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Annual Report 2008

President's Message | Board of Directors & Officers | 2008 Financial Report | 2008 Annual Report

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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