============
Average common shares outstanding
for Diluted EPS 33,036,937 32,935,285 33,106,224
For the Nine Months Ended
--------------------------
September 30, September 30,
2008 2007
------------ ------------
Interest income:
Loans secured by real estate $ 134,947 $ 122,367
Other loans 126 132
Mortgage-backed securities 9,196 4,535
Investment securities 1,412 1,194
Federal funds sold and other
short-term investments 4,325 6,736
------------ ------------
Total interest income 150,006 134,964
------------ ------------
Interest expense:
Deposits and escrow 45,347 56,657
Borrowed funds 37,136 25,375
------------ ------------
Total interest expense 82,483 82,032
------------ ------------
Net interest income 67,523 52,932
Provision for loan losses 966 180
------------ ------------
Net interest income after
provision for loan losses 66,557 52,752
------------ ------------
Non-interest income:
Service charges and other fees 3,690 3,677
Mortgage banking (loss) income,
net (408) 1,116
Loss on sale of other real
estate owned and other assets (129) -
Other 2,551 3,216
------------ ------------
Total non-interest income 5,704 8,009
------------ ------------
Non-interest expense:
Compensation and benefits 21,613 19,316
Occupancy and equipment 5,150 4,572
Other 10,688 10,276
------------ ------------
Total non-interest expense 37,451 34,164
------------ ------------
Income before taxes 34,810 26,597
Income tax expense 12,075 9,591
------------ ------------
Net Income $ 22,735 $ 17,006
============ ============
Earnings per Share:
Basic $ 0.70 $ 0.50
============ ============
Diluted $ 0.69 $ 0.50
============ ============
Average common shares outstanding
for Diluted EPS 32,861,191 33,946,319
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, 2007.
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
-------------------------------------------
September 30, June 30, September 30,
2008 2008 2007
------------- ------------- -------------
Net income as reported $ 8,353 $ 8,425 $ 5,544
Loss on sale of other real
estate owned and other assets - 129 -
Non-recurring adjustment to
income taxes 15 (590) -
Pre-tax income from life
insurance contract settlement - - (546)
Tax effect of adjustments - (58) -
------------- ------------- -------------
Core Earnings $ 8,368 $ 7,906 $ 4,998
------------- ------------- -------------
Cash Earnings Additions:
Non-cash stock benefit plan
expense 713 611 519
------------- ------------- -------------
Core Cash Earnings $ 9,081 $ 8,517 $ 5,517
------------- ------------- -------------
Performance Ratios (Based upon
Core Cash Earnings):
Core Cash EPS (Diluted) $ 0.27 $ 0.26 $ 0.17
Core Cash Return on Average
Assets 0.96% 0.93% 0.68%
Core Cash Return on Average
Tangible Stockholders' Equity 15.94% 15.40% 9.99%
For the Nine Months Ended
----------------------------
September 30, September 30,
2008 2007
------------- -------------
Net income as reported $ 22,735 $ 17,006
Loss on sale of other real
estate owned and other assets 129 -
Non-recurring adjustment to
income taxes (546) -
Pre-tax income from life
insurance contract settlement (546)
Tax effect of adjustments (58) -
------------- -------------
Core Earnings $ 22,260 $ 16,460
------------- -------------
Cash Earnings Additions:
Non-cash stock benefit plan
expense 1,885 1,314
------------- -------------
Core Cash Earnings $ 24,145 $ 17,774
------------- -------------
Performance Ratios (Based upon
Core Cash Earnings):
Core Cash EPS (Diluted) $ 0.73 $ 0.52
Core Cash Return on Average
Assets 0.88% 0.73%
Core Cash Return on Average
Tangible Stockholders' Equity 14.53% 10.30%
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
For the Three Months Ended
----------------------------------------
September 30, June 30, September 30,
2008 2008 2007
------------ ------------ ------------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.25 $ 0.26 $ 0.17
Return on Average Assets 0.88% 0.92% 0.69%
Return on Average Stockholders'
Equity 12.20% 12.44% 8.20%
Return on Average Tangible
Stockholders' Equity 14.69% 15.24% 10.04%
Net Interest Spread 2.52% 2.39% 1.92%
Net Interest Margin 2.77% 2.67% 2.28%
Non-interest Expense to Average
Assets 1.36% 1.34% 1.45%
Efficiency Ratio (1) 48.08% 49.10% 57.35%
Effective Tax Rate 37.43% 32.07% 36.51%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.25 $ 0.24 $ 0.15
Core Return on Average Assets 0.88% 0.86% 0.62%
Core Return on Average
Stockholders' Equity 12.22% 11.67% 7.39%
Core Return on Average Tangible
Stockholders' Equity 14.72% 14.30% 9.05%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.08 $ 8.05 $ 7.89
Tangible Book Value Per Share 6.75 6.63 6.43
Average Balance Data:
Average Assets $ 3,794,495 $ 3,659,084 $ 3,224,578
Average Interest Earning Assets 3,639,964 3,461,470 3,054,499
Average Stockholders' Equity 273,816 270,973 270,350
Average Tangible Stockholders'
Equity 227,454 221,171 220,915
Average Loans 3,219,914 3,006,571 2,786,862
Average Deposits 2,049,783 2,158,477 2,130,472
Asset Quality Summary:
Net (recoveries) charge-offs $ (26) $ 116 $ 7
Nonperforming Loans 6,440 6,852 1,792
Nonperforming Loans/ Total Loans 0.20% 0.22% 0.06%
Nonperforming Assets 6,440 6,852 1,792
Nonperforming Assets/Total Assets 0.17% 0.18% 0.05%
Allowance for Loan Loss/Total
Loans 0.52% 0.49% 0.54%
Allowance for Loan
Loss/Nonperforming Loans 256.97% 224.55% 857.92%
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.08% 6.11% 6.75%
Tangible Capital Ratio (Bank
Only) 7.87% 7.83% 8.75%
Leverage Capital Ratio (Bank
Only) 7.87% 7.83% 8.75%
Risk Based Capital Ratio (Bank
Only) 11.43% 11.46% 12.65%
For the Nine Months Ended
--------------------------
September 30, September 30,
2008 2007
------------ ------------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.69 $ 0.50
Return on Average Assets 0.83% 0.70%
Return on Average Stockholders'
Equity 11.18% 8.13%
Return on Average Tangible
Stockholders' Equity 13.68% 9.86%
Net Interest Spread 2.31% 1.86%
Net Interest Margin 2.59% 2.29%
Non-interest Expense to Average
Assets 1.37% 1.41%
Efficiency Ratio (1) 51.21% 56.57%
Effective Tax Rate 34.69% 36.06%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.68 $ 0.48
Core Return on Average Assets 0.81% 0.68%
Core Return on Average
Stockholders' Equity 10.95% 7.87%
Core Return on Average Tangible
Stockholders' Equity 13.39% 9.54%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.08 $ 7.89
Tangible Book Value Per Share 6.75 6.43
Average Balance Data:
Average Assets $ 3,655,434 $ 3,235,546
Average Interest Earning Assets 3,473,853 3,080,412
Average Stockholders' Equity 271,100 279,014
Average Tangible Stockholders'
Equity 221,614 230,057
Average Loans 3,040,856 2,749,274
Average Deposits 2,120,430 2,126,957
Asset Quality Summary:
Net (recoveries) charge-offs $ 234 $ 4
Nonperforming Loans 6,440 1,792
Nonperforming Loans/Total Loans 0.20% 0.06%
Nonperforming Assets 6,440 1,792
Nonperforming Assets/Total Assets 0.17% 0.05%
Allowance for Loan Loss/Total
Loans 0.52% 0.54%
Allowance for Loan
Loss/Nonperforming Loans 256.97% 857.92%
Regulatory Capital Ratios:
Consolidated Tangible
Stockholders' Equity to
Tangible Assets at period end 6.08% 6.75%
Tangible Capital Ratio (Bank
Only) 7.87% 8.75%
Leverage Capital Ratio (Bank
Only) 7.87% 8.75%
Risk Based Capital Ratio (Bank
Only) 11.43% 12.65%
(1) The calculated ratio excludes the following gains on the sale of loans
that are included in the "Mortgage Banking Income" line item in the
consolidated statements of operatrions: $802,000 for the three months
ended September 30, 2008, $132,000 for the three months ended June 30,
2008, $79,000 for the three months ended September 30, 2007, $1.0
million for the nine months ended September 30, 2008 and $546,000 for
the nine months ended September 30, 2007.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME
(Dollars In thousands)
For the Three Months Ended
-----------------------------------
September 30, 2008
-----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,218,192 $ 47,734 5.93%
Other loans 1,722 41 9.52
Mortgage-backed securities 318,224 3,610 4.54
Investment securities 31,271 340 4.35
Other short-term investments 70,555 783 4.44
----------- ---------- ----------
Total interest earning assets 3,639,964 $ 52,508 5.77%
----------- ----------
Non-interest earning assets 154,531
-----------
Total assets $ 3,794,495
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 103,718 $ 607 2.33%
Money Market accounts 633,946 4,075 2.56
Savings accounts 275,104 387 0.56
Certificates of deposit 944,367 7,858 3.31
----------- ---------- ----------
Total interest bearing deposits 1,957,135 12,927 2.63
Borrowed Funds 1,388,337 14,399 4.13
----------- ---------- ----------
Total interest-bearing
liabilities 3,345,472 27,326 3.25%
----------- ---------- ----------
Non-interest bearing checking
accounts 92,648
Other non-interest-bearing
liabilities 82,559
-----------
Total liabilities 3,520,679
Stockholders' equity 273,816
-----------
Total liabilities and stockholders'
equity $ 3,794,495
===========
Net interest income $ 25,182
==========
Net interest spread 2.52%
==========
Net interest-earning assets $ 294,492
===========
Net interest margin 2.77%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 108.80%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,049,783 $ 12,927 2.51%
Interest earning assets (excluding
prepayment and other fees) 5.64%
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 197,613
-----------
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%
For the Three Months Ended
-----------------------------------
September 30, 2007
-----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 2,785,057 $ 41,420 5.95%
Other loans 1,805 45 9.97
Mortgage-backed securities 153,738 1,588 4.13
Investment securities 22,921 374 6.53
Other short-term investments 90,978 1,474 6.48
----------- ---------- ----------
Total interest earning assets 3,054,499 $ 44,901 5.88%
----------- ----------
Non-interest earning assets 170,079
-----------
Total assets $ 3,224,578
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 45,609 $ 220 1.91%
Money Market accounts 654,192 6,348 3.85
Savings accounts 284,366 388 0.54
Certificates of deposit 1,053,972 11,963 4.50
----------- ---------- ----------
Total interest bearing deposits 2,038,139 18,919 3.68
Borrowed Funds 717,926 8,604 4.75
----------- ---------- ----------
Total interest-bearing
liabilities 2,756,065 27,523 3.96%
----------- ----------
Non-interest bearing checking
accounts 92,333
Other non-interest-bearing
liabilities 105,830
-----------
Total liabilities 2,954,228
Stockholders' equity 270,350
-----------
Total liabilities and stockholders'
equity $ 3,224,578
===========
Net interest income $ 17,378
==========
Net interest spread 1.92%
==========
Net interest-earning assets $ 298,434
===========
Net interest margin 2.28%
==========
Ratio of interest-earning assets
to interest-bearing liabilities 110.83%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,130,472 $ 18,919 3.52%
Interest earning assets (excluding
prepayment and other fees) 5.78%
Contact Information: Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279