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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, 2006 AND 2005 AND
FOR THE YEAR ENDED DECEMBER 31, 2006:
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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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4-8
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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, 2006
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9
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SIGNATURES
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10
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2006
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2005
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INVESTMENTS,
AT FAIR VALUE:
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Fixed
Income Funds:
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PIMCO
Total Return Administrative Fund
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$1,287,973
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$1,210,500
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Total
fixed income funds
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1,287,973
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1,210,500
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Equity
Funds:
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Alger
Mid Cap Growth Retirement Portfolio Fund
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1,031,824
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837,065
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RSI
Retirement Trust International Equity Fund
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846,034
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534,297
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American
Century Ultra Fund
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158,491
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221,660
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SSGA
S&P 500 Index Fund
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1,919,497
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1,517,164
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Neuberger
Berman Genesis Fund Trust
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2,091,645
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1,794,069
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RSI
Retirement Trust Value Equity Fund
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1,479,132
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1,138,389
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Total
equity funds
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7,526,623
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6,042,644
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Asset
Allocation funds:
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RS
Group Trust Co. Aggressive Asset Allocation
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105,736
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23,984
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RS
Group Trust Co. Conservative Asset Allocation
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115,066
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38,595
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RS
Group Trust Co. Moderate Asset Allocation
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428,035
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336,768
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Total
asset allocation funds
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648,837
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399,347
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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 and
$5,001,033 at December 31, 2006 and 2005, respectively)
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5,983,227
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4,997,011
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Dime
Community Bancshares, Inc. Common Stock Fund
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Stock
Investment
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7,499,035
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8,082,047
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RS
Group Federal Prime Obligation
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265,205
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187,544
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7,764,240
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8,269,591
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Participant
Loans
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463,377
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397,122
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TOTAL
INVESTMENTS
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23,674,277
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21,316,215
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DUE
FROM THE EMPLOYEE STOCK OWNERSHIP PLAN OF DIME
COMMUNITY BANCSHARES, INC. AND
CERTAIN AFFILIATES
("ESOP")
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410,040
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397,837
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CASH
BALANCE
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15,717
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3,204
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TOTAL
ASSETS
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24,100,034
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21,717,256
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LIABILITIES:
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Payable
for fund purchases
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-
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38,656
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS, AT FAIR VALUE
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24,100,034
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21,678,600
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Adjustment
from fair value to contract value for fully benefit responsive
insurance contracts
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55,417
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40,441
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS
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$24,155,451
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$21,719,041
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ADDITIONS:
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2006
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Investment
income (loss):
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Net
appreciation (depreciation) in fair value of investments:
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Fixed
income funds
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$(10,262)
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Equity
funds
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548,950
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Asset
allocation funds
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56,315
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Employer
stock fund
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(333,436)
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Total
net appreciation in fair value of investments
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261,567
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Interest
and dividend income
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907,948
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Investment
income, net
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1,169,515
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Participant
contributions
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1,845,583
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Net
change in contributions receivable from the Employee
Stock Ownership Plan
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12,203
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Total
additions, net
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3,027,301
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DEDUCTIONS:
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Benefits
paid to participants
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568,380
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Administrative
expenses
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22,511
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Total
deductions
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590,891
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NET
INCREASE
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2,436,410
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NET
ASSETS AVAILABLE FOR PLAN BENEFITS:
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Beginning
of year
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21,719,041
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End
of year
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$24,155,451
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a.
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General -
The Plan is a defined contribution plan covering all eligible
employees. 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.
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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 Dime Savings Bank of
Williamsburgh (the “Bank”).
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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 is guaranteed
through December 31, 2006 (unless the ESOP is terminated before then)
and
will be discretionary after that date. The contribution is
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 has 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 2006, a contribution of $397,837
was made to eligible participants based upon compensation for the
period
January 1, 2005 through December 31, 2005. 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.
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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 their
account balances into various options offered by the Plan. As
of both December 31, 2005 and 2006, there were twelve investment
options
available in the Plan. Investment options include one fixed
income fund, six equity funds, three asset allocation funds, one
employer
stock fund and one capital preservation fund. The capital preservation
fund is named the RS Group Trust Co. Stable Value Fund ("Stable Value
Fund"), which invests 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.
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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.
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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 interest
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 year ended
December 31, 2006. Forfeitures totaled $3,204 during the year
ended December 31, 2005.
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k.
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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.
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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.
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Investment
Valuation and Income Recognition— The Plan’s investments are
stated at fair value. Shares of fixed income and equity funds are
valued
at quoted market prices, which represent the net asset value of shares
held by the Plan at year end. Dime Community Bancshares,
Inc. common stock is valued at quoted market prices. The stable
value fund is stated at fair value as determined by the issuer of
the fund
based on the fair market value of the underlying
investments. The underlying investments of the stable
value fund are contacts valued at fair market, which for the purposes
of
the Statement of Net Assets Available for Plan Benefits are adjusted
to
contract value. Participant loans are valued at the outstanding loan
balances.
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e.
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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..
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f.
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Recent
Accounting Pronouncements – In December 2005, the
Financial Accounting Standards Board issued Financial
Accounting Standards Board Staff Position, 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 presents an adjustment
between the fair value and contract value of fully benefit-responsive
investment contracts. In accordance with FSP AAG, prior year
balances have been reclassified to conform to the current presentation,
and the Statement of Changes in Net Assets Available for Benefits
is
prepared on a contract value basis.
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In
September 2006, the FASB issued Statement No. 157, Fair Value Measurement
("FAS 157"). This statement defines fair value, establishes a
framework for measuring fair value and expands disclosures about
fair
value measurements. FAS 157 is effective for the Plan in the
first quarter of 2008. 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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December 31, 2006
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December 31, 2005
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Units
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Current
Value
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Units
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Current
Value
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PIMCO
Total Return Administrative Fund
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124,082
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$1,287,973
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115,286
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$1,210,500
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SSGA
S&P 500 Index Fund
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82,417
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1,919,497
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73,828
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1,517,164
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Neuberger
Berman Genesis Fund Trust
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43,822
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2,091,645
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36,953
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1,794,069
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RS
Group Trust Co. Stable Value Fund (*)
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170,251
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5,983,227
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147,735
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4,997,381
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RSI
Retirement Trust Value Equity Fund
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123,056
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1,479,132
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11,197
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1,138,389
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Dime
Community Bancshares, Inc. Common Stock Fund
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535,263
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7,764,240
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553,186
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8,269,591
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PIMCO
Total Return Administrative Fund
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$(10,262)
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Alger
Mid Cap Growth Retirement Portfolio Fund
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8,024
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RSI
Retirement Trust International Equity Fund
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172,292
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American
Century Ultra Fund
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(25,296)
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SSGA
S&P 500 Index Fund
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216,922
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Neuberger
Berman Genesis Fund Trust
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(41,858)
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RSI
Retirement Trust Value Equity Fund
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218,866
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RS
Group Trust Co. Aggressive Asset Allocation
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8,089
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RS
Group Trust Co. Conservative Asset Allocation
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7,500
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RS
Group Trust Co. Moderate Asset Allocation
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40,726
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Dime
Community Bancshares, Inc. Common Stock Fund
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(333,436)
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Net
appreciation in fair value of investments
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261,567
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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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Party
In
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Interest
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Identity
of Issuer
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Description
of Investments
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Cost
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Current
Value
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REGISTERED
INVESTMENT COMPANIES:
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*
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RSI
Retirement Trust
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Value
Equity Fund
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**
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$1,479,132
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*
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RSI
Retirement Trust
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International
Equity Fund
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**
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846,034
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Alger
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Mid
Cap Growth Retirement Portfolio Fund
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**
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1,031,824
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PIMCO
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Total
Return Administrative Fund
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**
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1,287,973
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|||||
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American
Century
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Ultra
Fund
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**
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158,491
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SSGA
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S&P
500 Index Fund
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**
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1,919,497
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Neuberger
Berman
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Genesis
Fund Trust
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**
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2,091,645
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Total
Registered Investment Companies
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8,814,596
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COMMON/
COLLECTIVE TRUSTS:
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||||||||
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*
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RS
Group Trust Co.
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Conservative
Asset Allocation
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**
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115,066
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||||
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*
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RS
Group Trust Co.
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Moderate
Asset Allocation
|
**
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428,035
|
||||
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*
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RS
Group Trust Co.
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Aggressive
Asset Allocation
|
**
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105,736
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||||
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*
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RS
Group Trust Co.
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Stable
Value Fund
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**
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6,038,644
|
||||
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Total
Common/ Collective Trusts
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$6,687,481
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EMPLOYER
SECURITIES
|
||||||||
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*
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Dime
Community Bancshares, Inc.
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Common
Stock Fund - Common
|
**
|
7,499,035
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||||
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INTEREST
BEARING CASH (INCLUDING MONEY MARKET ACCOUNTS AND CERTIFICATES OF
DEPOSIT):
|
||||||||
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*
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RSI
Group Trust Co.
|
Federal
Prime Obligation
|
**
|
265,205
|
||||
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PARTICIPANT
LOANS:
|
||||||||
|
*
|
Employee
Loans Receivable(118
loans with interest rates ranging from 5.00% to 10.50%)
|
**
|
463,377
|
|||||
|
TOTAL
|
$23,729,694
|
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