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 September 30, 1997 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
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
95 Barnes Road, Wallingford, Connecticut 06492
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(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; 5,162,237 shares were outstanding as of October
31, 1997.
The total number of pages in this report is 29
Exhibit Index is on page 25
<PAGE> 1
DIME FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition
September 30, 1997 and 1996 (unaudited) and December 31, 1996 3
Consolidated Statements of Operations
Three months ended September 30, 1997 and 1996 (unaudited) and
nine months ended September 30, 1997 and 1996 (unaudited) 3
Selected Financial Highlights 3
Consolidated Statement of Changes in Shareholders' Equity (unaudited) 4
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6-11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 12-22
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 24
Exhibit Index 25
</TABLE>
<PAGE> 2
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
September 30, 1997 and 1996, filed as Exhibit 19 hereto:
Consolidated Statements of Condition (unaudited)
Consolidated Statements of Operations (unaudited)
Selected Financial Highlights
<PAGE> 3
Dime Financial Corporation and Subisdiary
Consolidated Statement of Changes in Shareholders' Equity
Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Net Unrealized
Gain (Loss) 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, 1996 $5,481 $ 52,209 $ 8,788 $ (969) $(2,898) $62,611
Net Income 12,319 12,319
Options Exercised 33 371 404
Dividends Paid (1,492) (1,492)
Change in net unrealized gain (loss)
on securities available for sale 1,192 1,192
--------------------------------------------------------------------------
Balance at September 30, 1997 $5,514 $ 52,580 $19,615 $ 223 $(2,898) $75,034
==========================================================================
</TABLE>
<PAGE> 4
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 (unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands) 1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,319 $ 9,068
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 150 1,750
Depreciation and amortization 626 755
Amortization/Accretion investments, net (845) (460)
Amortization of intangible assets 262 263
Amortization of net deferred loan fees (165) (46)
Gain on investment securities (161) (203)
Gains on sale of other real estate owned (59) (486)
Increase in accrued income receivable (1,783) (744)
(Increase) decrease in other assets (828) 1,288
Increase in other liabilities 1,388 46
---------------------
Net cash provided by operating activities 10,904 11,231
---------------------
Cash flows from investing activities:
Available for sale investment securities:
Proceeds from sale of investment securities 15,023 4,076
Investment securities purchased (14,997) (19,745)
Proceeds from principal payments 3,042 1,431
Available for sale mortgage-backed securities:
Mortgage-backed securities purchased (219,192) (115,690)
Proceeds from principal payments 23,754 8,915
Proceeds from sale of mortgage-backed securities 29,072 62,604
Held to maturity investment securities:
Investment securities purchased (56,999) (60,680)
Proceeds from maturity of investment securities 37,500 22,000
Held to maturity mortgage-backed securities:
Mortgage-backed securities purchased (2,956) --
Proceeds from principal payments 148 --
Net decrease in loans 17,657 40,905
Proceeds from sale of loans 1,639 1,326
Purchase of premises and equipment (142) (349)
Proceeds from sale of bank-owned buildings -- 245
Proceeds from sale of other real estate owned 958 1,870
----------------------
Net cash used by investing activities (165,493) (53,092)
----------------------
Cash flows from financing activities:
Net increase in deposits 166,422 25,719
Net payments of FHLB of Boston advances (10,000) --
Proceeds from exercise of DFC stock options 377 1,086
Payments of cash dividends (1,492) (1,115)
----------------------
Net cash provided by financing activities 155,307 25,690
----------------------
Net increase (decrease) in cash and cash equivalents 718 (16,171)
Cash and cash equivalents at beginning of period 31,875 35,489
----------------------
Cash and cash equivalents at end of period $ 32,593 $ 19,318
======================
</TABLE>
<PAGE> 5
Item 1 (cont'd)
DIME FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 1997 (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 1996 Annual Report and Proxy Statement dated March
12, 1997. 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 1997 fiscal
year.
2. EARNINGS PER SHARE
The calculation of earnings per share is based on the weighted average number
of common shares and common stock equivalents outstanding during the periods
presented. Actual shares outstanding totalled 5,161,987 at September 30, 1997
and 5,129,289 at September 30, 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ ------------------
(dollars in thousands, except share data) 9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 4,395 $ 3,169 $12,319 $ 9,068
========================================
Weighted Average Common Shares and Common Stock
Equivalents Outstanding 5,423 5,226 5,356 5,140
Primary earnings per share $ 0.81 $ 0.61 $ 2.30 $ 1.76
========================================
Weighted Average Common Shares and Common Stock
Equivalents Outstanding 5,451 5,262 5,439 5,206
Fully diluted earnings per share $ 0.81 $ 0.60 $ 2.26 $ 1.74
========================================
</TABLE>
<PAGE> 6
2. EARNINGS PER SHARE (cont'd)
The Financial Accounting Standards Board has recently issued SFAS No. 128,
"Earnings per Share." This statement simplifies the computation of earnings per
share (EPS) by replacing the presentation of primary EPS with basic EPS. Under
the new statement, dual presentation of basic and diluted EPS is required on
the face of the income statement for entities with complex capital structures.
A reconciliation of the numerator and denominator used in the basic EPS
computation to the diluted EPS computation's numerator and denominator is also
required. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997 including interim periods. Upon adoption of SFAS
No. 128, the Company expects basic EPS to be slightly higher than the currently
disclosed primary EPS. Diluted EPS, under SFAS No. 128, is expected to be
comparable to the currently disclosed fully diluted EPS.
<PAGE> 7
3. INVESTMENT SECURITIES
The carrying values, approximate market values, and maturity groupings of
investment securities are as follows:
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
--------------------- ----------------------
Amortized Market Amortized Market
(Dollars in Thousands) Cost Value Cost Value
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
U.S. Government-sponsered agency obligations:
After 1 but within 5 years $ 4,000 $ 3,997 -- --
After 5 but within 10 years 8,000 7,974 -- --
Asset-backed securities:
After 10 years 11,313 11,468 $ 15,350 $ 15,403
Domestic obligations:
After 5 but within 10 years -- -- 3,000 2,997
Equity Securities 12 12 12 12
-----------------------------------------------
Total Investment Securities Available for Sale $ 23,325 $ 23,451 $ 18,362 $ 18,412
===============================================
INVESTMENT SECURITIES HELD TO MATURITY:
U.S. treasury securities:
After 1 but within 5 years $ 3,470 $ 3,528 $ 2,435 $ 2,435
After 5 but within 10 years -- -- 1,011 1,043
U.S Government-sponsored agency obligations:
Within 1 year 2,968 2,993 -- --
After 1 but within 5 years 47,934 47,955 50,837 50,426
After 5 but within 10 years 85,451 85,202 36,351 35,197
-----------------------------------------------
Total Investment Securities Held to Maturity $139,823 $139,678 $ 90,634 $ 89,101
===============================================
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Mortgage-backed securities:
GNMA $ 48,826 $ 49,304 $ 44,810 $ 44,350
FNMA -- -- 2,905 2,881
FHLMC -- -- 748 745
REMIC / CMO's 278,519 278,284 91,155 89,822
-----------------------------------------------
Total Mortgage-backed Sec. Available for Sale $327,345 $327,588 $139,618 $137,798
===============================================
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
REMIC / CMO's $ 2,805 $ 2,804 -- --
-----------------------------------------------
Total Mortgage-backed Sec. Held to Maturity $ 2,805 $ 2,804 -- --
===============================================
</TABLE>
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
INVESTMENT SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $ 155 $ 57
Gross unrealized losses $ 29 $ 7
INVESTMENT SECURITIES HELD TO MATURITY:
Gross unrealized gains $ 212 $ 55
Gross unrealized losses $ 357 $1,588
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:
Gross unrealized gains $1,027 $ 10
Gross unrealized losses $ 784 $1,830
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:
Gross unrealized losses $ 1 --
</TABLE>
<PAGE> 8
4. ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Balance at January 1, $ 12,929 $ 12,779
Provision for loan losses 150 1,750
Charge-offs (1,042) (2,036)
Recoveries 149 1,268
---------------------
Balance at September 30, $ 12,186 $ 13,761
=====================
Average loans $390,293 $433,468
Net charge-offs as a percentage of average loans 0.23% 0.18%
Non-performing loans $ 2,837 $ 6,052
Allowance for loan losses as a percentage of non-performing loans 429.47% 227.36%
Allowance for loan losses as a percentage of total loans 3.21% 3.33%
</TABLE>
5. NON-PERFORMING ASSETS
<TABLE>
<CAPTION>
September 30,
--------------------
1997 1996
-------- --------
(In Thousands)
<S> <C> <C>
Mortgage loans on real estate $ 2,437 $ 5,118
Commercial loans 204 659
Consumer loans 196 275
Total non-performing loans 2,837 6,052
Other real estate owned, net 507 825
Total non-performing assets $ 3,344 $ 6,877
Non-performing loans as a percentage of total loans 0.75% 1.47%
Non-performing assets as a percentage of total assets 0.36% 0.99%
</TABLE>
<PAGE> 9
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". Non-accrual 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 does not accrue income on loans
that are past due 90 days or more except in the case of education loans which
are conditionally guaranteed. Education loans which were 90 days or more past
due at September 30, 1997 and in accrual status totalled $101,000. The Company
may choose to place a loan on non-accrual 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 mortgage loans, commercial business
loans, and non-owner occupied residential investment mortgage loans which have
been classified as impaired are generally applied to the carrying value of such
loans. Interest payments received from all other loans which are classified as
impaired are recognized on a cash basis.
At September 30, 1997 impaired loans totalled $3.1 million with a related
allowance of $595,000 compared with impaired loans at September 30, 1996 of
$4.0 million with a related allowance of $695,000. Management believes that the
valuation allowance for impaired loans at September 30, 1997 is adequate.
<PAGE> 10
7. FHLBB ADVANCES
Federal Home Loan Bank of Boston advances consisted of the following:
<TABLE>
<CAPTION>
September 30,
--------------------
1997 1996
-------- --------
(In Thousands)
<S> <C> <C>
5.61% due 1997 5,000 --
7.16% due 1997 -- 25,000
6.05% due 1998 15,000 15,000
6.66% due 1999 10,000 --
6.29% due 1999 10,000 10,000
6.51% due 2000 8,000 8,000
Total FHLBB advances $ 48,000 $ 58,000
</TABLE>
<PAGE> 11
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") which was organized in 1871.
Consolidated assets as of September 30, 1997 were $921.5 million.
The Company provides a full range of banking services to individual and
corporate customers through its subsidiary which operates eleven retail banking
offices in six contiguous communities within New Haven County, Connecticut.
Products and services offered include a variety of savings, time, and checking
products, as well as numerous mortgage loans, consumer loans, and commercial
loans. Deposits are insured by the Federal Deposit Insurance Corporation
("FDIC") up to certain limits under the law.
FINANCIAL CONDITION
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 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.
In the third quarter of 1997, the Company reported net income of $4.4 million
or $0.81 per share on a fully diluted basis compared with net income of $3.2
million or $0.60 per share on a fully diluted basis for the quarter ended
September 30, 1996. Net income for the nine month period ended September 30,
1997 totalled $12.3 million or $2.26 per share on a fully diluted basis
compared with net income of $9.1 million or $1.74 per share on a fully diluted
basis for the nine month period ended September 30, 1996. Results for 1997 were
affected primarily by a lower provision to the allowance for loan losses and
improvement in net interest income.
<PAGE> 12
The provision to the allowance for loan losses totalled $50,000 for the quarter
ended September 30, 1997 compared with a provision of $450,000 during the third
quarter of 1996. The provision to the allowance for loan losses for the nine
months ended September 30, 1997 totalled $150,000 compared with $1.8 million
for the year earlier period. The change in the provision from 1996 reflects a
reduction in non-performing loans and total loans outstanding as well as
improvement in the coverage ratio of the allowance for loan losses to
non-performing loans.
Net interest income totalled $7.2 million for the quarter ended September 30,
1997 representing a net interest rate spread ("spread") of 2.73% and a net
interest margin ("margin") of 3.29% compared with net interest income of $6.3
million for the quarter ended September 30, 1996 representing a spread of 3.20%
and a margin of 3.76%. Net interest income for the nine months ended September
30, 1997 totalled $20.9 million representing a spread of 2.85% and a margin of
3.39% as compared with net interest income of $19.6 million for the nine months
ended September 30, 1996 representing a spread of 3.40% and a margin of 3.94%.
The increase in net interest income was primarily caused by a larger volume of
interest-earning assets which was partially offset by a decrease in the spread
and margin. The decrease in the spread and margin was due primarily to the
combination of higher costing deposits, a lower loan yield, and a greater
volume of short-term investments, on average, as a percentage of assets.
Operating expenses, excluding the net cost of operations of other real estate
owned ("OREO operations") equalled $3.4 million for the quarter ended September
30, 1997 compared with $3.2 million for the third quarter of 1996. Total
operating expenses excluding OREO operations for the nine month period ended
September 30, 1997 were $10.1 million compared with $10.8 million for the nine
month period ended September 30, 1996. The decrease in operating expenses
during 1997 was caused primarily by a decrease in occupancy and equipment
expenses resulting from the outsourcing of data processing operations during
the second quarter of 1996.
OREO operations may include gains or losses on the sale of OREO, writedowns of
OREO, and expenses to operate and maintain OREO. The net cost (benefit) of
operation of OREO equalled a net gain of $51,000 for the third quarter of 1997
compared with a net cost of $67,000 for the third quarter of 1996. For the
first nine months of 1997 the OREO operations equalled a net cost of $48,000
compared with a net gain of $223,000 for the same period in 1996. The increase
in costs during 1997 was primarily due to a reduction in gains realized on the
sales of OREO compared with the first nine months of 1996.
At September 30, 1997, the Company's allowance for loan losses was $12.2
million or 429.47% of non-performing loans, 364.39% of non-performing assets,
and 3.21% of total loans. At December 31, 1996, the allowance for loan losses
was $12.9 million, or 503.07% of non-performing loans, 342.02% of
non-performing assets, and 3.23% of total loans. At September 30, 1996, the
allowance for loan losses was $13.8 million, or 227.36% of non-performing
loans, 200.09% of non-performing assets, and 3.33% of total loans.
<PAGE> 13
At September 30, 1997, non-performing loans totalled $2.8 million, or 0.75% of
total loans, compared with $2.6 million, or 0.64% of total loans at December
31, 1996, and compared with $6.1 million, or 1.47% of total loans at September
30, 1996. Other real estate owned totalled $507,000 at September 30, 1997,
compared with $1.2 million at December 31, 1996 and $825,000 at September 30,
1996. Total non-performing assets, were $3.3 million, or 0.36% of total assets
at September 30, 1997, compared with $3.8 million or 0.50% of total assets at
December 31, 1996, and compared with $6.9 million or 0.99% of total assets at
September 30, 1996.
Total assets grew to $921.5 million at September 30, 1997 representing an
increase of $170.2 million or 23% from December 31, 1996 and increased $229.7
million or 33% from September 30, 1996. The growth in assets was due to an
increase in the investment securities portfolio and was funded by deposit
growth. Investment securities, excluding the investment in FHLBB stock,
totalled $493.7 million at September 30, 1997 representing an increase of
$188.4 million or 62% from December 31, 1996 and representing an increase of
$246.8 million or 100% from September 30, 1996. Deposits totalled $792.5
million at September 30, 1997 representing an increase of $166.4 million or 27%
from December 31, 1996 and representing an increase of $223.5 million or 39%
from September 30, 1996. The growth in deposits was the result of enhanced
retail marketing efforts. In addition, $28 million of retail brokered deposits
were added compared with the prior year.
Gross loans totalled $380.0 million at September 30, 1997 representing a
decrease of $20.2 million or 5% from December 31, 1996 and down $32.8 million
or nearly 8% from September 30, 1996. The reduction in total loans outstanding
was caused primarily by a decrease in the demand for quality loans.
ASSET QUALITY
The composition of the Company's balance sheet has changed over the past year.
Fierce competition and highly competitive pricing tempered loan production as
management believed that the pricing necessary to sustain the loan portfolio
was inconsistent with the risk presented. As a result, the Company focused on
the investment securities portfolio. The Company's investment securities
portfolio equalled $493.7 million representing approximately 54% of total
assets at September 30, 1997 compared with $246.8 million or approximately 36%
of total assets at September 30, 1996. While the portfolio increased over the
past year, the quality of the investments continue to be of the highest caliber
consisting entirely of U.S. Treasury securities, U.S. Government Agency
securities, U.S. Government-Sponsored Agency securities and AAA rated
non-Agency securities. Included within the total portfolio are $278.3 million
of collateralized mortgage obligations ("CMO").
<PAGE> 14
Ongoing loan review procedures 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 third quarter of 1997 the Company added $50,000 to the
allowance for loan losses compared with a provision of $450,000 in the second
quarter of 1996. The Company added $150,000 for the first nine months of 1997
compared with a provision of $1.8 million for the same period in 1996. The
decreased provision in 1997 reflects a reduction in non-performing loans and
total loans outstanding as well as continued strength in the coverage ratio of
the allowance for loan losses to non-performing loans.
In addition to non-performing loans, management has classified performing loans
totalling $1.8 million as substandard for internal purposes, at September 30,
1997 compared with $1.6 million at September 30, 1996 and compared with $3.3
million at December 31, 1996. Substandard loans are inadequately protected by
the current sound worth and paying capacity of the obligor or the collateral
pledged, if any, and must have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt. These loans are still performing and
management does not have serious doubt as to their collectibility.
ASSET / LIABILITY MANAGEMENT
The primary objective of asset / liability management is to maximize net
interest income while ensuring adequate liquidity, and while maintaining an
appropriate balance between interest rate sensitive assets and interest rate
sensitive liabilities. 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 rates and economic trends and other relevant
information. To aid in the measurement of interest rate risk, the Company
utilizes an asset / liability management 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.
During the second quarter of 1997, Dime entered into interest rate contracts in
order to hedge against future changes in net interest income caused by
fluctuations in the level of prevailing interest rates. Dime purchased an
interest rate floor contract with a notional value of $10.0 million for a three
year period. This hedge was purchased in order to mitigate the impact of
falling interest rates which could cause increases in prepayment within the
loan, mortgage-backed security, and CMO portfolios. The contract calls for
payments to be made to Dime when the three month London Interbank Offering Rate
("LIBOR" or "the index") falls below a specified level at certain measurement
dates. The premium for this contract is amortized over the life of the contract
and is recorded as a reduction of interest income.
<PAGE> 15
Dime also entered into interest rate cap corridor contracts with a notional
amount totalling $20.0 million for a three year period. This hedge was
purchased in order to mitigate the impact of rising interest rates which could
cause an increase in the cost of funds. This contract calls for payments to be
made to the Bank when the same index rises above a specified level at certain
measurement dates. The premiums for these contracts are amortized over the life
of the contract and are recorded as an increase in interest expense.
The costs of these contracts are fixed to Dime. No additional interest rate
contracts were entered into during the third quarter of 1997 and no interest
rate contracts were outstanding prior to the second quarter of 1997.
LIQUIDITY MANAGEMENT
Liquidity management involves the ability to meet the cash flow requirements of
the Company's loan and deposit customers. Cash on hand, 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 $32.6 million at September 30,
1997, compared with $19.3 million at September 30, 1996. Cash and cash
equivalents represented 3.54% of total assets at September 30, 1997 compared
with 2.79% of total assets at September 30, 1996. The Company believes that
liquidity is sufficient to meet currently known demands and commitments.
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 operating expenses.
During the first nine months of 1997, deposits increased by $166.4 million from
$626.1 million at December 31, 1996 to $792.5 million at September 30, 1997. In
addition to the increase in the retail deposit base, Dime sold retail brokered
certificates of deposit ("brokered deposits"). During 1996, when these were
first introduced, the Bank sold $3 million of brokered deposits. During the
first nine months of 1997, Dime sold an additional $25 million of brokered
deposits, to total $28 million at September 30, 1997.
Dime is a member of the Federal Home Loan Bank of Boston ("FHLBB") and as a
member may borrow from the FHLBB to secure additional funds. At September 30,
1997, FHLBB borrowings equalled $48.0 million, down from $58.0 million at
year-end 1996 and September 30, 1996. Funds may be derived from the FHLBB,
retail brokered certificates, or from other alternative funding sources.
<PAGE> 16
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 regulations. 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 September 30, 1997 the Tier 1 leverage capital
ratio of Dime was 8.13%. The following table presents the Company's risk-based
and leverage capital ratios:
<TABLE>
<CAPTION>
September 30,
----------------
Required 1997 1996
-------- ------ ------
<S> <C> <C> <C>
Tier I risk-based capital 4.0% 19.94% 17.62%
Total risk-based capital 8.0% 21.22% 18.90%
Leverage capital 4.0% 8.14% 8.41%
</TABLE>
On October 15, 1997 the Board of Directors increased the regular quarterly
dividend payment to $0.11 per share payable on November 18, 1997 to
shareholders of record on November 4, 1997.
<PAGE> 17
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 Nine months ended
September 30, 1997 September 30, 1997
compared to compared to
September 30, 1996 September 30, 1996
------------------ ------------------
<S> <C> <C>
Interest income $3,690 $7,677
Interest expense 2,824 6,343
----------------------------
Net interest income 866 1,334
Provision for loan losses (400) (1,600)
Investment securities gains, net 112 (42)
Other operating income (18) (6)
Other operating expenses 99 (410)
----------------------------
Income before income taxes 1,261 3,296
Income tax expense 35 45
----------------------------
Net income $1,226 $3,251
============================
</TABLE>
Quarter and Nine months Ended September 30, 1997
Compared with
Quarter and Nine months Ended September 30, 1996
General. Net income for the quarter ended September 30, 1997, was $4.4 million
or $0.81 per share, compared with net income of $3.2 million or $0.60 per share
for the same period in 1996. Net income for the nine months ended September 30,
1997 totalled $12.3 million or $2.26 per share compared with $9.1 million or
$1.74 per share for the first nine months of 1996. The change in net income was
influenced primarily by a decrease in the provision for loan losses and an
improvement in net interest income.
Interest Income. Interest income for the quarter ended September 30, 1997
totalled $16.3 million representing an average yield on interest earning assets
of 7.44% and totalled $46.0 million for the nine months ended September 30,
1997 representing an average yield on interest earning assets of 7.47%.
Interest income for the quarter ended September 30, 1996 totalled $12.6 million
and represented an average yield on interest earning assets of 7.49% and
totalled $38.3 million for the nine months ended September 30, 1996 and
represented an average yield of 7.72%. The increase in interest income was
caused primarily by an increase in the volume of interest-earning assets. The
decrease in yield was caused primarily by a change in the mix of
interest-earning assets as higher yielding loans decreased and lower yielding
investment securities increased.
<PAGE> 18
Interest Expense. Interest expense totalled $9.2 million for the quarter ended
September 30, 1997 representing an average cost of funds of 4.71% and totalled
$25.0 million for the nine months ended September 30, 1997 representing an
average cost of funds of 4.62%. Total interest expense for the quarter ended
September 30, 1996 was $6.3 million which represented an average cost of funds
of 4.29% and totalled $18.7 million for the first nine months of 1996 which
represented an average cost of funds of 4.32%. The increase in interest expense
was caused primarily by an increase in the volume of interest-bearing deposits.
The increase in the cost of funds was caused by an increase in the volume of
higher-costing certificates of deposit versus lower-costing savings deposits.
In addition, during the latter part of 1996 and into 1997 the Company
introduced an aggressive marketing effort to highlight our money market
product, the insured investment account. Success in this effort has generated
growth of $36.6 million during the first nine months of 1997.
In an effort to expand and diversify the funding alternatives traditionally
utilized, Dime sold retail brokered certificates of deposit ("brokered
deposits") and actively solicited a local municipality for deposits. During the
first nine months of 1997, Dime sold $25 million of brokered deposits, to
increase the portfolio outstanding to $28 million at September 30, 1997.
Municipal time deposits increased $17.0 million during 1997 to total $18.5
million at September 30, 1997.
Net Interest Income. Net interest income totalled $7.2 million for the quarter
ended September 30, 1997 compared with $6.3 million for the quarter ended
September 30, 1996. Net interest income totalled $20.9 million for the first
nine months of 1997 compared with $19.6 million for the first nine months of
1996. The net interest rate spread for the quarter ended September 30, 1997 was
2.73% compared with 3.20% for the quarter ended September 30, 1996. The net
interest rate spread for the nine months ended September 30, 1997 was 2.85%
down from the prior year spread of 3.40%. The net interest margin was 3.29% for
the third quarter of 1997 compared with a net interest margin of 3.76% for the
third quarter of 1996. The net interest margin was 3.39% for the first nine
months of 1997 compared with a net interest margin of 3.94% for the nine months
ended September 30, 1996. The following table summarizes the yields for the
major components of net interest income for the periods presented:
<PAGE> 19
Comparative Interest Spread Table
For the quarters and nine months ended
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest Earning Assets:
Loans 8.25% 8.01% 8.20% 8.37%
Investment Securities 6.89% 6.72% 6.89% 6.57%
Federal Funds Sold 5.54% 5.26% 5.36% 5.23%
Yield on Interest Earning Assets 7.44% 7.49% 7.47% 7.72%
Interest Bearing Liabilities:
Deposits 4.61% 4.03% 4.48% 4.03%
Borrowings 6.30% 6.63% 6.44% 6.83%
Cost of Interest Bearing Liabilities 4.71% 4.29% 4.62% 4.32%
Net Interest Rate Spread 2.73% 3.20% 2.85% 3.40%
Net Interest Margin 3.29% 3.76% 3.39% 3.94%
</TABLE>
Provision for Loan Losses. The provision to the allowance for loan losses for
the quarter ended September 30, 1997 totalled $50,000 compared with a provision
of $450,000 for the third quarter of 1996. The provision for the first nine
months of 1997 totalled $150,000 compared with a provision of $1.8 million for
the first nine months of 1996.
Investment Securities Gains (Losses), Net. The Company recorded $161,000 of net
realized investment security gains during the first nine months of 1997
compared with net realized security gains of $203,000 recorded during the year
earlier period.
Other Operating Income. Other operating income totalled $534,000 for the third
quarter of 1997 compared with $552,000 in the third quarter of 1996 and
totalled $1.5 million for the first nine months of 1997 and 1996. The following
table comparatively summarizes the categories of other operating income:
<PAGE> 20
OTHER OPERATING INCOME:
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
(Dollars in thousands) 9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Deposit account fees $428 $421 $1,228 $1,210
Customer service fees 40 39 107 105
Fees from savings bank life insurance sales 31 31 132 126
Loan and loan servicing fees 10 11 33 35
Other fees 25 50 37 67
--------------------------------------
Total Other Operating Income $534 $552 $1,537 $1,543
======================================
</TABLE>
Other Operating Expenses. Total operating expenses, including OREO operations,
equalled $3.4 million for the third quarter of 1997 compared with total
operating expenses of $3.3 million for the third quarter of 1996. Total
operating expenses for the nine month period ended September 30, 1997 were
$10.1 million compared with $10.6 million for the nine month period ended
September 30, 1996. The following table comparatively illustrates the
categories of operating expenses:
OPERATING EXPENSES
(Dollars in thousands)
<TABLE>
<CAPTION>
Quarter Quarter YTD YTD
9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
<S> <C> <C> <C> <C>
Salaries and Employee Benefits $1,740 $1,628 $ 5,085 $ 5,036
Professional Services 617 574 1,756 1,668
Occupancy and Equipment 452 534 1,423 2,147
FDIC Assessment 21 1 59 79
Net Cost (Gain) of OREO operations (51) 67 48 (223)
Restructure Expense, net -- -- -- 340
Other Operating Expenses 579 455 1,770 1,504
----------------------------------------
Total Operating Expenses $3,358 $3,259 $10,141 $10,551
========================================
</TABLE>
<PAGE> 21
Income Taxes. Income tax expense for the third quarter and nine months ended
September 30, 1997 totalled $35,000. No income tax expense was recorded during
1996 and the first six months of 1997 because of a reduction in the valuation
allowance due to projected earnings.
<PAGE> 22
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
----------- ----------------------
19 Report furnished to the Company's shareholders for the
quarter ended September 30, 1997.
27 Financial Data Schedule
b. No report on form 8-K has been filed by the registrant with the
Securities and Exchange Commission during the quarter ended
September 30, 1997.
<PAGE> 23
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: November 13, 1997 /s/ Richard H. Dionne
------------------------------------------
Richard H. Dionne
President & Chief Executive Officer
Date: November 13, 1997 /s/ Albert E. Fiacre, Jr.
------------------------------------------
Albert E. Fiacre, Jr.
Executive Vice President and Chief
Financial Officer
Date: November 13, 1997 /s/ Robert P. Simon
------------------------------------------
Robert P. Simon
Vice President & Comptroller
<PAGE> 24
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
19 Report furnished to the Company's shareholders for the
quarter ended September 30, 1997.
27 Financial Data Schedule
<PAGE>
Dime Financial Corporation - Third Quarter Results
Dime Financial Corporation ("DFC") (NASDAQ: DIBK) announced net income of
$4.4 million or $0.81 per share on a fully diluted basis for the quarter ended
September 30, 1997 compared with net income of $3.2 million or $0.60 per share
on a fully diluted basis for the quarter ended September 30, 1996 representing
a per share increase of 35%. Net income for the nine months ended September 30,
1997 totalled $12.3 million or $2.26 per share on a fully diluted basis
compared with $9.1 million or $1.74 per share on a fully diluted basis for the
nine months ended September 30, 1996. The change in net income from the prior
year was primarily the result of a reduced provision to the allowance for loan
losses and an improvement in net interest income. In addition, the Board of
Directors announced an increase in the quarterly dividend to $0.11 per share
payable on November 18, 1997 to shareholders of record on November 4, 1997. The
provision to the allowance for loan losses totalled $50,000 for the quarter
ended September 30, 1997 compared with a provision of $450,000 for the quarter
ended September 30, 1996. The provision to the allowance for loan losses during
the first nine months of 1997 totalled $150,000 compared with $1.8 million for
the nine months ended September 30, 1996. The change in the provision from 1996
reflects a reduction in the level of non-performing loans and total loans
outstanding along with the increase in the coverage ratio of the allowance for
loan losses to non-performing loans.
Net interest income, the key component of the Company's earnings,
totalled $7.2 million for the quarter ended September 30, 1997 representing a
net interest spread of 2.73% and a net interest margin of 3.29% compared with
net interest income of $6.3 million for the quarter ended September 30, 1996
representing a net interest spread of 3.20% and a net interest margin of 3.76%.
Net interest income for the nine months ended September 30, 1997 totalled $20.9
million representing a net interest spread of 2.85% and a net interest margin
of 3.39% compared with net interest income of $19.6 million for the nine months
ended September 30, 1996 representing a net interest spread of 3.40% and a net
interest margin of 3.94%. The increase in net interest income for both the
third quarter and the nine months was primarily the result of a larger volume
of interest-earning assets which was partially offset by a decrease in the net
interest rate spread and net interest margin. The decrease in the net interest
rate spread and net interest margin for the third quarter was due primarily to
a higher cost of deposits. For the nine months, the decrease in the net
interest spread and net interest margin was due primarily to the combination of
a higher cost of deposits and a lower loan yield.
Total operating expenses, excluding the net cost of operations of other
real estate owned ("OREO operations"), equalled $3.4 million for the quarter
ended September 30, 1997 compared with operating expenses of $3.2 million for
the quarter ended September 30, 1996. Operating expenses, excluding OREO
operations, totalled $10.1 million for the nine months ended September 30, 1997
compared with $10.8 million for the nine months ended September 30, 1996. The
ratio of operating expenses to average assets improved to 1.50% for the quarter
ended September 30, 1997 (versus 1.85% for the prior year quarter) and 1.59% of
average assets for the nine months ended September 30, 1997 (versus 2.06% for
the prior year period). OREO operations equalled a net gain of $51,000 for the
third quarter of 1997 compared with a net expense of $67,000 for the third
quarter of 1996 and a net expense of $48,000 for the nine months ended
September 30, 1997 compared with a net gain of $223,000 for the first nine
months of 1996.
Total assets were $921.5 million at September 30, 1997 compared with
total assets of $691.8 million at September 30, 1996, representing an increase
of nearly $230 million or 33%. In addition to the increase in total assets, the
composition of the Company's balance sheet continued to change with an increase
in the investment securities portfolio and a decrease in total loans
outstanding. At September 30, 1997, investment securities totalled $493.7
million compared with $246.8 million at September 30, 1996, representing an
increase of $246.8 million or 100%. The investment securities portfolio at
September 30, 1997 consisted entirely of instruments issued by the U.S.
Treasury, U.S. government agencies, U.S. government-sponsored agencies, or AAA
rated non-agencies. Total loans, net of the allowance for loan losses, equalled
$367.8 million at September 30, 1997 compared with $399.0 million at September
30, 1996, a decrease of nearly 8%.
The third quarter of 1997 was marked by continued growth in the Company's
deposit base. Total deposits rose to $792.5 million at September 30, 1997 an
increase of $36.7 million or nearly 5% from June 30, 1997 and an increase of
$223.4 million or 39% from September 30, 1996. The increase in deposits from
1996 was caused primarily by an increased advertising effort and competitive
pricing for selected deposit products. Non-performing loans equalled $2.8
million at September 30, 1997 representing a decrease of $3.2 million or 53%
from September 30, 1996. Other real estate owned ("OREO") totalled $507,000 at
September 30, 1997 compared with OREO of $825,000 at September 30, 1996. Total
non-performing assets were $3.3 million at September 30, 1997 compared with
$6.9 million at September 30, 1996. Non-performing assets equalled 0.36% of
total assets at September 30, 1997 compared with 0.99% of total assets at
September 30, 1996. The allowance for loan losses at September 30, 1997
totalled $12.2 million and equalled 3.21% of total loans outstanding compared
with an allowance for loan losses of $13.8 million at September 30, 1996
representing 3.33% of total loans outstanding. The allowance for loan losses
equalled 429% of non-performing loans at September 30, 1997 compared with 227%
at September 30, 1996.
Total shareholders' equity was $75.0 million at September 30, 1997 representing
an equity to assets ratio of 8.14% compared with shareholders' equity of $59.4
million at September 30, 1996 representing an equity to assets ratio of 8.59%.
The Tier 1 regulatory capital ratio at September 30, 1997 for The Dime Savings
Bank of Wallingford ("Dime"), the Company's sole subsidiary, was 8.13% compared
with a Tier 1 regulatory capital ratio of 8.39% at September 30, 1996. The
risk-based capital ratio of Dime at September 30, 1997 equalled 21.20% compared
with a risk-based capital ratio of 18.79% at September 30, 1996. These ratios
are in excess of the regulatory minimums. Book value per share equalled $14.54
at September 30, 1997 compared with $11.58 at September 30, 1996.
Dime Financial Corporation and Subsidiary
<TABLE>
<CAPTION>
Consolidated Statements of Condition
September 30, December 31, September 30,
(In thousands, except share data) 1997 1996 1996
------------- ------------ -------------
<S> <C> <C> <C>
Assets
Cash and amounts due from banks $ 9,172 $ 10,430 $ 7,581
Interest bearing deposits 49 149 24
Federal funds sold 23,372 21,296 11,713
Investment securities available for sale (a) 23,451 26,233 18,412
Investment securities held to maturity (b) 139,823 120,257 90,634
Mortgage-backed securities available for sale (c) 327,588 158,728 137,798
Mortgage-backed securities held to maturity (d) 2,805 -- --
Investment in Federal Home Loan Bank of Boston stock 7,192 7,192 7,192
Loans receivable:
Mortgage Loans:
Residential real estate - owner occupied 271,572 287,654 304,010
Residential real estate - non-owner occupied 28,709 31,365 23,396
Commercial real estate 27,141 33,448 35,726
Builders' and Land 1,050 447 811
Commercial loans 8,401 3,075 3,569
Consumer loans 43,129 44,233 45,246
Allowance for loan losses (12,186) (12,929) (13,761)
------------------------------------------
Loans receivable, net 367,816 387,293 398,997
Premises and equipment, net 4,611 5,095 5,275
Accrued income receivable 6,997 5,214 5,195
Other real estate owned, net 507 1,210 825
Other assets 5,971 5,788 5,679
Excess of cost over fair value of net assets acquired 2,156 2,418 2,505
------------------------------------------
Total assets $ 921,510 $ 751,303 $ 691,830
==========================================
Liabilities and Shareholders' equity
Liabilities:
Deposits $ 792,520 $ 626,098 $ 569,063
Federal Home Loan Bank of Boston advances 48,000 58,000 58,000
Other liabilities 5,956 4,594 5,350
------------------------------------------
Total liabilities 846,476 688,692 632,413
------------------------------------------
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 5,513,594 shares, 5,480,896 and 5,480,896,
respectively; outstanding 5,161,987 shares, 5,129,289 and
5,129,289, respectively 5,514 5,481 5,481
Additional paid-in capital 52,580 52,209 52,209
Retained earnings 19,615 8,788 5,793
Net unrealized gain (loss) on available for sale securities 223 (969) (1,168)
Treasury stock--351,607 shares at cost (2,898) (2,898) (2,898)
------------------------------------------
Total shareholders' equity 75,034 62,611 59,417
------------------------------------------
Total liabilities and shareholders' equity $ 921,510 $ 751,303 $ 691,830
==========================================
<FN>
- -------------------
<Fa> amortized cost: $23,325 at September 30, 1997; $26,304 at December 31,
1996; and $18,362 at September 30, 1996.
<Fb> market value: $139,678 at September 30, 1997; $119,238 at December 31,
1996; and $89,101 at September 30, 1996.
<Fc> amortized cost: $327,345 at September 30, 1997; $160,124 at December 31,
1996; and $139,618 at September 30, 1996.
<Fd> market value: $2,804 at September 30, 1997
</FN>
</TABLE>
<PAGE>
Dime Financial Corporation and Subsidiary
<TABLE>
<CAPTION>
Consolidated Statements of Operations
Three months ended Nine Months Ended
Sept. 30, Sept. 30,
-------------------- --------------------
(In thousands, except share data) 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 7,906 $ 8,359 $ 24,000 $ 27,224
Interest-bearing deposits 1 1 3 22
Federal funds sold 350 148 946 628
Interest and dividends on investments:
U.S. treasury securities 56 56 170 185
U.S. government agency obligations 2,546 1,429 7,435 3,599
REMIC/CMO's 2,783 713 6,000 2,333
Non-agency REMIC/CMO's 1,408 652 3,822 1,141
Mortgage-backed securities 953 891 2,584 2,402
Asset-backed securities 213 268 691 394
Other bonds and notes -- 7 -- 46
Dividends on Federal Home Loan Bank of Boston Stock 118 117 348 345
Asset Hedge Premiums (3) -- (3) --
---------------------------------------------
Total Interest Income 16,331 12,641 45,996 38,319
---------------------------------------------
Interest Expense
Interest to depositors 8,446 5,364 22,575 15,691
Interest on Federal Home Loan Bank of Boston advances 717 983 2,466 3,015
Liability Hedge Premiums 8 -- 8 --
---------------------------------------------
Total Interest Expense 9,171 6,347 25,049 18,706
---------------------------------------------
Net Interest Income 7,160 6,294 20,947 19,613
Provision for loan losses 50 450 150 1,750
---------------------------------------------
Net interest income after provision 7,110 5,844 20,797 17,863
Investment securities gains, net 144 32 161 203
Other operating income 534 552 1,537 1,543
---------------------------------------------
Income before other operating expenses 7,788 6,428 22,495 19,609
---------------------------------------------
Other Operating Expenses:
Salaries and employee benefits 1,740 1,628 5,085 5,036
Professional and other services 617 574 1,756 1,668
Bank occupancy and equipment expense 452 534 1,423 2,147
FDIC Assessment 21 1 59 79
Net (benefit) cost of operation of other real estate (51) 67 48 (223)
Restructure expense, net -- -- -- 340
Other operating expenses 579 455 1,770 1,504
---------------------------------------------
Total Other Operating Expenses 3,358 3,259 10,141 10,551
---------------------------------------------
Income before income taxes 4,430 3,169 12,354 9,058
Income tax expense (benefit) 35 -- 35 (10)
---------------------------------------------
Net income $ 4,395 $ 3,169 $ 12,319 $ 9,068
=============================================
Primary Earnings per Share $ 0.81 $ 0.61 $ 2.30 $ 1.76
Weighted Average Common Shares and Common Stock Equivalents
outstanding 5,423 5,226 5,356 5,140
Fully Diluted Earnings per Share $ 0.81 $ 0.60 $ 2.26 $ 1.74
Weighted Average Common Shares and Common Stock Equivalents
outstanding 5,451 5,262 5,439 5,206
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Highlights
Three months ended Nine months ended
Sept. 30, Sept. 30,
-------------------- --------------------
(Dollars in thousands) 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average yield on interest-earning assets 7.44% 7.49% 7.47% 7.72%
Average cost of funds 4.71% 4.29% 4.62% 4.32%
Net interest rate spread 2.73% 3.20% 2.85% 3.40%
Net interest margin 3.29% 3.76% 3.39% 3.94%
Net income $ 4,395 $ 3,169 $12,319 $ 9,068
Return on average assets 1.97% 1.84% 1.96% 1.79%
Return on average equity 24.63% 22.11% 24.58% 22.13%
Leverage capital ratio 8.14% 8.41% 8.14% 8.41%
Fully diluted earnings per share $ 0.81 $ 0.60 $ 2.26 $ 1.74
Book value per share $ 14.54 $ 11.58 $ 14.54 $ 11.58
</TABLE>
Dime Financial Corporation And Subsidiary
<TABLE>
<CAPTION>
Selected Financial Data
September 30, December 31, September 30,
(in thousands) 1997 1996 1996
------------- ------------ -------------
<S> <C> <C> <C>
Non-Performing Asset Information:
Non-Performing Loans:
Residential Real Estate - owner occupied $ 590 $ 862 $ 2,691
Residential Real Estate - non-owner occupied 361 510 926
Commercial Real Estate 1,486 788 1,501
------------------------------------------
Total Mortgage Loans 2,437 2,160 5,118
Commercial Loans 204 303 659
Consumer Loans 196 107 275
------------------------------------------
Total Non-Performing Loans 2,837 2,570 6,052
Other Real Estate Owned 507 1,210 825
Total Non-Performing Assets $ 3,344 $ 3,780 $ 6,877
==========================================
<CAPTION>
September 30, December 31, September 30,
(in thousands) 1997 1996 1996
------------- ------------ -------------
<S> <C> <C> <C>
Average Balance Information
For the quarters ended:
Interest earning assets:
Gross loans $ 383,307 $ 407,780 $ 417,390
Investment securities 468,973 271,856 246,184
Federal funds sold / interest bearing deposits 25,250 22,982 11,280
------------------------------------------
Total interest earning assets 877,530 702,618 674,854
Total Assets $ 894,271 $ 716,892 $ 688,470
==========================================
Interest bearing liabilities:
Interest bearing deposits $ 729,574 $ 552,925 $ 528,520
Borrowings 44,500 58,000 58,000
------------------------------------------
Total interest bearing liabilities 774,074 610,925 586,520
Total Liabilities 822,884 655,992 631,119
Shareholders' Equity 71,387 60,900 57,351
Total Liabilities & Shareholders' Equity $ 894,271 $ 716,892 $ 688,470
==========================================
Average Balance Information For the nine and twelve
months ended:
Interest earning assets:
Gross loans $ 390,293 $ 427,008 $ 433,468
Investment securities 407,339 227,010 211,933
Federal funds sold / interest bearing deposits 23,367 18,003 16,341
------------------------------------------
Total interest earning assets 820,999 672,021 661,742
Total Assets $ 838,207 $ 686,624 $ 676,456
==========================================
Interest bearing liabilities:
Interest bearing deposits $ 674,082 $ 528,245 $ 519,950
Borrowings 50,454 58,000 58,000
------------------------------------------
Total interest bearing liabilities 724,536 586,245 577,950
Total Liabilities 771,380 630,408 621,812
Shareholders' Equity 66,827 56,216 54,644
Total Liabilities & Shareholders' Equity $ 838,207 $ 686,624 $ 676,456
==========================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,172
<INT-BEARING-DEPOSITS> 49
<FED-FUNDS-SOLD> 23,372
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 351,039
<INVESTMENTS-CARRYING> 142,628
<INVESTMENTS-MARKET> 142,482
<LOANS> 380,002
<ALLOWANCE> 12,186
<TOTAL-ASSETS> 921,510
<DEPOSITS> 792,520
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 5,956
<LONG-TERM> 43,000
0
0
<COMMON> 5,514
<OTHER-SE> 69,520
<TOTAL-LIABILITIES-AND-EQUITY> 921,510
<INTEREST-LOAN> 24,000
<INTEREST-INVEST> 20,702
<INTEREST-OTHER> 1,294
<INTEREST-TOTAL> 45,996
<INTEREST-DEPOSIT> 22,575
<INTEREST-EXPENSE> 25,049
<INTEREST-INCOME-NET> 20,947
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 161
<EXPENSE-OTHER> 10,141
<INCOME-PRETAX> 12,354
<INCOME-PRE-EXTRAORDINARY> 12,319
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,319
<EPS-PRIMARY> 2.30
<EPS-DILUTED> 2.26
<YIELD-ACTUAL> 3.39
<LOANS-NON> 2,837
<LOANS-PAST> 101
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,929
<CHARGE-OFFS> 1,042
<RECOVERIES> 149
<ALLOWANCE-CLOSE> 12,186
<ALLOWANCE-DOMESTIC> 12,186
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
