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Dime Community Bancshares Reports Third Quarter Earnings of $0.33 per Diluted Share


October 27, 2011 - Brooklyn, NY

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 third quarter ended September 30, 2011. Consolidated net income was $11.2 million, or 33 cents per diluted share, compared to $12.3 million, or 36 cents per diluted share, for the quarter ended June 30, 2011, and $11.4 million, or 34 cents per diluted share, for the quarter ended September 30, 2010. The linked-quarter EPS reduction of $0.03 reflected lower interest income, mainly prepayment fees, and a higher loan loss provision.

Vincent F. Palagiano, Chairman and Chief Executive Officer of Dime, commented, "We posted another solid quarter led by a net interest margin approximating 3.6% and continued operational efficiency. Prepayment fee income returned to more normalized levels for this cycle in the current quarter, and our loan loss provision was $555,000 higher than the June 2011 quarter, due primarily to loan downgrades to one borrower discussed later in the release. However, our overall business outlook remains favorable, with profitable interest rate spreads, and no market-driven reason to compete on rate for deposit funding. While we remained active in our lending market, origination volumes continued at a measured pace. We continue to closely monitor the credit quality of our loan portfolio, which remains a competitive strength. At September 30, 2011, non-performing assets approximated 46 basis points of total assets, and loans delinquent between 30 and 89 days were also less than one percent of total assets."

OPERATING RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2011
Net Interest Margin
Linked quarter net interest margin ("NIM") declined 8 basis points from 3.66% to 3.58%. Regarding individual components of NIM, the average yield on real estate loans declined by 25 basis points linked quarter, to 5.76%. The cost of interest bearing deposits declined by 6 basis points, and the cost of borrowed funds declined by 4 basis points, both linked quarter.

Core NIM (excluding loan prepayment fees) rose 11 basis points from 3.33% to 3.44%. Core NIM rose because the Bank's level of liquid (overnight) funds declined from a 2nd quarter 2011 average of $376.3 million to a 3rd quarter 2011 average of $302.2 million. Liquidity was used mainly to fund deposit outflows and pay off maturing borrowings. The Company's expectation is that overnight liquidity will continue to contract through year-end to a level of approximately $150 million through these activities.

Prepayment fees, which were $3.2 million in the 2nd quarter 2011, declined to $1.3 million in the 3rd quarter 2011, consistent with management's previous statement that 2Q'11 appeared as if it would be the high water mark for prepayment fees for the year. This continues to be our expectation. While prepayment fee income is generally favorable to the Bank, the slowdown in refinance activity associated with declining prepayment fees is more beneficial to sustaining NIM going forward.

During this period when the Bank's profitability remains at or near cyclical highs, the Company is moderating asset and loan portfolio growth. Capital continues to grow, providing future leverage opportunity. Rate competition for in-market deposits remains light, in contrast to the comparatively robust New York City multifamily lending market. Offering rates on new 12-month certificates of deposit ("CDs") range between 50 and 75 basis points. Rates on New York City multifamily loans range from 3.75% to 4.00%. Although the resulting spread between those instruments is wide, the duration mismatch could be between four and seven years. Therefore, management will continue to seek only to maintain its competitive position, foregoing any significant growth in its loan portfolio for the time being.

Net Interest Income
Net interest income was $34.2 million in the quarter ended September 30, 2011, a reduction of 5.5% from $36.2 million reported in the second quarter of 2011 and approximating the $34.3 million reported in the third quarter of 2010. The reduction from the June 2011 quarter was driven primarily by a decline of $2.0 million in loan prepayment fee income, as loan prepayment rates slowed in the most recent quarter.

Interest Rate Risk
The Company continues to believe that lengthening the duration of its liabilities to more closely match the repricing duration of its primary investment, the 5-year repricing multifamily loan, is a prudent strategy in the current interest rate environment. During the September 2011 quarter, the Company modified $102.5 million of existing putable FHLBNY advances, equal to approximately 11.0% of total outstanding FHLBNY advances at June 30, 2011. The current favorable interest rate environment enabled the Company to lengthen the maturity of these liabilities and simultaneously lower their cost to the Company's benefit. The modification of these $102.5 million in advances resulted in a 108 basis point reduction in their weighted average cost to 2.17%, as well as an extension of 2.65 years in their weighted average term to maturity to the third quarter of 2015.

The amount of short-term, putable advances modified during the 15 months ended September 30, 2011 totaled approximately $300.0 million, and the average duration of the Company's total borrowing position has increased to 3.5 years at September 30, 2011. The prepayment / modification activity that has been ongoing since second quarter of 2010 served to reduce the average cost of borrowings by 27 basis points from the quarter ended September 30, 2010 to the quarter ended September 30, 2011. At September 30, 2011, the Company had $375.0 million of putable borrowings remaining, with a weighted average maturity of 4.8 years. However, since the weighted average cost of these borrowings is 4.1%, they are not currently anticipated to be called.

Provision/Allowance For Loan Losses
At September 30, 2011, the allowance for loan losses as a percentage of total loans stood at 0.63%, up 6 basis points from the prior quarter. Charge-offs were relatively minor during the September 2011 quarter. However, during the most recent quarter the Bank experienced an increase of $20.3 million in loans delinquent between 30 to 89 days. The increase in loan delinquencies combined with downgrades to several performing loans led to an increase in the loan loss provision to $2.2 million during the September 2011 quarter, compared to $1.7 million recorded in the June 2011 quarter. In the absence of charge-off activity, nearly all of the $2.2 million provision resulted in an addition to the allowance for loan losses balance at September 30, 2011 compared to June 30, 2011.

Non-Interest Income
Non-interest income was $2.1 million for the quarter ended September 30, 2011, an increase of $415,000 from the previous quarter. This growth resulted primarily from a reduction of $515,000 in other-than temporary impairment charges on the Company's pooled bank trust preferred securities (a negative component of non-interest income). This was partially offset by a net reduction of $157,000 in the market valuation of trading securities. This $157,000 reduction was fully offset by a comparable reduction in salaries and benefits expense during the most recent quarter, as these securities are earmarked for future settlement of certain benefit liabilities that are also required to be recognized at fair value on an ongoing basis.

Non-Interest Expense
Non-interest expense was $15.0 million in the quarter ended September 30, 2011, relatively unchanged from the prior quarter. Within non-interest expense, lower salary and benefits and other operating expenses offset additional occupancy and equipment and FDIC insurance expenses compared to the June 2011 quarter.

Non-interest expense was 1.48% of average assets during the most recent quarter, resulting in an efficiency ratio of 41.0%. This remains among the lowest efficiency ratios in the industry, and a longstanding hallmark of Dime.

Income Tax Expense
The effective tax rate (Federal, New York State and New York City combined) was 41.7% during the September 2011 quarter. In the quarter ended September 30, 2010 the effective tax rate approximated 42.6%. During the September 2010 quarter, New York State enacted a change in tax law associated with bad debt deductions permissible by savings banks, effective retroactively to January 1, 2010. As a result, Dime was required to recognize a catch-up adjustment approximating $700,000 during the September 2010 quarter for the difference between the previous and new rules for the first six months of 2010, which accounted for the higher effective tax rate during that period.

BALANCE SHEET
Total assets were $4.04 billion at September 30, 2011, a reduction of $52.9 million from June 30, 2011. Cash and due from banks and federal funds sold and other short-term investments were reduced by $22.5 million in aggregate, and investment and mortgage backed securities available-for-sale were reduced by $37.2 million in aggregate during the most recent quarter. On the funding side, the Company reduced its borrowed funds by $55.0 million and deposits declined by $31.4 million during the September 2011 quarter. All balances are as of period end.

Real Estate Loans
Real estate loans increased $12.8 million during the most recent quarter due to lower prepayment activity and a slight increase in origination levels. Real estate loan originations were $169.7 million during the most recent quarter and carried an average rate of 4.54%. Loan amortization and satisfactions totaled $164.3 million, or 19.2% of the average portfolio balance on an annualized basis. To put this in historical perspective, the annualized real estate loan portfolio amortization rate approximated 59% in the quarter ended September 30, 2003, during the last significant downturn in mortgage rates. The average rate on amortized or satisfied loan balances during the most recent quarter was 5.92%. The loan pipeline stood at $95.6 million at September 30, 2011, with a weighted average rate of 4.42%. One of the reasons that the NIM held up reasonably well during the first three quarters of 2011 is that the new loans originated in 2011 at rates below 5% (approximately $475.0 million) represented only about 14% of the total loan portfolio. The average yield on the loan portfolio (excluding prepayment income) during the quarter ended December 31, 2010 was 5.78% compared to 5.63% during the September 2011 quarter.

The Bank had $505.3 million of real estate loans sold on a servicing retained basis as of September 30, 2011. In the course of business, the Bank occasionally repurchases, at par, loans previously sold for the sole purpose of facilitating the borrowers' refinancing. All such repurchased loans are in the process of either being satisfied, or refinanced with the Bank. During the quarter ended September 30, 2011, such repurchases totaled $9.2 million, and are not included in the $169.7 million of total originations for the quarter.

Credit Summary
Non-accrual loans were $17.5 million, or 0.51% of total loans, at September 30, 2011, a slight increase from $16.5 million, or 0.48% of loans, at June 30, 2011. There was, however, an increase in loans delinquent between 30 and 89 days to $33.9 million, or approximately 1.0% of total loans, at September 30, 2011, compared to $13.6 million, or 0.40% of loans, at June 30, 2011. Of the $20.3 million increase in loans 30 to 89 days delinquent experienced in the most recent quarter, $12.8 million resulted from one borrower relationship.

As has been discussed in the past, the Bank often finances multiple properties for individual creditworthy and experienced borrowers/landlords in the New York City multifamily market. Therefore, when such a borrower encounters financial difficulties it can impact several portfolio properties at one time, causing a spike in delinquencies. The 3rd quarter 2011 spike in delinquencies and provisioning was just such a situation where a single borrower accounts for a significant portion of the increase in 30 to 89 day loan delinquencies. This does not appear to be predictive of an upward trend in loan portfolio delinquencies, which otherwise remain within cyclical bounds for Dime.

The sum of non-performing assets and accruing loans past due 90 days or more represented 6.1% of tangible capital plus the allowance for loan losses (otherwise known as the "Texas Ratio") at September 30, 2011 (see table below). This number compares very favorably to both industry and regional averages.

Within the $318.1 million remaining in the pool of loans sold to Fannie Mae with recourse exposure, total loans 30 days or more delinquent approximated $2.1 million at September 30, 2011, up from the $1.4 million level at June 30, 2011, reflecting one additional delinquent loan.

Deposits and Borrowed Funds
Deposits decreased $31.4 million from June 30, 2011 to September 30, 2011, reflecting a reduction of $47.8 in CDs from the expiration of earlier deposit promotional campaigns. Given the Bank's strong liquidity position, management chose not to bid aggressively to retain these deposits. Core (non-CD) deposits increased $16.4 million, led by $14.1 million of growth in money market deposits. The Bank remained selective in the products, rates and terms on which it competes for deposits, focusing on products that encourage long-term customer retention, and discouraging renewals of promotional deposits in cases where customer relationships have not proved durable.

At September 30, 2011, average deposit balances approximated $95.4 million per branch for branches open in excess of one year.

Proceeds from loan amortization and the utilization of balance sheet liquidity accumulated during the first six months of 2011 provided sufficient liquidity to fund new loan originations during the most recent quarter, and facilitated the reduction of $55.0 million of maturing FHLBNY advances.

Tangible Capital
Dime continues to grow tangible capital through retained earnings. The Bank's tangible capital ratio was 8.84% at September 30, 2011, up 31 basis points from June 30, 2011. At the Company, consolidated tangible capital was 7.66% of tangible assets at September 30, 2011, up 30 basis points from June 30, 2011. The consolidated Company also has approximately $70.0 million of trust preferred securities that were issued as debt, which, if added to Tier 1 (tangible) capital, would increase its consolidated Tier 1 (tangible) capital ratio to approximately 9.4%. Trust preferred securities are included as a capital component for banks and thrifts below $15 billion in consolidated assets.

Reported earnings per share exceeded the quarterly cash dividend rate per share by 136% during the most recent quarter, a 42% payout rate. Tangible book value per share increased $0.21 sequentially during the most recent quarter to $8.71 at September 30, 2011. This growth was fueled by a return of approximately 14.8% on average tangible equity during the most recent quarter.

OUTLOOK FOR THE QUARTER ENDING DECEMBER 31, 2011
The Company expects to maintain its current pace of loan originations through year end, with the goal of maintaining the absolute level of the loan portfolio -- currently approximately $3.4 billion. Some low-yielding liquidity will continue to be deployed throughout the remainder of the year, but it is not currently management's intention to meaningfully grow the loan portfolio at present rates. In the meantime, the Company is operating at a strong level of profitability and will continue to grow capital, which will be available for leverage at an appropriate time in the future.

Loans contractually scheduled to mature or reprice during the quarter ending December 31, 2011 total $86.7 million, at an average rate of 5.53%. Satisfaction and amortization rates (including prepayments and loan refinancing activity), which approximated 19.2% on an annualized basis during the most recent quarter, are expected to fall in the 15 - 20% annualized range during the December 2011 quarter.

The loan commitment pipeline was approximately $95.6 million at September 30, 2011, with an approximate weighted average rate of 4.42%, and was comprised primarily of multifamily residential loans.

On the liability side, deposit funding costs are expected to remain near current historically low levels through the fourth quarter of 2011. The Bank has $181.2 million of CDs maturing during the fourth quarter of 2011 at an average cost of 1.29%. Offering rates on 12-month term CDs currently range between 50 and 75 basis points. No borrowings are scheduled to mature or reprice during the fourth quarter of 2011, and the Bank will continue to look for opportunities to restructure its borrowed funds portfolio in order to either enhance profitability or reduce interest rate risk.

Net interest margin can be expected to decline gradually over time if rates remain range bound.

Assuming current levels hold for delinquent and troubled loans, management expects loan loss provisioning to decline in the December 2011 quarter compared to the September 2011 quarter.

Operating expenses for the December 2011 quarter are expected to approximate $15.0 million.

The Company projects that the consolidated effective tax rate will approximate 41% for the December 2011 quarter.

ABOUT DIME COMMUNITY BANCSHARES
The Company (NASDAQ: DCOM) had $4.04 billion in consolidated assets as of September 30, 2011, and is the parent company of the Bank. The Bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-six 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)

September 30, June 30, December 31,
2011 2011 2010
------------- ------------ ------------
ASSETS:
Cash and due from banks $ 120,703 $ 131,643 $ 86,193
Investment securities held to
maturity 7,173 7,249 6,641
Investment securities available
for sale 139,626 165,112 85,642
Trading securities 1,675 1,829 1,490
Mortgage-backed securities
available for sale 105,695 117,437 144,518
Federal funds sold and other
short-term investments - 11,575 4,536
Real Estate Loans:
One-to-four family and
cooperative apartment 102,092 103,058 116,886
Multifamily and underlying
cooperative (1) 2,547,120 2,511,646 2,497,339
Commercial real estate (1) 767,708 789,115 833,314
Construction and land
acquisition 10,588 10,884 15,238
Unearned discounts and net
deferred loan fees 4,801 4,807 5,013
------------- ------------ ------------
Total real estate loans 3,432,309 3,419,510 3,467,790
------------- ------------ ------------
Other loans 2,244 3,630 2,394
Allowance for loan losses (21,539) (19,518) (19,166)
------------- ------------ ------------
Total loans, net 3,413,014 3,403,622 3,451,018
------------- ------------ ------------
Loans held for sale 642 656 3,308
Premises and fixed assets, net 32,695 32,608 31,613
Federal Home Loan Bank of New
York capital stock 47,014 49,489 51,718
Other real estate owned, net - - -
Goodwill 55,638 55,638 55,638
Other assets 115,990 115,924 117,980
------------- ------------ ------------
TOTAL ASSETS $ 4,039,865 $ 4,092,782 $ 4,040,295
============= ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY:
Deposits:
Non-interest bearing checking $ 135,454 $ 136,500 $ 125,730
Interest Bearing Checking 100,438 101,379 108,078
Savings 347,633 343,335 329,182
Money Market 772,544 758,454 727,939
------------- ------------ ------------
Sub-total 1,356,069 1,339,668 1,290,929
------------- ------------ ------------
Certificates of deposit 1,028,548 1,076,304 1,059,652
------------- ------------ ------------
Total Due to Depositors 2,384,617 2,415,972 2,350,581
------------- ------------ ------------
Escrow and other deposits 92,345 89,466 68,542
Securities sold under agreements
to repurchase 195,000 195,000 195,000
Federal Home Loan Bank of New
York advances 884,775 939,775 990,525
Subordinated Notes Sold - - -
Trust Preferred Notes Payable 70,680 70,680 70,680
Other liabilities 57,656 34,615 36,233
------------- ------------ ------------
TOTAL LIABILITIES 3,685,073 3,745,508 3,711,561
------------- ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock ($0.01 par,
125,000,000 shares authorized,
51,393,667 shares, 51,393,667
shares and 51,219,609 shares
issued at September 30, 2011,
June 30, 2011 and December 31,
2010, respectively, and
34,936,614 shares, 34,936,614
shares and 34,593,180 shares
outstanding at September 30,
2011, June 30, 2011 and December
31, 2010, respectively) 515 514 512
Additional paid-in capital 230,196 228,996 225,585
Retained earnings 350,093 343,670 329,668
Unallocated common stock of
Employee Stock Ownership Plan (3,297) (3,354) (3,470)
Unearned common stock of
Restricted Stock Awards (3,476) (3,915) (2,684)
Common stock held by the Benefit
Maintenance Plan (8,655) (8,634) (7,979)
Treasury stock (16,457,053
shares, 16,457,053 shares and
16,626,429 shares at September
30, 2011, June 30, 2011 and
December 31, 2010, respectively) (204,441) (204,442) (206,546)
Accumulated other comprehensive
loss, net (6,143) (5,561) (6,352)
------------- ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 354,792 347,274 328,734
------------- ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,039,865 $ 4,092,782 $ 4,040,295
============= ============ ============

(1) While the loans within both of these categories are often considered
"commercial real estate" in nature, they are classified separately in the
statement above to provide further emphasis upon the discrete composition
of their underlying real estate collateral.




 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, 2011 2011 2010 ------------- ------------- -------------Interest income: Loans secured by real estate $ 49,139 $ 51,857 $ 50,648 Other loans 24 24 28 Mortgage-backed securities 1,192 1,330 1,846 Investment securities 321 382 290 Federal funds sold and other short-term investments 640 677 702 ------------- ------------- ------------- Total interest income 51,316 54,270 53,514 ------------- ------------- -------------Interest expense: Deposits and escrow 6,498 6,798 7,383 Borrowed funds 10,646 11,312 11,855 ------------- ------------- ------------- Total interest expense 17,144 18,110 19,238 ------------- ------------- ------------- Net interest income 34,172 36,160 34,276Provision for loan losses 2,217 1,662 667 ------------- ------------- -------------Net interest income after provision for loan losses 31,955 34,498 33,609 ------------- ------------- ------------- Non-interest income: Service charges and other fees 1,172 901 1,284 Mortgage banking income (loss), net 136 203 316 Other than temporary impairment ("OTTI") charge on securities (1) (59) (574) (1,639) Gain (loss) on sale of other real estate owned and other assets 14 14 (10) Gain (loss) on trading securities (150) 7 86 Other 1,036 1,183 1,031 ------------- ------------- ------------- Total non-interest income (loss) 2,149 1,734 1,068 ------------- ------------- -------------Non-interest expense: Compensation and benefits 8,662 9,016 8,514 Occupancy and equipment 2,649 2,403 2,190 Federal deposit insurance premiums 591 347 1,116 Other 3,062 3,317 3,072 ------------- ------------- ------------- Total non-interest expense 14,964 15,083 14,892 ------------- ------------- ------------- Income before taxes 19,140 21,149 19,785Income tax expense 7,976 8,811 8,430 ------------- ------------- ------------- Net Income $ 11,164 $ 12,338 $ 11,355 ============= ============= ============= Earnings per Share: Basic $ 0.33 $ 0.37 $ 0.34 ============= ============= ============= Diluted $ 0.33 $ 0.36 $ 0.34 ============= ============= ============= Average common shares outstanding for Diluted EPS 33,881,323 33,865,908 33,394,522 -------------------------------(1) Total OTTI charges on securities are summarized as follows for the periods presented:Credit component (shown above) $ 59 $ 574 $ 1,639Non-credit component not included in earnings 24 - 219 ------------- ------------- -------------Total OTTI $ 83 $ 574 $ 1,858 ------------- ------------- ------------- 

 For the Nine Months Ended ---------------------------- September 30, September 30, 2011 2010 ------------- -------------Interest income: Loans secured by real estate $ 151,625 $ 151,839 Other loans 74 97 Mortgage-backed securities 3,974 6,199 Investment securities 1,019 1,009 Federal funds sold and - other short-term investments 2,089 2,125 ------------- ------------- Total interest income 158,781 161,269 ------------- -------------Interest expense: Deposits and escrow 20,081 22,986 Borrowed funds 33,325 38,036 ------------- ------------- Total interest expense 53,406 61,022 ------------- ------------- Net interest income 105,375 100,247Provision for loan losses 5,305 7,948 ------------- -------------Net interest income after provision for loan losses 100,070 92,299 ------------- ------------- Non-interest income: Service charges and other fees 2,836 3,165 Mortgage banking income (loss), net 433 829 Other than temporary impairment ("OTTI") charge on securities (1) (695) (2,312) Gain (loss) on sale of other real estate owned and other assets 28 618 Gain (loss) on trading securities (97) 243 Other 3,288 3,492 ------------- ------------- Total non-interest income (loss) 5,793 6,035 ------------- -------------Non-interest expense: Compensation and benefits 27,404 25,923 Occupancy and equipment 7,741 7,096 Federal deposit insurance premiums 2,163 3,099 Other 9,599 10,256 ------------- ------------- Total non-interest expense 46,907 46,374 ------------- ------------- Income before taxes 58,956 51,960Income tax expense 24,374 21,131 ------------- ------------- Net Income $ 34,582 $ 30,829 ============= ============= Earnings per Share: Basic $ 1.03 $ 0.93 ============= ============= Diluted $ 1.02 $ 0.93 ============= ============= Average common shares outstanding for Diluted EPS 33,783,408 33,328,574 ----------------------------------------------(1) Total OTTI charges on securities are summarized as follows for the periods presented:Credit component (shown above) $ 695 $ 2,312Non-credit component not included in earnings 25 282 ------------- -------------Total OTTI $ 720 $ 2,594 ------------- -------------



 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, 2011 2011 2010 ------------- ------------- ------------- Performance Ratios (Based upon Reported Earnings):Reported EPS (Diluted) $ 0.33 $ 0.36 $ 0.34Return on Average Assets 1.10% 1.18% 1.11%Return on Average Stockholders' Equity 12.70% 14.40% 14.23%Return on Average Tangible Stockholders' Equity 14.81% 16.86% 16.92%Net Interest Spread 3.39% 3.44% 3.44%Net Interest Margin 3.58% 3.66% 3.60%Non-interest Expense to Average Assets 1.48% 1.44% 1.46%Efficiency Ratio 40.98% 39.21% 40.35%Effective Tax Rate 41.67% 41.66% 42.61% Book Value and Tangible Book Value Per Share:Stated Book Value Per Share $ 10.13 $ 9.93 $ 9.33Tangible Book Value Per Share 8.71 8.50 7.86 Average Balance Data:Average Assets $ 4,052,159 $ 4,177,651 $ 4,090,033Average Interest Earning Assets 3,821,747 3,948,392 3,806,510Average Stockholders' Equity 351,615 342,808 319,090Average Tangible Stockholders' Equity 301,534 292,801 268,477Average Loans 3,413,596 3,455,282 3,440,764Average Deposits 2,410,033 2,419,476 2,406,853 Asset Quality Summary:Net charge-offs $ 148 $ 1,933 $ 6,817Non-accrual Loans 17,468 16,534 19,598Nonperforming Loans/ Total Loans 0.51% 0.48% 0.57%Nonperforming Assets (1) 18,483 17,163 20,242Nonperforming Assets/Total Assets 0.46% 0.42% 0.51%Allowance for Loan Loss/Total Loans 0.63% 0.57% 0.49%Allowance for Loan Loss/Nonperforming Loans 123.31% 118.05% 86.45%Loans Delinquent 30 to 89 Days at period end $ 33,855 $ 13,583 $ 15,729 Regulatory Capital Ratios:Consolidated Tangible Stockholders' Equity to Tangible Assets at period end 7.66% 7.36% 6.90%Tangible Capital Ratio (Bank Only) 8.84% 8.53% 8.01%Leverage Capital Ratio (Bank Only) 8.84% 8.53% 8.01% 



 For the Nine Months Ended ---------------------------- September 30, September 30, 2011 2010 ------------- ------------- Performance Ratios (Based upon Reported Earnings):Reported EPS (Diluted) $ 1.02 $ 0.93Return on Average Assets 1.12% 1.00%Return on Average Stockholders' Equity 13.46% 13.22%Return on Average Tangible Stockholders' Equity 15.75% 15.82%Net Interest Spread 3.41% 3.28%Net Interest Margin 3.62% 3.47%Non-interest Expense to Average Assets 1.52% 1.51%Efficiency Ratio 41.91% 43.05%Effective Tax Rate 41.34% 40.67% Book Value and Tangible Book Value Per Share:Stated Book Value Per Share $ 10.13 $ 9.93Tangible Book Value Per Share 8.71 8.50 Average Balance Data:Average Assets $ 4,106,344 $ 4,105,697Average Interest Earning Assets 3,880,803 3,852,759Average Stockholders' Equity 342,456 310,856Average Tangible Stockholders' Equity 292,678 259,821Average Loans 3,446,310 3,455,969Average Deposits 2,399,270 2,242,875 Asset Quality Summary:Net charge-offs $ 3,061 $ 12,610Non-accrual Loans 17,468 16,534Nonperforming Loans/ Total Loans 0.51% 0.48%Nonperforming Assets (1) 18,483 17,163Nonperforming Assets/Total Assets 0.46% 0.42%Allowance for Loan Loss/Total Loans 0.63% 0.57%Allowance for Loan Loss/Nonperforming Loans 123.31% 118.05%Loans Delinquent 30 to 89 Days at period end $ 33,855 $ 13,583 Regulatory Capital Ratios:Consolidated Tangible Stockholders' Equity to Tangible Assets at period end 7.66% 7.36%Tangible Capital Ratio (Bank Only) 8.84% 8.53%Leverage Capital Ratio (Bank Only) 8.84% 8.53% (1) Amount comprised of total non-accrual loans, other real estate owned and the recorded balance of two pooled bank trust preferred security investments for which the Bank has 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 --------------------------------- September 30, 2011 --------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- -------Assets: Interest-earning assets: Real estate loans $ 3,412,553 $ 49,139 5.76% Other loans 1,043 24 9.20 Mortgage-backed securities 105,886 1,192 4.50 Investment securities 150,930 321 0.85 Other short-term investments 151,335 640 1.69 ------------ ----------- ------- Total interest earning assets 3,821,747 $ 51,316 5.37% ------------ ----------- Non-interest earning assets 230,412 ------------Total assets $ 4,052,159 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking $ 93,649 $ 66 0.28% Money Market accounts 775,697 1,295 0.66 Savings accounts 345,237 180 0.21 Certificates of deposit 1,053,415 4,957 1.87 ------------ ----------- ------- Total interest bearing deposits 2,267,998 6,498 1.14 Borrowed Funds 1,171,433 10,646 3.61 ------------ ----------- ------- Total interest-bearing liabilities 3,439,431 $ 17,144 1.98% ------------ ----------- ------- Non-interest bearing checking accounts 142,035 Other non-interest-bearing liabilities 119,078 ------------ Total liabilities 3,700,544 Stockholders' equity 351,615 ------------Total liabilities and stockholders' equity $ 4,052,159 ============Net interest income $ 34,172 ===========Net interest spread 3.39% =======Net interest-earning assets $ 382,316 ============Net interest margin 3.58% =======Ratio of interest-earning assets to interest-bearing liabilities 111.12% =========== Deposits (including non-interest bearing checking accounts) $ 2,410,033 $ 6,498 1.07% Interest earning assets (excluding prepayment and other fees) 5.23% 



 For the Three Months Ended --------------------------------- June 30, 2011 --------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- -------Assets: Interest-earning assets: Real estate loans $ 3,454,204 $ 51,857 6.01% Other loans 1,078 24 8.91 Mortgage-backed securities 116,786 1,330 4.56 Investment securities 166,723 382 0.92 Other short-term investments 209,601 677 1.29 ------------ ----------- ------- Total interest earning assets 3,948,392 $ 54,270 5.50% ------------ ----------- Non-interest earning assets 229,259 ------------Total assets $ 4,177,651 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking $ 97,656 $ 90 0.37% Money Market accounts 749,299 1,265 0.68 Savings accounts 340,968 179 0.21 Certificates of deposit 1,089,227 5,264 1.94 ------------ ----------- ------- Total interest bearing deposits 2,277,150 6,798 1.20 Borrowed Funds 1,244,507 11,312 3.65 ------------ ----------- ------- Total interest-bearing liabilities 3,521,657 $ 18,110 2.06% ------------ ----------- ------- Non-interest bearing checking accounts 142,326 Other non-interest-bearing liabilities 170,860 ------------ Total liabilities 3,834,843 Stockholders' equity 342,808 ------------Total liabilities and stockholders' equity $ 4,177,651 ============Net interest income $ 36,160 ===========Net interest spread 3.44% =======Net interest-earning assets $ 426,735 ============Net interest margin 3.66% =======Ratio of interest-earning assets to interest-bearing liabilities 112.12% =========== Deposits (including non-interest bearing checking accounts) $ 2,419,476 $ 6,798 1.13% Interest earning assets (excluding prepayment and other fees) 5.17% 



 For the Three Months Ended --------------------------------- September 30, 2010 --------------------------------- Average Average Yield/ Balance Interest Cost ------------ ----------- -------Assets: Interest-earning assets: Real estate loans $ 3,439,448 $ 50,648 5.89% Other loans 1,316 28 8.51 Mortgage-backed securities 166,672 1,846 4.43 Investment securities 64,325 290 1.80 Other short-term investments 134,749 702 2.08 ------------ ----------- ------- Total interest earning assets 3,806,510 $ 53,514 5.62% ------------ ----------- Non-interest earning assets 283,523 ------------Total assets $ 4,090,033 ============ Liabilities and Stockholders' Equity: Interest-bearing liabilities: Interest Bearing Checking $ 98,588 $ 99 0.40% Money Market accounts 760,509 1,221 0.64 Savings accounts 317,243 202 0.25 Certificates of deposit 1,107,791 5,861 2.10 ------------ ----------- ------- Total interest bearing deposits 2,284,131 7,383 1.28 Borrowed Funds 1,213,607 11,855 3.88 ------------ ----------- ------- Total interest-bearing liabilities 3,497,738 $ 19,238 2.18% ------------ ----------- ------- Non-interest bearing checking accounts 122,722 Other non-interest-bearing liabilities 150,483 ------------ Total liabilities 3,770,943 Stockholders' equity 319,090 ------------Total liabilities and stockholders' equity $ 4,090,033 ============Net interest income $ 34,276 ===========Net interest spread 3.44% =======Net interest-earning assets $ 308,772 ============Net interest margin 3.60% ======= Ratio of interest-earning assets to interest-bearing liabilities 108.83% =========== Deposits (including non-interest bearing checking accounts) $ 2,406,853 $ 7,383 1.22% Interest earning assets (excluding prepayment and other fees) 5.54% 



 DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARIESUNAUDITED SCHEDULE OF NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS (Dollars In thousands) At September 30, At June 30, At December 31,Non-Performing Loans 2011 2011 2010 ----------------- ------------- ---------------- One- to four-family and cooperative apartment $ 72 $ 67 $ 223 Multifamily residential and mixed use residential (1) 4,542 3,352 7,548 Mixed Use Commercial (1) 3,672 3,309 1,217 Commercial real estate 6,310 6,931 11,163 Construction 2,865 2,865 - Other 7 10 17 ----------------- ------------- ----------------Total Non-Performing Loans (2) $ 17,468 $ 16,534 $ 20,168 ----------------- ------------- ----------------Other Non-Performing Assets Other real estate owned - - - Pooled bank trust preferred securities 1,015 629 593 ----------------- ------------- ----------------Total Non-Performing Assets $ 18,483 $ 17,163 $ 20,761 ----------------- ------------- ---------------- Troubled Debt Restructurings not included in non-performing loans Multifamily residential and mixed use (1) 2,079 2,095 2,098 Commercial real estate 8,081 8,907 8,736 Construction - - - Mixed Use Commercial (1) 1,154 1,159 1,588 Other - - - ----------------- ------------- ----------------Total Performing Troubled Debt Restructurings ("TDRs") $ 11,314 $ 12,161 $ 12,422 ----------------- ------------- ---------------- (1) While the loans within these categories are often considered "commercial real estate" in nature, they are classified separately in the statement above to provide further emphasis upon the discrete composition of their underlying real estate collateral. (2) Total non-performing loans include some loans that have been modified in a manner that would meet the criteria for a TDR. These non-accruing TDR's, which totaled $7.0 million at September 30, 2011, $6.1 million at June 30, 2011 and $10.1 million at December 31,2010, respectively, are included in the non-performing loan table, but excluded from the TDR amount shown above. PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES At September 30, At June 30, At December 31, 2011 2011 2010 ---------------- ------------ ---------------Total Non-Performing Assets $ 18,483 $ 17,163 $ 20,732Loans over 90 days past due on accrual status (3) 4,105 2,420 8,340 ---------------- ------------ --------------- PROBLEM ASSETS $ 22,588 $ 19,583 $ 29,072 ---------------- ------------ --------------- Tier 1 Capital - Dime Savings Bank of Williamsburgh $ 350,684 $ 342,975 $ 326,554Allowance for loan losses 21,539 19,518 19,166 ---------------- ------------ --------------- TANGIBLE CAPITAL PLUS RESERVES $ 372,223 $ 362,493 $ 345,720 ---------------- ------------ --------------- PROBLEM ASSETS AS A PERCENTAGE OF TANGIBLE CAPITAL AND RESERVES 6.1% 5.4% 8.4% (3) These loans are expected to be either satisfied, made current or re- financed within the next twelve months, and are 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

MarketWire

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