SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996 or
( ) Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________________ to
____________________.
Commission File Number 0-17494
DIME FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-1237470
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
95 Barnes Road, Wallingford, Connecticut 06492
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (203) 269-8881
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock - $1.00 par value; 5,023,985 shares were outstanding as of March
31, 1996.
The total number of pages in this report is 23
Exhibit Index is on page 19
DIME FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
Part I Financial Information Page No.
Item 1. Financial Statements
Consolidated Statements of Condition
March 31, 1996 and 1995 (unaudited)
and December 31, 1995. 3.
Consolidated Statements of Operations
Three months ended March 31, 1996 and 1995 (unaudited) 3.
Selected Financial Highlights 3.
Consolidated Statement of Changes in Shareholders' Equity 4.
Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1995 (unaudited) 5.
Notes to Consolidated Financial Statements (unaudited) 6-9.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-16.
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 17.
Signatures 18.
Exhibit Index 19.
Part I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The registrant incorporates herein by reference the following information from
its Quarterly Report to Shareholders for the quarters ended March 31, 1996 and
1995, filed as Exhibit 20 hereto:
Consolidated Statements of Condition
Consolidated Statements of Operations
Selected Financial Highlights
Dime Financial Corporation Subsidiary
Consolidated Statement of Changes in Shareholders' Equity
Three Months Ended March 31, 1996
<TABLE>
<CAPTION>
Net Unrealized
Gain on
Additional Retained Available
Common Paid-in Earnings for Sale Treasury
(dollars in thousands) Stock Capital (Deficit) Securities Stock Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $5,374 $51,117 ($2,166) $241 ($2,898) $51,688
Net Income 2,859 2,859
Options Exercised 1 16 17
Dividends Paid (351) (351)
Change in net unrealized
gain on securities
for sale (794) (794)
- ------------------------------------------------------------------------------------------------------
Balance at March 31, 1996 $5,375 $51,133 $ 342 ($553) ($2,898) $53,399
======================================================================================================
</TABLE>
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1995 (unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,859 $ (791)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Provision for loan losses 700 3,500
Depreciation and amortization 271 377
Amortization/Accretion investments, net (75) 115
Amortization of intangible assets 88 87
Amortization of net deferred loan fees (9) (47)
Gain on investment securities (159) (234)
Gains on sale of other real estate owned (255) (140)
Increase in accrued income receivable (560) (225)
Decrease in other assets 1,342 1,280
Increase (decrease) in other liabilities (49) 180
- -------------------------------------------------------------------------
Net cash provided by operating activities 4,153 4,102
- -------------------------------------------------------------------------
Cash flows from investing activities:
Available for sale investment securities:
Proceeds from sale of investment securities 4,076 659
Available for sale mortgage-backed securities:
Mortgage-backed securities purchased (54,190) --
Proceeds from principal payments 2,544 --
Proceeds from sale of mortgage-backed
securities 25,057 --
Held to maturity investment securities:
Investment securities purchased (24,951) (4,995)
Proceeds from maturity of investment
securities 8,000 2,000
Net decrease in loans 12,868 3,975
Purchase of premises and equipment (291) (59)
Proceeds from sale of other real estate owned 1,195 498
- -------------------------------------------------------------------------
Net cash provided (used) by investing
activities (25,692) 2,078
- -------------------------------------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits 11,371 (3,293)
Payments of FHLBB advances -- (2,000)
Proceeds from exercise of DFC stock options 17 --
Payments of cash dividends (351) --
- -------------------------------------------------------------------------
Net cash provided (used) by financing
activities 11,037 (5,293)
- -------------------------------------------------------------------------
Net (increase) decrease in cash and cash
equivalents (10,502) 887
Cash and cash equivalents at beginning of period 35,489 49,960
- -------------------------------------------------------------------------
Cash and cash equivalents at end of period $24,987 $50,847
=========================================================================
</TABLE>
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 1996 (unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
Dime Financial Corporation's 1995 Annual Report and Proxy Statement dated March
8, 1996. In the opinion of management, the accompanying consolidated financial
statements reflect all necessary adjustments, consisting of normal recurring
accruals for a fair presentation of results as of the dates and for the periods
covered by the consolidated financial statements. The results of operations of
the interim period may not be indicative of results for the entire 1996 fiscal
year.
2. EARNINGS PER SHARE
The calculation of earnings per share is based on the weighted average number of
common shares outstanding during the periods presented as follows:
<TABLE>
<CAPTION>
(dollars in thousands, except share data) Three Months Ended
3/31/96 3/31/95
- -----------------------------------------------------------------------
<S> <C> <C>
Net income (loss) $2,859 $ (791)
=======================================================================
Weighted Average
Common Shares Outstanding 5,023 4,994
Earnings (loss) per share $0.57 $(0.16)
=======================================================================
</TABLE>
3. INVESTMENT SECURITIES
The amortized cost, approximate market values, and maturity groupings of
investment securities are as follows:
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
- ---------------------------------------------------------------------------------------------------
Amortized Market Amortized Market
(Dollars in Thousands) Cost Value Cost Value
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
U.S. treasury securities:
Within 1 year $ 4,011 $ 4,006 ---- ----
U.S. Government agency obligations:
Within 1 year ---- ---- 3,994 3,990
Equity Securities 12 12 12 12
- ---------------------------------------------------------------------------------------------------
Total Investment Securities Available for Sale $ 4,023 $ 4,018 $ 4,006 $ 4,002
===================================================================================================
INVESTMENT SECURITIES HELD TO MATURITY:
U.S. treasury securities:
Within 1 year ---- ---- $14,496 $14,415
After 1 but within 5 years ---- ---- 4,141 4,043
After 5 but within 10 years 1,012 1,061 1,014 1,018
- ---------------------------------------------------------------------------------------------------
Total U.S. treasury securities 1,012 1,061 19,651 19,476
- ---------------------------------------------------------------------------------------------------
U.S. Government agency obligations and
U.S Government-sponsored agency obligations:
Within 1 year ---- ---- 18,000 17,978
After 1 but within 5 years 27,897 27,817 4,995 4,975
After 5 but within 10 years 35,952 35,309 ---- ----
After 10 years ---- ---- 50 50
- ---------------------------------------------------------------------------------------------------
Total U.S. Government agency obligations and
U.S.Government-sponsored agency oblig. 63,849 63,126 23,045 23,003
- ---------------------------------------------------------------------------------------------------
Domestic obligations:
Within 1 year ---- ---- 6,805 6,698
After 1 but within 5 years ---- ---- 4,248 4,155
After 5 but within 10 years ---- ---- 997 1,030
- ---------------------------------------------------------------------------------------------------
Total domestic obligations ---- ---- 12,050 11,883
- ---------------------------------------------------------------------------------------------------
Total Investment Securities Held to Maturity $ 64,861 $ 64,187 $54,746 $54,362
===================================================================================================
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities:
GNMA $ 39,137 $ 38,826 ---- ----
FNMA 1,959 1,962 ---- ----
FHLMC 758 746 ---- ----
REMIC / CMO's 79,822 79,309 ---- ----
- ---------------------------------------------------------------------------------------------------
Total Mortgage-backed Sec. Available for Sale $121,676 $120,843 ---- ----
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Gross unrealized losses $ 5 $ 4
INVESTMENT SECURITIES HELD TO MATURITY:
Gross unrealized gains $103 $ 37
Gross unrealized losses $777 $421
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $ 98 $ --
Gross unrealized losses $931 $ --
</TABLE>
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
- ---------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Balance at January 1, $ 12,779 $ 9,326
Provision for loan losses 700 3,500
Charge-offs (875) (370)
Recoveries 600 21
- -------------------------------------------------------------------
Balance at March 31, $ 13,204 $ 12,477
===================================================================
Average loans $450,462 $509,234
Net quarterly charge-offs as a
percentage of average loans 0.06% 0.07%
Non-performing loans $ 6,010 $ 8,312
Allowance for loan losses as a
percentage of non-performing loans 219.71% 150.11%
</TABLE>
5. NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
March 31,
- -------------------------------------------------------------------
1996 1995
- -------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Mortgage loans on real estate $5,228 $ 6,716
Commercial loans 373 1,290
Consumer loans 409 306
- -------------------------------------------------------------------
Total non-performing loans 6,010 8,312
Other real estate owned, net 608 3,533
- -------------------------------------------------------------------
Total non-performing assets $6,618 $11,845
===================================================================
Non-performing loans as a percentage of
total loans 1.36% 1.64%
Non-performing assets as a percentage of
total assets .99% 1.88%
</TABLE>
6. IMPAIRED LOANS
Impaired loans are commercial, commercial real estate, non-owner occupied
residential mortgage loans, and individually significant owner-occupied
residential mortgage and consumer loans for which it is probable that the
Company will not be able to collect all amounts due according to the contractual
terms of the loan agreement. Owner occupied residential mortgage and consumer
loans which are not individually significant are measured for impairment
collectively.
The definition of "impaired loans" is not the same as the definition of
"non-accrual loans". Nonaccrual loans include impaired loans and are those on
which the accrual of interest is discontinued when collectibility of principal
or interest is uncertain or payments of principal or interest have become
contractually past due 90 days. The Company may choose to place a loan on
nonaccrual status while not classifying the loan as impaired if it is probable
that the Company will collect all amounts due in accordance with the contractual
terms of the loan.
Factors considered by management in determining impairment include payment
status and collateral value. Loans that experience insignificant payment delays
and insignificant shortfalls are not classified as impaired. Management
determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of delay, reasons
for delay, the borrower's prior payment record, and the amount of the shortfall
in relation to the total debt owed. The amount of impairment is generally
determined by the difference between the fair value of underlying collateral
securing the loan and the recorded amount of the loan.
Interest payments received from commercial type loans which have been classified
as impaired are generally applied to the carrying value of such loans. Interest
payments received from loans which are classified as impaired, other than
commercial loans, are recognized on a cash basis.
At March 31, 1996 impaired loans totalled $4.4 million with a related allowance
of $797,000 compared with impaired loans at March 31, 1995 of $6.9 million with
a related allowance of $2.4 million.
7. FHLBB ADVANCES
Federal Home Loan Bank of Boston advances consisted of the following:
<TABLE>
<CAPTION>
March 31,
1996 1995
---------------------------------------------------
(In Thousands)
<S> <C> <C>
7.07% due 1996 33,000 33,000
7.16% due 1997 25,000 25,000
---------------------------------------------------
Total FHLBB advances $58,000 $58,000
</TABLE>
Item 2:
DIME FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Dime Financial Corporation of Wallingford, Connecticut (the "Company"),
organized in 1988, is the parent company of one wholly-owned subsidiary, The
Dime Savings Bank of Wallingford ("Dime"). Consolidated assets as of March 31,
1996 were $671.4 million.
The Company provides a full range of banking services to individual and
corporate customers through its subsidiary, The Dime Savings Bank of
Wallingford, which operates eleven retail banking offices in New Haven County,
Connecticut. Products offered include savings and checking products, mortgage
loans, and consumer installment loans. Deposits are insured by the FDIC up to
certain limits under the law.
FINANCIAL CONDITION
In the first quarter of 1996, the Company reported net income of $2.9 million or
$0.57 per share compared to a net loss of $791,000, or $0.16 per share for the
quarter ended March 31, 1995. The first quarter results were affected primarily
by a lower provision to the allowance for loan losses and a reduction in
operating expenses. The provision to the allowance for loan losses totalled
$700,000 for the quarter ended March 31, 1996 compared with a provision in the
first quarter of 1995 of $3.5 million. In addition, operating expenses decreased
to $3.5 million for the quarter ended March 31, 1996 compared with $4.7 million
in the first quarter of 1995, a reduction of 24%. The reduction in operating
expenses was primarily noted in salaries and benefits, OREO operations and FDIC
insurance.
Salaries and employee benefits decreased $524,000 or 23% and totalled $1.8
million for the quarter ended March 31, 1996 compared with $2.3 million for the
first quarter of 1995. The net cost of OREO operations equalled a net gain of
$154,000 for the quarter ended March 31, 1996 compared with a net cost during
the first quarter of 1995 of $84,000. The cost of FDIC insurance decreased to
$38,000 for the quarter ended March 31, 1996 compared with $378,000 for the
first quarter of 1995.
The Company's earnings primarily depend upon the difference between the interest
and dividend income earned on loans and investments and the interest expense
paid on deposits and borrowed money ("net interest income"). The difference
between the average interest rate earned on loans and investments and the
average interest rate paid on deposits and borrowings ("net spread") is affected
by economic factors influencing general interest rates, loan demand, the level
of non-performing loans, and savings flows as well as the effects of competition
for loans and deposits. Net income is also affected by gains and losses on
investment securities transactions and other operating income such as service
charges and fees offset by additions to the provision for loan losses, other
operating expenses and income tax expense.
At March 31, 1996, the Company's allowance for loan losses was $13.2 million or
219.71% of non-performing loans, 199.52% of non-performing assets, and 2.98% of
total loans. At December 31, 1995, the allowance for loan losses was $12.8
million, or 166.36% of non-performing loans, 140.48% of non-performing assets,
and 2.80% of total loans. At March 31, 1995, the allowance for loan losses was
$12.5 million, or 150.11% of non-performing loans, 105.33% of non-performing
assets, and 2.47% of total loans.
At March 31, 1996, non-performing loans, totalled $6.0 million, or 1.36% of
total loans, compared with $7.7 million, or 1.68% of total loans at December 31,
1995, and compared with $8.3 million, or 1.64% of total loans at March 31, 1995.
Other real estate owned totalled $608,000 at March 31, 1996, compared with $1.4
million at December 31, 1995 and $3.5 million at March 31, 1995. Total
non-performing assets, were $6.6 million, or 0.99% of total assets at March 31,
1996, compared with $9.1 million or 1.38% of total assets at December 31, 1995,
and compared with $11.8 million or 1.88% of total assets at March 31, 1995.
Total loans decreased by $13.3 million, or 2.91% from $456.4 million at December
31, 1995 to $443.2 million at March 31, 1996 and decreased $62.7 million or
12.40% from $505.9 million at March 31, 1995.
Deposits, including escrow deposits, increased $11.4 million from $543.3 million
at December 31, 1995 to $554.7 million at March 31, 1996 and increased by $30.5
million from March 31, 1995.
ASSET QUALITY
In order to maintain asset quality, loan review procedures are in place to
assess loan quality in addition to providing the Board and management with
analysis to determine that the allowance for loan losses is sufficient given the
risks inherent in the loan portfolio at a point in time. During the first
quarter of 1996 the Company added $700,000 to the allowance for loan losses
compared with a provision of $3.5 million in the first quarter of 1995. The
increased provision in 1995 was primarily due to the Company's assessment, based
on new information received concerning collateral values, that there was
increased potential exposure in the performing residential loan portfolio.
In addition to non-performing assets, management has classified performing loans
totalling $8.1 million at March 31, 1996 as substandard for internal purposes
compared with $12.7 million at March 31, 1995 and compared with $10.5 million at
December 31, 1995. These loans are still performing. Management does not have
serious doubt as to their collectibility and believes that the amounts
specifically allocated to these loans in the allowance for loan losses are
adequate. Management had no performing loans classified as doubtful for internal
purposes at March 31, 1996 and December 31, 1995, compared with performing
residential loans classified as doubtful totalling $215,000 at March 31, 1995.
Under FDIC guidelines substandard loans are inadequately protected by the
current sound worth and paying capacity of the obligor or of the collateral
pledged, if any, and must have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. Doubtful loans have all the weaknesses
inherent in those classified as substandard with the added characteristic that
the weaknesses make collection or liquidation in full, on the basis of currently
known facts, conditions, and values, highly questionable and improbable.
Management continues to closely monitor the loan portfolio and the foreclosed
properties of its subsidiary and takes appropriate action when necessary. The
table entitled "Allowance For Loan Losses," on page 8, indicates that at March
31, 1996 the balance in the allowance for loan losses represented 219.71% of
non-performing loans and 2.98% of total loans. Management believes that the
allowance for loan losses at March 31, 1996 is adequate, based on the quality of
the loan portfolio at that date.
The net cost of operation of other real estate owned ("OREO") may include: gains
or losses on the sale of OREO, writedowns of OREO, and expenses to operate and
maintain OREO. The net cost of operation of OREO equalled a net gain of $154,000
for the first quarter of 1996 compared with a net cost of $84,000 for the first
quarter of 1995. The reduction in costs during 1996 was primarily due to gains
realized on the sales of OREO coupled with reduced levels of OREO.
LIQUIDITY, SOURCES AND USES OF FUNDS, AND CAPITAL RESOURCES
Liquidity involves the ability to meet cash flow requirements of depositors
wanting to withdraw funds or of borrowers needing assurance that sufficient
funds will be available to meet their credit needs. Cash on hand, demand
deposits at other financial institutions, interest-bearing deposits with an
original maturity of three months or less, and Federal funds sold are the
principal sources of liquidity. Cash and cash equivalents amounted to $25.0
million at March 31, 1996, as compared to $50.8 million at March 31, 1995. Cash
and cash equivalents represented 3.72% of total assets at March 31, 1996 as
compared to 8.05% of total assets at March 31, 1995. The Company believes that
its liquidity is sufficient to meet currently known demands and commitments.
The primary objective of asset/liability management is to maximize net interest
income while ensuring adequate liquidity, monitoring proper credit risk and
maintaining an appropriate balance between interest rate sensitive assets and
interest rate sensitive liabilities. Liquidity management involves the ability
to meet the cash flow requirements of the Company's loan and deposit customers.
Interest rate sensitivity management seeks to minimize fluctuating net interest
margins and to enhance consistent growth of net interest income through periods
of changing interest rates.
The Company has an asset / liability committee ("ALCO") which meets weekly to
discuss loan and deposit pricing and trends, current liquidity and interest rate
risk positions, interest rate and economic trends and other relevant
information. To aid in the measurement of interest rate risk, the Company
utilizes an asset / liability model which, given many key assumptions, projects
estimated results within the constraints of those assumptions. The model is also
used to estimate movement within the balance sheet, given certain scenarios, and
to measure the effects of that movement on net interest income.
Principal sources of funds include cash receipts from deposits, loan principal
and interest payments, earnings on investments, and proceeds from amortizing and
maturing investments. The current principal uses of funds include disbursements
to fund investment purchases, loan originations, payments of interest on
deposits, and payments to meet the operating expenses of the Company. During the
first three months of 1996, deposits increased by $11.4 million from $543.3
million at December 31, 1995 to $554.7 million at March 31, 1996. The Company
may rely on borrowings from the Federal Home Loan Bank of Boston ("FHLBB") if
deposits do not keep pace with the demand for quality loans. At March 31, 1996,
FHLBB borrowings remained unchanged from December 31, 1995 and March 31, 1995 at
$58.0 million. The Company currently has no plans to increase the level of
borrowings.
The Company's primary source of funds is in the form of dividends received from
its subsidiary bank, Dime. Therefore, the liquidity and the capital resources of
the Company are largely dependent upon the liquidity, profitability, and capital
position of its subsidiary, and the ability of the subsidiary to declare and pay
dividends under applicable laws and regulatory authorities. The Company must
comply with the capital ratio requirements set by the Board of Governors of the
Federal Reserve while Dime must comply with the capital ratio requirements set
by the FDIC. At March 31, 1996 the Tier 1 leverage capital ratio of Dime was
7.71%.
On January 18, 1996. the Board of Directors declared, after consent of the
appropriate regulatory authorities, the resumption of the quarterly dividend
with an initial payment of $0.07 per share paid on February 22, 1996. Dividend
payments had been suspended by the Board in June of 1991.
The following table presents the Company's risk-based and leverage capital
ratios:
<TABLE>
<CAPTION>
March 31,
Required 1996 1995
-----------------------------------------------------------
<S> <C> <C> <C>
Tier I risk-based capital 4.0% 16.01% 11.65%
Total risk-based capital 8.0% 17.30% 12.92%
Leverage capital 4.0% 7.72% 6.58%
</TABLE>
COMPARATIVE ANALYSIS
The following table sets forth the dollar increases (decreases) in the
components of the Company's consolidated statements of operations during the
periods indicated and is followed by management's discussion of the various
changes.
<TABLE>
<CAPTION>
Three months ended
March 31, 1996
compared to
March 31, 1995
----------------------------------------------------------
<S> <C>
Interest income $1,114
Interest expense 1,303
-----------------------------------------------------
Net interest income (189)
Provision for loan losses (2,800)
Investment securities gains, net (75)
Other operating income (46)
Other operating expenses (1,141)
-----------------------------------------------------
Income before income taxes 3,631
Income tax expense (19)
-----------------------------------------------------
Net income $3,650
=====================================================
</TABLE>
Quarter Ended March 31, 1996
Compared to
Quarter Ended March 31, 1995
General. Net income for the quarter ended March 31, 1996, was $2.9 million or
$0.57 per share, compared to a net loss of $791,000, or $0.16 per share for the
same period in 1995. The change in net income was influenced primarily by a
decrease in the provision for loan losses for the first quarter ended March 31,
1996 to $700,000 versus a provision of $3.5 million for the first three months
of 1995.
Interest Income. Interest income for the quarter ended March 31, 1996 totalled
$12.6 million representing an average yield on interest earning assets of 7.79%.
Interest income for the quarter ended March 31, 1995 totalled $11.5 million and
represented an average yield on interest earning assets of 7.59%.
Interest Expense. Interest expense totalled $6.2 million for the quarter ended
March 31, 1996 representing an average cost of funds of 4.38%. Total interest
expense for the quarter ended March 31, 1995 was $4.9 million representing an
average cost of funds of 3.65%.
Net Interest Income. Net interest income totalled $6.4 million for the quarter
ended March 31, 1996 compared with $6.6 million for the quarter ended March 31,
1995. The net interest rate spread for the quarter ended March 31, 1996 was
3.41% down from the prior year quarter of 3.94%. The net interest margin was
3.95% for the first quarter of 1996 compared with a net interest margin of 4.32%
for the first quarter of 1995. The following table summarizes the yields on
interest earning assets and costs of interest bearing liabilities for the
periods presented:
Comparative Interest Spread Table
<TABLE>
<CAPTION>
For the quarters ended:
3/31/96 3/31/95
- -----------------------------------------------------------------------
<S> <C> <C>
Interest Earning Assets:
Loans 8.44% 7.90%
Investment Securities 6.37% 5.45%
Federal Funds Sold 5.27% 5.78%
Yield on Interest Earning Assets 7.79% 7.59%
Interest Bearing Liabilities:
Deposits 4.05% 3.22%
Borrowings 7.11% 7.11%
Cost of Interest Bearing Liabilities 4.38% 3.65%
Net Interest Spread 3.41% 3.94%
Net Interest Margin 3.95% 4.32%
</TABLE>
Provision for Loan Losses. The provision for loan losses for the quarter ended
March 31, 1996 totalled $700,000 compared with a provision of $3.5 million for
the first quarter of 1995. The decrease in the loan loss provision for the first
quarter compared with the prior year is primarily due to new information
regarding collateral valuation in the first quarter of 1995 with regard to the
increased risk associated with one to four family residential mortgage loans.
Investment Securities Gains (Losses), Net. The Company recorded $159,000 net
investment security gains during the first quarter of 1996. This compares to
$234,000 net investment security gains during the first quarter March 31, 1995.
Other Operating Income. Other operating income totalled $506,000 for the first
quarter of 1996 compared with $552,000 in the first quarter of 1995. The
following table summarizes the categories of other operating income:
<TABLE>
<CAPTION>
OTHER OPERATING INCOME: March 31,
(Dollars in thousands) 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Deposit account fees $392 $392
Customer service fees 32 34
Fees from savings bank life insurance sales 65 58
Loan and loan servicing fees 12 18
Other fees 5 50
- -----------------------------------------------------------------
Total Other Operating Income $506 $552
=================================================================
</TABLE>
Other Operating Expenses. Total operating expenses were $3.5 million for the
first quarter of 1996 compared with total operating expenses of $4.7 million for
the first quarter of 1995. The reduction in 1996 is primarily reflective of
decreases in salaries and benefits, OREO operations, and FDIC insurance costs.
Salaries and benefits totalled $1.8 million for the first quarter of 1996
compared with $2.3 million for the first quarter of 1995. The cost of OREO
operations for the first quarter of 1996 equalled a net gain of $154,000 versus
a net cost of $84,000 for the first quarter of 1995. FDIC insurance costs were
$38,000 for the quarter ended March 31, 1996 compared with $378,000 for the
first quarter of 1995.
Net Income. The factors discussed above resulted in net income of $2.9 million
or $0.57 per share for the first quarter ended March 31, 1996 compared with a
net loss of $791,000 or $0.16 per share for the first quarter ended March 31,
1995.
DIME FINANCIAL CORPORATION AND SUBSIDIARY
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
a. The following exhibits are included in this report:
Exhibit No. Description
11. Statement of Computation of Per Share Earnings
Incorporated by reference to note 2 to Consolidated Financial
Statements for the quarters ended March 31, 1996 and 1995. (See
pages 5-8 for notes to Consolidated Financial Statements.)
20. Report furnished to the Company's shareholders for the
quarter ended March 31, 1996.
b. A report on Form 8-K dated January 18, 1996, was filed by the
registrant with the Securities and Exchange commission on January 29,
1996 containing a disclosure under item 5 of such form.
DIME FINANCIAL CORPORATION AND SUBSIDIARY
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 thereunto duly authorized.
DIME FINANCIAL CORPORATION
Date: May 13, 1996 /s/ Richard H. Dionne
Richard H. Dionne
President & Chief Executive Officer
Date: May 13, 1996 /s/ Albert E. Fiacre, Jr.
Albert E. Fiacre, Jr.
Senior Vice President and Chief Financial
Officer
Date: May 13, 1996 /s/ Robert P. Simon
Robert P. Simon
Vice President & Comptroller
EXHIBIT INDEX
Exhibit No. Description Page
11. Statement of Computation of Per Share Earnings
Incorporated by reference to note 2 to Consolidated Financial
Statements for the quarters ended March 31, 1996 and 1995. (See
pages 6-9 for Notes to Consolidated Financial Statements.)
20. Report furnished to the Company's shareholders for the quarter
ended March 31, 1996.
EXHIBIT 20
Dime Financial P.O. Box 700
Corporation Wallingford, CT 06492
(203) 269-8881
Dime Financial Corporation - First Quarter Results
Dime Financial Corporation ("DFC") (NASDAQ: DIBK) announced net income of
$2.9 million or $0.57 per share for the quarter ended March 31, 1996 compared
with a loss of $791,000 or $0.16 per share for the quarter ended March 31,
1995. The change in net income from the year earlier period was primarily the
result of a reduction in the provision to the allowance for loan losses and a
decline in operating expenses. In addition, The Board of Directors declared a
dividend of $0.07 per share payable on May 23, 1996 to shareholders of record
on May 6, 1996.
The provision to the allowance for loan losses totalled $700,000 during the
first quarter of 1996 compared with a provision of $3.5 million during the
first quarter of 1995. The allowance for loan losses at March 31, 1996
equalled $13.2 million and represented 220% of non-performing loans of $6.0
million and 2.98% of total loans outstanding. The allowance for loan losses at
December 31, 1995 totalled $12.8 million and represented 166% of non-
performing loans of $7.7 million and 2.80% of total loans outstanding and
totalled $12.5 million or 150% of non-performing loans of $8.3 million and
2.47% of total loans at March 31, 1995.
Operating expenses totalled $3.5 million for the quarter ended March 31, 1996,
a decrease of $1.1 million or 24% from the quarter ended March 31, 1995. The
decline in operating expenses was primarily the result of a restructure
program, implemented during 1995, which has resulted in a reduction of
approximately 33% of the Company's workforce. Salaries and employee benefits
for the quarter ended March 31, 1996 totalled $1.8 million compared with
salaries and employee benefits of $2.3 million for the quarter ended March 31,
1995 representing a decline of $524,000 or 23%.
The cost of FDIC insurance also declined and totalled $38,000 for the quarter
ended March 31, 1996 compared with a cost of $378,000 for the quarter ended
March 31, 1995, representing a reduction of $340,000 or 90%. The drop in the
cost of FDIC insurance was caused primarily by a general reduction in the
assessment rate charged. In addition, the net cost of the operation of other
real estate owned ("OREO operations") declined. OREO operations equalled a net
gain of $154,000 for the quarter ended March 31, 1996 as gains realized from
the sales of OREO more than offset the cost of operations. OREO operations for
the quarter ended March 31, 1995 totalled a net cost of $85,000.
Non-performing loans totalled $6.0 million at March 31, 1996 representing a
decrease of $1.7 million or 22% from December 31, 1995 and representing a
decrease of $2.3 million or 28% from March 31, 1995. Other real estate owned
("OREO") totalled $600,000 at March 31, 1996 compared with OREO of $1.4
million at December 31, 1995 and $3.5 million at March 31, 1995. Total non-
performing assets were $6.6 million at March 31, 1996 compared with $9.1
million at December 31, 1995 and $11.8 million at March 31, 1995. Non-
performing assets equalled 0.99% of total assets at March 31, 1996 compared
with 1.38% of total assets at December 31, 1995 and compared with 1.88% of
total assets at March 31, 1995.
Net interest income totalled $6.4 million for the quarter ended March 31, 1996
representing a net interest rate spread of 3.41% and a net interest margin of
3.95%. Net interest income for the year earlier quarter ended March 31, 1995
totalled $6.6 million and represented a net interest rate spread of 3.94% and
a net interest margin of 4.32%.
Total assets were $671.4 million at March 31, 1996 compared with total assets
of $631.7 million at March 31, 1995, representing an increase of $39.7 million
or 6.3%. Total deposits were $554.7 million at March 31, 1996 compared with
$524.2 million at March 31, 1995, representing an increase of $30.5 million or
6.8%.
Total shareholders' equity was $53.4 million at March 31, 1996 representing an
equity to assets ratio of 7.95% compared with shareholders' equity of $44.3
million at March 31, 1995 which represented an equity to assets ratio of
7.01%. The Tier 1 regulatory capital ratio at March 31, 1996 for The Dime
Savings Bank of Wallingford, the Company's subsidiary bank, was 7.71% compared
with a Tier 1 regulatory capital ratio of 6.56% at March 31, 1995. This ratio
is in excess of the regulatory minimum.
Dime Financial Corporation and Subsidiary
Consolidated Statements of Condition
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(In thousands, except share data) 1996 1995 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and amounts due from banks $ 12,148 $ 11,172 $ 13,257
Interest bearing deposits 293 2,983 5,644
Federal funds sold 12,546 21,334 31,946
Investment securities available for sale (a) 4,018 8,138 4,002
Investment securities held to maturity (b) 64,861 47,898 54,746
Mortgage-backed securities available for sale (c) 120,843 95,190 ---
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 320,387 329,597 389,621
Residential real estate - non-owner occupied 26,359 27,699 (d)
Commercial real estate 42,356 43,658 56,067
Builders' and Land 1,684 1,501 3,680
Commercial loans 4,223 4,529 6,602
Consumer loans 48,166 49,459 49,951
Allowance for loan losses (13,204) (12,779) (12,477)
- -------------------------------------------------------------------------------------------------
Loans receivable, net 429,971 443,664 493,444
Premises and equipment, net 5,946 5,926 7,967
Accrued income receivable 5,011 4,451 4,223
Other real estate owned, net 608 1,415 3,533
Other assets 5,309 6,242 2,728
Excess of cost over fair value of net assets acquired 2,680 2,768 3,030
- -------------------------------------------------------------------------------------------------
Total assets $671,426 $658,373 $631,712
=================================================================================================
Liabilities and Shareholders' equity
Liabilities:
Deposits $554,715 $543,344 $524,200
Federal Home Loan Bank of Boston advances 58,000 58,000 58,000
Other liabilities 5,312 5,361 5,220
- -------------------------------------------------------------------------------------------------
Total liabilities 618,027 606,705 587,420
- -------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock; no par value; authorized
1,000,000 shares; none issued and outstanding --- --- ---
Common stock; $1.00 par value; authorized
9,000,000 shares; issued 5,375,592 shares,
5,373,992 and 5,345,390, respectively. 5,375 5,374 5,345
Additional paid-in capital 51,133 51,117 50,846
Retained earnings (deficit) 342 (2,166) (8,998)
Net unrealized gain (loss) on available for sale
securities (553) 241 (3)
Treasury stock--351,607 shares at cost (2,898) (2,898) (2,898)
- -------------------------------------------------------------------------------------------------
Total shareholders' equity 53,399 51,668 44,292
- -------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $671,426 $658,373 $631,712
=================================================================================================
<FN>
<Fa> amortized cost: $4,023 at March 31, 1996; $8,155 at December 31, 1995;
and $4,006 at March 31, 1995.
<Fb> market value: $64,187 at March 31, 1996; $48,245 at December 31, 1995;
and $54,362 at March 31, 1995.
<Fc> amortized cost: $121,676 at March 31, 1996; and $94,809 at December 31,
1995.
<Fd> information for this period is not available, it is included within
Residential real estate - owner occupied.
</FN>
</TABLE>
Dime Financial Corporation and Subsidiary
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended March 31,
(In thousands, except share data) 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C>
Interest Income:
Interest and fees on loans $ 9,508 $10,183
Interest-bearing deposits 12 51
Federal funds sold 210 384
Interest and dividends on investments:
U.S. treasury securities 62 241
U.S. government agency obligations 992 290
REMIC/CMO's 833 ---
Non-agency REMIC/CMO's 68 ---
Mortgage backed securities 751 ---
Other bonds and notes 39 190
Equity securities --- 3
Dividends on Federal Home Loan Bank of Boston Stock 113 132
- -------------------------------------------------------------------------------
Total Interest Income 12,588 11,474
Interest Expense:
Interest to depositors 5,132 3,835
Interest on Federal Home Loan Bank of Boston
advances 1,042 1,036
- -------------------------------------------------------------------------------
Total Interest Expense 6,174 4,871
- -------------------------------------------------------------------------------
Net Interest Income 6,414 6,603
Provision for loan losses 700 3,500
- -------------------------------------------------------------------------------
Net Interest Income after provision 5,714 3,103
Investment securities gains (losses), net 159 234
Other operating income 506 552
- -------------------------------------------------------------------------------
Income before other operating expenses 6,379 3,889
- -------------------------------------------------------------------------------
Other Operating Expenses:
Salaries and employee benefits 1,765 2,289
Professional and other services 516 619
Bank occupancy and equipment expense 674 754
FDIC Assessment 38 378
Net cost of operation of other real estate (154) 84
Other operating expenses 689 545
- -------------------------------------------------------------------------------
Total Other Operating Expenses 3,528 4,669
Income (loss) before income taxes 2,851 (780)
Income tax expense (benefit) (8) 11
- -------------------------------------------------------------------------------
Net income (loss) $2,859 ($ 791)
===============================================================================
Weighted average common shares 5,023 4,994
Earnings (loss) per share $ 0.57 ($ 0.16)
</TABLE>
Selected Financial Highlights
<TABLE>
<CAPTION>
For the three months
ended March 31,
(Dollars in thousands) 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Average yield on interest-earning assets 7.79% 7.59 %
Average cost of funds 4.38% 3.65 %
Net interest rate spread 3.41% 3.94 %
Net yield on interest-earning assets 3.95% 4.32 %
Net income $2,859 ($ 791)
Return on average assets 1.73% (0.50)%
Return on average equity 21.80% (6.94)%
Leverage capital ratio 7.72% 6.58 %
Earnings per share $ 0.57 ($0.16)
Book value per share $10.63 $8.87
</TABLE>
Dime Financial Corporation And Subsidiary
Selected Financial Data
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(in thousands) 1996 1995 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $2,316 $2,729 $ 4,039
Residential Real Estate - non-owner occupied 1,376 1,235 *
Commercial Real Estate 1,536 2,580 2,677
- ----------------------------------------------------------------------------------------
Total Mortgage Loans 5,228 6,544 6,716
Commercial Loans 373 690 1,290
Consumer Loans 409 448 306
- ----------------------------------------------------------------------------------------
Total Non-Performing Loans 6,010 7,682 8,312
Other Real Estate Owned 868 1,865 4,163
Less: Reserve for OREO Losses 260 450 630
- ----------------------------------------------------------------------------------------
Total OREO, net 608 1,415 3,533
Total Non-Performing Assets $6,618 $9,097 $11,845
<FN>
<F*> information for this period is not available, it is included
within Residential real estate - owner occupied
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31, March 31,
(in thousands) 1996 1995 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Average Balance Information
For the quarters ended:
Interest earning assets:
Gross loans $450,462 $472,201 $509,234
Investment securities 179,356 136,976 62,843
Federal funds sold / interest bearing deposits 16,348 20,244 32,928
- --------------------------------------------------------------------------------------------
Total interest earning assets 646,166 629,421 605,005
Total Assets $662,414 $644,264 $628,130
Interest bearing liabilities:
Interest bearing deposits $509,063 $494,502 $482,409
Borrowings 58,000 58,000 58,244
- --------------------------------------------------------------------------------------------
Total interest bearing liabilities 567,063 552,502 540,653
Total Liabilities 609,961 594,596 582,498
Shareholders' Equity 52,453 49,668 45,632
Total Liabilities & Shareholders' Equity $662,414 $644,264 $628,130
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,148
<INT-BEARING-DEPOSITS> 293
<FED-FUNDS-SOLD> 12,546
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 124,861
<INVESTMENTS-CARRYING> 64,861
<INVESTMENTS-MARKET> 64,187
<LOANS> 443,175
<ALLOWANCE> 13,204
<TOTAL-ASSETS> 671,426
<DEPOSITS> 554,715
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,312
<LONG-TERM> 58,000
0
0
<COMMON> 5,375
<OTHER-SE> 48,024
<TOTAL-LIABILITIES-AND-EQUITY> 671,426
<INTEREST-LOAN> 9,508
<INTEREST-INVEST> 2,745
<INTEREST-OTHER> 335
<INTEREST-TOTAL> 12,588
<INTEREST-DEPOSIT> 5,132
<INTEREST-EXPENSE> 6,174
<INTEREST-INCOME-NET> 6,414
<LOAN-LOSSES> 700
<SECURITIES-GAINS> 159
<EXPENSE-OTHER> 3,528
<INCOME-PRETAX> 2,851
<INCOME-PRE-EXTRAORDINARY> 2,859
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,859
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 3.95
<LOANS-NON> 6,010
<LOANS-PAST> 73
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,779
<CHARGE-OFFS> 875
<RECOVERIES> 600
<ALLOWANCE-CLOSE> 13,204
<ALLOWANCE-DOMESTIC> 13,204
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
