Message From The President
 |
Jim Cronin, President of Dime Bank |
To say this year has been anything but
ordinary from many perspectives is an
understatement, but especially from an
economic standpoint. It has been the
most difficult for our financial markets
since 1931 with the Dow falling 31.9%
and several highly regarded institutions
failing. More than a trillion dollars in
value has been lost. And practically everyone
from individuals to businesses, large
and small, has been negatively impacted.
Dime was no exception. However, I’m
pleased to report that, although it was by
far the most difficult year I personally
have ever experienced from a banking
perspective, I’m very proud of how well
Dime managed through the roller coaster
we were put on. We took our lumps, but
we more than weathered the storm and
ultimately still remain a very strongly
capitalized institution
How did the country get into
this mess?
It is attributable, first to the arrogance,
greed, recklessness and irresponsible actions on the part of many individuals
and institutions over the past several
years. And on top of all of that our
government let us down! It did so by
allowing abuses and excesses to proliferate
in the form of subprime loans, which
subsequently were packaged as securities
and sold around the world, only to
ultimately default, resulting in never
before seen losses. Government, unfortunately,
failed to put a stop to these abuses
and excesses as they were happening, and
when it finally did, it mismanaged the
remedies, which only exacerbated the
problems. Now, when I say government,
I mean the Executive Branch, Congress,
Regulators and Agencies.
How did that impact Dime?
First, let me stress that Dime did not
originate any subprime loans, nor did we
invest in any securities that were backed
by subprime loans. We did, however,
invest in Fannie Mae and Freddie Mac
preferred stock. Those stocks have been
a part of many community bank stock
portfolios for years, understandably so because banks have enjoyed a long
relationship with Fannie and Freddie by
originating mortgages for resale to them.
Like most other investors, banks purchased
those stocks with the understanding that
they were both Government Sponsored
Enterprises that, although they were not
backed with the explicit full faith and
credit of the government, it was implied
that the government would back them in
the event of a default. We all know now
that did not happen. Instead, the government
put them into receivership resulting
in direct losses to anyone who owned the
common or preferred securities. As a
consequence, like many other banks
throughout the country, we had to write
them down which contributed significantly
to our losses.
We also all know, that when Fannie and
Freddie were taken over by the government,
it was the beginning of a cascade of
additional failures or takeovers such as
Lehman, Washington Mutual, Merrill
Lynch and so on. Not that the government
was responsible for those failures,
too. Not at all, those companies jumped on the bandwagon and got too greedy
and paid a dear price for it. Unfortunately,
anyone who had invested in those companies,
long before they knew about the toxic
assets they had on their books, had to
take losses on them too.
While all of this was happening in the
securities market, we also experienced
some softening in the local real estate
market, which resulted in the bank
having to set aside several million dollars
into the loan loss reserve for current and
potential future losses. Although this was
an unexpected charge, we are pleased that
we had the earnings to fund the loan loss
provision and are confident that, between
earnings and reserves, we will be able to
absorb any losses we might take in 2009.
All of these events cumulatively resulted
in a net loss of $2.5 million for the year.
As difficult as that loss is for us to swallow,
we recognize that it is a one-time event.
We are thankful that we had the earnings
and capital to offset it and still remain a
very well capitalized institution.
In accepting these losses, we are also
comforted by the fact that they were
offset by our net interest income of $21.5 million which was at record levels.
And we are encouraged by the fact that
core earnings will put us on the road to
recovery in 2009.
Dime, over its soon to be 140-year-history,
has had to manage through many financial,
national and world crises. We’ve survived
through two World Wars, the Great
Depression, numerous recessions and
banking failures in the1980s and 1990s.
We’ve been able to do that because of our
prudent and careful management, which
has generated record earnings for us over
the past twenty years. Those accumulated
earnings have been the source of our capital
strength which allowed us to absorb
this year’s losses yet still left Dime a very
strongly capitalized institution.
Moreover, as important as earnings are to
Dime, they do not tell the whole story for
the year. We are pleased to report that
deposits grew at a very healthy 7.76% in
2008, increasing by over $32 million.
Much of that growth took place in our
checking accounts and certificates of
deposits as consumers and businesses
sought to return to a local bank that they
knew was a safe haven away from the
creations of Wall Street.
Loan originations were also very strong
for the year with over $177 million originated.
We were most pleased to see that
both our consumer/residential and commercial
portfolios grew 6% and 11% respectively. And even more so, in light of
all the negative news that banks were
bombarded with by the press throughout
the year about the lack of loan
originations.
Another initiative we undertook this year,
which we are most proud of, was the
introduction of Dime Trust Services. We
had identified Trust Services as a community
need several years ago and had been
working on the most advantageous
structure to offer them through. We are
very pleased with the reception they have
received from area professionals in related
trust businesses, such as accountants and
attorneys, as well as people in general
who find the Dime team knowledgeable,
welcoming, reassuring and comforting
advisors and associates.
As we turn the page on 2008 and plan
for 2009 and beyond, we are convinced
Dime is positioned to be a strong earning
institution once again. We look forward
to the challenges we will face with a spirit
of confidence, excitement and optimism.
We assure you that you still will be able
to “Depend on the Dime” for a long time
to come.
I would like to thank everyone at Dime
for all of his or her hard work, understanding
and support throughout this
difficult year.
I would also like to thank you, our
customers, for your loyalty and support,
and the faith you have placed with us.
We truly appreciate it and assure you we
will continue to do everything in our
power to earn it.
Jim Cronin,
President, Dime Bank
jcronin@dime-bank.com
Download a PDF of the 2008 Annual Report
