ACCOUNTING FOR STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

ACCOUNTING FOR STOCK BASED COMPENSATION [Abstract]

ACCOUNTING FOR STOCK BASED COMPENSATION

7.    ACCOUNTING FOR STOCK BASED COMPENSATION

During the three-month and nine-month periods ended September 30, 2011 and 2010, the Holding Company and Bank maintained the Dime Community Bancshares, Inc. 2001 Stock Option Plan for Outside Directors, Officers and Employees and the 2004 Stock Incentive Plan (collectively the "Stock Plans"), which are discussed more fully in Note 15 to the Company's audited consolidated financial statements for the year ended December 31, 2010, and which are subject to the accounting requirements of ASC 505-50 and ASC 718.

Stock Option Awards

Combined activity related to stock options granted under the Stock Plans during the periods presented was as follows:

	At or for the Three Months Ended September 30,				At or for the Nine Months Ended September 30,
	2011		2010		2011		2010
	(Dollars in Thousands, Except per Share Amounts)
Options outstanding - beginning of period		3,079,040		3,327,984		3,213,007		3,266,920
Options granted		-		-		91,583		97,294
Weighted average exercise price of grants		-		-	$	15.46	$	12.75
Options exercised		55,955		-		276,944		19,331
Weighted average exercise price of exercised options		10.91		-		10.95		8.53
Options forfeited		10,312		-		14,873		16,899
Weighted average exercise price of forfeited options		18.11		-		17.69	$	14.30
Options outstanding - end of period		3,012,773		3,327,984		3,012,773		3,327,984
Weighted average exercise price of outstanding options at the end of period	$	14.97	$	14.54	$	14.97	$	14.54
Remaining options available for grant		422,274		553,738		422,274		553,738
Exercisable options at end of period		2,801,169		2,860,928		2,801,169		2,860,928
Weighted average exercise price of exercisable options at the end of period	$	15.12	$	14.86	$	15.12	$	14.86
Cash received for option exercise cost		610		-		3,030		165
Income tax benefit recognized		94		-		339		20
Compensation expense recognized	$	85		246	$	444		738
Remaining unrecognized compensation expense		628		928		628		928
Weighted average remaining years for which compensation expense is to be recognized		2.9		1.8		2.9		1.8

-9-

The range of exercise prices and weighted-average remaining contractual lives of options outstanding, vested and unvested, under the Stock Plans were as follows:

		Outstanding Options as of September 30, 2011				Vested Options as of September 30, 2011
Exercise Prices		Amount		Weighted Average Contractual Years Remaining		Amount		Weighted Average Contractual Years Remaining
$	8.34		149,909		7.6		92,679		7.6
$	10.91		116,126		0.1		116,126		0.1
$	12.75		87,541		8.6		46,345		8.6
$	13.16		511,078		1.3		511,078		1.3
$	13.74		863,375		5.6		863,375		5.6
$	14.92		34,425		6.4		25,818		6.4
$	15.10		318,492		3.7		318,492		3.7
$	15.46		91,583		9.6		-		9.6
$	16.45		76,320		3.3		76,320		3.3
$	16.73		51,943		6.8		38,955		6.8
$	18.18		80,000		6.7		80,000		6.7
$	19.90		631,981		2.3		631,981		2.3
Total			3,012,773		4.1		2,801,169		3.7

The weighted average fair value per option at the date of grant for stock options granted was estimated as follows:

	Nine Months Ended September 30,
	2011			2010
Total options granted		91,583			97,294
Estimated fair value on date of grant	$	4.82		$	3.70
Pricing methodology utilized	Black- Scholes			Black- Scholes
Expected life (in years)		6.80			5.99
Interest rate		2.59	%		2.76	%
Volatility		42.35			43.69
Dividend yield		3.62			4.39

Restricted Stock Awards

The Company, from time to time, issues restricted stock awards to outside directors and officers under the 2004 Stock Incentive Plan.  Typically, awards to outside directors fully vest on the first anniversary of the grant date, while awards to officers vest in equal annual installments over a four- or five-year period.

The following is a summary of activity related to the restricted stock awards granted under the 2004 Stock Incentive Plan during the periods indicated:

	At or for the Three Months Ended September 30,				At or for the Nine Months Ended September 30,
	2011		2010		2011		2010
	(Dollars in Thousands)
Unvested allocated shares - beginning of period		324,454		332,866		309,783		295,066
Shares granted		-		-		126,304		143,083
Shares vested		-		-		109,649		95,107
Shares forfeited		-		-		1,984		10,176
Unvested allocated shares - end of period		324,454		332,866		324,454		332,866
Unallocated shares - end of period		-		-		-		-
Compensation recorded to expense	$	439	$	347	$	1,139	$	954
Income tax benefit recognized		60		-		60		68