Fitch Affirms Dime Community's Ratings; Outlook Revised to Stable

Business Wire, Feb 25, 2009

NEW YORK -- Fitch Ratings has affirmed Dime Community Bancshares, Inc.'s (DCOM) as follows:

--Long-term Issuer Default Rating (IDR) at 'BBB';

--Short-term IDR at 'F2';

--Individual rating at 'B/C';

--Subordinated debt at 'BBB-';

--Support at '5';

--Support Floor at 'NF'.

The Rating Outlook is revised to Stable from Negative.

The revision of the Rating Outlook to Stable reflects DCOM's consistent performance in a volatile credit environment. Through 2008, the company set itself apart from many of its peers, especially in terms of profitability and asset quality. When other issuers experienced significant downward pressure on profitability because of higher credit costs, DCOM's fundamental operating performance improved. While spread expansion was a primary contributor to the improved profitability, without the stability of asset quality, operating performance would have suffered. Recognizing a more challenging operating environment and considering the company's strong asset growth, management curtailed its stock buyback activity in early 2008 and has since adopted a controlled growth strategy. Fitch views these capital preservation and ratio building actions positively. Previously, Fitch commented on capital pressure as one of the drivers for the Negative Outlook. Going forward, a liberalized approach to capital management in the face of either declining operating performance or asset quality deterioration would likely have negative rating implications.

DCOM's affirmation reflects strong asset quality, sufficient capital, and a reasonable level of loan loss reserves. Asset quality remains a strength of the company, particularly in the current operating environment. Fitch expects pressure on asset quality through 2009; however, given DCOM's historical performance through times of economic stress, any further weakening is expected to be manageable.

The following related entities are affected by the rating action.

Dime Savings Bank of Williamsburgh

--Long-term IDR affirmed at 'BBB';

--Long-term Deposits affirmed at 'BBB ';

--Short-Term IDR affirmed at 'F2';

--Short-Term Deposits affirmed at 'F2';

--Individual Rating affirmed at 'B/C';

--Support affirmed at '5';

--Support Floor affirmed at 'NF';

Outlook revised to Stable from Negative.

Dime Community Capital Trust I

--Preferred stock affirmed at 'BBB-'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.