SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 21, 1999
DIME COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-27782 11-3297463
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
209 HAVEMEYER STREET, BROOKLYN, NEW YORK 11211
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (718) 782-6200
NONE
(Former name or former address, if changed since last report)
<PAGE>
The Registrant hereby amends the items, financial statements, exhibits or
other portions of its current report on Form 8-K dated January 21, 1999 and
filed February 5, 1999 as set forth herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) (i) The following documents have been filed on December 29, 1998 with
the Securities and Exchange Commission (the "Commssion") by Financial Bancorp,
Inc. ("FIBC") as part of FIBC's Annual Report on Form 10-K for the year ended
September 30, 1998 pursuant to the Exchange Act of 1934, as amended, and are
incorporated by reference in this Form 8-K/A:
a) Consolidated Statements of Financial Condition as of September
30, 1998 and 1997;
b) Consolidated Statements of Income for the years ended
September 30, 1998, 1997 and 1996;
c) Consolidated Statements of Cash Flows for the years ended
September 30, 1998, 1997 and 1996;
d) Consolidated Statements of Changes in Stockholders' Equity for
the years ended September 30, 1998, 1997 and 1996;
e) Notes to Consolidated Financial Statements;
f) Independent Auditors Report dated as of December 4, 1998.
(a) (ii) The following unaudited consolidated financial statements as of
and for the three months ended December 31, 1998 of FIBC and Subsidiaries are
attached hereto as Exhibit 99.2 and are incorporated herein by reference:
a) Consolidated Statements of Financial Condition as of December
31, 1998;
b) Consolidated Statements of Income and Other Comprehensive Income
for the three months ended December 31, 1998;
c) Consolidated Statement of Changes in Stockholders' Equity for
the three months ended December 31, 1998;
d) Consolidated Statements of Cash Flows for the three months ended
December 31, 1998 and 1997; and
e) Notes to the consolidated financial statements.
(b) The pro forma financial information that is required pursuant to
Article 11 of Regulation S-X is attached hereto as Exhibit 99.3 and is
incorporated herein by reference.
2
<PAGE>
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.1 Agreement and Plan of Merger dated as of July 18, 1998, by and between
Dime Community Bancshares, Inc. and Financial Bancorp, Inc. *
23.1 Consent of Independent Certified Accountants dated as of April 5, 1999.
99.1 Press Release issued on January 21, 1999.**
99.2 Financial Bancorp, Inc. and Subsidiaries Unaudited Consolidated Financial
Statements as of December 31, 1998 and for the three months ended
December 31, 1998 and 1997.
99.3 Dime Community Bancshares, Inc. and Subsidiary and Financial Bancorp, Inc.
and Subsidiaries Pro Forma Condensed Combined Unaudited Consolidated
Statement of Financial Condition as of December 31, 1998 and
Statement of Operations for the six months ended December 31, 1998 and
year ended June 30, 1998 and related notes.
</TABLE>
* This exhibit has been previously filed by the Registrant with the Form S-4
(Registration No. 333-66761) filed by Dime Community Bancshares, Inc. on
November 4, 1998, and is incorporated herein by reference.
** This exhibit has been previously filed by the Registrant with Form 8-K on
filed by Dime Community Bancshares, Inc. February 5, 1999, and is
incorporated herein by reference.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
DIME COMMUNITY BANCSHARES, INC.
/s/ KENNETH J. MAHON
By: ___________________________________________________
Kenneth J. Mahon
Executive Vice President and Chief Financial Officer
Dated: April 6, 1999
<PAGE>
4
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.1 Agreement and Plan of Merger dated as of July 18, 1998, by and between
Dime Community Bancshares, Inc. and Financial Bancorp, Inc. *
23.1 Consent of Independent Certified Accountants dated as of April 6, 1999.
99.1 Press Release issued on January 21, 1999.**
99.2 Financial Bancorp, Inc. and Subsidiaries Unaudited Consolidated
Financial Statements as of December 31, 1998 and for the three months
ended December 31, 1998 and 1997.
99.3 Dime Community Bancshares, Inc. and Subsidiary and Financial Bancorp, Inc.
and Subsidiaries Pro Forma Condensed Combined Unaudited Consolidated
Statement of Financial Condition as of December 31, 1998 and
Statements of Operations for the six months ended December 31, 1998
and year ended June 30, 1998 and related notes.
</TABLE>
* This exhibit has been previously filed by the Registrant with the Form S-4
(Registration No. 333-66761) filed by Dime Community Bancshares, Inc. on
November 4, 1998, and is incorporated herein by reference.
** This exhibit has been previously filed by the Registrant with Form 8-K
filed by Dime Community Bancshares, Inc. on February 5, 1999, and is
incorporated herein by reference.
5
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Dime Community Bancshares, Inc. as
acquiror of Financial Bancorp, Inc.
We consent to the incorporation by reference in the Current Report
Amendment No. 1 on Form 8-K/A of Dime Community Bancshares, Inc. of our
report dated December 4, 1998 related to the consolidated statements of
financial condition of Financial Bancorp, Inc. and Subsidiaries as of
September 30, 1998 and 1997, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of the
years in the three-year period ended September 30, 1998, which report is
included in the Annual Report on Form 10-K of Financial Bancorp, Inc. filed
with the Securities and Exchange Commission on December 29, 1998.
/s/ RADICS & CO. LLC
Pine Brook, New Jersey
April 5, 1999
Exhibit 99.2
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DECEMBER 31, SEPTEMBER 30,
1998 1998
(UNAUDITED)
----------- -----------
ASSETS
Cash and amounts due from depository institutions $2,980,544 $2,001,493
Federal funds sold and securities purchased under agreements to resell 22,825,000 5,375,000
Total cash and cash equivalents 25,805,544 7,376,493
Investment securities available for sale 6,357,875 6,287,750
Investment securities held to maturity, net; estimated fair value of
$37,320,780 and $46,595,000 at December 31, 1998 and September 30,
1998, respectively 37,239,393 46,200,449
Mortgage-backed securities available for sale 17,255,520 20,679,363
Mortgage-backed securities held to maturity, net; estimated fair value
of $25,850,927 and $28,582,000 at December 31, 1998 and September 30,
1998, respectively 25,614,051 28,242,002
Loans receivable, net 191,238,071 196,027,388
Real estate owned, net 302,403 739,403
Investments in real estate, net 177,248 3,496,029
Premises and equipment, net 2,504,567 2,446,120
Federal Home Loan Bank of New York stock, at cost 2,110,400 2,110,400
Accrued interest receivable, net 1,902,974 2,043,279
Other assets 2,380,500 2,962,720
------------ -----------
TOTAL ASSETS $312,888,546 $318,611,396
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $230,812,504 $228,095,902
Advance payments by borrowers for taxes and insurance 1,479,740 1,518,016
Advances from Federal Home Loan Bank of New York - 6,000,000
Securities sold under agreements to repurchase 42,000,000 42,000,000
Treasury tax and loan account and other short term borrowings 5,604,934 7,770,251
Other liabilities 2,861,157 4,051,936
------------ -----------
Total liabilities 282,758,335 289,436,105
------------ -----------
Stockholders' equity
Preferred stock, $0.01 par value, 2,500,000 shares authorized; none
issued - -
Common stock, $0.01 par value, 6,000,000 shares authorized; 2,185,000
shares issued, 1,721,324 and 1,708,632 outstanding at
December 31, 1998 and September 30, 1998, respectively 21,850 21,850
Additional paid-in capital 20,561,881 20,505,364
Retained earnings - substantially restricted 16,913,820 16,347,698
Common stock acquried by Employee Stock Ownership Plan (ESOP) (809,246) (849,710)
Common stock acquired by Recognition & Retention Plan (RRP) (252,079) (280,888)
Accumulated other comprehensive income (loss) (119,065) (212,762)
Treasury stock, at cost; 463,676 shares and 476,368 shares at
December 31, 1998 and September 30, 1998, respectively (6,186,950) (6,356,261)
------------ -----------
Total stockholders' equity 30,130,211 29,175,291
------------ -----------
Total liabilities and stockholders' equity $312,888,546 $318,611,396
============ ===========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C> <C>
1998 1997
------------ ------------
INTEREST INCOME:
Loans $3,821,303 $3,200,084
Mortgage-backed securities 688,118 983,736
Investments and other interest-earning assets 822,472 1,051,546
Federal funds sold and securities purchased
under agreements to resell 206,536 82,954
------------ ------------
Total interest income 5,538,429 5,318,320
------------ ------------
INTEREST EXPENSE:
Deposits 2,199,596 2,196,188
Borrowings 768,387 605,994
------------ ------------
Total interest expense 2,967,983 2,802,182
Net interest income 2,570,446 2,516,138
Provision for loan losses 83,913 109,650
------------ ------------
Net interest income after provision for loan losses 2,486,533 2,406,488
------------ ------------
NON-INTEREST INCOME:
Fees and service charges 230,544 149,634
Gain on sale of loans 18,840 -
Gain from real estate operations 89,282 13,824
Miscellaneous 2,460 19,242
------------ ------------
Total non-interest income 341,126 182,700
------------ ------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 819,247 705,350
Net occupancy expense of premises 127,749 122,129
Equipment 201,935 169,380
Advertising 5,551 38,867
(Income) loss from real estate owned (13,702) 16,422
Federal insurance premium 30,831 30,403
Miscellaneous 301,180 273,102
------------ ------------
Total non-interest expenses 1,472,791 1,355,653
------------ ------------
Income before income taxes 1,354,868 1,233,535
Income taxes 586,308 533,982
------------ ------------
NET INCOME $768,560 $699,553
============ ============
BASIC EARNINGS PER SHARE $0.47 $0.43
============ ============
DILUTED EARNINGS PER SHARE $0.45 $0.42
============ ============
</TABLE>
Statements of Other Comprehensive Income:
<TABLE>
<S> <C> <C>
NET INCOME $768,560 $699,553
CHANGE IN UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE 93,697 4,360
------------ ------------
OTHER COMPREHENSIVE INCOME $862,257 $703,913
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
<S> <C>
FOR THE THREE
MONTHS ENDED
DECEMBER 31, 1998
--------------------
COMMON STOCK (PAR VALUE $0.01):
Balance at beginning of period $21,850
-------------
Balance at end of period 21,850
=============
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period 20,505,364
Amortization of excess fair value over cost = ESOP stock 106,016
Exercise of stock options (49,500)
-------------
Balance at end of period 20,561,880
=============
RETAINED EARNINGS:
Balance at beginning of period 16,347,698
Net income for the period 768,560
Cash dividends declared and paid (202,438)
-------------
Balance at end of period 16,913,820
=============
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET:
Balance at beginning of period (212,762)
Change in unrealized gain on securities available for sale
during the period, net of deferred taxes 93,697
-------------
Balance at end of period (119,065)
=============
COMMON STOCK ACQUIRED BY EMPLOYEE STOCK OWNERSHIP PLAN:
Balance at beginning of period (849,710)
Amortization of earned portion of ESOP stock 40,464
-------------
Balance at end of period (809,246)
=============
COMMON STOCK ACQUIRED BY RECOGNITION AND RETENTION PLAN:
Balance at beginning of period (280,888)
Amortization of earned portion of RRP stock 28,809
-------------
Balance at end of period (252,079)
=============
TREASURY STOCK:
Balance at beginning of period (6,356,261)
Purchase of treasury shares, at cost 169,311
-------------
Balance at end of period (6,186,950)
=============
</TABLE>
See notes to consolidated financial statements
3
<PAGE>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C>
1998 1997
----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $768,560 $699,553
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Gain on sale of loans and other assets (108,122) -
Net depreciation and amortization 102,755 127,354
ESOP and RRP compensation expense 175,289 130,780
Provision for loan losses 83,913 -
Increase in accrued interest receivable other assets and other real estate
owned 1,082,865 127,409
Decrease in other liabilities (1,190,780) 936,091
----------- ------------
Net cash provided by operating activities 914,480 2,021,187
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities - 21,840,000
Proceeds from calls of investment securities held to maturity 9,000,000 -
Purchases of investment securities held to maturity - (7,250,000)
Purchases of mortgage backed securities available for sale - (21,719,234)
Principal collected on mortgage backed securities 6,005,555 3,340,322
Net decrease (increase) in loans 4,854,390 (5,532,033)
Purchases of fixed assets (94,537) (10,995)
Net (increase) decrease in investments in real estate 3,318,781 (20,000)
----------- ------------
Net cash provided by (used in) investing activities 23,084,189 (9,351,940)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in due to depositors 2,716,602 6,246,197
Net decrease in advance payments by borrowers for taxes and insurance (38,276) (139,892)
Repayments of Federal Home Loan Bank of New York Advances (6,000,000) (2,000,000)
Proceeds from reverse repurchase agreements - 7,000,000
Net decrease in treasury tax account borrowings (2,165,317) (1,207,288)
Cash dividends paid (202,438) (160,175)
Exercise of stock options 119,811 -
----------- ------------
Net cash (used in) provided by financing activities (5,569,618) 9,738,842
----------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS 18,429,051 2,408,089
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,376,493 13,388,392
----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $25,805,544 $15,796,481
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes - 115,519
=========== ===========
Cash paid for interest 2,925,862 2,801,826
=========== ===========
Transfer of loans to Other real estate owned - 129,006
=========== ===========
Change in unrealized gain on available for sale securities, net of deferred
taxes 93,697 4,360
=========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited consolidated financial
statements of Financial Bancorp, Inc. and Subsidiaries (the "Company") contain
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of the Company's financial condition as of December 31,
1998, the results of operations and cash flows for the three-month periods
ended December 31, 1998 and 1997, and changes in stockholders' equity for the
three months ended December 31, 1998. The results of operations for the three-
months ended December 31, 1998, are not necessarily indicative of the results
of operations to be expected for the remainder of the year. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles ("GAAP")
have been omitted pursuant to the rules and regulations of the Securities and
Exchange Commission.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. Areas in the accompanying financial statements where estimates
are significant include the allowance for loan losses and the carrying value
of other real estate.
These consolidated financial statements should be read in conjunction with the
audited consolidated financial statements as of and for the year ended
September 30, 1998 and notes thereto of the Company.
5
Exhibit 99.2
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
FINANCIAL BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
DIME FINANCIAL PRO PRO
COMMUNITY BANCORP, FORMA FORMA
BANCSHARES, INC. INC. ADJUSTMENTS COMBINED
--------------- ---------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $20,355 $2,981 $(4,289)C $19,047
Investment securities held-to-maturity 50,907 37,239 (259)D 87,887
Investment securities available-for-sale 106,551 6,358 (482)D 112,427
Mortgage-backed securities held-to-maturity 33,213 25,614 227 D 59,054
Mortgage-backed securities available-for-sale 430,070 17,256 - 447,326
Federal funds sold and securities purchased
under agreement to resell 29,750 22,825 - 52,575
Loans receivable:
Real estate loans 1,085,338 192,449 1,110 D 1,278,897
Other loans 6,398 501 - 6,899
Less: allowance for loan losses 12,046 1,712 - 13,758
--------------- ---------- --------- ---------
Loans, net 1,079,690 191,238 1,110 D 1,272,038
--------------- ---------- --------- ---------
Investment in real estate, net - 177 - 177
Premises and fixed assets 10,704 2,505 2,274 D 15,483
Federal Home Loan Bank of New York capital stock 21,843 2,110 - 23,953
Other real estate owned, net 492 302 - 794
Goodwill 22,825 - 41,188 E 64,013
Core deposit premium - - 4,950 D 4,950
Other assets 23,275 4,284 (2,331)D 25,448
--------------- ---------- --------- ---------
Total Assets $1,829,675 $312,889 $42,388 $2,184,952
=============== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to depositors $1,023,992 $230,812 $1,955 D $1,256,759
Escrow and other deposits 30,893 1,480 - 32,373
Securities sold under agreement to repurchase 352,054 47,605 - 399,659
Federal Home Loan Bank of New York advances 227,500 - 35,958 C 263,458
Accrued post-retirement benefit obligation 2,725 - - 2,725
Other liabilities 15,068 2,861 - 17,929
--------------- ---------- --------- ---------
Total liabilities 1,652,232 282,758 37,913 1,972,903
--------------- ---------- --------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock - - - -
Common stock 145 22 (22)F 145
Additional paid-in capital 144,829 20,562 (20,562)F 148,030
3,201 C
Unallocated common stock held by ESOP (8,593) (809) 809 F (8,593)
Unearned common stock held by RRP (6,664) (252) 252 F (6,664)
Common stock held by Benefit Maintenance Plan (831) - - (831)
Treasury stock (64,364) (6,187) 6,187 F (32,900)
31,464 C
Retained earnings 111,408 16,914 (16,914)F 111,408
Net unrealized gains/(losses) on securities (59)D
available for sale, net of deferred taxes 1,513 (119) 119 F 1,454
--------------- ---------- --------- ---------
Total stockholders' equity 177,443 30,131 4,475 212,049
--------------- ---------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,829,675 $312,889 $42,388 $2,184,952
=============== ========== ========= ==========
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
1
<PAGE>
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
FINANCIAL BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DIME FINANCIAL PRO
COMMUNITY BANCORP, FORMA PRO FORMA
BANCSHARES, INC. INC. ADJUSTMENTS COMBINED
------------- ------- -------- -------
<S> <C> <C> <C> <C>
Interest income $60,658 $11,223 $58 G $71,939
Interest expense 35,572 6,024 538 G 42,134
------------- ------- --------- -------
Net interest income 25,086 5,199 (480) 29,805
Provision for loan losses 120 172 - 292
------------- ------- --------- -------
Net interest income after provision for
loan losses 24,966 5,027 (480) 29,513
------------- ------- --------- -------
Non-interest income
Service charges and other fees 1,161 453 - 1,614
Gain (loss) on sales of securities and
other assets 754 (100) - 654
Net gain on sale of loans 27 26 - 53
Other 1,719 97 - 1,816
------------- ------- --------- -------
Total non-interest income 3,661 476 - 4,137
------------- ------- --------- -------
Non-interest expense:
Salaries and employee benefits 5,798 1,275 - 7,073
ESOP and RRP benefits 2,290 314 - 2,604
Occupancy and equipment 1,222 424 28 G 1,674
Federal deposit insurance premiums 174 63 - 237
Data processing 621 - - 621
Credit for losses on other real estate
owned (2) (13) - (15)
Amortization of goodwill 1,203 - 429 H 1,632
Amortization of core deposit premium - - 172 G 172
Other 2,460 750 - 3,210
------------- ------- --------- -------
TOTAL NON-INTEREST EXPENSE 13,766 2,813 629 17,208
------------- ------- --------- -------
INCOME BEFORE INCOME TAX EXPENSE 14,861 2,690 (1,109) 16,442
Income tax expense 6,193 1,137 (292)I 7,038
------------- ------- --------- -------
Net income $8,668 $1,553 $(817) $9,404
============= ======= ========= =======
Earnings per share:
Basic $0.83 $0.96 $0.79
Diluted $0.77 $0.90 $0.73
Weighted average number of shares outstanding 10,392,020 1,623,380 11,896,745
Weighted average number of shares and common stock
equivalents outstanding 11,297,610 1,719,590 12,802,335
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
2
<PAGE>
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
FINANCIAL BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
DIME FINANCIAL PRO
COMMUNITY BANCORP, FORMA PRO FORMA
BANCSHARES, INC. INC. ADJUSTMENTS COMBINED
------------- ------- -------- -------
<S> <C> <C> <C> <C>
Interest income $106,464 $21,562 $115 G $128,141
Interest expense 56,935 11,448 1,076 G 69,459
------------- ------- --------- -------
Net interest income 49,529 10,114 (961) 58,682
Provision for loan losses 1,635 433 - 2,068
------------- ------- --------- -------
Net interest income after provision for
loan losses 47,894 9,681 (961) 56,614
------------- ------- --------- -------
Non-interest income
Service charges and other fees 2,352 757 - 3,109
Gain on sales of securities and
other assets 2,873 193 - 3,066
Net gain on sale of loans 108 3 - 111
Other 1,674 73 - 1,747
------------- ------- --------- -------
Total non-interest income 7,007 1,026 - 8,033
------------- ------- --------- -------
Non-interest expense:
Salaries and employee benefits 12,748 2,463 - 15,211
ESOP and RRP benefits 5,378 458 - 5,836
Occupancy and equipment 3,011 804 57 G 3,872
Federal deposit insurance premiums 350 124 - 474
Data processing 1,169 - - 1,169
Credit for losses on other real estate
owned 114 379 - 493
Amortization of goodwill 2,405 29 858 H 3,292
Amortization of core deposit premium - - 344 G 344
Other 4,762 1,402 - 6,164
------------- ------- --------- -------
TOTAL NON-INTEREST EXPENSE 29,937 5,659 1,259 36,855
------------- ------- --------- -------
INCOME BEFORE INCOME TAX EXPENSE 24,964 5,048 (2,220) 27,792
Income tax expense 11,866 2,162 (585)I 13,443
------------- ------- --------- -------
Net income $13,098 $2,886 $(1,635) $14,349
============= ======= ========= =======
Earnings per share:
Basic $1.19 $1.79 $1.15
Diluted $1.09 $1.71 $1.06
Weighted average number of shares outstanding 11,000,740 1,612,440 12,505,465
Weighted average number of shares and common stock
equivalents outstanding 12,040,740 1,682,910 13,545,465
</TABLE>
SEE NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (UNAUDITED)
3
<PAGE>
DIME COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
FINANCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(A) Basis of Presentation
The Unaudited Pro Forma Condensed Combined Consolidated Statement of
Financial Condition of Dime Community Bancshares, Inc. ("DCB") and
Subsidiary and Financial Bancorp, Inc. ("FIBC") FIBC and
Subsidiary at December 31, 1998 has been prepared as if the
Merger had been consummated on that date. The Unaudited Pro Forma
Condensed Combined Statements of Operations for the six months ended
December 31, 1998 and for the year ended June 30, 1998 have been prepared as if
the Merger had been consummated on July 1, 1998. The unaudited pro forma
condensed combined consolidated financial statements are based on the
historical financial statements of DCB and FIBC after giving effect to the
Merger under the purchase method of accounting and the assumptions
and adjustments in the notes that follow.
(i) Estimated fair values - Estimated fair values for securities
held-to-maturity, mortgage-backed securities held-to-maturity,
loans and borrowings were calculated in accordance with the methodology
of Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments." The estimated fair value
amounts have been determined by DCB using available market information
and appropriate valuation methodologies. The resulting net discount/
premium on securities held-to-maturity, mortgage-backed securities
held-to-maturity and loans, respectively, for purposes of these pro
forma financial statements, is being accreted/amortized to interest
income on a straight-line basis over 2.6, 3.0 and 8 years,
respectively, which represent the estimated lives of these
instruments. The resulting net premium on borrowings is being
amortized into interest expense on a straight-line basis over the
remaining estimated life of 5.5 years. The fair value of FIBC's
premises was estimated by a certified appraiser with the
resulting premium being amortized into depreciation expense over an
estimated life of 40 years. The estimated fair value of certificates
of deposits was determined by a third party consulting firm and the
resulting premium is being amortized into interest expense over
an estimated life of 40 years. The estimated fair value of certificates
of deposits was determined by a third party consulting firm and the
resulting premium is being amortized into interest expense over an
estimated life of 3 years. Additionally, an evaluation analysis of the
core deposit intangible was performed by a third party consulting firm
and the resulting core deposit premium is being amortized to
non-interest expense on a straight-line basis over 6 years.
(ii) Income taxes - A deferred tax was recorded equal to the deferred tax
consequences associated with difference between the tax basis and
book basis of the assets acquired and liabilities assumed, using an
effective tax rate of 43%, which reflects DCB's current effective
tax rate.
(B) On January 20, 1999, DCB, under the terms of the Merger Agreement, issued
a written request to FIBC to modify and change certain of its policies and
practices, including loan and real estate policies and
practices (including loan classifications and level of reserves) before the
consumation of the merger so as to be consistent, on a mutually satisfactory
basis with those of DCB, subject to compliance with generally accepted
accounting principles. FIBC complied with DCB's request, and recorded,
prior to the consumation of the merger, an additional provision for loan
losses of $1,300,000. A corresponding deferred tax asset of $598,000 was
recorded in other assets using FIBC's historical statutory tax rate of 46%.
The provision and related deferred tax asset, which are not reflected in
the unaudited Pro Forma Condensed Combined Consolidated Financial
Statements, resulted in an increase to the total goodwill of $702,000 and
increased annual goodwill expense by $35,100. In addition, pursuant to the
terms of the Merger Agreement, FIBC declared a $1.00 per share cash
dividend to all holders of record immediately prior to consumation of the
merger on January 21, 1999. This dividend, which was paid on February 4,
1999 and is not reflected in the unaudited Pro-Forma Condensed Combined
Consolidated Financial Statements, increased the total goodwill associated
with the purchase transaction by $1.7 million and the annual goodwill
amortization expense by $85,000.
4
<PAGE>
(C) Pursuant to the Merger Agreement, each FIBC stockholder who
submitted a valid election for cash received $39.14 in cash and each FIBC
stockholder who submitted a valid election for DCB common stock received
1.8282 shares of DCB common stock, plus cash in lieu of any fractional
shares, in exchange for their shares of FIBC common stock. The remaining
shares of FIBC common stock for which a valid election was not submitted
were converted into, pursuant to the Merger Agreement, a combination of
DCB stock and cash such that each such shareholder received $31.257 in
cash and 0.3682 shares of DCB common stock for each share of FIBC common
stock, except that all stockholders of FIBC who own less than 50 shares
of FIBC common stock received cash.
The total cost of the transaction is summarized as follows:
Cash Stock Total
------- ------ --------
(In thousands)
FIBC's total common stock outstanding (i) $34,534 $32,216(v) $66,750
FIBC total stock options, net of tax 834 2,448(ii) 3,282
Estimated transaction costs (iii) 3,455 - 3,455
------- ------ --------
Totals $38,823(iv) $34,664 $73,487
======= ====== ========
________________________
(i) Based on 1,705,361 shares of FIBC Common Stock outstanding, which
represents 1,721,324 shares of FIBC Common Stock outstanding as of
January 21, 1999, less (i) 963 unallocated shares of FIBC Common
Stock held in the Financial Federal Savings Bank Recognition and
Retention Plan and (ii) 15,000 shares of FIBC Common Stock held
directly by DCB.
(ii) Determined as the fair market value of 96,975 FIBC stock options
which were exchanged for 177,286 DCB stock options, with an weighted
average exercise price of $8.43.
(iii) Transaction costs of $3,455,000, which were paid from cash and due
from banks, consisted of the following:
(In thousands)
--------------
Merger related compensation and severance $792
Directors Plan 320
Professional fees 2,325
Other expense 18
--------------
Total $3,455
==============
(iv) The cash portion of the transaction, exclusive of transaction
costs, was financed through 5 year Federal Home Loan Bank of
New York ("FHLB") advances. At December 31, 1998, the rate on
5 year FHLB advances was 5.01%, resulting in annual interest
expense of $1.8 million.
(v) The shares issued to FIBC stockholders were acquired from DCB's
treasury stock. The average cost per share of the reissued treasury
shares was $20.91. For accounting purposes, the fair market value
of DCB Common Stock was $21.41 per share, for determination of total
stock consideration.
5
<PAGE>
(D) Purchase accounting adjustments as follows:
(In thousands)
-------------
FIBC's net assets - historical at December 31, 1998 $30,131
Elimination of FIBC's core deposit premium (109)
Elimination of DCB's investment in FIBC Common Stock (373)
Fair value adjustments: (i)
Securities held-to-maturity (259)
Mortgage-backed securities held-to-maturity 227
Loans receivable 1,110
Bank premises 2,274
Deposits (1,955)
Borrowings (1,424)
-------------
Subtotal - net fair value adjustments (27)
Tax effects of fair value adjustments at 43% (12)
-------------
Core deposit premium 4,950
Deferred tax on core deposit premium 2,285
-------------
Total core deposit and deferred tax on core deposit premium 2,665
-------------
Total net adjustments to net assets acquired 2,168
-------------
Adjusted net assets acquired $32,299
=============
___________________________
(i) Fair value adjustments in accordance with purchase accounting under
generally accepted accounting principles.
(E) The excess of cost over the fair value of net assets acquired is set
forth below:
(In thousands)
--------------
Total cost:
Cash portion $38,823
Stock portion 34,664
--------------
73,487
Net assets acquired 32,299
--------------
Total excess of cost over the fair value of net assets acquired $41,188
==============
(F) Purchase accounting adjustments to eliminate FIBC's stockholders' equity
accounts.
6
<PAGE>
(G) Pro forma adjustments to interest income, interest expense and non-interest
expense were calculated as follows:
For the Six For the
Months Ended Year Ended
December 31, 1998 June 30, 1998
----------------- -------------
(In thousands)
Amortization of premium on
securities (2.6 Years) (50) (100)
Amortization of premium on
mortgage-backed securities (3 Years) 38 76
Accretion of discount on loans (8 Years) 69 139
----------------- -------------
Total net adjustments - interest income 57 115
================= =============
Increase in interest expense on borrowings
to fund acquisition 994 1,987
Amortization of premium on
deposits (3 Years) (326) (652)
Amortization of premium on
borrowings (5.5 Years) (130) (259)
----------------- -------------
Total net adjustments - interest expense 538 1,076
================= =============
Amortization of premium on bank
premises (40 Years) 28 57
Amortization of core deposit
premium (6 Years) 172 344
----------------- -------------
Total net adjustments - non-interest
expense 200 401
================= =============
(H) The excess of cost over the fair value of assets acquired is being
amortized, straight-line, over a period of twenty years, which
approximates the average life to maturity of the long term interest-earning
assets.
(I) Income tax expense was calculated using an effective tax rate of 43%.
(J) Basic and diluted weighted average number of common stock and common stock
equivalents utilized for the calculation of earnings per share for the six
months ended December 31, 1998 were calculated using DCB's historical
weighted average common and common stock equivalents plus 1,504,704 shares
issued to FIBC stockholders under the terms of the Merger Agreement.
(K) The following table summarizes the estimated impact of the amortization
and accretion of the purchase accounting adjustments made in connection
with the merger on DCB's results of operations for the next five years:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Excess of Cost Net Core Net Effect Net Decrease
Future Amounts for the Over Fair Value of Deposit of Fair In Income
fiscal years ending June 30 Assets Acquired Amortization Value Adj. Before Taxes
- --------------------------- ------------------- ------------ ----------- ------------
1999 858 344 (308) 894
2000 2,060 825 (739) 2,146
2001 2,060 825 (739) 2,146
2002 2,060 825 (418) 2,467
2003 2,060 825 (63) 2,822
2004 and thereafter 32,089 1,306 2,240 35,635
------------------- ------------ ----------- ------------
Total 41,187 4,950 (27) 46,110
=================== ============ =========== ============
</TABLE>
7
