Dime Community Bancshares Reports Earnings for the Quarter Ended March 31, 2009

Dime Community Bancshares, Inc. (NASDAQ: DCOM) (the "Company"), the parent company of The Dime Savings Bank of Williamsburgh ("Dime"), today reported consolidated net income of $2.9 million, or 9 cents per diluted share, for the quarter ended March 31, 2009, compared to $5.3 million, or 16 cents per diluted share, for the quarter ended December 31, 2008 and $6.0 million, or 18 cents per diluted share, for the quarter ended March 31, 2008.

There were two variances which caused reported earnings to deviate from last quarter's discussion of the outlook: Other-than-temporary impairment ("OTTI") charges and augmented loan loss provisioning and credit costs. During the quarter, the Company booked an OTTI charge related to three pooled bank trust preferred securities downgraded by rating agencies. This resulted in a pre-tax charge of $2.0 million. Additionally, the Company booked a pre-tax $3.1 million OTTI charge related to five equity mutual funds with a cost basis of $6.6 million. These equity funds were initially established as a long-term investment, but due to the significant deterioration in the valuation of U. S. and international equity markets, as well as the extended duration of this decline, an OTTI charge was recognized. Lastly, the Company's quarter-end evaluation of the adequacy of the loan loss reserve and periodic credit costs resulted in a total quarterly pre-tax charge of $4.1 million, compared to a pre-tax $2.0 million charge included in last quarter's earnings outlook. On an earnings per share basis, the variance of 12 cents is comprised of 8 cents for OTTI charges and 4 cents for credit costs exceeding those previously forecasted. Excluding these variances, earnings per share would have been 21 cents for the quarter ended March 31, 2009, in line with the range in the outlook of 20 to 22 cents.

Vincent F. Palagiano, Chairman and CEO of the Company, stated, "OTTI and credit costs resulted in earnings per share falling below the range provided in the outlook section of our prior earnings release. Nevertheless, net interest income rose, non-performing loan levels remained among the lowest, both nationally and regionally, the quarterly common stock dividend was maintained at its existing level, and the Company still maintained its tangible capital ratio from the prior quarter-end." Significantly, non-performing loans represented only 40 basis points of total loans at March 31, 2009.

Mr. Palagiano concluded, "We remain optimistic about growth in net interest income for the remainder of the year, as the steep slope currently present in the yield curve is advantageous for Dime."

Core earnings were $0.17 per diluted share during the quarter ended March 31, 2009, and $0.22 per diluted share during the quarter ended December 31, 2008. Core earnings for the quarter ended March 31, 2009 excluded the combined $5.0 million of pre-tax OTTI charges on securities discussed above. Core earnings for the March 2009 quarter additionally excluded a $431,000 pre-tax gain recognized on the sale of a $10 million portfolio of municipal agency securities. The net effect of these items was to reduce after-tax net income by $2.5 million, or 8 cents per diluted share during the period. During the quarter ended December 31, 2008, reported earnings were adversely impacted by 6 cents due to a $1.7 million after-tax OTTI charge related to two pooled bank trust preferred securities.

OTHER FIRST QUARTER 2009 HIGHLIGHTS

--  Assets fell $14.8 million, as the Company sought to curtail asset
    growth and focus on preserving and enhancing its well-capitalized posture.
--  At March 31, 2009, non-performing loans totaled $13.1 million, or
    0.40% of total loans, while the allowance for loan losses totaled $18.4
    million, or 0.56% of total loans, a coverage ratio of 140%.
--  Real estate loan originations were $83.7 million, below the $230.5
    million level in the December 2008 quarter and $163.7 million level in the
    March 2008 quarter.
--  Total deposits grew $75.5 million, or 3%.
--  Incremental growth in the allowance for loan losses approximated
    $900,000, as the aggregate loan loss provision and other transfers into the
    allowance for loan losses exceeded net charge-offs and other transfers out
    of the allowance for loan losses.
--  The Company provided $1.5 million related to loans sold with recourse.
--  Net interest margin was 2.51%, down from 2.63% in the December 2008
    quarter, and up from 2.32% in the March 2008 quarter.
--  Prepayment and other fee income declined significantly to $292,000
    compared to $971,000 in the December 2008 quarter and $1.1 million in the
    March 2008 quarter.
--  The Company grew its consolidated ratio of tangible capital to
    tangible assets from 5.79% to 5.83%.
--  FDIC insurance premium expense increased $507,000 from the previous
    quarter, and $744,000 from the prior year.

The net interest margin was down slightly during the quarter because Dime was temporarily carrying approximately $200 million in liquid funds. A portion of these funds, combined with $100 million of cash received in April 2009 from a sale of multifamily loans, are planned to fund deposit outflows and maturing borrowings throughout the remainder of the year. This rebalancing should lead to a smaller balance sheet by year-end.