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

Compared to the March 2008 quarter, non-interest expense increased $1.3 million during the quarter ended March 31, 2009, reflecting increases of $567,000 in compensation and benefits, $516,000 in occupancy and equipment costs, and $744,000 in FDIC assessment expense. These increases all reflect the same conditions discussed in the previous paragraph. Other operating expenses declined $475,000 as a result of lower marketing and legal consulting expenses.

INCOME TAX EXPENSE

The Company's customary consolidated effective tax rate approximates 37%. The impact of the non-recurring OTTI charges on investment securities (which are taxed at a higher effective tax rate) reduced the actual effective tax rate for the quarter ended March 31, 2009 to 26%. Similarly, the OTTI charges reduced the effective tax rate for the December 2008 quarter to 28%.

BALANCE SHEET

Total assets declined $14.8 million during the quarter ended March 31, 2009, as the Company implemented a capital preservation strategy during the period that curtailed asset growth.

The decline in assets was experienced primarily in both investment and mortgage-backed securities, as the Company sold $10 million of its investment securities and did not purchase any investments or mortgage backed securities during the period.

Offsetting the decline in these asset accounts was a net decline of $17.6 million in liabilities. This decline reflected a reduction of $60.0 million in maturing FHLBNY advances. In addition, escrow and other deposits declined $33.7 million as semi-annual real estate tax payments made on behalf of borrowers were funded in early January 2009. Deposits increased $75.5 million during the quarter, as deposit outflows did not materialize as expected due to a decline in the premium deposit pricing that characterized the marketplace during the quarter.

Real Estate Lending and Loan Amortization

Real estate loan originations totaled $83.7 million during the quarter ended March 31, 2009. The average rate on real estate loan originations during the quarter was 6.21%, compared to 6.09% during the quarter ended December 31, 2008 and 6.03% during the quarter ended March 31, 2008.

Real estate loan amortization during the March 2009 quarter approximated 9% of the real estate loan portfolio on an annualized basis, compared to 16% during the December 2008 quarter and 14% during the March 2008 quarter. This was slightly below management's forecast of prepayment speeds disclosed at the commencement of the year.

Also at March 31, 2009, the Bank had a commitment to sell an 80% participation in approximately $124 million of multifamily loans from portfolio. This is similar to a loan sale transaction which occurred in the third quarter of 2008. The loans were sold at par and without recourse. This transaction settled on April 20, 2009 and the Bank recognized a mortgage servicing gain of approximately $600,000 on the sale (as a component of mortgage banking income), which will be reflected in the June 2009 quarterly results. The Bank retained servicing on all of the loans.