Dimeco : 2Q22

INVESTOR INFORMATION

Stock Listing - DIMC

Stock Listing - DIMC

Transfer Agent

American Stock Transfer & Trust Company, LLC 6201 15th Avenue

Brooklyn, NY 11219 800-937-5449

e-mail: [e-mail]

Internet address: www.astfinancial.com

Dividend Reinvestment Plan

The Company offers a plan for stockholders to

automatically reinvest their dividends in shares of common stock along with the opportunity to

purchase additional stock. There are no brokerage commissions or fees imposed. For more

information, contact the Transfer Agent listed

above.

Dimeco, Inc. Stock Market Makers

Boenning & Scattergood, Inc. 800-842-8928

Janney Montgomery Scott, LLC 404-601-7225

Raymond James & Associates 800-800-4693

Stifel, Nicolaus & Company, Inc. 800-233-8602

Directors

John S. Kiesendahl, Chairman

Todd J. Stephens, Vice Chairman

Peter Bochnovich, President

John F. Spall, Secretary

Gary C. Beilman

Gregory J. Frigoletto

Barbara J. Genzlinger

Brian T. Kelly

Thomas A. Peifer

David D. Reynolds, M.D.

Henry M. Skier

e-mail: [e-mail] www.thedimebank.com

888-4MY-DIME

TWENTY

TWENTY-TWO

SECOND

QUARTER

12/28/20 - layout time - 2 hours

	CONSOLIDATED FINANCIAL HIGHLIGHTS	(unaudited)
										% Increase
	(dollars in thousands, except per share)		2020			2019		% In
	Perform nc	for t	e three months ended March 31,					(decrease)
(dollars in thous nds,	xcept per s	are)		2022			2021		(decrease)
Performance for the six months ended June 30,
	Interest income		$	18,313		$	17,422		5.1%
	Interest expense		$	1,178		$	1,984		(40.6%)
	Net interest income	$	17,135		$	15,438		11.0%
	Net income			$	6,136		$	5,440		12.8%
Shareholders' Value (per share)
	Net income - basic		$	2.42		$	2.16		12.0%
	Net income - diluted	$	2.41		$	2.15		12.1%
	Dividends			$	.72		$	.68		5.9%
	Book value			$	34.43		$	38.84		(11.4%)
	Market value		$	44.05		$	36.00		22.4%
	Market value/book value ratio		127.9%		92.7%	38.0%
	*Price/earnings multiple		9.1X		8.3X	9.6%
	*Dividend yield			3.27%		3.78%	(13.5%)
Financial Ratios
	*Return on average assets		1.27%		1.16%	9.5%
	*Return on average equity		12.86%		11.21%	14.7%
	Efficiency ratio			60.82%		60.72%	.2%
	Net interest margin			3.93%		3.62%	8.6%
	Shareholders' equity/asset ratio		9.00%		9.97%	(9.7%)
	Dividend payout ratio		29.75%		31.48%	(5.5%)
	Nonperforming assets/total assets		.58%		1.68%	(65.5%)
	Allowance for loan losses as a % of loans		1.80%		1.66%	8.4%
	Net charge-offs/average loans		-			.04%	(100.0%)
	Allowance for loan losses/nonaccrual loans		226.69%		71.09%	218.9%
	Allowance for loan losses/nonperforming loans		217.84%		68.19%	219.5%
Financial Position at June 30,
	Assets			$	974,267		$	986,984		(1.3%)
	Loans			$	652,442		$	667,400		(2.2%)
	Deposits			$	854,114		$	802,724		6.4%
	Stockholders' equity	$	87,714		$	98,382		(10.8%)

*annualized

Dear Shareholders:

The first half of the year is behind us and I am pleased to present the financial results of your Company. There are many positive outcomes outlined below, but as 2022 progresses, there is still the same uncertainty surrounding the economy as there was earlier in the year. Inflation continues at a record pace and as the Federal Reserve tries to combat it by raising interest rates, the fear of a possible recession weighs on all our minds. Geopolitical events continue to impact the world economy and there seems to be no end in sight, but we will continue to do what we do best by providing exceptional customer service, making prudent banking decisions and remaining true to our mission and strategic goals.

Total assets of $974 million was a decrease of $12.7 million or 1.3% over last year. Cash balances decreased by $33.4 million or 45.9% as excess funds were deployed into the loan or investment portfolio to increase interest income or to paydown long-term borrowings. Investment securities of $224 million grew $24.4 million or 12.2% over last year. Loan balances at June 30, 2022 were $652 million or $15 million less than a year earlier. As expected, commercial loans decreased due to the SBA Paycheck Protection Program (PPP) loan forgiveness. Balances of these PPP loans decreased by over $81 million from last year with approximately $7.4 million remaining. Total mortgage loans showed the greatest increase with balances growing approximately $70 million over last year including both residential and commercial real estate categories.

Deposit balances ended the quarter at $854 million, an increase of $51.4 million or 6.4% over the previous year. Continuing the trend since the start of the pandemic, all deposit types except for Certificates of Deposit experienced growth. Management still believes there will be some runoff as inflation remains elevated, coupled with interest rates rising 150 basis points in 2022 with more anticipated.

Borrowings from the Federal Home Loan Bank of Pittsburgh (FHLB) decreased by $54.2 million or 72.3%. Prepayments on long-term borrowings accounted for $26.2 million of this decrease while the rest was due to maturities and regularly scheduled payments. Most of the remaining borrowings were used to match fund loans to alleviate interest rate risk for the bank.

Stockholders' equity decreased $10.7 million from June 30, 2021, to $87.7 million. This decrease stems from an $18.8

million increase in the accumulated other comprehensive loss, offset by an increase in retained earnings from net income. The accumulated other comprehensive loss is the result of the mark to market value of the securities portfolio in the current rising rate environment. Dimeco, Inc.'s capital remains well above the regulatory minimum requirements to be considered well capitalized.

Net income for the first six months was $6.1 million, $696 thousand or 12.8% higher than the previous year. Interest income increased $891 thousand or 5.1% due to loan and investment interest income. Interest expense declined $806 thousand or 40.6% mainly because of the prepayment of FHLB borrowings. Non-interest income declined by $140 thousand or 4.5% because of less sales of mortgages in the secondary market with brokerage commissions offsetting this decrease. Non-interest expense grew by $966 thousand or 8.5%. Payroll and furniture and equipment showed the greatest increase as we relocated our Greentown branch and are expanding our physical presence with two new branches. Provision expense for the second quarter decreased by $450 thousand or 64.3% over this time last year. Tax expense increased by $345 thousand due to higher income. This resulted in an annualized return on average assets of 1.27% and return on average equity of 12.86%.

As mentioned in previous letters, we are very excited about the upcoming opening of our branch at the Marketplace at Steamtown, and our new micro branch located at 1055 Texas Palmyra Highway in the same location as our new support center. Work is progressing and I would personally like to thank everyone for their dedicated efforts and hard work to get these facilities in place. We are eager to open our doors and welcome in existing and new customers. Look for more updates in future letters.

As always, we would like to thank you for your continued support and commitment to your Company. Please take any opportunity to refer family and friends to Dimeco. I welcome your questions or comments.

Peter Bochnovich

President and Chief Executive Officer

	CONSOLIDATED BALANCE SHEET					(unaudited)
	(iin thousands)			March 31,		March 31,			June 30,			March 31,			Dec. 31,
Assets							6/30/2022						3/31/2022			6/30/2021
Cash and cash equivalents						$	39,435					$			39,846			$	72,865
Mortgage loans held for sale											285								-					-
Investment securities available for sale									224,112						221,511					199,675
Loans, net of allowance for loan losses									640,679						632,976					656,317
Premises and equipment									18,605								16,361					13,535
Accrued interest receivable											2,703								2,830					2,836
Other real estate owned											224								224					333
Other assets									48,224								46,933					41,423
TOTAL ASSETS						$	974,267					$	960,681			$	986,984
Liabilities
Deposits:						$	220,171
	Noninterest-bearing										$	197,883			$	200,929
	Interest-bearing									633,943						621,673					601,795
	Total deposits									854,114						819,556					802,724
Short-term borrowings											2,500								2,500					17,500
Other borrowed funds									18,225								34,045					57,380
Accrued interest payable											54								122					133
Other liabilities									11,660								10,959					10,865
TOTAL LIABILITIES									886,553						867,182					888,602
TOTAL STOCKHOLDERS' EQUITY									87,714								93,499					98,382
TOTAL LIABILITIES AND						$	974,267
STOCKHOLDERS' EQUITY										$	960,681			$	986,984
	CONSOLIDATED STATEMENT OF INCOME		(unaudited)
	(in thousands, except per share data)			Three­months­ended											Nine­months­ended
	(in			Three months nded									Six months ended
Interest Income	6/30/2022		3/31/2022		6/30/2021		6/30/2022		6/30/2021
Loans, including fees	$	7,704		$	8,040		$	7,757		$	15,744		$	15,398
Investment securities			1,284			1,109				953				2,393				1,890
Other			115			61				67				176				134
	Total interest income			9,103			9,210				8,777				18,313				17,422
Interest Expense			428																848
Deposits					420				458							950
Short-term borrowings			3			4				14				7				31
Other borrowed funds			119			204				670				323				1,003
	Total interest expense			550			628				1,142				1,178				1,984
Net Interest Income			8,553			8,582				7,635				17,135				15,438
Provision for loan losses			115			135				400				250				700
Net Interest Income, After
Provision for Loan Losses			8,438			8,447				7,235				16,885				14,738
Noninterest income			1,567			1,400				1,791				2,967				3,107
Noninterest expense			6,365			6,031				5,679				12,396				11,430
Income before income taxes			3,640			3,816				3,347					7,456				6,415
Income taxes			695			625				535				1,320				975
NET INCOME		$	2,945		$	3,191			$	2,812		$	6,136		$	5,440
Earnings per share-basic	$	1.16		$	1.26		$	1.12		$	2.42		$	2.16
Earnings per share-diluted	$	1.15		$	1.26		$	1.11		$	2.41		$	2.15
Average shares outstanding-basic			2,537,955			2,536,719				2,518,241				2,537,519				2,514,676
Average shares outstanding-diluted			2,544,346			2,542,209				2,529,478				2,543,324				2,526,192