Core Diluted EPS of $0.17; Core Deposits Up 10%
-- Assets fell $14.8 million, as the Company sought to curtail asset
growth and focus on preserving and enhancing its well-capitalized posture.
-- At March 31, 2009, non-performing loans totaled $13.1 million, or
0.40% of total loans, while the allowance for loan losses totaled $18.4
million, or 0.56% of total loans, a coverage ratio of 140%.
-- Real estate loan originations were $83.7 million, below the $230.5
million level in the December 2008 quarter and $163.7 million level in the
March 2008 quarter.
-- Total deposits grew $75.5 million, or 3%.
-- Incremental growth in the allowance for loan losses approximated
$900,000, 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.
-- The Company provided $1.5 million related to loans sold with recourse.
-- Net interest margin was 2.51%, down from 2.63% in the December 2008
quarter, and up from 2.32% in the March 2008 quarter.
-- Prepayment and other fee income declined significantly to $292,000
compared to $971,000 in the December 2008 quarter and $1.1 million in the
March 2008 quarter.
-- The Company grew its consolidated ratio of tangible capital to
tangible assets from 5.79% to 5.83%.
-- FDIC insurance premium expense increased $507,000 from the previous
quarter, and $744,000 from the prior year.
The net interest margin was down slightly during the quarter because Dime
was temporarily carrying approximately $200 million in liquid funds. A
portion of these funds, combined with $100 million of cash received in
April 2009 from a sale of multifamily loans, are planned to fund deposit
outflows and maturing borrowings throughout the remainder of the year.
This rebalancing should lead to a smaller balance sheet by year-end.
Prepayment fees declined along with the pace of refinancing in the
commercial mortgage market. Refinancing activity has picked up slightly in
the second quarter; however, the Company does not expect a near-term return
to the more robust levels experienced in 2008.
NET INTEREST INCOME
Net interest income was $24.1 million during the March 2009 quarter, up
$300,000 from the December 2008 quarter. Growth in average interest
earning assets of $224.2 million from the December 2008 quarter to the
March 2009 quarter generated the increase in the linked quarter net
interest income. Offsetting the increase in average interest earning
assets was a decline in net interest margin from 2.63% in the December 2008
quarter to 2.51% in the March 2009 quarter. The decline in net interest
margin reflected the Company's decision to retain deposit inflows in highly
liquid cash balances at the Federal Reserve Bank, earning a negative spread
to funding costs.
Mr. Palagiano commented, "Late in 2008 (in the post-TARP operating
environment), our business strategy shifted considerably toward capital
preservation, resulting in the decision to curb asset growth this year.
The combination of deposit growth experienced from promotional programs
instituted in late 2008, and unanticipated inflows of commercial money
market and checking deposits during the first few months of 2009, created
funding in excess of our desired level during the March 2009 quarter. We
elected to keep these funds highly liquid. While that decision adversely
impacted our net interest margin during the most recent quarter, we expect
that it will allow management to maintain considerable flexibility in
managing deposits and borrowings during the remainder of 2009."
Declines of $679,000 in prepayment and other fee income and $94,000 in
FHLBNY capital stock income during the quarter ended March 31, 2009
compared to the December 2008 quarter also contributed to the decline in
net interest margin from the level experienced in the December 2008
quarter. Cost of deposits declined from 2.69% in the December 2008 quarter
to 2.48% in the March 2009 quarter, which is a precursor to higher levels
of net interest income going forward.
Net interest income exceeded the March 2008 quarterly level by $4.9
million, driven by growth of $534 million in average interest earning
assets and an increase in the net interest margin of 19 basis points from
the quarter ended March 31, 2008 to the quarter ended March 31, 2009. The
growth in average interest earning assets reflected the significant loan
origination volume and asset growth experienced by the Company in 2008.
PROVISION / ALLOWANCE FOR LOAN LOSSES AND PROBLEM PORTFOLIO LOANS
Non-performing loans, which were $3.1 million at March 31, 2008, rose to
$7.4 million at December 31, 2008 and $13.1 million at March 31, 2009. In
addition to the higher level of non-performing loans, there were
approximately $19 million of loans that were over 30 days delinquent as of
March 31, 2009, compared to $5 million at December 31, 2008.
Mr. Palagiano noted, "It appears we are now in a weaker market for
commercial real estate in New York. Multifamily residential credits appear
stable. Market-based rents are off slightly but rent regulated apartments
appear unaffected. The consensus of real estate professionals is that
commercial credits (office buildings and retail space) in the New York City
metropolitan area will deteriorate further." The Bank has a small
percentage of real estate loans collateralized by office space in its
portfolio (typically professional and medical offices), and virtually no
credits outstanding to retail space containing "big box" retailers. Mr.
Palagiano additionally stated, "At the beginning of a downturn in the
credit cycle, it is typical to see marginal operators who begin to
experience cash flow problems turning to banks for relief. We lend on the
strength of the building's existing cash flow, so when problems occur we
have found that they do not evolve generally from the type of collateral
underlying the loan, or the amount of leverage, as much as from the
expertise of the owners/operators."
In recognition of this negative outlook, the Company began increasing its
quarterly loan loss provision during the June 2008 quarter and will
continue to do so this year. In addition, management actively managed its
problem loan portfolio during the quarter ended March 31, 2009, selling
several loans that had entered non-performing status during the period.
Mr. Palagiano continued, "We are hearing from multiple buyers in the market
for non-performing loans, a number of which the Bank sold during the
quarter, some at a discount and others at par. It is a hopeful sign that
investors remain interested in quality properties."
Mr. Palagiano stated, "Our objectives are to stay ahead of credit costs by
passing them through income in a timely manner and to be realistic in the
valuation of troubled credits so that credit losses do not linger on the
balance sheet. We are fortunate to be able to take these steps in a very
favorable yield curve environment in which the outlook for core earnings is
strong."
During the March 2009 quarter, total credit costs recognized through
earnings were $4.1 million, comprised of the $2.6 million provision for
loan losses and a $1.5 million provision for losses on loans sold to Fannie
Mae with recourse (recorded as a component of mortgage banking income).
Total charge-offs recognized on problem loans were $1.9 million.
At March 31, 2009, the allowance for loan losses was $18.4 million, or 140%
of non-performing loans.
NON-INTEREST INCOME
OTTI and Gain on Sale of Investment Securities.
The Company elected to early adopt Financial Accounting Standards Board
Staff Position Number FAS 115-2 and FAS 124-2, "Recognition and
Presentation of Other-Than-Temporary Impairments." This standard
establishes a process by which the OTTI associated with debt securities is
divided between a credit-related component (which is recognized through
earnings) and a non-credit component (which is recognized through
accumulated other comprehensive income). As a result of adoption of the
new standard, the Company increased its retained earnings balance as of
January 1, 2009 by $1.3 million, (with a corresponding offset to
accumulated other comprehensive loss) reflecting the after-tax, non-credit
component of the OTTI charge recognized during the quarter ended December
31, 2008.
The two pooled trust preferred securities that were deemed
other-than-temporarily impaired at December 31, 2008 continued to meet the
criteria for OTTI at March 31, 2009. Due to a deterioration in credit
conditions in connection with the collateral underlying these securities,
applying the provisions of this new standard resulted in a pre-tax charge
of $1.6 million through earnings during the quarter ended March 31, 2009.
In addition, a third pooled trust preferred security met the criteria for
OTTI at March 31, 2009, on which a charge of $356,000 was reflected in
earnings for the quarter.
As of March 31, 2009, all of the Company's pooled trust preferred
securities have paid all contractual cash flows since the Company's initial
investment. In management's judgment, however, the credit quality of the
collateral pool underlying three of the securities deteriorated to the
point that full recovery of the Company's initial investment was considered
to be uncertain, thus resulting in recognition of OTTI. The remaining
aggregate amortized cost of these securities that could be subject to
future OTTI charges through earnings was $16.8 million at March 31, 2009.
Of this total, unrealized losses of $7.4 million have already been
recognized as a component of accumulated other comprehensive income.
Additionally, the Company recognized a pre-tax $3.1 million OTTI charge on
five actively-managed equity mutual fund investments during the March 2009
quarter. OTTI charges recognized in earnings are reflected in non-interest
income. Partially offsetting the OTTI charges during the quarter ended
March 31, 2009, was a pre-tax gain of $431,000 recognized on the sale of
the Company's $10 million portfolio of municipal agency securities. The
Company no longer holds municipal securities in its investment portfolio.
Mortgage Banking Income and Delinquent Loans Sold with Recourse to Fannie
Mae
Loan sales were negligible during the quarters ended March 31, 2009,
December 31, 2008 and March 31, 2008. Gains on loan sales are included in
the mortgage banking income line item in the consolidated statements of
operations. Dime's M-Flex lender agreement with Fannie Mae expired on
December 31, 2008, its stated termination date, and no new agreement is
currently contemplated. The Bank will continue to seek to originate and
sell multifamily loans in order to meet its balance sheet objectives.
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. This mortgage banking loss fell below the $2.0 million
level recognized in the December 2008 quarter, during which a $2.0 million
provision to the reserve for losses on Fannie Mae serviced loans was
recorded and was partially offset by approximately $206,000 of servicing
fee income. Mortgage banking income was $286,000 during the March 2008
quarter reflecting $199,000 of servicing fee income and $87,000 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 $507.5 million at March 31, 2009. During
the quarter ended March 31, 2009, the Company re-acquired four delinquent
loans from Fannie Mae with an outstanding principal balance of $5.7
million. In March 2009, Dime sold three of these four loans. The
remaining loan, with a balance of $3.3 million, was included in Dime's
non-performing loan total at March 31, 2009.
Within the Fannie Mae portfolio, loans delinquent 90 days or more declined
from $23.7 million at December 31, 2008 to $17.3 million at March 31, 2009.
This decline resulted primarily from the re-acquisition of the four loans
totaling $5.7 million during the period. The majority of the 90-day or
more delinquency total at March 31, 2009 was comprised of one loan totaling
$13.2 million secured by five apartment buildings. These five buildings
are located in the Bronx, New York, and contain a total of 260 units. The
Company re-acquired this loan from Fannie Mae on April 27, 2009. The
property is currently under contract of sale, with the existing mortgage to
be assumed by the purchaser.
At March 31, 2009, there were $3.0 million of loans delinquent less than 90
days within the pool of loans serviced for Fannie Mae.
The Bank's aggregate support obligation (first loss position) for loans
sold to Fannie Mae was $21.9 million as of March 31, 2009, against which
$4.0 million had been recorded through income in current and prior periods
as a reserve for the support obligation. At March 31, 2009, the reserve
for support obligation approximated 0.78% of the remaining principal
balance of loans in the pool. This reserve for support obligation balance
is recorded as a liability on the balance sheet, and all additions to the
reserve are charged against mortgage banking (non-interest) income.
Other Components of Non-Interest Income
Other components of non-interest income totaled $1.7 million during the
quarter ended March 31, 2009, down from $2.1 million during the December
2008 quarter and $2.0 million during the March 2008 quarter, reflecting
both lower retail deposit fees and loan administrative fee income, based on
volumes.
NON-INTEREST EXPENSE
Non-interest expense was $13.6 million during the quarter ended March 31,
2009, an increase of $1.1 million from the December 2008 quarter. This
increase reflected higher compensation and benefits costs of $790,000, of
which $285,000 was due to increased staffing levels reflecting the addition
of the Brooklyn Heights branch that opened in late 2008, normal annual
salary increases, increased payroll taxes, and a $393,000 increase to
expenses associated with the employee pension plan (which was frozen as to
additional benefits in April 2000). Higher occupancy and equipment expense
of $269,000 reflected the addition of the new branch and higher seasonal
building maintenance expense. In addition, the Bank experienced higher
FDIC assessment expense of $507,000 resulting from a re-capitalization plan
implemented by the FDIC in late 2008. Other operating expenses declined
$551,000 primarily as a result of reduced marketing expenses as promotional
activities were minimized during the March 2009 quarter.
Compared to the March 2008 quarter, non-interest expense increased $1.3
million during the quarter ended March 31, 2009, reflecting increases of
$567,000 in compensation and benefits, $516,000 in occupancy and equipment
costs, and $744,000 in FDIC assessment expense. These increases all
reflect the same conditions discussed in the previous paragraph. Other
operating expenses declined $475,000 as a result of lower marketing and
legal consulting expenses.
INCOME TAX EXPENSE
The Company's customary consolidated effective tax rate approximates 37%.
The impact of the non-recurring OTTI charges on investment securities
(which are taxed at a higher effective tax rate) reduced the actual
effective tax rate for the quarter ended March 31, 2009 to 26%. Similarly,
the OTTI charges reduced the effective tax rate for the December 2008
quarter to 28%.
BALANCE SHEET
Total assets declined $14.8 million during the quarter ended March 31,
2009, as the Company implemented a capital preservation strategy during the
period that curtailed asset growth.
The decline in assets was experienced primarily in both investment and
mortgage-backed securities, as the Company sold $10 million of its
investment securities and did not purchase any investments or mortgage
backed securities during the period.
Offsetting the decline in these asset accounts was a net decline of $17.6
million in liabilities. This decline reflected a reduction of $60.0
million in maturing FHLBNY advances. In addition, escrow and other
deposits declined $33.7 million as semi-annual real estate tax payments
made on behalf of borrowers were funded in early January 2009. Deposits
increased $75.5 million during the quarter, as deposit outflows did not
materialize as expected due to a decline in the premium deposit pricing
that characterized the marketplace during the quarter.
Real Estate Lending and Loan Amortization
Real estate loan originations totaled $83.7 million during the quarter
ended March 31, 2009. The average rate on real estate loan originations
during the quarter was 6.21%, compared to 6.09% during the quarter ended
December 31, 2008 and 6.03% during the quarter ended March 31, 2008.
Real estate loan amortization during the March 2009 quarter approximated 9%
of the real estate loan portfolio on an annualized basis, compared to 16%
during the December 2008 quarter and 14% during the March 2008 quarter.
This was slightly below management's forecast of prepayment speeds
disclosed at the commencement of the year.
Also at March 31, 2009, the Bank had a commitment to sell an 80%
participation in approximately $124 million of multifamily loans from
portfolio. This is similar to a loan sale transaction which occurred in
the third quarter of 2008. The loans were sold at par and without
recourse. This transaction settled on April 20, 2009 and the Bank
recognized a mortgage servicing gain of approximately $600,000 on the sale
(as a component of mortgage banking income), which will be reflected in the
June 2009 quarterly results. The Bank retained servicing on all of the
loans.
Deposits
Deposits increased $75.5 million from December 31, 2008 to March 31, 2009.
Core deposits rose $114.3 million, or 10%, during the quarter ended March
31, 2009, and were offset by a decline of $38.8 million in certificates of
deposit. Within core deposits, money markets increased by $100.8 million,
checking accounts increased $3.8 million, and passbook savings accounts
increased $9.6 million.
During the March 2009 quarter, there were far fewer bank competitors
offering premium deposit pricing, therefore the spread narrowed between
deposit rates and Treasury rates across all maturities. A portion of the
deposit inflows and deposit retention can also be attributed to the fact
that savers sought the safety and security of FDIC-insured deposits. Dime
gained both money market and checking accounts through its promotional
marketing efforts, notwithstanding that the Bank's offering rate declined.
For example money market offering rates declined from 2.8% at January 1,
2009 to 1.5% at March 31, 2009. Dime took the opportunity to compete for
IRA plans as the first calendar quarter provided unique opportunities to
increase IRA households. IRA deposits increased from $131.6 million at
December 31, 2008 to $153.7 million at March 31, 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 $150.5 million of
promotional rate CDs with a weighted average rate of 4.62% maturing during
the second and third quarters of 2009, which will have a positive impact on
net interest margin in the second half of 2009. One- and two-year offering
rates on new and renewing CDs are approximately 1.25% and 2.25%,
respectively. The Bank is also maintaining a pool of liquidity to fund
potential outflows of deposits.
Dime's primary deposit strategy continues to be gathering checking accounts
(interest bearing or non-interest bearing) in order to establish a more
cost effective and stable component of deposit funding and build core
retail customer relationships.
In December 2008, Dime opened its 23rd retail branch office, located in
Brooklyn Heights, New York. This branch had $17.1 million in aggregate
deposits as of March 31, 2009, of which $2.5 million, or 15%, were checking
based product.
Including this relatively new branch, average deposits per branch still
exceeded $100 million at March 31, 2009, the approximate level at March 31,
2008. Core deposits (deposits exclusive of CDs) comprised 52% of total
deposits at March 31, 2009, up from 49% at December 31, 2008 and down
slightly from 53% at March 31, 2008. The loan-to-deposit ratio was 141% at
March 31, 2009, compared to 146% at December 31, 2008 and 134% at March 31,
2008.
Stockholders' Equity
The Company's reported total stockholders' equity at March 31, 2009 was
$279.7 million, or 6.92% of total assets, compared to $277.0 million, or
6.83% of total assets, at December 31, 2008.
After outlays for dividends paid to shareholders, the Company's tangible
stockholders' equity increased slightly to $232.4 million at March 31,
2009, compared to $232.2 million at December 31, 2008. The quarterly cash
dividend paid in February 2009 represented a payout ratio of 82% of first
quarter 2009 core earnings. At March 31, 2009, the consolidated tangible
stockholders' equity ratio was 5.83% of tangible assets and tangible book
value per share was $6.80.
The Company has no TARP capital.
There were no stock repurchases during the quarter ended March 31, 2009.
As of March 31, 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 March 31, 2009, the reported returns on average
stockholders' equity and average tangible equity were 4.08% and 4.89%,
respectively. The core returns on average stockholders' equity and average
tangible equity were 7.82% and 9.36%, 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 10.46%.
OUTLOOK
Diluted earnings per share for the quarter ended March 31, 2009 were
adversely impacted by 8 cents of OTTI charges on investment securities and
4 cents of pre-tax loan credit costs exceeding the level factored into the
guidance estimate from our previous earnings release by $2.1 million.
Removing these two items, diluted earnings per share would have been $0.21
for the March 2009 quarter, in line with the forecasted level in the
Company's previous earnings release.
The average cost of deposits decreased from 2.69% during the December 2008
quarter to 2.48% during the March 2009 quarter, as the Company ceased using
promotional rates in its deposit gathering campaigns in mid-January 2009,
and lowered its offering rates on both new certificates of deposit as well
as 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 April 1, 2009 was down to 2.23%, lower again than the
2.48% average cost of deposits in the first quarter. It is expected that
deposits raised in late 2008 using promotional rates will either flow out
or reprice in a manner that will favorably impact the net interest margin
in the upcoming quarters.
There are approximately $181 million in portfolio mortgage loans with a
weighted average coupon of 5.47% scheduled to contractually reprice or
mature during 2009. Today's rates for similar products are in the range of
5.875% to 6.125%.
Amortization rates (including prepayments and loan refinancing activity),
which approximated 9% during the first quarter of 2009, are expected to
fall in the 10% to 15% 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 still
expected to adversely impact earnings for the remainder of 2009, with 2009
insurance expense still forecasted to exceed the 2008 level by $2.3 million
exclusive of the proposed one-time special assessment, which has yet to be
finalized by the agency. Based upon the current consensus, the one-time,
estimated special assessment of 8 cents per $100 of deposits could add
another $1.8 million in pre-tax expense, and is included in the guidance.
At March 31, 2009, the real estate loan commitment pipeline approximated
$70.3 million, including $3.6 million of commitments on loans intended for
sale. The real estate loan pipeline intended for portfolio retention had a
weighted average interest rate approximating 6.00% at March 31, 2009.
Operating expenses for the June 2009 quarter are expected to approximate
$15.1 million, including the one-time, estimated special FDIC assessment of
$1.8 million discussed above.
The quarterly provision for loan losses and credit costs built into the
current projection of earnings for the June 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 $0.19 to
$0.21 for the June 2009 quarter, including the gain on the sale of loans
recognized on April 20, 2009.
ABOUT DIME COMMUNITY BANCSHARES
The Company (
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands except share amounts)
March 31,
2009 December 31,
(Unaudited) 2008
----------- -----------
ASSETS:
Cash and due from banks $ 199,318 $ 211,020
Investment securities held to maturity 9,406 10,861
Investment securities available for sale 5,966 16,602
Mortgage-backed securities available for sale 287,335 301,351
Federal funds sold and other short-term
investments 20,230 -
Real Estate Loans:
One-to-four family and cooperative apartment 143,074 142,295
Multifamily and underlying cooperative 2,170,922 2,242,542
Commercial real estate 827,875 848,208
Construction and land acquisition 50,824 52,982
Unearned discounts and net deferred loan fees 3,335 3,287
----------- -----------
Total real estate loans 3,196,030 3,289,314
----------- -----------
Other loans 1,942 2,191
Allowance for loan losses (18,351) (17,454)
----------- -----------
Total loans, net 3,179,621 3,274,051
----------- -----------
Loans held for sale 100,377 -
Premises and fixed assets, net 30,144 30,426
Federal Home Loan Bank of New York capital stock 50,735 53,435
Other real estate owned, net 300 300
Goodwill 55,638 55,638
Other assets 101,688 101,914
----------- -----------
TOTAL ASSETS $ 4,040,758 $ 4,055,598
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Non-interest bearing checking $ 91,952 $ 90,710
Interest Bearing Checking 115,277 112,687
Savings 279,956 270,321
Money Market 734,001 633,167
----------- -----------
Sub-total $ 1,221,186 $ 1,106,885
----------- -----------
Certificates of deposit 1,114,338 1,153,166
----------- -----------
Total Due to Depositors 2,335,524 2,260,051
----------- -----------
Escrow and other deposits 96,423 130,121
Securities sold under agreements to repurchase 230,000 230,000
Federal Home Loan Bank of New York advances 959,675 1,019,675
Subordinated Notes Sold 25,000 25,000
Trust Preferred Notes Payable 72,165 72,165
Other liabilities 42,249 41,622
----------- -----------
TOTAL LIABILITIES 3,761,036 3,778,634
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par, 125,000,000 shares
authorized, 51,122,319 shares issued at both
March 31, 2009 and December 31, 2008, and
34,179,900 shares outstanding at both March 31,
2009 and December 31, 2008) 511 511
Additional paid-in capital 214,357 213,917
Retained earnings 297,350 297,848
Unallocated common stock of Employee Stock
Ownership Plan (3,875) (3,933)
Unearned common stock of Restricted Stock Awards (1,559) (1,790)
Common stock held by the Benefit Maintenance Plan (8,007) (8,007)
Treasury stock (16,942,419 shares at both March
31, 2009 and December 31, 2008) (210,471) (210,471)
Accumulated other comprehensive loss, net (8,584) (11,111)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 279,722 276,964
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,040,758 $ 4,055,598
=========== ===========
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars In thousands except per share amounts)
For the Three Months Ended
-------------------------------------
March 31, December 31, March 31,
2009 2008 2008
---------- ---------- -----------
Interest income:
Loans secured by real estate $ 48,329 $ 47,987 $ 43,066
Other loans 37 40 44
Mortgage-backed securities 3,280 3,489 2,216
Investment securities 245 538 708
Federal funds sold and other
short-term investments 503 594 2,196
---------- ---------- -----------
Total interest income 52,394 52,648 48,230
---------- ---------- -----------
Interest expense:
Deposits and escrow 14,212 14,631 17,968
Borrowed funds 14,042 14,188 11,031
---------- ---------- -----------
Total interest expense 28,254 28,819 28,999
---------- ---------- -----------
Net interest income 24,140 23,829 19,231
Provision for credit losses 2,640 1,040 60
---------- ---------- -----------
Net interest income after provision
for credit losses 21,500 22,789 19,171
---------- ---------- -----------
Non-interest income:
Service charges and other fees 858 1,077 1,049
Mortgage banking (loss)
income, net (1,169) (1,782) 286
Impairment charge on
securities (5,040)(1) (3,209) -
Gain on sale of other real
estate owned and other assets 431 - -
Other 874 1,024 832
---------- ---------- -----------
Total non-interest income
(loss) (4,046) (2,890) 2,167
---------- ---------- -----------
Non-interest expense:
Compensation and benefits 7,801 7,011 7,234
Occupancy and equipment 2,086 1,817 1,570
Other 3,721 3,694 3,476
---------- ---------- -----------
Total non-interest expense 13,608 12,522 12,280
---------- ---------- -----------
Income before taxes 3,846 7,377 9,058
Income tax expense 996 2,084 3,101
---------- ---------- -----------
Net Income $ 2,850 $ 5,293 $ 5,957
========== ========== ===========
Earnings per Share:
Basic $ 0.09 $ 0.16 $ 0.18
========== ========== ===========
Diluted $ 0.09 $ 0.16 $ 0.18
========== ========== ===========
Average common shares outstanding
for Diluted EPS 32,888,319 32,903,141 32,683,161
(1) Total other-than-temporary impairment on securities was $6,102,000 and
$3,209,000, respectively, during the three months ended March 31, 2009
and December 31, 2008. The non-credit component of the impairment
charge recognized in accumulated other comprehensive income was
$1,062,000 during the three months ended March 31, 2009. The
non-credit component of the impairment charge recorded during
the quarter ended December 31, 2008 was $2,287,000, and was recognized
as a cumulative effect adjustment to retained earnings as of
January 1, 2009.
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
------------------------------------
March 31, December 31, March 31,
2009 2008 2008
---------- ---------- ----------
Net income as reported $ 2,850 $ 5,293 $ 5,957
Loss on sale of other real estate
owned and other assets - - -
Impairment charge on equity mutual
funds 3,063 - -
Credit related impairment charge on
trust preferred securities 1,977 3,209(1) -
Gain on sale of municipal agency
securities (431) - -
Non-recurring adjustment to income
taxes - 36 -
Expense associated with prepayment
of FHLBNY Advances 185 - -
Tax effect of adjustments and other
non-recurring tax items (2,185) (1,449) 29
---------- ---------- ----------
Core Earnings $ 5,459 $ 7,089 $ 5,986
---------- ---------- ----------
Cash Earnings Additions :
Non-cash stock benefit plan expense 640 685 563
---------- ---------- ----------
Core Cash Earnings $ 6,099 $ 7,774 $ 6,549
---------- ---------- ----------
Performance Ratios (Based upon Core
Cash Earnings):
Core Cash EPS (Diluted) $ 0.19 $ 0.24 $ 0.20
Core Cash Return on Average Assets 0.60% 0.80% 0.75%
Core Cash Return on Average
Tangible Stockholders' Equity 10.46% 13.47% 12.09%
(1) Amount reflects the pre-tax charge through the Company's earnings
during the quarter ended December 31, 2008. Of this total,
$2,287,000 was reversed on January 1, 2009 for the cumulative
effect adjustment of adopting Financial Accounting Standards Board
Staff Positions 115-2 and 124-2, "Recognition and Presentation of
Other-Than Temporary Impairments."
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED SELECTED FINANCIAL HIGHLIGHTS
(Dollars In thousands except per share amounts)
For the Three Months Ended
---------------------------------------
March 31, December 31, March 31,
2009 2008 2008
----------- ----------- -----------
Performance Ratios (Based upon
Reported Earnings):
Reported EPS (Diluted) $ 0.09 $ 0.16 $ 0.18
Return on Average Assets 0.28% 0.55% 0.68%
Return on Average Stockholders'
Equity 4.08% 7.67% 8.87%
Return on Average Tangible
Stockholders' Equity 4.89% 9.17% 11.00%
Net Interest Spread 2.21% 2.42% 2.01%
Net Interest Margin 2.51% 2.63% 2.32%
Non-interest Expense to Average
Assets 1.35% 1.29% 1.40%
Efficiency Ratio 55.09% 51.85% 57.39%
Effective Tax Rate 25.90% 28.25% 34.23%
Performance Ratios (Based upon
Core Earnings):
Core EPS (Diluted) $ 0.17 $ 0.22 $ 0.18
Core Return on Average Assets 0.54% 0.73% 0.68%
Core Return on Average
Stockholders' Equity 7.82% 10.28% 8.92%
Core Return on Average Tangible
Stockholders' Equity 9.36% 12.28% 11.05%
Book Value and Tangible Book
Value Per Share:
Stated Book Value Per Share $ 8.18 $ 8.10 $ 7.97
Tangible Book Value Per Share 6.80 6.79 6.46
Average Balance Data:
Average Assets $ 4,039,762 $ 3,873,395 $ 3,512,724
Average Interest Earning Assets 3,853,025 3,629,527 3,320,124
Average Stockholders' Equity 279,072 275,896 268,512
Average Tangible Stockholders'
Equity 233,200 230,886 216,623
Average Loans 3,311,006 3,237,562 2,896,081
Average Deposits 2,321,613 2,163,553 2,153,031
Asset Quality Summary:
Net (recoveries) charge-offs $ 1,876(1) $ 350 $ 144
Nonperforming Loans 13,123 7,402 3,090
Nonperforming Loans/Total Loans 0.40% 0.22% 0.11%
Nonperforming Assets 13,423 7,702 3,985
Nonperforming Assets/Total Assets 0.33% 0.19% 0.11%
Allowance for Loan Loss/Total Loans 0.56% 0.53% 0.53%
Allowance for Loan Loss/
Nonperforming Loans 139.84% 235.80% 506.96%
Regulatory Capital Ratios:
Consolidated Tangible Stockholders'
Equity to Tangible Assets at
period end 5.83% 5.79% 6.09%
Tangible Capital Ratio (Bank Only) 7.86% 7.63% 7.77%
Leverage Capital Ratio (Bank Only) 7.86% 7.63% 7.77%
Risk Based Capital Ratio (Bank Only) 11.83% 11.43% 11.78%
(1) Amount includes $347,000 of charge-offs recognized as a direct witedown
of loan principal balance and not as a reduction of the allowance for
loan losses.
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED AVERAGE BALANCES AND NET INTEREST INCOME
(Dollars In thousands)
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
----------------------------------
December 31, 2008
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 3,235,756 $ 47,987 5.93%
Other loans 1,806 40 8.86
Mortgage-backed securities 306,652 3,489 4.55
Investment securities 27,456 538 7.84
Other short-term investments 57,857 594 4.11
----------- ---------- ----------
Total interest earning assets 3,629,527 $ 52,648 5.80%
----------- ----------
Non-interest earning assets 243,868
-----------
Total assets $ 3,873,395
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 104,224 $ 603 2.30%
Money Market accounts 606,647 4,074 2.67
Savings accounts 269,153 382 0.56
Certificates of deposit 1,090,661 9,572 3.49
----------- ---------- ----------
Total interest bearing
deposits 2,070,685 14,631 2.81
Borrowed Funds 1,317,166 14,188 4.29
----------- ---------- ----------
Total interest-bearing
liabilities 3,387,851 28,819 3.38%
----------- ---------- ----------
Non-interest bearing checking
accounts 92,868
Other non-interest-bearing
liabilities 116,780
-----------
Total liabilities 3,597,499
Stockholders' equity 275,896
-----------
Total liabilities and stockholders'
equity $ 3,873,395
===========
Net interest income $ 23,829
==========
Net interest spread 2.42%
==========
Net interest-earning assets $ 241,676
===========
Net interest margin 2.63%
==========
Ratio of interest-earning assets to
interest-bearing liabilities 107.13%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,163,553 $ 14,631 2.69%
Interest earning assets (excluding
prepayment and other fees) 5.70%
For the Three Months Ended
----------------------------------
March 31, 2008
----------------------------------
Average
Average Yield/
Balance Interest Cost
----------- ---------- ----------
Assets:
Interest-earning assets:
Real estate loans $ 2,894,264 $ 43,066 5.95%
Other loans 1,817 44 9.69
Mortgage-backed securities 192,772 2,216 4.60
Investment securities 35,655 708 7.94
Other short-term investments 195,616 2,196 4.49
----------- ---------- ----------
Total interest earning assets 3,320,124 $ 48,230 5.81%
----------- ----------
Non-interest earning assets 192,600
-----------
Total assets $ 3,512,724
===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest Bearing Checking $ 63,834 $ 410 2.58%
Money Market accounts 670,662 5,956 3.56
Savings accounts 271,839 367 0.54
Certificates of deposit 1,057,803 11,235 4.26
----------- ---------- ----------
Total interest bearing
deposits 2,064,138 17,968 3.49
Borrowed Funds 995,888 11,031 4.44
----------- ---------- ----------
Total interest-bearing
liabilities 3,060,026 28,999 3.80%
----------- ----------
Non-interest bearing checking
accounts 88,893
Other non-interest-bearing
liabilities 95,293
-----------
Total liabilities 3,244,212
Stockholders' equity 268,512
-----------
Total liabilities and stockholders'
equity $ 3,512,724
===========
Net interest income $ 19,231
==========
Net interest spread 2.01%
==========
Net interest-earning assets $ 260,098
===========
Net interest margin 2.32%
==========
Ratio of interest-earning assets to
interest-bearing liabilities 108.50%
==========
Deposits (including non-interest
bearing checking accounts) $ 2,153,031 $ 17,968 3.35%
Interest earning assets (excluding
prepayment and other fees) 5.68%
Contact Information: Contact: Kenneth Ceonzo Director of Investor Relations 718-782-6200 extension 8279