Quarterly Financial Highlights

Third Quarter 2021

 
Dear Shareholders:

I am pleased to report the financial results as of September 30, 2021. Overall, there are many positive outcomes from this quarter including continued growth and profitability. Despite the ongoing challenges of this pandemic, our employees remain determined to provide the best possible service and results.

Total assets of $969 million increased $95 million or 10.8% over last year. Cash balances grew by $20 million as a result of forgiveness on our customers’ Payroll Protection Program (PPP) loans. The injection of cash through government stimulus programs along with the related forgiveness also impacted our loan growth as the net increase year over year was $6 million or.9%. Mortgage loans showed the greatest gains while other categories remained flat or slightly receded. There is still healthy loan demand, but some businesses are using their excess liquidity to pay down loans or for reinvestment. Investment securities of $206 million were $63 million or 44.0% greater than last year. As mentioned in my previous letters, when there is excess cash, we deploy those funds into our investment portfolio to purchase bonds that meet our guidelines.
 
Deposits of $801 million are $127 million or 18.8% greater than the same quarter last year. Both noninterest bearing and interest-bearing deposits continue to surge except for certificate of deposits (CDs) which decreased year over year. In addition, certain public depositors receive tax dollars this time of year that will get bid out for placement into CDs for their financial requirements. Short term borrowings decreased almost $21 million as there was no need to renew these borrowings when they became due. Other borrowed funds also decreased by $20 million, as we used some of our excess liquidity to pay off these borrowings to position ourselves for less interest expense in future years.
 
Net income year to date of $8.9 million was $2.5 million or almost 40% higher than 2020, resulting in an annualized return on average assets of 1.25% and return on average equity of 12.06%. Fees received from PPP loans along with increased investment income, impacted interest income adding an additional $1.2 million over the prior year. As experienced since the second quarter of 2020, interest expense continues to decline resulting in an overall decrease of $1.3 million. This resulted in net interest income of $23.7 million or 11.7% greater than the same period last year. Provision for loan losses expense was $900 thousand, a decrease of $1.6 million or 64.0% over the previous year. As certain economic factors showed improvement since this time last year, we adjusted our provision as indicated by our detailed analysis. Non-interest income grew $723 thousand or 18.6% from last year. Brokerage commissions from our Wealth Management division continued to show growth, increasing $421 thousand or 40.4%, and gains from sales of certain investment securities added $175 thousand. Finally, debit card fees increased $272 thousand or 28.2% as more customers are using electronic means to pay for goods and services. Non-interest expense grew by almost $1.4 million or 8.7% mainly due to payroll related expenses as well as professional fees and third-party software used to assist with PPP loans. Additionally, FDIC insurance expense increased almost $180 thousand as previous years’ credits expired and overall deposits continue to climb.
 
As we enter the last quarter of 2021, management continues to look at ways to position your Company for future growth and success. Margin compression is a concern and will remain so for the near future. We are continuously adjusting our strategic plan to help us lessen that impact. Our new Greentown branch is under construction with expected completion by the first or second quarter of 2022 and our new support center will begin renovations soon. I look forward to the future with all these exciting changes and hope you do as well.
 
Dimeco, Inc. began trading on the OTCQX as of September 13, 2021, elevating itself from the OTC Pink sheets to increase exposure to a wider range of financial investors. Our goal is to provide financial information that is easily accessible and understandable to allow financial advisors, brokers, and shareholders to make informed decisions. We encourage you to refer The Dime Bank for financial services and Dimeco, Inc. for investment opportunities. As always, thank you for your continued support.

Peter Bochnovich

President and Chief Executive Officer

Consolidated Financial Highlights

(unaudited)
(dollars in thousands, except per share)
Performance for the nine months ended September 30, 2021 2020 % Increase (decrease)
Interest income
$26,397 $25,187 4.8%
Interest expense $2,690 $3,959 (32.1%)
Net interest income $23,707 $21,228 11.7%
Net income $8,884 $6,349 39.9%
Shareholders' Value (per share) 2021 2020 % Increase (decrease)
Net income - basic $3.53  $2.54 39.0%
Net income - diluted $3.51 $2.52 39.3%
Dividends $1.02 $.99 3.0%
Book value $39.62 $37.32 6.2%
Market value $36.50 $33.60 8.6%
Market value/book value ratio 92.1% 90.0% 2.3%
* Price/earnings multiple 7.8X 9.9X (21.2%)
* Dividend yield 3.73% 3.93% (5.1%)
Financial Ratios 2021 2020 % Increase (decrease)
* Return on average assets 1.25% 1.06% 17.9%
* Return on average equity 12.06% 9.33% 29.3%
Efficiency ratio 58.99% 61.25% (3.7%)
Net Interest Margin 3.65% 3.84% (4.9%)
Shareholders' equity/asset ratio 10.40% 10.68% (2.6%)
Dividend payout ratio 28.90% 38.98% (25.9%)
Nonperforming assets/total assets 1.64% 1.52% 7.9%
Allowance for loan losses as a % of loans 1.71% 1.59% 7.5%
Net charge-offs/average loans .04% .09% (55.6%)
Allowance for loan losses/nonaccrual loans
72.59% 92.51% (21.5%)
Allowance for loan losses/nonperforming loans
72.45% 89.55% (19.1%)
Financial Position at September 30, 2021 2020 % Increase (decrease)
Assets $968,893 $874,358 10.8%
Loans $659,822 $654,201 .9%
Deposits $801,140 $674,422 18.8%
Stockholder' equity $100,777 $93,347 8.0%
* annualized

Consolidated Balance Sheet

(unaudited) (in thousands)
Assets
9/30/2021 6/30/2021 3/31/2021 9/30/2020
Cash and cash equivalents
$51,748 $72,865 $27,438 $32,084
Mortgage loans held for sale
- - $505 -
Investment securities available for sale
$206,083 $199,675 $179,751 $143,136
Loans, net of allowance for loan losses
$648,554 $656,317 $672,484 $643,796
Premises and equipment $13,716 $13,535 $12,502 $12,371
Accrued interest receivable $2,955 $2,836 $2,977 $2,841
Other real estate owned $333 $333 $333 $1,573
Other assets $45,504 $41,423 $39,329 $38,557
          Total Assets $968,893 $986,984 $935,319 $874,358
Liabilities
9/30/2021 6/30/2021 3/31/2021 9/30/2020
Deposits - Noninterest-bearing $191,094 $200,929 $186,683 $155,315
Deposits - Interest-bearing $610,046 $601,795 $555,588 $519,107
           Total Deposits $801,140 $802,724 $742,271 $674,422
Short-term borrowings
$2,500 $17,500 $22,500 $23,200
Other borrowed funds $51,607 $57,380 $61,721 $71,850
Accrued interest payable $99 $133 $191 $199
Other liabilities $12,770 $10,865 $12,988 $11,340
Total Liabilities $868,116 $888,602 $839,671 $781,011
Total Stockholders' Equity $100,777 $98,382 $95,648 $93,347
Total Liabilities & Stockholders' Equity
$968,893 $986,984 $935,319 $874,358


Consolidated Statement of Income

 
(unaudited) (in thousands, except per share data) 


Three months ended


Nine months ended 
Interest Income 9/30/2021 6/30/2021 3/31/2021 9/30/2020 9/30/2021 9/30/2020
Loans, including fees $7,891 $7,757 $7,641 $7,703 $23,289 $22,325
Investment securities $1,009 $953 $937 $876 $2,899 $2,655
Other $75 $67 $67 $67 $209 $207
       Total interest income $8,975 $8,777 $8,645 $8,646 $26,397 $25,187
Interest Expense 9/30/2021 6/30/2021 3/31/2021 9/30/2020 9/30/2021 9/30/2020
Deposits $441 $458 $492 $673 $1,391 $2,817
Short-term borrowings $6 $14 $17 $11 $37 $19
Other borrowed funds $259 $670 $333 $384 $1,262 $1,123
       Total interest expense $706 $1,142 $842 $1,068 $2,690 $3,959
Net Interest Income $8,269 $7,635 $7,803 $7,578 $23,707 $21,228
Provision for loan losses $200 $400 $300 $900 $900 $2,500
Net Interest Income, After Provision for Loan Losses $8,069 $7,235 $7,503 $6,678 $22,807 $18,728
Noninterest Income $1,504 $1,791 $1,316 $1,453 $4,611 $3,888
Noninterest expense $5,520 $5,679 $5,751 $5,150 $16,950 $15,598
Income before income taxes $4,053 $3,347 $3,068 $2,981 $10,468 $7,018
Income taxes $609 $535 $440 $343 $1,584 $669
Net Income $3,444 $2,812 $2,628 $2,638 $8,884 $6,349
Earnings per share-basic $1.37 $1.12 $1.04 $1.06 $3.53 $2.54
Earnings per share-diluted $1.36 $1.11 $1.04 $1.05 $3.51 $2.52
Average shares outstanding-basic 2,519,318 2,518,241 2,516,759 2,501,066 2,519,743 2,501,904
Average shares outstanding-diluted
2,526,214 2,529,478 2,528,733 2,516,509 2,528,906 2,520,147