form11k062509.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
11-K
x
|
ANNUAL
REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
For the fiscal
year ended December 31,
2008 |
or
o
|
TRANSITION
REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from _____ to
_____
|
Commission
File Number 001-13695
A.
|
Full
title of the plan and the address of the plan, if different from that of
the issuer named below:
|
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
5790
Widewaters Parkway
DeWitt,
New York 13214
B.
|
Name
of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
|
Community
Bank System, Inc.
5790
Widewaters Parkway
DeWitt,
New York 13214
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Signature
Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustee (or
other persons who administer the employee benefit plan) has duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
|
|
Community
Bank System, Inc. |
|
|
401(k)
Employee Stock Ownership Plan |
|
|
|
|
|
Community
Bank, N. A., Trustee |
|
|
|
Dated: June
25, 2009
|
|
|
|
|
/s/ Scott
Kingsley |
|
|
Scott
Kingsley |
|
|
Executive Vice
President and Chief |
|
|
Financial
Officer |
COMMUNITY BANK SYSTEM,
INC.
401(K) EMPLOYEE STOCK
OWNERSHIP PLAN
FINANCIAL
STATEMENTS
AND
SUPPLEMENTAL
SCHEDULE
* * *
DECEMBER 31, 2008 AND
2007
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Financial
Statements and Supplemental Schedule
December
31, 2008 and 2007
|
Page(s) |
|
|
Report of Independent
Registered Public Accounting
Firm.......................................................................................................... |
1 |
|
|
Financial
Statements: |
|
|
|
Statements of
Net Assets Available for
Benefits...........................................................................................................................
|
2 |
|
|
Statements of
Changes in Net Assets Available for
Benefits......................................................................................................
|
3 |
|
|
Notes to
Financial
Statements...........................................................................................................................................................
|
4-10 |
|
|
Supplemental
Schedule: |
|
|
|
Schedule of
Assets (Held at End of Year) (Schedule H, Part IV, Item
(i))...................................................................................
|
11 |
Note:
|
All
other schedules are omitted since they are not applicable or are not
required based on the disclosure requirements of the Employee Retirement
Income Security Act of 1974 and applicable regulations issued by the
Department of Labor.
|
Report of Independent
Registered Public Accounting Firm
June 25,
2009
|
To
the Participants and Administrators
of
|
|
Community
Bank System, Inc. 401(k) Employee Stock Ownership
Plan
|
We have
audited the accompanying statements of net assets available for benefits of
Community Bank System, Inc. 401(k) Employee Stock Ownership Plan (“the Plan”) as
of December 31, 2008 and 2007 and the related statements of changes in net
assets available for benefits for the years then
ended. These financial statements are the responsibility of the
Plan’s management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Plan is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Plan’s internal control over financial
reporting. Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the net assets available for benefits of the Plan as of
December 31, 2008 and 2007, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles (United States).
Our
audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of
Assets Held for Investment Purposes at End of Year as of December 31, 2008, is
presented for the purpose of additional analysis and is not a required part of
the basic financial statements, but is supplementary information required by the
Department of Labor’s Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This
supplemental schedule is the responsibility of the Plan’s
management. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/
Dannible & McKee, LLP
Dannible
& McKee, LLP
Syracuse,
New York
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Statements
of Net Assets Available for Benefits
December
31, 2008 and 2007
|
2008
|
|
2007
|
Assets
|
|
|
|
Investments,
at fair value (Notes B and C):
|
|
|
|
Mutual
funds
|
$ 25,164,399
|
|
$ 36,835,176
|
Collective
investment funds
|
997,484
|
|
-
|
Community
Bank System, Inc. common stock
|
18,359,556
|
|
15,992,529
|
Collective
trust fund
|
15,518,312
|
|
14,458,238
|
Participant
loans
|
2,327,898
|
|
2,166,994
|
Self-directed
brokerage
|
574,529
|
|
705,308
|
Money
market fund
|
722,577
|
|
406,447
|
Total
investments
|
63,664,755
|
|
70,564,692
|
|
|
|
|
Contributions
receivable – employer
|
889,635
|
|
769,806
|
|
|
|
|
Payable
to plan sponsor
|
6,677
|
|
-
|
|
|
|
|
Net
assets available for benefits at fair value
|
64,547,713
|
|
71,334,498
|
|
|
|
|
Adjustment
from fair value to contract value for fully
|
|
|
|
benefit-responsive
investments
|
1,506,759
|
|
372,868
|
|
|
|
|
Net
assets available for benefits
|
$
66,054,472
|
|
$
71,707,366
|
|
|
|
|
The
accompanying notes are an integral part of the financial
statements.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Statements
of Changes in Net Assets Available for Benefits
Years
Ended December 31, 2008 and 2007
|
|
2008
|
|
2007
|
|
|
|
|
Additions
|
|
|
|
Employee
contributions
|
$
4,733,958
|
|
$
4,045,568
|
Employer
contributions
|
2,481,925
|
|
1,859,744
|
Interest
and dividend income
|
2,614,743
|
|
4,281,873
|
Transfer
from merged plan (Note F)
|
-
|
|
5,046,146
|
Total
additions
|
9,830,626
|
|
15,233,331
|
|
|
|
|
Deductions
|
|
|
|
Net
depreciation in the fair value of investments
|
10,031,104
|
|
2,697,894
|
Benefit
payments
|
5,358,476
|
|
5,780,078
|
Administrative
fees
|
93,940
|
|
89,683
|
Total
deductions
|
15,483,520
|
|
8,567,655
|
|
|
|
|
|
Net
(decrease) increase in net assets available for benefits
|
(5,652,894)
|
|
6,665,676
|
|
|
|
|
Net
assets available for benefits
|
|
|
|
Beginning
of Year
|
71,707,366
|
|
65,041,690
|
|
|
|
|
End
of Year
|
$
66,054,472
|
|
$
71,707,366
|
The
accompanying notes are an integral part of the financial
statements.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
|
A.
|
Description
of the Plan
|
The
following description of the Community Bank System, Inc. 401(k) Employee Stock
Ownership Plan (the “Plan”) provides only general
information. Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
General
The Plan
is a defined contribution plan covering substantially all employees of Community
Bank System, Inc. (the “Company”) who are age 18 or older. Employees
are eligible to participate in the plan after 90 days of
service. Employees must have one year of service to be eligible for
the Company’s discretionary profit sharing contribution. The Plan
also qualifies as an employee stock ownership plan under the meaning of
Section 4975(e)(7) of the Internal Revenue Code. The Plan is
subject to the provisions of the Employment Retirement Income Security Act of
1974 (ERISA).
Plan
Amendments
In 2007,
the Plan was amended to comply with final regulations issued under Sections
401(k) and 401(m) of the Internal Revenue Code. Effective January 1,
2008, the Plan was amended to allow Roth Elective Contributions, to provide
automatic enrollment into the Plan for employees once they satisfy eligibility
requirements, and the creation of automatic deferral payments which increase by
1% annually from 3% to a maximum of 6% absent employee direction to the
contrary. Effective January 1, 2008 the plan was further amended to
increase the maximum Company match to 3.5% as described below.
Contributions
Participants
may make voluntary contributions of up to 90% of their total compensation on a
pre-tax or after-tax basis up to a maximum contribution of $15,500 for
2008. Voluntary cash contributions of up to 6% of total eligible
compensation are matched 100% by the Company for the first 1% contributed and
50% for the next 5% contributed. Prior to January 1, 2008 the Company
matched 50% of the first 6% contributed. The Company match amounted
to $1,592,295 and $1,079,510 in 2008 and 2007, respectively. The
amount of the Company’s annual discretionary profit sharing contribution is
determined by the Board of Directors, within certain maximum
limitations. These discretionary profit sharing contributions to the
Plan are allocated to individual participant accounts. Such
discretionary profit sharing contributions were $889,630 and $769,474 in 2008
and 2007, respectively.
Participant
Accounts
Each
participant's account is credited with the participant's contribution and
allocations of the Company's contribution as well as Plan earnings and charged
with an allocation of administrative expenses. Allocation of Plan
earnings and administrative expenses are based on 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. Forfeited accounts are allocated annually to eligible
participant accounts based on the ratio of each eligible participant's
compensation to total eligible participant compensation. Forfeited
accounts allocated to eligible participants amounted to $5,712 and $18,312 for
2008 and 2007, respectively.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
Vesting
Participants
are immediately vested in their contributions and the Company's discretionary
profit sharing contributions. Vesting in the Company's matching
contribution portion plus actual earnings thereon is based on years of
continuous service. A participant is 100 percent vested after three
years of service.
Participant
Loans
Participants
may borrow from the Plan a minimum of $1,000 up to a maximum equal to the lesser
of $50,000 or 50 percent of their vested account balance. Loans are
collateralized by the balance in the participant's account. Interest
accrues at the prime rate in effect at the inception of the loan plus 1% for
residential loans and plus 2.9% for Reserve Plus loans.
Payment
of Benefits
Normal
retirement date for participants under the Plan is the later of age 65 or the
completion of 5 years of service. Upon termination of service due to
death, disability or retirement, the participant will receive either a lump sum
amount or installment payments equal to the value of the participant's vested
interest in his or her account. If some or all of a participant’s
account balance is allocated to the employee stock option feature of the Plan,
that portion of the Plan benefit may be paid in the form of Company
stock. Upon termination of employment, if the account balance is less
than $5,000, the participant will receive a single lump sum amount equal to the
value of his or her account, otherwise, the participant may elect to defer
payment up to age 65. Hardship withdrawals of up to 100% of employee
contributions are available if Internal Revenue Service guidelines are
met.
Plan
Termination
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue contributions at any time and terminate the Plan subject to
the provisions set forth in ERISA. In the event the Plan terminates,
the net assets of the Plan are to be set aside for participating employees based
upon balances then credited to individual accounts. Participants
shall be vested 100% in the assets so allocated to their accounts.
B.
|
Significant
Accounting Policies
|
Basis
of Accounting
The
accompanying financial statements are prepared on an accrual basis of accounting
in accordance with accounting principles generally accepted in the United States
of America.
Valuation
of Investments
Investments
are stated at aggregate fair value, except for the SEI Stable Asset GIC Fund,
which is stated at contract value. Securities that are traded on a
national securities exchange are valued at the last reported sales price on the
last business day of the Plan year. Shares of mutual funds are valued
at the net asset value of shares held by the Plan at
year-end. Participant loan receivable balances are reported at cost,
which approximates fair value.
The Plan
presents in the Statement of Changes in Net Assets the net appreciation
(depreciation) in the fair value of its investments, which consists of realized
gains or losses as well as unrealized appreciation (depreciation) on those
investments.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
Purchases
and sales of securities are recorded on the trade date. Gains or
losses on sales of securities are based on average cost. Interest
income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
The SEI
Stable Asset GIC Fund is stated according to the 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”), which states that contract value is the
relevant measurement attribute for that portion of the net assets available for
benefits of a defined-contribution plan attributable to fully benefit-responsive
investment contracts because contract value is the amount participants would
receive if they were to initiate permitted transactions under the terms of the
plan. As required by the FSP, the accompanying Statements of Net Assets
Available for Benefits presents the fair value of the investment contracts as
well as the adjustment of the fully benefit-responsive investment contracts from
fair value to contract value. The accompanying Statement of Changes
in Net Assets Available for Benefits is prepared on a contract value
basis. Contract value represents contributions made under the
contract, plus earnings, less participant withdrawals and administrative
expenses. Participants may ordinarily direct the withdrawal or
transfer of all or a portion of their investments at contract
value. There are no reserves against contract value for credit risk
of the contract issuer or otherwise. If an event occurs that may
impair the ability of the contract issuer to perform in accordance with the
contract terms, fair value may be less than contract value. For the
years ended December 31, 2008 and 2007 the average yields utilized were
6.44% and 5.84% and the crediting interest rates to the fund were 3.27% and
4.44% respectively.
Payment
of Benefits
Benefits
are recorded when paid.
Administrative
Expenses
Certain
administrative expenses are paid by the Company. These amounted to
approximately $584,000 and $349,000, including approximately $276,000 and
$273,000 paid to Benefit Plans Administrative Services, Inc. (“BPA”), in 2008
and 2007, respectively. (See Note E).
Inactive
Accounts
Account
balances of individuals who have withdrawn from participation in the Plan had an
accumulated basis of approximately $10,856,943 and $11,689,367 at
December 31, 2008 and 2007, respectively.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Risks
and Uncertainties
The plan
provides for various investment options in mutual funds and Company
stock. Investment securities are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated
with certain investment securities and the level of uncertainty related to
changes in the value of investment securities, it is at least reasonably
possible that changes in risk in the near term would materially affect
participants' account balances and the amounts reported in the Statements of Net
Assets Available for Benefits and the Statements of Changes in Net Assets
Available for Benefits.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
Investments
are held within various common funds maintained by the Community Bank, N.A.
Trust Department. Participants, at their discretion, may allocate
contributions and account balances between various investment options offered by
the Plan. A brief description of these investment options, as
provided by the plan administrator, follows:
Community Bank System, Inc.
Employee Stock Ownership Fund – these Funds invest in the common stock of
the Plan sponsor, which is traded on the New York Stock Exchange under the
symbol “CBU”.
SEI Stable Asset GIC
Fund – a collective trust fund that holds primarily a diversified
portfolio of stable value contracts issued by insurance companies and
banks. Investments in the SEI Stable Asset GIC Fund are not
marketable securities and are reported at contract value.
American Funds Washington
Mutual Investors Fund Class A – a mutual fund that invests in common
stocks and securities convertible into such common stocks.
Federated Total Return Bond
Fund – a mutual fund seeking to provide total return by investing
primarily in a diversified portfolio of investment grade fixed income
securities.
Managers Special Equity
Fund – a mutual fund that invests in equity securities of small- and
medium-sized U.S. companies.
American Funds EuroPacific
Growth Fund Class A – a mutual fund that invests in stocks of issuers
located in Europe and the Pacific Basin.
Dreyfus S&P 500 Index
Fund – a mutual fund that invests in equities and seeks to match the
performance of the S&P 500 Composite Stock Price Index.
Federated Mid-Cap Index
Fund – a mutual fund primarily that invests in stocks of U.S.
companies.
T. Rowe Price Blue Chip
Growth Fund – a mutual fund primarily that invests in stocks of U.S.
companies.
AITC Smart Conservative 2010
R1 – a mutual fund portfolio that attempts to achieve current income with
long-term growth of principal by investing primarily in 47% stocks and 53% bonds
and cash.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
AITC Smart 2020 R1 –
a mutual fund portfolio that attempts to achieve current income with long-term
growth of principal be investing primarily in 63% stock and 37% bonds and
cash.
AITC Smart Moderate 2030
R1 – a mutual fund portfolio that attempts to achieve long-term growth of
principal and income by investing primarily in 70% stock and 30% bonds and
cash.
AITC Smart 2040 R1 –
a mutual fund portfolio that attempts to achieve long-term growth of principal
and income by investing primarily in 80% stock and 20% bonds and
cash.
AITC Smart Aggressive 2050
R1 – a mutual fund portfolio that attempts to achieve long-term growth of
principal by investing primarily in 90% stock and 10% bonds and
cash.
TD Waterhouse IDA
Account – participants select the individual investment securities,
including equity securities, mutual funds and bonds.
The fair
value of individual investments which represent 5% or more of net assets
available for benefits ($3,302,723 for 2008 and $3,585,368 for 2007) at either
December 31, 2008 or 2007 are as follows:
|
2008
|
|
2007
|
Community
Bank System, Inc. common stock
|
$
18,359,556
|
|
$
15,992,529
|
SEI
Stable Asset GIC Fund
|
15,518,312
|
|
14,458,238
|
American
Funds Washington Mutual Investors Fund Class A
|
6,133,230
|
|
9,216,851
|
American
Funds EuroPacific Growth Fund Class A
|
4,000,606
|
|
6,640,176
|
Manager
Special Equity Fund
|
2,400,620
|
|
4,190,719
|
Federated
Total Return Bond Fund
|
4,562,916
|
|
4,920,314
|
T.
Rowe Price Blue Chip Growth Fund
|
3,234,965
|
|
5,036,759
|
Dreyfus
S&P 500 Index Fund
|
2,552,229
|
|
3,624,196
|
The
Plan’s investments (depreciated) appreciated in value as follows:
|
2008
|
|
2007
|
Community
Bank System, Inc. common stock
|
$ 4,129,028
|
|
$ (2,252,647)
|
Mutual
funds
|
(14,160,132)
|
|
(445,247)
|
Total
net depreciation in fair value of investments
|
$
(10,031,104)
|
|
$ (2,697,894)
|
|
D.
|
Fair
Value Measurements
|
Effective
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS
157), which establishes a common definition for fair value to be applied to
generally accepted accounting principles requiring the use of fair value,
establishes a framework for measuring fair value and expands disclosure about
such fair value instruments. It defines fair value as the price that
would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit
price). It also classifies the inputs used to measure fair value into
the following hierarchy:
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
·
|
Level
1 – |
Quoted
prices in active markets for identical assets or
liabilities.
|
· |
Level
2 – |
Quoted
prices in active markets for similar assets or liabilities, or quoted
prices for identical or similar assets or liabilities in markets that are
not active, or inputs other than quoted prices that are observable for the
asset or liability. |
· |
Level
3 – |
Significant
valuation assumptions not readily observable in a
market. |
A
financial instrument’s categorization within the valuation hierarchy is based
upon the lowest level of input that is significant to the fair value
measurement. The following tables set forth the Company’s financial
assets that were accounted for at fair value on a recurring basis as of December
31, 2008:
|
Level
1
|
|
Level
2
|
|
Level
3
|
|
Total
Fair Value
|
Mutual
Funds
|
`$25,164,399
|
|
$
-
|
|
$
-
|
|
$25,164,399
|
Collective
investment funds
|
-
|
|
997,484
|
|
-
|
|
997,484
|
Common
stock
|
18,359,556
|
|
-
|
|
-
|
|
18,359,556
|
Collective
trust fund
|
-
|
|
15,518,312
|
|
-
|
|
15,518,312
|
Loan
fund
|
-
|
|
-
|
|
2,327,898
|
|
2,327,898
|
Self-directed
brokerage
|
574,529
|
|
-
|
|
-
|
|
574,529
|
Money
market fund
|
722,577
|
|
-
|
|
-
|
|
722,577
|
Total
|
$44,821,061
|
|
$16,515,796
|
|
$2,327,898
|
|
$63,664,755
|
The
valuation techniques used to measure fair value for the items in the table above
are as follows:
Mutual
funds and money market funds: Valued at the net asset value of shares
held by the plan at year-end.
Collective
investment funds and collective trust funds: The units held of
collective investment and collective trust funds are valued periodically by the
trustee of the respective fund. The values are based on the current
market values of the underlying assets of the fund, which have been determined
to be Level 1 or Level 2.
Common
stock and self directed brokerage: Valued at he closing price reported on the
active market on which the individual securities are traded.
Loan
fund: Valued at amortized cost, which approximates fair
value.
The
methods described above may produce a fair value calculation that may not be
indicative of net realizable value or reflective of future fair
values. Furthermore, while the Plan believes its valuation methods
are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different fair value measurement at the
reporting date.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Notes
to Financial Statements
December
31, 2008 and 2007
The table
below sets forth a summary of changes in the fair value of the plan’s level 3
assets for the year ended December 31, 2008.
|
|
Loan
fund
|
Balance,
beginning of year
|
|
$2,166,994
|
Realized
gains/(losses)
|
|
-
|
Unrealized
gains/(losses) relating to instruments still held at the reporting
date
|
|
-
|
Purchases,
sales, issuances and settlements, net
|
|
160,904
|
Balance
at end of year
|
|
$2,327,898
|
|
E.
|
Transactions
with Parties-in-Interest
|
The
assets of the Plan are administered by BPA, a subsidiary of Community Bank
System, Inc. The Company paid BPA approximately $276,000 and $273,000
for record keeping, trustee, and other services in 2008 and 2007,
respectively.
The Plan
held 752,749 and 804,858 shares of the Plan sponsor’s common stock at
December 31, 2008 and 2007, respectively. The cost of these
shares at December 31, 2008 and 2007 is $14,935,905 and $15,378,211,
respectively, and their fair value at December 31, 2008 and 2007 is
$18,359,556 and $15,992,529, respectively. Dividends received on the
investment in Community Bank System, Inc. common stock amounted to $668,882 and
$647,596 for the years ended December 31, 2008 and 2007,
respectively. The Plan sold 408,252 and 232,602 shares of Community
Bank System, Inc. common stock during 2008 and 2007, respectively, and purchased
361,270 and 291,641 shares of Community Bank System, Inc. common stock during
2008 and 2007, respectively.
The Plan
obtained its most recent determination letter in July 2003, in which the
Internal Revenue Service stated that the plan, as then designed, was in
compliance with Section 401(a) of the Internal Revenue Code. The Plan
has been amended since receiving the determination letter, however, the Plan
administrator believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code.
G. Plan
Mergers
On
December 1, 2006 the Company acquired ONB Corporation, the parent company of
Ontario National Bank and merged the Ontario National Bank 401(K) Savings Plan
into the Plan. Accordingly, total plan assets of $1,633,945 were
transferred to the Plan for the year ended December 31, 2007. On May
18, 2007, Benefit Plan Administrative Services, a wholly owned subsidiary of the
Company acquired Hand Benefits & Trust, Inc. and merged the Hand Benefits
& Trust, Inc Employees 401(k) Savings Plan into the
Plan. Accordingly, total plan assets of $2,908,136 were transferred
to the Plan for the year ended December 31, 2007. On June 1, 2007,
the Company acquired TLNB Financial Corporation, the parent company of Tupper
Lake National Bank and merged the Tupper Lake National Bank 401(K)
Plan into the Plan. Accordingly, total plan assets of $504,065 were
transferred to the Plan for the year ended December 31, 2007.
Community
Bank System, Inc.
401(k)
Employee Stock Ownership Plan
Schedule
of Assets (Held at End of Year)
(Schedule
H, Part IV, Item (i))
December
31, 2008
(a)
|
(b)
Identify of issue, borrower, lessor or similar party
|
(c)
Description of investment including maturity date, rate of interest,
collateral, par or maturity value
|
(e)
Current value
|
|
|
|
|
|
Mutual
Funds
|
|
|
|
|
|
|
|
American
Funds Washington Mutual Investors Fund Class A
|
Mutual
fund – 286,466 shares
|
$6,133,230
|
|
American
Funds EuroPacific Growth Fund Class A
|
Mutual
fund – 142,828 shares
|
4,000,606
|
|
Managers
Special Equity Fund
|
Mutual
fund – 79,281 shares
|
2,400,620
|
|
Federated
Total Return Bond Fund
|
Mutual
fund – 448,224 shares
|
4,562,916
|
|
T.
Rowe Price Blue Chip Growth Fund
|
Mutual
fund – 140,590 shares
|
3,234,965
|
|
Dreyfus
S&P 500 Index Fund
|
Mutual
fund – 101,158 shares
|
2,552,229
|
|
Federated
Mid-Cap Index Fund
|
Mutual
fund – 174,968 shares
|
2,279,833
|
|
|
|
25,164,399
|
|
|
|
|
|
Collective
Investment Funds
|
|
|
|
AITC
Smart Conservative 2010 R1
|
Collective
investment fund – 15,273 shares
|
159,295
|
|
AITC
Smart 2020 R1
|
Collective
investment fund – 27,096 shares
|
209,995
|
|
AITC
Smart Moderate 2030 R1
|
Collective
investment fund – 22,684 shares
|
220,942
|
|
AITC
Smart 2040 R1
|
Collective
investment fund – 44,839 shares
|
343,019
|
|
AITC
Smart Aggressive 2050 R1
|
Collective
investment fund – 7,209 shares
|
64,233
|
|
|
|
997,484
|
|
|
|
|
|
Common
stock of plan sponsor
|
|
|
*
|
Community
Bank System, Inc.
|
Common
stock – 752,749 shares
|
18,359,556
|
|
|
|
|
|
Collective
Trust Fund
|
|
|
**
|
SEI
Stable Asset GIC Fund
|
Collective
trust fund – 17,025,071 shares
|
17,025,071
|
|
|
|
|
|
Loan
Fund
|
|
|
|
Participant
loans
|
Loan,
5.0% – 10.5%
|
2,327,898
|
|
|
|
|
|
Self
Directed brokerage
|
|
|
|
TD
Waterhouse IDA Account
|
Self-directed
brokerage
|
574,529
|
|
|
|
|
|
Money
Market Fund
|
|
|
|
ReservePlus
Money Market
|
Money
market fund - 722,577 shares
|
722,577
|
|
Total
investments
|
|
$65,171,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
–
Denotes party-in-interest
|
|
|
**
|
–
Investment stated at Contract Value. The fair value of the
investment was $15,518,312.
|
|
|
|
|
|
|
|
|
|
|
|
|
|