What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-28 compared with 2022-03-01 · 25 added, 77 removed, 204 unchanged (33% of the section changed)

17 unchanged sentences

Other Information

On February 24, 2022, the Company adopted Amendment One to the Dime Community Bancshares, Inc.

2021 Equity Incentive Plan (the “Amendment”).

The Amendment provides that upon an involuntary termination following a change in control, all performance awards will vest as to all shares subject to an outstanding performance award as of the date of such involuntary termination:

(i) based on actual performance measured as of the most recent completed fiscal quarter, and (ii) if actual performance cannot be determined, all performance awards will vest as to all shares subject to an outstanding performance award at the target performance level.

The foregoing description of the Amendment does not purport to be complete and it is qualified in its entirety by reference to Exhibit 10.9 to this Annual Report on Form 10-K, which is incorporated herein by reference.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

53 unchanged sentences

(2013) issued by COSO.

Change in Accounting Principle

As discussed in Notes 1 and 5 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2021 due to the adoption of Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326) .

The Company adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

The adoption of the new credit loss standard and its subsequent application is also communicated as a critical audit matter below.

Basis for Opinions

13 unchanged sentences

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

6 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition – Fair Value of Acquired Loans

As described in Note 2 to the financial statements, on February 1, 2021 Dime Community Bancshares, Inc.

(“Legacy Dime”) merged with and into Bridge Bancorp, Inc.

(“Bridge”) (the “Merger”).

The Merger was accounted for as a reverse acquisition, with Legacy Dime deemed to have acquired Bridge in the Merger.

Determination of the acquisition date fair values of the assets acquired and liabilities assumed required management to make significant estimates and assumptions.

Specifically, the fair value of a loan portfolio acquired in a business combination requires greater levels of management estimates and judgment than the remainder of purchased assets or assumed liabilities.

The fair value of the acquired loans was $4.53 billion and required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are subjective and subject to change.

We identified the determination of the acquisition date fair value of acquired loans as a critical audit matter as auditing this estimate is especially complex and requires subjective auditor judgment.

The principal considerations for our determination that this is a critical audit matter is the level of judgment involved in evaluating the reasonableness of management’s assumptions, the need for specialized skill to audit in the development and application of subjective assumptions used to estimate cash flows, and the size of the acquired loan portfolio.

The primary procedures we performed to address this critical audit matter included:

● Testing the effectiveness of controls over the evaluation of the assumptions used in the estimate of fair value of the acquired loans, including controls addressing:

o Management's review of the due diligence performed on the acquired loan portfolio, which impacts the probability of default and loss given default assumptions used in the cash flow calculations.

o Management’s review of the reasonableness of the significant valuation assumptions used in the estimate of the fair value of acquired loans.

o Management’s review of the results of the third-party valuation of the acquired loan portfolio, including the review of the completeness and accuracy of the data inputs used as a basis for the valuation.

● Substantively testing management’s process, including evaluating their judgments and the reasonableness of assumptions used in the fair value estimate of the acquired loan portfolio, which included:

o Evaluation of the completeness and accuracy of data inputs used as a basis for the valuation.

o Evaluation, with the assistance of professionals with specialized skill and knowledge, of the reasonableness of management’s significant valuation assumptions used in the estimate of the fair value of the acquired loans.

o Testing the mathematical accuracy of the estimated fair value, including the application of the assumptions used in the calculation.

Allowance for Credit Losses for Loans – Model Design and Qualitative Factors

As described in Notes 1 and 5 to the financial statements and referred to in the change in accounting principle explanatory paragraph above, on January 1, 2021 (“adoption date”), the Company adopted ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326) under a modified retrospective approach, which required the Company to estimate expected credit losses for its financial assets carried at amortized cost utilizing the current expected credit loss (“CECL”) methodology.

As of the adoption

date, the Company recorded a decrease in the allowance for credit losses (“ACL”) for loans of approximately $3.9 million as a cumulative effect adjustment from a change in accounting policy, with a corresponding increase in retained earnings, net of applicable income taxes.

At December 31, 2021, the ACL on the overall loan portfolio was $83.9 million and consisted of $41.4 million related to collectively evaluated loans, $22.3 million related to individually evaluated loans and $20.2 million related to purchased loans with credit deterioration (“PCD Loans”).

In determining the ACL related to non-PCD loans that are collectively evaluated, expected credit losses are determined by calculating a loss percentage by loan segment, or pool.

Allowance for Credit Losses for Loans – Qualitative Factors

As described in Notes 1 and 5 to the financial statements, the Company estimates expected credit losses for its financial assets carried at amortized cost utilizing the current expected credit loss (“CECL”) methodology.

At December 31, 2022, the allowance for credit losses (the “ACL”) on the overall loan portfolio was $83.5 million.

In determining the ACL related to loans that are collectively evaluated, expected credit losses are determined by calculating a loss percentage by loan segment, or pool.

Management estimates the allowance for credit losses on each loan pool using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

Historically observed credit loss experience of peer banks within the Company’s geography provide the basis for the estimation of expected credit losses on similar loan pools.

Within the model, assumptions are made in the determination of probability of default, loss given default, reasonable and supportable economic forecasts, prepayment rate, curtailment rate, and recovery lag periods.

Statistical regression is utilized to relate historical macro-economic variables to historical credit loss experience of the peer group.

These models are then utilized to forecast future expected loan losses based on expected future behavior of the same macro-economic variables.

The quantitative results are adjusted using qualitative factors.

Historically observed credit loss experience of peer banks within the Company’s geography, adjusted for prepayment and curtailment assumptions as well as macro-economic variables, provide the basis for the estimation of quantitatively modeled expected credit losses on similar loan pools.

The quantitative results of the modeling are then adjusted using qualitative factors.

These factors include:

9 unchanged sentences

A significant amount of judgment is required to assess the reasonableness of the qualitative factors.

Further, changes to these factors as well as changes in the model design could have a material effect on the Company’s financial results.

The model design and the qualitative factors used contribute significantly to the determination of ACL related to loans that share similar risk characteristics.

We identified the assessment of the model design and construction and the assessment of qualitative factors as a critical audit matter because auditing management’s estimate required especially subjective auditor judgment and significant audit effort, including the need for specialized skill.

The primary procedures we performed to address these critical audit matters included:

● Testing the effectiveness of controls over the evaluation of the conceptual design and construction of the models and the evaluation of the qualitative factors, including controls addressing:

o Management’s review and approval of the models and methodologies used to establish the ACL.

o Management’s review of the results of the third-party model validation.

o Management’s review and approval of the qualitative factors, including significant assumptions and judgments made and the relevance and reliability of data used as the basis for those judgments.

● Substantively testing management’s process, including evaluating their judgments and significant assumptions used in the conceptual design and construction of the models and assessment of qualitative factors, which included:

o Evaluation, with the assistance of professionals with specialized skill and knowledge, of the reasonableness of management’s judgments related to the conceptual design and construction of the models.

o Evaluation of the reasonableness of management’s judgments related to qualitative factors to determine if they are calculated to conform with management’s policies and were consistently applied from the point of adoption to year end.

Further, changes to these factors could have a material effect on the Company’s financial results.

The qualitative factors contribute significantly to the determination of the ACL related to loans that share similar risk characteristics.

We identified the assessment of qualitative factors as a critical audit matter because auditing management’s estimate required especially subjective auditor judgment.

The primary procedures we performed to address this critical audit matter included testing the effectiveness of controls over the evaluation of the qualitative factors and substantively testing management’s process related to the assessment of qualitative factors.

The testing of the effectiveness of controls over the evaluation of qualitative factors involved controls addressing management’s review and approval of the qualitative factors, including significant assumptions and judgments made and the relevance and reliability of data used as the basis for those judgments.

The substantive testing of management’s process related to the assessment of qualitative factors, including evaluating management’s judgments and significant assumptions used in the assessment of qualitative factors, involved evaluation of the reasonableness of management’s judgments related to qualitative factors to determine if they are calculated to conform with management’s policies.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

16 unchanged sentences

Second Supplemental Indenture, dated as of February 1, 2021, by and between the Registrant and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Registrant’s Form 8-K, filed February 1, 2021 (SEC File No.

Indenture, dated May 6, 2022, between the Registrant and Wilmington Trust National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K, filed May 6, 2022 (SEC File No.

First Supplemental Indenture, May 6, 2022, between the Registrant and Wilmington Trust National Association, as Trustee, including the form of 5.000% Fixed-to-Floating Rate Subordinated Notes due 2032 (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K, filed May 6, 2022 (SEC File No.

Form of Employment Agreement entered into with Kevin M.

O’Connor, Stuart H.

Lubow, Avinash Reddy, John McCaffery and Conrad J.

Lubow, Avinash Reddy and Conrad J.

Gunther (incorporated by reference to Exhibit 10.4 to Pre-Effective Amendment No.

6 unchanged sentences

Lubow (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed December 23, 2021 (File No.

Amendment to Employment Agreement entered into with Kevin L.

Santacroce (incorporated by reference to Exhibit 10.8 to Pre-Effective Amendment No.

1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No.

Change in Control Employment Agreement between Dime Community Bancshares, Inc.

and Patricia M.

Amendments One and Two to the Change in Control Employment Agreement between Dime Community Bancshares, Inc.

and Patricia M.

Form of Retention and Award Agreement entered into with Kevin M.

O’Connor, Stuart H.

Lubow, Avinash Reddy, John M.

McCaffery, Kevin L.

Santacroce, Conrad J.

Gunther and James J.

Manseau (incorporated by reference to Exhibit 10.5 to Pre-Effective Amendment No.

Lubow, Avinash Reddy and Conrad J.

Gunther (incorporated by reference to Exhibit 10.5 to Pre-Effective Amendment No.

1 to the Registrant’s Registration Statement on Form S-4, filed October 15, 2020 (File No.

2 unchanged sentences

Mahon, Stuart H.

Lubow, Avinash Reddy, John McCaffery and Conrad J.

Lubow, Avinash Reddy and Conrad J.

Gunther (incorporated by reference to Exhibit 10.6 to Pre-Effective Amendment No.

14 unchanged sentences

001-34096, filed April 2, 2012)

Agreement and General Release by and between Dime Community Bancshares, Inc., Dime Community Bank and John M.

McCaffery (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed June 15, 2021 (File No.

Settlement and Release Agreement with Howard Nolan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed February 1, 2021 (File No.

Non-Competition and Consulting Agreement with Howard Nolan (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed February 1, 2021 (File No.

Bridge Bancorp, Inc.

5 unchanged sentences

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) and 18 U.S.C.

The following financial statements from Dime Community Bancshares, Inc.’s Annual Report on Form 10-K for the Year Ended December 31, 2021, filed on February 28, 2022, formatted in Inline XBRL:

(i) Consolidated Balance Sheets as of December 31, 2021 and 2020, (ii) Consolidated Statements of Income for the Years Ended December 31, 2021, 2020 and 2019, (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019, (iv) Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020 and 2019, (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019, and (vi) the Notes to Consolidated Financial Statements.

Inline XBRL Instance Document

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Inline XBRL Taxonomy Extension Schema Document

13 unchanged sentences

Avinash Reddy

Senior Executive Vice President and Chief Financial Officer

February 28, 2022

/s/ Leslie Veluswamy

Leslie Veluswamy

Senior Vice President, Chief Accounting Officer

Senior Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.

16 unchanged sentences

February 28, 2023

/s/ Vincent F.

February 28, 2023

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures