Dime's Earnings Slip a Penny

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On Jan. 23, 2009, Dime Community Bancshares (DCOM Quote) posted a 2.6% drop in Q4 FY08 earnings due to impairment charges on securities. Net income declined to $5.29 million or $0.16 per share from $5.44 million or $0.17 per share in Q4 FY07. The quarterly earnings include an impairment charge of $3.21 million related to two pooled bank trust preferred securities. However, core earnings were up 30.4% to $7.09 million or $0.22 per share, which missed the consensus estimate of $0.25 per share.

Dime Community's interest income grew 11.5% to $52.65 million, led by a larger portfolio of real estate loans and mortgage-backed securities. Total interest expenses declined marginally to $28.82 million from $29.12 million, reflecting a 64 basis points reduction in average funding costs to 3.38%. Consequently, net interest income before provision for loan losses increased 31.8% to $23.83 million. Net interest margin improved 36 basis points to 2.63%, while net interest spread expanded 50 basis points to 2.42%. In addition, the company's noninterest loss was $2.89 million as against income of $2.41 million a year earlier, hurt by mortgage banking loss of $1.78 million and impairment charge of $3.21 million on securities. Total noninterest expenses rose 10.4% to $12.52 million on higher compensation and benefit costs. Subsequently, efficiency ratio improved to 51.85% from 55.89% a year ago.

During Q4 FY08, provision for credit losses increased several times to $1.04 million from $60,000 in the prior year's quarter. Non-performing loans was $7.40 million or 0.22% of total loans compared to $2.86 million or 0.10% of total loans in Q4 FY07. Meanwhile, risk-based capital ratio of the bank declined marginally to 11.43% from 11.92%.

For FY08, DCOM's interest income was up 11.3% to $202.65 million compared to the previous year, whereas non-interest income fell 73.0% to $2.81 million. Consequently, earnings for the year grew 24.9% to $28.03 million or $0.85 per share.

Looking forward to Q1 FY09, DCOM expects EPS of $0.20 to $0.22. In addition, the company anticipates its operating expenses to remain at $12.80 million.

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