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

Market Wire, January, 2009

There are approximately $253 million in portfolio mortgage loans with a weighted average coupon of 5.44% scheduled to contractually reprice or mature during 2009. Today's rates for similar products are in the range of 5.75% to 6.50%.

Amortization rates (including prepayments and loan refinancing activity), which approximated 17% during 2008, are expected to fall in the 10% to 15% range during 2009, reflecting ongoing loan refinancing activity as loans approach their contractual repricing.

Among the headwinds putting pressure on earnings is an anticipated increase of approximately $2.3 million in FDIC insurance premium costs in 2009, reflecting recapitalization plans recently implemented by the FDIC, along with the a decline in the expected return on the Bank's investment in Federal Home Loan Bank of New York ("FHLBNY") common stock. During 2008, the Bank earned an average rate of 5.6% on a $47.4 million average balance of FHLBNY common stock. The Bank was recently notified that the first quarter 2009 dividend, which the Bank records quarterly based upon each declaration, will approximate an annualized rate of 1.1%, representing a decline in pre-tax income of $343,000 from the fourth quarter of 2008. If that dividend rate and the current investment level are maintained throughout 2009, it will represent a potential decline of $2.1 million in pre-tax income during 2009 compared to fiscal year 2008.

At December 31, 2008, the real estate loan commitment pipeline approximated $85.9 million, including $8.1 million of commitments on loans intended for sale. The real estate loan pipeline intended for portfolio retention had a weighted average interest rate approximating 6.56% at December 31, 2008.

The Company is preparing to curtail the growth of the balance sheet in the upcoming quarters, preferring in the near term to preserve capital. Therefore, the Company expects to focus primarily on retaining portfolio loans that are approaching their contractual interest rate repricing, and rebalancing the funding mix between deposits and borrowings.

Operating expenses for the March 2009 quarter are expected to approximate $12.8 million, including the anticipated increases in FDIC premiums. The quarterly provision for loan losses built into the current projection of earnings approximates $2.0 million pre-tax, compared to $1.0 million pre-tax in the fourth quarter of 2008. Should the projected level of loan loss provision occur, the first quarter 2009 earnings per diluted share are estimated to be in the range of $0.20 to $0.22. The actual loan loss provision is determined at each quarter-end, and could differ materially from the preliminary $2.0 million estimate.

ABOUT DIME COMMUNITY BANCSHARES

The Company (NASDAQ: DCOM) had $4.06 billion in consolidated assets as of December 31, 2008, and is the parent company of the Bank. The Bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-three branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and Bank can be found on the Bank's Internet website at www.dime.com .