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BABY DIME’S SHARE PRICE SOARS AS INVESTORS BET ON ACQUISITION: EARNINGS LAG MARKET PERFORMANCE.(Dime Savings Bank) go to website dime savings bank

Crain’s New York Business June 22, 1998 | Isidore, Chris Dime Savings Bank of Williamsburgh should be loved by its shareholders.

But many of them would prefer that it just disappear.

Its stock has almost tripled in value since its conversion from a mutual to a stock company two years ago this week. In part, that’s because some investors believe that it has been more adept than its rivals in using the capital from its IPO. But part of the gain is also in expectation that the thrift will be acquired.

“We can’t control how the market views us as an acquisition candidate,” says Kenneth Mahon, chief financial officer of the $1.5 billion thrift. “But we think we’ve shown we’re a good asset generator and that there’s still room for growth.” Its holding company’s name is Dime Community Bancshares Inc. Its nickname is Baby Dime, to distinguish it from Dime Savings Bank of New York, the city’s largest thrift.

Baby Dime is an energetic child, which says it is not for sale and is looking for acquisitions of its own. It completed the purchase of Conestoga Bancorp, a Long Island thrift, the same day it converted to stock. That reduced the overcapitalization that hurts many new stocks’ performance. go to web site dime savings bank

It raised its dividends in each of the last four quarters, and now pays 9 cents a quarter, or 36 cents a year. Its stock repurchase program has reduced outstanding shares by almost 20%, about twice as fast as other recently converted thrifts.

“We like Baby Dime,” says Thomas Kahn, president of Kahn Brothers & Co., an asset manager that is its ninth-largest shareholder. “They have a strategy to use the proceeds of their conversion, and they’re not done with that strategy yet.” Not everyone is buying its strategy. Janus Capital Corp., formerly its largest shareholder, sold most of its nearly 900,000 shares earlier this year. Its officials won’t comment on the reason for the sale.

Its business results have been far more modest than its stock results. Net income of $3.3 million in the most recent quarter was 5% less than a year earlier, despite a 3% growth in net interest income to $12.5 million.

The thrift’s emphasis on multifamily loans yields better results than traditional home mortgages, but that business has seen more competitive pricing since early 1997.

While Baby Dime’s strong stock price puts it in good position for an acquisition, other potential targets are also trading at high multiples, making any deal expensive. Even some of its fans wonder if it can ever grow enough to stay independent.

“I think in the near term the company is looking to buy,” says Salvatore J. DiMartino, an analyst at Advest Inc. “But longer term, three to five years out, I think most of the midtier thrifts here are going to end up being taken over.” Dime Community Bancshares Inc.

Brooklyn FRIDAY CLOSE: $28.50 52-week high: $29.31 52-week low: $18.56 1998 earnings per share:* $1.05 1997 earnings per share:* $0.95 Shares: 12,440,000 Institution ownership: 43% Fiscal year ends June 30. *Analysts’ estimates.

Isidore, Chris