Dime Community Bancshares Reports Earnings for Fourth Quarter and Fiscal Year Ended December 31, 2008

Market Wire, January, 2009

Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the "Company"), the parent company of The Dime Savings Bank of Williamsburgh (the "Bank" or "Dime"), today reported net income of $5.3 million, or 16 cents per diluted share, for the quarter ended December 31, 2008, compared to $8.4 million, or 25 cents per diluted share, for the quarter ended September 30, 2008 and $5.4 million, or 17 cents per diluted share, for the quarter ended December 31, 2007.

Core earnings, which approximated reported earnings during the three months ended both September 30, 2008 and December 31, 2007, were $0.22 during the quarter ended December 31, 2008. During the quarter ended December 31, 2008, the Company recorded a non-recurring other-than temporary impairment charge related to two pooled bank trust preferred securities. The charge reduced non-interest income by $3.2 million and after-tax net income by $1.7 million during the period. These securities were performing in accordance with their contractual terms as of December 31, 2008, and had paid all contractual cash flows since the Bank's initial investment. In management's judgment, however, the credit quality of the collateral pool underlying two of the securities had deteriorated during the most recent quarter to the point that full recovery of the Bank's initial investment was considered to be uncertain. Consequently, an other-than temporary impairment charge was deemed to be warranted as of December 31, 2008.

OTHER FOURTH QUARTER 2008 HIGHLIGHTS

--  Net interest margin was 2.63%, down from 2.77% in the September 2008
    quarter and up from 2.27% in the December 2007 quarter.
--  Non-performing loans as a percentage of total loans edged up only
    slightly from 20 basis points at September 30, 2008 to 22 basis points at
    December 31, 2008.
--  Average cost of deposits was 2.69%, up from 2.51% in the September
    2008 quarter and down from 3.55% in the December 2007 quarter.
--  Assets increased by 24% annualized fueled by continued strong
    origination levels and deposit growth of $162 million.
--  Real estate loan originations were $230.0 million at an average rate
    of 6.09%, compared to $352.5 million at an average rate of 5.86% during the
    quarter ended September 30, 2008 and $175.3 million at an average rate of
    6.10% during the quarter ended December 31, 2007.
--  The annualized loan amortization rate was 16%, compared to 21% during
    the previous quarter.
--  Prepayment and other fee income was $971,000, compared to $1.2 million
    in the September 2008 quarter and $1.3 million in the December 2007
    quarter.
--  The Company increased its quarterly loan loss provision to $1.0
    million, reflecting both growth in the loan portfolio, as well as higher
    forecasted loss levels on problem loans.
--  The Bank recorded a $1.9 million provision to mortgage banking income
    related to potential losses on loans sold to Fannie Mae with recourse.
--  The Company grew tangible capital by $1.6 million, continuing to
    strengthen its capital position.
    

FISCAL YEAR EARNINGS PER SHARE UP 27%

For the year ended December 31, 2008, the Company's earnings were $28.0 million, or $0.85 per diluted share, compared to $22.4 million, or $0.67 per diluted share during the year ended December 31, 2007. Core earnings were $29.3 million, or $0.89 per diluted share during the year ended December 31, 2008, compared to $21.9 million, or $0.65 per diluted share during the year ended December 31, 2007. In addition to the $1.7 million after-tax other-than temporary impairment charge discussed above, non-recurring income tax benefits of $510,000 and an after tax loss of approximately $70,000 on the sale of two foreclosed properties were excluded from the calculation of core earnings for the year ended December 31, 2008. Non-recurring after-tax income of $546,000 related to the receipt of a Bank Owned Life Insurance benefit payment was excluded from the calculation of core earnings for the year ended December 31, 2007.

According to Vincent F. Palagiano, Chairman and Chief Executive Officer of the Company, "Overall, the Company had a very good year, posting a 27% increase in earnings per share, year-over-year, and as we begin 2009, deposit costs have begun a rapid descent which should help buffer what is beginning to look like a potential uptick in credit costs in 2009."

Mr. Palagiano continued, "Our mortgage loan portfolio continues to perform well despite the difficult economic times. We are, however, beginning to see an elevated level of 30 to 60 day loan delinquencies and will continue to monitor them closely. Non-performing loans as a percentage of total loans edged up only slightly from 20 basis points at September 30, 2008 to 22 basis points at December 31, 2008."

"The Company increased loans and deposits during the fourth quarter of 2008, resulting in annualized growth of 24% in its balance sheet. However, since October 2008, we have witnessed rapid deterioration of employment in New York's financial and service sectors, along with the continued deterioration of the domestic and global economies. Consequently, the Company will proceed cautiously before further leveraging its healthy capital levels," stated Mr. Palagiano.