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Page
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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1
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FINANCIAL
STATEMENTS AS OF DECEMBER 31, 2007 AND 2006 AND
FOR THE YEAR ENDED DECEMBER 31, 2007:
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Statements of Net Assets Available for Plan Benefits
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2
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Statement
of Changes in Net Assets Available for Plan Benefits
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3
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Notes
to Financial Statements
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4-9
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SUPPLEMENTAL
SCHEDULES:
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Form 5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held At End
of Year) as
of December 31, 2007
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10
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Form 5500, Schedule H, Part IV, Line 4j - Schedule of Reportable
Transactions:
Series of Transactions from Same Issue Exceeding 5% of Assets Year
Ended
December 31, 2007
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11
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SIGNATURES
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12
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2007
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2006
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INVESTMENTS,
AT FAIR VALUE:
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Fixed
Income Funds:
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|||
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PIMCO
Total Return Administrative Fund
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$1,607,280
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$1,287,973
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Total
fixed income funds
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1,607,280
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1,287,973
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Equity
Funds:
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Janus
Adviser Large Cap Growth Fund
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169,008
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-
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Alger
Mid Cap Growth Retirement Portfolio Fund
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1,263,030
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1,031,824
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RSI
Retirement Trust International Equity Fund
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1,076,945
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846,034
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American
Century Ultra Fund
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-
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158,491
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SSGA
S&P 500 Index Fund
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1,869,758
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1,919,497
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Neuberger
Berman Genesis Fund Trust
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2,627,407
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2,091,645
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RSI
Retirement Trust Value Equity Fund
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1,212,368
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1,479,132
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Total
equity funds
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8,218,516
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7,526,623
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Asset
Allocation funds:
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Sunrise
Balanced Equity Fund
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106,784
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-
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Sunrise
Balanced Fund
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524,033
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-
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Sunrise
Diversified Income Fund
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126,998
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-
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RS
Group Trust Co. Aggressive Asset Allocation
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-
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105,736
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RS
Group Trust Co. Conservative Asset Allocation
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-
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115,066
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RS
Group Trust Co. Moderate Asset Allocation
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-
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428,035
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Total
asset allocation funds
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757,815
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648,837
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Stable Value
Funds:
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RS
Group Trust Co. Stable Value Fund (which includes guaranteed insurance
contracts
or synthetic
guaranteed insurance contracts totaling $2,130,578 at
December 31, 2006)
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-
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5,983,227
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SEI
Stable Asset Fund (which includes guaranteed insurance contracts
or
synthetic guaranteed insurance contracts
totaling $6,406,572 at
December 31, 2007)
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6,459,246
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-
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Total
stable value funds
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6,459,246
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5,983,227
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Dime
Community Bancshares, Inc. Common Stock Fund
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7,764,266
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7,764,240
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Participant
Loans
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443,011
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463,377
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TOTAL
INVESTMENTS AT FAIR VALUE
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25,250,134
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23,674,277
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DUE
FROM THE EMPLOYEE STOCK OWNERSHIP PLAN OF DIME
COMMUNITY
BANCSHARES, INC. AND CERTAIN AFFILIATES ("ESOP")
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455,038
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410,040
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CASH
BALANCE
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1,824
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15,717
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TOTAL
ASSETS
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25,706,996
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24,100,034
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS, AT FAIR VALUE
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25,706,996
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24,100,034
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Adjustment
from fair value to contract value for fully benefit responsive
insurance contracts
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166,580
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55,417
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS
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$25,873,576
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$24,155,451
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2007
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ADDITIONS:
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Investment
income (loss):
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Net
appreciation (depreciation) in fair value of investments:
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Fixed
income funds
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$140,873
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Equity
funds
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1,036,880
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Asset
allocation and stable value funds
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293,904
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Employer
stock fund
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(637,774)
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Total
net appreciation in fair value of investments
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833,883
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Interest
and dividend income
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338,842
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Investment
income, net
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1,172,725
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Participant
contributions
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1,516,399
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Net
change in contributions receivable from the Employee
Stock Ownership Plan
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44,998
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Total
additions
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2,734,122
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DEDUCTIONS:
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Benefits
paid to participants
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992,165
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Administrative
expenses
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23,832
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Total
deductions
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1,015,997
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INCREASE
IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
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1,718,125
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS:
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Beginning
of year
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24,155,451
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End
of year
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$25,873,576
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a.
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General - The Plan is a
defined contribution plan covering all eligible employees. The Employee
Benefits Committee, comprised of members of both the Board of Directors
and management of the Dime Savings Bank of Williamsburgh (the "Bank"),
oversees the operation and administration of the Plan. It
is subject to the provisions of the Employee Retirement Security Act of
1974, as amended (“ERISA”).
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b.
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Eligibility
and Participation - Participation in the Plan is
voluntary. An employee shall become an eligible employee if he
or she has completed a period of service of at least one year, and is a
salaried employee. An employee is not an eligible employee if
he or she is compensated principally on an hourly, daily, commission, or
retainer basis, or has waived any claim to membership in the
Plan.
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| c. | Contributions - Employee contributions of up to 25% of compensation, as defined in the Plan document, are permitted. There are currently no direct contributions to the Plan either made or required to be made by Dime Community Bancshares, Inc. (the “Company”) or the Bank. |
| Effective July 1, 2000, the Company or the Bank makes a required 100% vested cash contribution to participants in the Employee Stock Ownership Plan of Dime Community Bancshares, Inc. and Affiliates (the “ESOP”) in the amount of 3% of total W-2 compensation (including amounts deducted from W-2 compensation for pre-tax benefits such as health insurance premiums and contributions to the Plan). This contribution was guaranteed through December 31, 2006, and was automatically transferred to the Plan, regardless of whether or not the individual otherwise participates in the Plan. Upon transfer of funds to the Plan, the participant had the ability to invest this contribution in any of the investment options currently offered under the Plan. This annual employer contribution is made in the first quarter of each year based upon the total compensation through December 31st of the previous year. In March 2007, a contribution of $410,040 was made to eligible participants based upon compensation for the period January 1, 2006 through December 31, 2006. During the year ended December 31, 2007, contributions from the Company or Bank were voluntary. In March 2008, the Bank made a contribution of $455,038 to eligible participants based upon compensation for the period January 1, 2007 through December 31, 2007. |
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d.
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Participant
Accounts –Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the
participant's contribution, the Company's contribution and Plan earnings,
and charged with withdrawals and an allocation of Plan losses and
administrative expenses. Allocations are based upon participant
earnings or account balances, as defined. The benefit to which
a participant is entitled is the benefit that can be provided from the
participant's vested account.
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e.
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Vesting
- All participants are 100% vested in the value of the annual 3% employer
contribution to the Plan and any investment income that these funds may
earn. Participant contributions and earnings thereon are
nonforfeitable.
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f.
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Investment
Options - Participants direct the investment of both their existing
individual account balances and their contribution amounts into various
options offered by the Plan. As of December 31, 2007, there
were sixteen investment options available in the Plan, which included one
fixed income fund, six equity funds, seven asset allocation funds, one
employer stock fund and one capital preservation fund. As of December 31,
2006, there were twelve investment options available in the Plan, which
included one fixed income fund, six equity funds, three asset allocation
funds, one employer stock fund and one capital preservation fund. At both
December 31, 2007 and 2006, the respective capital preservation funds were
"Stable Value Funds," which invested in various investments including
fully benefit responsive guaranteed investment contracts issued by
insurance companies, bank investment contracts, and cash and cash
equivalents.
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| All investment options are participant directed. Retirements Systems Group Inc. (“RSI”) ("Trustee") acts as trustee for all investments in the Plan. | |
| Transfers between investment alternatives and rollover contributions to the Plan are placed in any of the above funds in multiples of 1%, at the election of the participant | |
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g.
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Withdrawal of Funds - On termination of service, a participant may elect to receive either a lump-sum amount equal to the vested balance of his or her account, or annual installments limited to a ten-year period. |
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h.
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Loans to Participants - Loans are permitted, subject to current IRS statutes and regulations. Participants may borrow up to 50% of their vested account balance up to a maximum of $50,000. Prior to June 11, 1998, participants were permitted no more than one outstanding loan at any time. The Plan was amended, effective June 11, 1998, whereby participants are now permitted a maximum of two outstanding loans at any time. Interest charged is fixed for the entire term of the loan and is based upon the prime rate as published in the Wall Street Journal on the date the loan is requested, increased by 1% and rounded to the nearest 1/4 of 1%. The maximum loan term for the purchase of a principal residence may not exceed ten years and loans for any other reason may not exceed five years. The loans are secured by the balances in the participant’s account. Loan repayments are made by automatic payroll deduction. |
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i. |
Payment of Benefits – On termination of services due to death, disability, or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant's vested balance in his or her account, or annual installments over a ten-year period. For termination of service for other reasons, a participant may receive the value of the vested interest in his or her account as a lump-sum distribution or annual installments limited to a ten-year period. |
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j.
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Forfeitures - If a participant is not fully vested in previous contributions made by the Company or Bank and terminates his or her employment, the units representing the nonvested portion of his or her account shall constitute forfeitures. Forfeitures are allocated to participants, on a pro rata basis, based upon their before-tax contribution accounts. There were no forfeitures during the years ended December 31, 2007 and 2006. |
| k. | Plan Termination - Although the Company or Bank has not expressed any intent to terminate the Plan, it has the right to terminate the Plan subject to the provisions of ERISA. In the event of termination, all participants would become 100% vested in their individual account balances (including the Bank’s contributions) at the termination date. |
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2.
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SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
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a. |
Basis of Accounting - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. |
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b.
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Use of
Estimates - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires Plan management to make estimates and
assumptions that affect the reported amounts of net assets available for
plan benefits as well as the reported amounts of changes in net assets
available for plan benefits. Actual results could differ from
those estimates.
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c.
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Risks and
Uncertainties - The Plan provides for various investment
options. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the value
of investment securities will occur in the near term and that such changes
could materially affect participants’ account balances and the amounts
reported in the financial
statements.
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d. |
Investment Valuation and Income Recognition – The Plan's investments are stated at fair value. The Fixed Income and Equity funds are comprised of funds maintained by registered investment companies, all of which are traded on national securities exchanges and carried at fair value based on their quoted market prices at the end of the year. The common stock of the Company is carried at fair value based upon the quoted market price at the end of the year. The Plan's Asset Allocation and Stable Value funds are carried at fair value based on the Plan’s proportionate share of units of beneficial interest in the respective funds. |
| The Stable Value Funds shown in the statements of net assets available for plan benefits are carried at fair value by the Plan trustee. In accordance with accounting rules discussed in Note 2(e) below an adjustment is made on the statement of net assets to present the contract value of these fund assets. | |
| Participant loans are carried at the principal amount of the loans outstanding, which approximates fair value. | |
| Net investment income consists of gains and losses realized from the sales of investments, the net change in the unrealized appreciation or depreciation on investments, and interest and dividends earned. | |
| Purchases and sales are accounted for on a trade-date basis. Interest income is recorded on the accrual basis and dividend income is recorded on the ex-dividend date. Realized gains and losses from securities transactions are recorded on the average cost basis. | |
| Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments. |
| e. | Valuation and Presentation of Stable Value Funds – At December 31, 2007 and 2006, the Plan's Stable Value Funds held investments in fully benefit responsive guaranteed investment contracts ("GICS") and synthetic GICS. The fair value of the GICS is calculated by discounting the related cash flows based on the current yields of similar instruments with comparable durations. The fair value of the synthetic GICs equals the total of the fair value of the underlying assets plus the total wrap rebid value, which is calculated by discounting the annual rebid fee, due to rebid, over the duration of the contract assets. Withdrawals from these contracts may be made at contract value for qualified benefit plans. The contract value represents invested principal plus contractual interest earned. |
| During the year ended December 31, 2006, the Plan adopted FSP AAG INV−1 and SOP 94−4−1, “Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans” ("FSP AAG"). FSP AAG recognizes contract value is the most relevant measurement attribute for fully benefit-responsive investment contracts in determining the net assets available for benefits of a defined-contribution plan, since contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. However, under FSP AAG, investment contracts held by a defined-contribution plan are required to be reported at fair value on the statement of net assets. FSP AAG requires that the Statement of Net Assets Available for Benefits present an adjustment between the fair value and contract value of fully benefit-responsive investment contracts. The statement of changes in net assets available for plan assets is presented on a contract value basis and is not affected by FSP AAG. |
| f. | Administrative Expenses - The Bank will pay the ordinary expenses of the Plan and compensation of the Trustees to the extent required, except that any expenses directly related to the Plan, such as transfer taxes, brokers’ commissions, registration charges, or administrative expenses of the Trustee, shall be paid from the Plan or from such investment account to which such expenses directly relate. The Bank may charge employees all or part of the reasonable expenses associated with withdrawals and other distributions, loans or account transfers. |
| g. | Recent Accounting Pronouncements – In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"), which defined fair value, established a framework for measuring fair value under generally accepted accounting principles, and expanded disclosures about fair value measurements. Other current accounting pronouncements that require or permit fair value measurements will require application of SFAS 157. SFAS 157 does not require any new fair value measurements, however, changes the definition of, and methods used to measure, fair value. SFAS 157 emphasizes fair value as a market-based, not entity-specific, measurement. Under SFAS 157, a fair value measurement should be based on the assumptions that market participants would use in pricing the asset or liability. SFAS 157 further establishes a fair value hierarchy that distinguishes between (i) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs), and (ii) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. SFAS 157 also expands disclosures about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. SFAS 157 applies to reporting periods beginning after November 15, 2007. The Plan is currently evaluating the statement's impact upon the financial statements. |
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4.
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INVESTMENTS
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Value
at December 31,
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2007
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2006
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PIMCO
Total Return Administrative Fund
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$1,607,280
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$1,287,973
|
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SSGA
S&P 500 Index Fund
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1,869,758
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1,919,497
|
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Neuberger
Berman Genesis Fund Trust
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2,627,407
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2,091,645
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RS
Group Trust Co. Stable Value Fund *
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-
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5,983,227
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|||
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SEI
Stable Asset Fund *
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6,459,246
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-
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RSI
Retirement Trust Value Equity Fund
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1,212,368**
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1,479,132
|
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Dime
Community Bancshares, Inc. Common Stock Fund
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7,764,266
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7,764,240
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PIMCO
Total Return Administrative Fund
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$140,873
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Sunrise
Balanced Equity Fund
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(1,494)
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Sunrise
Balanced Fund
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(4,863)
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Sunrise
Diversified Income Fund
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(712)
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RS
Group Trust Co. Conservative Asset Allocation
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5,084
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RS
Group Trust Co. Moderate Asset Allocation
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19,109
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RS
Group Trust Co. Aggressive Asset Allocation
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4,527
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RS
Group Trust Co. Stable Value Fund
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252,300
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SEI
Stable Asset Fund
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19,953
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RSI
Retirement Trust Value Equity Fund
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(37,609)
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SSGA
S&P 500 Index Fund
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85,066
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American
Century Ultra Fund
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34,682
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Janus
Advisor Large Cap Growth Fund
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9,100
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RSI
Retirement Trust International Equ ity Fund
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141,123
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Alger
Mid Cap Growth Retirement Portfolio Fund
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336,616
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Neuberger
Berman Genesis Fund Trust
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467,902
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Dime
Community Bancshares, Inc. Common Stock Fund
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(637,774)
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$
833,883
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(a)
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(b)
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(c)
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(d)
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(e)
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||||
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Party
In
|
Current
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|||||||
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Interest
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Identity
of Issuer
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Description
of Investments
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Cost
|
Value
|
||||
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REGISTERED
INVESTMENT COMPANIES:
|
||||||||
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*
|
RSI
Retirement Trust
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Value
Equity Fund
|
**
|
$1,212,368
|
||||
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*
|
RSI
Retirement Trust
|
International
Equity Fund
|
**
|
1,076,945
|
||||
|
Alger
|
Mid
Cap Growth Retirement
Portfolio
Fund
|
**
|
1,263,030
|
|||||
|
PIMCO
|
Total
Return Administrative Fund
|
**
|
1,607,280
|
|||||
|
Janus
Advisers
|
Large
Cap Growth Fund
|
**
|
169,008
|
|||||
|
SSGA
|
S&P
500 Index Fund
|
**
|
1,869,758
|
|||||
|
Neuberger
Berman
|
Genesis
Fund Trust
|
**
|
2,627,407
|
|||||
|
Total
Registered Investment Companies
|
9,825,796
|
|||||||
|
COMMON/
COLLECTIVE TRUSTS:
|
||||||||
|
*
|
Fiserv
Trust Company
|
Sunrise
Balanced Equity Fund
|
**
|
106,784
|
||||
|
*
|
Fiserv
Trust Company
|
Sunrise
Balanced Fund
|
**
|
524,033
|
||||
|
*
|
Fiserv
Trust Company
|
Sunrise
Diversified Income Fund
|
**
|
126,998
|
||||
|
SEI
Trust Co.
|
Stable
Asset Fund
|
**
|
6,625,826
|
|||||
|
Total
Common/ Collective Trusts
|
7,383,641
|
|||||||
|
EMPLOYER
SECURITIES
|
||||||||
|
*
|
Dime
Community Bancshares, Inc.
|
Common
Stock Fund
|
**
|
7,764,266
|
||||
|
PARTICIPANT
LOANS
|
||||||||
|
*
|
Employee
Loans Receivable
(144
loans with interest rates ranging from 5.00% to 10.50%)
|
**
|
443,011
|
|||||
|
TOTAL
|
$25,416,714
|
|||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(g)
|
(h)
|
(i)
|
||||||
|
Current
Value
|
||||||||||||
|
Description
of asset
|
of
Asset on
|
|||||||||||
|
Identity
of
|
(include
interest rate and
|
Purchase
|
Selling
|
Cost
of
|
Transaction
|
Net
gain
|
||||||
|
Party
Involved
|
Maturity in case of a
loan)
|
Price
|
Price
|
Asset
|
Date
|
or
(loss)
|
||||||
|
RSI
Retirement Trust
|
Stable
Value Fund
|
$5,858,697
|
$6,595,854
|
$5,858,697
|
$6,595,854
|
$737,157
|
||||||
|
SEI
Trust Co.
|
Stable
Asset Fund
|
$6,595,854
|
$6,595,854
|
$6,595,854
|
-
|