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

Market Wire, April, 2009

The two pooled trust preferred securities that were deemed other-than-temporarily impaired at December 31, 2008 continued to meet the criteria for OTTI at March 31, 2009. Due to a deterioration in credit conditions in connection with the collateral underlying these securities, applying the provisions of this new standard resulted in a pre-tax charge of $1.6 million through earnings during the quarter ended March 31, 2009. In addition, a third pooled trust preferred security met the criteria for OTTI at March 31, 2009, on which a charge of $356,000 was reflected in earnings for the quarter.

As of March 31, 2009, all of the Company's pooled trust preferred securities have paid all contractual cash flows since the Company's initial investment. In management's judgment, however, the credit quality of the collateral pool underlying three of the securities deteriorated to the point that full recovery of the Company's initial investment was considered to be uncertain, thus resulting in recognition of OTTI. The remaining aggregate amortized cost of these securities that could be subject to future OTTI charges through earnings was $16.8 million at March 31, 2009. Of this total, unrealized losses of $7.4 million have already been recognized as a component of accumulated other comprehensive income.

Additionally, the Company recognized a pre-tax $3.1 million OTTI charge on five actively-managed equity mutual fund investments during the March 2009 quarter. OTTI charges recognized in earnings are reflected in non-interest income. Partially offsetting the OTTI charges during the quarter ended March 31, 2009, was a pre-tax gain of $431,000 recognized on the sale of the Company's $10 million portfolio of municipal agency securities. The Company no longer holds municipal securities in its investment portfolio.

Mortgage Banking Income and Delinquent Loans Sold with Recourse to Fannie Mae

Loan sales were negligible during the quarters ended March 31, 2009, December 31, 2008 and March 31, 2008. Gains on loan sales are included in the mortgage banking income line item in the consolidated statements of operations. Dime's M-Flex lender agreement with Fannie Mae expired on December 31, 2008, its stated termination date, and no new agreement is currently contemplated. The Bank will continue to seek to originate and sell multifamily loans in order to meet its balance sheet objectives.

Mortgage banking losses totaled $1.2 million during the quarter ended March 31, 2009, reflecting a provision to the reserve for losses on Fannie Mae serviced loans of $1.5 million, that was partially offset by servicing fee income of $255,000. This mortgage banking loss fell below the $2.0 million level recognized in the December 2008 quarter, during which a $2.0 million provision to the reserve for losses on Fannie Mae serviced loans was recorded and was partially offset by approximately $206,000 of servicing fee income. Mortgage banking income was $286,000 during the March 2008 quarter reflecting $199,000 of servicing fee income and $87,000 of net gains on loans sold.